In 2012, several media reports, articles and forums dealt with the situation of the online bonus/coupon sales. The interest is not groundless, as ever since its appearance in Hungary in the autumn of 2010, the model keeps internet users, and what is more, even great masses of people previously not involved in online shopping in a fever of excitement. A great number of new services and products – previously not available or not easily found in the Internet – became available in a favourable, and for many people at an unmissable price. Thanks to the above, the popularity of the greatest pages raised to the sky instantly, which was only topped off by the fact that there was a long and tight competition for the market leader status in terms of different sales figures.

At the time when bonus/coupon sites were lounched at the end of 2010, eNET set the goal of measuring the performance of these pages, and as a result, it would present its findings reflecting the developments in the competition. The present summary evaluates last year’s performance of the sector:

The market totalling 4,5 billion HUF in the first full year after its start – in 2011 – valued 6,5 billion HUF in 2012, which is almost a 45% increase compared to 2011. Furthermore, the value includes only the sales of the bonus/coupon sites with general supply.

Consolidation

At the end of last year, the number of bonus/coupon market participants with general supply was 19, however, this number was over 30 at the beginning of 2012. Since in terms of most of the data measured (number of offers, number of bonuses/coupons sold, revenues etc.), it is clearly visible that the performance of the top three sites is outstanding compared to the rest – with a 70% market share in total – the consolidation is expected to continue in the future.

This does not mean that the companies with lower revenues are less skilled than the top three, but those were the first market entrants that succeeded in becoming known brands, which in turn is crucial in attracting merchant partners and masses of consumers. Therefore, in the middle tier of the market there is only little chance for outstanding growth, except for some offers with spectacular success.

Besides consolidation, last year brought specialisation as well, especially the popularity of the sites focusing on travel offers showed an outstanding growth (e.g. NemaradjLe.hu, Szállásguru.hu). In our analysis in 2011, these sites were still valued as parts of the bonus/coupon market, however, currently it is more accurate to value this special field as part of the online travel broker market, which shows a dinamic growth as well.

Bónusz Brigád is still in the lead

The top sellers had monthly sales values of several hundred million forints each. In 2012., Bónusz Brigád achieved the highest turnover selling bonuses in a value of more than 2.2 billion forints, the second was Kupon Világ with its coupons sold in a value of almost 1.9 billion forints, and Napi Tipp qualified again in 2012 as the third with its 426 million forints yearly revenue.

One million bonuses / coupons sold

In 2012, the companies monitored by eNET presented a mean 12 thousand offers in total, and sold more than one million bonuses/coupons in the total value of 6.5 billion forints with an average 55% discount. This means that if we claculate with the original price of the services and products offered, the real value would be 14.4 billion HUF, leaving 7.9 billion HUF in the pockets of the customers as savings.

Customers spend 12 600 Forints on an average bonus/coupon, which is more than twice as much as the value measured at the end of 2011, implying that besides the high number of more expensive offers, customers are more and more conscious and buy bonuses/coupons at a higher price more fearlessly. They do so despite the fact that the average discount on an offer did not show any reasonable growth and stagnates at about 50-55%. The stagnation of discount rates is due to the popularity of the products as well, for which brokers offer discount rates at 30-40 % compared to the usual 50-90% discount rate in the case of services.

Of the approximately 12 thousand offers comprised in the total market, 6500 were tied to the three major players. Bónusz Brigád, with its 4200 offers made up 65% of the whole supply, so the market leader alone had more offers in 2012 than the second and the third runners-up combined. On the whole, in 2012, 35% of the total offers were given by Bónusz Brigád, 12% by Kupon Világ and 8% by Napi Tipp.

The top three companies are also dominating the market in terms of sales volume, thanks to their 775 thousand bonuses/coupons sold, representing 72% of the market total. Bónusz Brigád sold 55 thousand more bonuses on its own than Kupon világ and Napi Tipp together, thus the market leader provided 54% of the bonuses/coupons sold.

Except for the travel offers, the vast majority of the discounts were available in Budapest. Services available in other cities brought not more than 2.3% of the total revenue. Thus, the market is still unable to broaden beyond Budapest, which is implied by the fact that local sellers concentrating on certain cities or regions disappeared one after the other from the range of offers. In the course of 2012, virtually all the sellers became local, so presently there is a single statewide public shopping site in Hungary, Bónusz Brigád, which has a widespread and regular activity in the country. Last year they had a total of 930 local offers in seven big cities: Debrecen, Győr, Kecskemét, Miskolc, Pécs, Szeged, Székesfehérvár, selling 43 thousand bonuses in the value of 140 million forints.

Still primarily services

In 2012, product sales played a bigger role than in the previous year, however, the focus is still on services regarding the total market. Of the 12 thousand offers, 21% was concerned products, of which 310 thousand bonuses/coupons found their buyers. This is 28% of the total number sold, while it means not more than 13% of the total revenue. Thus, although product offers are popular, they are typically of lower value. While the average price of a service offer was 14 thousand forints, this value was hardly half of it in the case of products.

However, the popularity of different offer categories did not show significant change even last year. Travel offers are still on top in terms of revenues, closely followed by the beauty care and health offers, which are popular as well. The latter two categories dominate one third of the service offers, and this is so with the TOP3 sellers. The basis of the revenues at each of the three companies were travel offers, followed by beauty care offers at the second place.

Community building is crucial

Active presence on the largest social site is part of the business model, which is not only an excellent channel of communication and advertisement, but also a forum where customers can share their comments and experiences with other members of the community, boosting brand loyality that is crucial to these online sites.

The three largest market players showed a marked improvement in this field as well during the course of the year. The number of their followers grew by 90 thousand people in total, and presumably, the great majority of these new followers have already made a purchase or will eventually shop on one of the bonus/coupon websites.

Which way further?

Thanks to the consolidation, the number of companies dropped under 20 in 2012, and another two players left the market this year. However, the reasons for the drop are not due to the inadequate or unsustainable business model, but much rather they should be deemed as part of an educational process. Merchants and suppliers who use bonus/coupon sales are more and more conscious in utilising this tool, have learnt its place among their different advertising activities and sales channels, and they aim to ensure their presence on the website of any of the most popular brokers – brands – to achieve success. This tendence gradually suppresses small and local players.

Consumers keep on shopping, trust in brokers, which is well indicated by the more and more „brave”, increasing pricing. The greatest player surmounting the market is outstanding today not only in the sector but also concerning the total e-commerce in terms of volume and market position.

eNET

The transmission, processing and storage of data have continuously improved and become cheaper, enabling enterprises to re-think their IT infrastructure. Companies can now afford Internet-based services which provide storage of files and software somewhere „in a cloud” instead of the users’ computers (hence the name cloud computing). As the applications processing data are also hosted on the Internet, operating a local server may become redundant. The services are accessed by a thin client, saving money, place and energy for companies.

Cloud computing is available at all levels of IT processes:

• Software as a Service, SaaS. In the SaaS model, software developed by an independent provider is accessed over the Internet by users who are charged a fixed license fee. Unlike traditional software, these solutions are not installed on the users’ computers or servers. Owned by the provider, these software applications are hosted in the provider’s data centre running on its computers. SaaS includes different mailing systems, online file sharing and storage provision, complex office software solutions and recently even accounting and CRM systems.
• Platform as a Service, PaaS. PaaS solutions are development platforms which provide development tools in a cloud to be accessed via a web browser, similarly to SaaS solutions. PaaS enables IT specialists to design web applications without installing any software on their computers. These applications may then be installed on PaaS servers without any special knowledge of system administration. The user thus is charged for using an application environment such as .NET, Java, etc. One of the most widely used providers is Google App Engine.
• Infrastructure as a Service, IaaS. In this model, the provider offers its virtual computers in a virtual environment for a fee. This solution is sometimes even deployed within a company to ensure a better use of resources and cost efficiency. IaaS is recommended for users who do not wish to maintain any device or server but want to retain control over their software environment. For this purpose, they can hire a virtual machine from IaaS providers such as Amazon or Magyar Telekom in Hungary.

SMEs That Should Switch to Cloud Computing

Earlier surveys of eNET found that IT plays a key role for the majority of micro-enterprises and SMEs. On average, an SME needs to set up a server exclusively dedicated to its own network once the number of PCs in its IT system has exceed 10. Approximately one-third of small and medium enterprises use a server to support their IT operations. Typically, however, server supervision is outsourced to an administrator.

For companies like these, outsourcing the operation of the server and the related services can be a good idea. Any error in the system may result in downtime, losing money for a company – cloud computing can be the answer to that.

The availability of cloud computing means that providing some parts of the IT background can become a decision of „build or buy” for a company, a decision similar to „make or buy”. Enterprises must analyze their options and objectives to decide whether to manage their IT processes in-house or try outsourcing. Obviously, numerous SMEs started using a server prior to the introduction of cloud computing therefore their IT processes are based on the existence of an in-house server. Implementing cloud computing may need a more complex re-organizing of processes in their case.

According to eNET’s latest survey conducted among SMEs, the majority of companies with an in-house server operate their server onsite (a mere 5 % uses server hosting or leasing) but nearly half of them have outsourced the operation of their IT systems to a third party. In-house servers are mainly used for e-mailing, data storage and running data bases. IT plays a lesser role for companies that do not have their own server and find cloud computing unappealing. For the remaining 50% of SMEs, however, other reasons must be found for their reluctance toward cloud computing.

Awareness and Use of Cloud Computing

Source: survey conducted by eNET Kft. among SMEs, November 2012

According to our survey, one of the key obstacles to implementing cloud computing is lack of awareness. A mere one-third of SMEs have heard about cloud computing and just a fraction of them is aware of its options and service levels (SaaS, PaaS, IaaS). Only 10% of companies familiar with cloud computing use a cloud service (a little over 3% of all SMEs!) and about 20% have plans to do so in the future. Enterprises interested in cloud computing typically have more than 20 employees and IT plays a major role in their business. Cloud computing is not used by smaller companies that have their own server but 25% of them intend to try a cloud service in the future. In their case, it may indeed be a more viable option to acquire the required extra capacities through a cloud service than build their own infrastructure and start requesting quotations for administration.

It’s Getting Clouded

In spite of the present low level of use, the share of SMEs (around 10%) planning to use cloud computing and the trends seen in the most developed countries (USA, Western Europe) can lead us to the conclusion that the use of cloud computing is set to grow among Hungarian enterprises too.

Benefits of using cloud computing (among users) | Reasons for not using cloud computing (among non-users)

Source: survey conducted by eNET Kft.among SMEs, November 2012

Enterprises already using cloud computing stress its cost efficiency: it’s cheaper to outsource a service than deliver it in-house by building the right infrastructure or hiring a specialist. These benefits may become more pronounced in the future while concerns about cloud computing (security risks, the lack of a proper service or the need for high-level expertise) may ease up through the wider use, improvement and possible regulation of cloud services.

eNET – Telekom

The telephone survey was conducted in November, 2012 using a national representative sample of 300 Hungarian enterprises with sales revenue of HUF 5-250 million.

]]> http://gkienet.hu/en/news/cloud-computing-in-the-sme-sector/feed/ 0 http://gkienet.hu/en/news/christmas-shopping-fever-on-the-internet/ http://gkienet.hu/en/news/christmas-shopping-fever-on-the-internet/#comments Fri, 21 Dec 2012 12:39:40 +0000 gkienet http://gkienet.hu/en/?p=848 While retail sales in Hungary are still struggling, online retailers cannot complain. In the past year 1,6 million people purchased a product online at least once, with sales approaching HUF 177 billion, a nearly 14 % rise compared to last year’s HUF 155 billion. This was greatly facilitated by the emergence of online shopping malls which provide customers with a convenient way to shop on the Internet, reveals eNET – Telekom’s „Report on the Internet Economy”.

Only Online Retailing on the Rise

Online retailing continues to grow steadily despite the outbreak of the recession in 2008 which has heavily influenced retail trade. Even though the total sales of HUF 6,500 billion in 2011 surpassed the level of 2008, this was mainly due to price increases in the food sector. The other sectors were rather characterized by stagnation or a slight decline.

E-retailers, however, are expected to hit sales of HUF 177 billion, an increase of 14 %, accounting for 3 % of the total retail turnover. The majority of their revenues, almost 40%, are again generated in the last two months of the year as a result of the shopping frenzy before the holidays.

In addition, the average value of the online shopping cart is higher than that of traditional purchases. On the Internet a customer spends HUF 7,000 on average on a purchase while only HUF 3,000 in traditional commerce. Online customers are therefore more inclined to spend a bigger sum at one go, encouraged by the fact that most e-stores offer free delivery over a certain amount of spending.

More Women Shopping on the Internet

In the last 12 months 1,6 million customers made at least one online purchase, reveals eNET’s latest survey conducted at the end of the third quarter of 2012. For now, women and men have a balanced representation but thanks to numerous online stores targeting women and promoting impulse shopping, more women than men are expected to shop online in the next six months. E-retailers, therefore, need to be prepared to fulfil the needs of women, making the transformation of websites necessary in plenty of cases.

Top Gifts: Smartphones, Tablets, Perfumes

In addition to toys and books, traditionally popular in e-commerce, the market of technology products has exploded this year, showing an especially high demand for consumer electronics compared to last year. In 2012 online sales of such products are anticipated to reach HUF 15-20 billion. Their success is also explained by the prices set by e-stores which are often 10-20 % lower than in traditional stores, clearly facilitating the growth of the sector.

eNET’s survey also reveals the most popular products of this year’s Christmas season. Similarly to previous years, the popularity of HD televisions remains undiminished but in consumer electronics the real rage is smartphones and tablets. In the last three months of 2012, nearly 200,000 smartphones were sold, the majority of them over the Internet.

Unlike in the previous years, in 2012 online sales of home decoration products, household appliances and articles of clothing play a major role thanks to the emergence of female customers. In 2011, the apparel market was worth only HUF 5 billion but is expected to expand up to HUF 8 billion this year. The online market of household appliances and home decoration products has also experienced a huge boost, potentially generating sales of HUF 15 billion in 2012, double last year’s figure.

Hungarians spend more and more in online beauty stores too. The top product in the HUF 7 billion market is perfumes of which online sales of HUF 1,5 billion are predicted according to the survey.

Ordering Online But Picking It Up In Person

In order to adapt to the needs of masses of customers who are just getting to know online shopping, numerous e-stores have opened showrooms and delivery points. Along with the growth of online shopping, the number of customers picking up their purchases in person has also increased. The same number of people chooses to receive their purchased products personally as opts for using a parcel service, a trend practically unknown in Western Europe where personal receipt is almost non-existent. It may seem strange that so many people order products on the Internet but do not have them delivered to their home or work. According to the majority of online retailers, this Hungarian peculiarity stems from the fact that Hungarian customers still want to inspect products before making a purchase and, due to their high price sensitivity, also try to save on the cost of delivery.

70% of total sales are still paid for by cash, followed by payment by bank card at the time of collecting the product (15 %), bank transfer (10 %) and finally online payment by bank card (5 %).

Online Shopping Malls Emerging in Hungary

This year Hungary has also been part of the international trend of customers not only making occasional purchases on the Internet but also doing their routine shopping rounds online. A philosophy of „everything available at one place” may be built on these shopping activities with a shopping mall-like e-store offering buyers all the products.

A major advantage of such e-stores is that customers can save time and save on the costs of delivery on larger orders. In addition to time and money saved, another important requirement and expectation is a large selection of products.

Responding to this trend, Hungarian online retailers have gradually expanded their selection of products, leading to the creation of the above mentioned online stores where „everything is available at one place”. An increasing number of such online malls has emerged on the e-commerce market, already producing substantial sales. Even though Hungarian retailers are responsible for a mere 5% of total e-commerce, online shopping malls may receive another boost from the planned launch of the Hungarian website of Amazon.com, the biggest of all online retailers.

eNET – Telekom

]]> http://gkienet.hu/en/news/christmas-shopping-fever-on-the-internet/feed/ 0 http://gkienet.hu/en/news/851/ http://gkienet.hu/en/news/851/#comments Thu, 20 Dec 2012 12:43:55 +0000 gkienet http://gkienet.hu/en/?p=851 Internet users have split into the two groups: those under 30 and older generations. The two groups use the Internet for different purposes via different devices in a different way. For young people, the Internet is the primary source of information where they search for movies, videos and images rather than written texts. Social media sites have replaced e-mail while more and more people want to be online all the time and use their smartphone to get ongoing access to the Internet. Young people have a huge competitive edge, reveals eNET – Telekom’s „Report on the Internet Economy”.

Starting at an Early Age

People aged over 30 (ages 31-65) and younger people (ages 15-30) started intensely using the web and Internet-capable devices 5-6 years ago, according to eNET’s report compiled in October, 2012. The majority of young people under thirty received their first mobile phone at an early age and used a computer and the Internet. In terms of the use of info communication technologies, this is a huge advantage over those who learnt how to use a computer and the Internet as an adult. Using the Internet and the related devices and technologies comes as natural to young people as reading is to people over 30.

As a consequence, young people, often called digital natives, use the Internet far more effectively, getting a massive competitive edge over older people, i.e. digital immigrants, in today’s information-intensive social and economic environment. Young people’s intensive Internet use also influence how devices and content evolve. Analyzing their habits of information consumption and Internet usage reveals which communication channels and media surfaces will be preferred in the future.

Television and the Internet Neck and Neck?

According to eNET’s survey, both in the group of under 30s and over 30s the Internet and television serve as the key source of information. The Internet, however, is used by 88% of young people and by only 45% of people over 30. In the group of Internet users, there are no major differences in the intensity of usage. Young people assign less importance to the written media and radio as sources of information. On the other hand, older Internet users regard the Internet less important as a means of getting information although its popularity has surpassed that of television even in this generation too. Television holds roughly the same level of significance for both age groups.

The amount of time spent watching television and using the Internet clearly illustrates the changing content consumption habits of the younger generation and the increasing importance of the Internet:

Source: eNET

Young people spend the same amount of time online as in front of the television while older generations still dedicate considerably more time to television viewing – they spend 7 hours more per week on average watching TV.

The difference between television and Internet consumption is not only seen in the number of hours but also in the content users choose. Young people prefer shorter content requiring less time and attention (videos, television series) whereas longer programmes lasting even several hours (popular science films, feature films, news programmes) are more frequently viewed by the older generations.

Engine of Growth: Downloads and Social Media

There is also a major difference between generations regarding the uses of the Internet. Young people are a lot more adventurous in obtaining content online, e.g. using download services, torrent sites where they mostly look for movies, television series, music, software and games.

Also, under 30 users tend to lead their private life more intensely on the Internet, happily sharing photos and videos about themselves on social media sites.

Source: eNET

The new generation downloads audio and audiovisual content and visits social media sites more frequently. Users over 30, however, more often read longer texts and articles online and use the Internet to manage their affairs. While nearly half of the younger Internet users download movies and nearly one-third of them download music and software, only 10-15% of the over 30 users do the same. The e-mail is equally popular in both groups but social media sites, the other main area of communication, are regularly used by more than two-thirds of young people and less than 40% of users over 30. This means that for young people, email is being replaced by communication via social media sites. In addition, young people more frequently use the Internet to listen to the radio, watch television or visit dating sites.

Still Watching TV Shows But No Longer on Traditional Television

Even though young people watch less traditional television they also require movies, television series and structured programmes. Their media consumption, however, is gradually shifting to various devices with Internet access, e.g. computers, smartphones, tablets or interactive television which offers advanced image and video on demand. This trend is linked to viewer comfort as young generations want to watch television content on the device and in the order of their choice at a time they can select.

At the same time, young people read less online than users over 30. Only a little more than one-third of them read news on the Internet compared to over 50% of older generation users. Obviously, it doesn’t mean that young people need no information – just that their consumption and usage are different. Thanks to the possibilities of the Internet, non-written content, photos, videos and audio content are more popular in this user group.

Constant Online Presence

In addition to their more open and active attitude to online content, the younger generation also differs from older users in their choice of device. 33 % of young people own a smart phone while only 23% of over 30 users have one. Roughly 20% of young people use their phone for surfing the net while only 6% of users over 30 do the same.

eNET – Telekom

The survey was conducted in October, 2012 using a national representative sample of 1,000 people aged 15-65. 900 respondents replied via an online questionnaire, 100 people (ages 50-65) gave their answers by phone, ensuring the representativeness of the survey.

Digital native: a person who was born after the introduction of digital technologies and through interacting with digital technology from an early age, has a greater understanding of its use.

Naturally, this is only a short version of the concept created by Marc Prensky in his article Digital Natives, Digital Immigrants in 2001 where he described in detail the differences between generations born digital and born before digital technology. Though written ten years ago, the article still gives an accurate picture of the distinction between generations.

]]> http://gkienet.hu/en/news/851/feed/ 0 http://gkienet.hu/en/news/christmas-presents-getting-smarter-smartphones-are-all-the-rage/ http://gkienet.hu/en/news/christmas-presents-getting-smarter-smartphones-are-all-the-rage/#comments Tue, 27 Nov 2012 12:27:24 +0000 gkienet http://gkienet.hu/en/?p=840 The penetration of smartphones in Hungary has gained momentum – last year’s sales of 800,000 mobile handsets were exceeded by mobile network operators by October, 2012 and the Christmas shopping spree is likely to boost that figure to a total of over 1,000,000 smartphones by the end of the year. As a result, one in three active mobile phones will be a smartphone in Hungary, reveals the eNET–Telekom Report on the Internet Economy.

Smart Present Under the Christmas Tree

By the end of the third quarter of 2012, a total of nearly 800,000 new smartphones were sold in Hungary, a figure expected to cross the one million-sold threshold before Christmas. Smartphones will be one of the top Christmas gifts in 2012. Together with this year’s sales, smartphones in Hungary will number 2,9 million, accounting for 33% of the 8,7 million handsets in use, a figure which had stagnated for years. Compared to the neighbouring states, the Hungarian market is in a leading position in the share of smartphones but still lags far behind the United States where smartphone penetration already reached 50% in 2011.

The popularity of smartphones remains undiminished and nothing will stop further growth: the extensive range of handsets fulfils every financial and other need and the increasing number of various data packages also enables Hungarian users to exploit the extra features of smart devices.

The surge is also fuelled by the fact that mobile network operators traditionally acquire the highest number of new customers in the last month of the year (according to data of the National Media and Infocommunications Authority Hungary, this figure exceeded a total of 120,000 at the three network operators last year and is expected to be just as high this year) and the majority of subscriptions are purchased together with a new device.

US in the Lead

Globally, smartphones are also on the rise at a staggering pace. In the third quarter of 2012 only, 181,1 million smartphones were sold worldwide compared to 115 million sold in the same period last year.

In the US market of 308 million people, there were 234 million active mobile phones by the third quarter of 2012, of which 120 million, i.e. over 50% were smartphones.

FIGURE 1 – SHARE OF SMARTPHONE USERS IN HUNGARY AND THE UNITED STATES

The Life and Soul of Smartphones: The Operating System

In terms of platforms, Google’s Android system dominates the Hungarian market, accounting for 53% of smartphones while iPhone and its iOS system represent only 8%, a figure way below the international average. Nokia’s earlier Symbian platform powers 28% of handsets while the later handsets running the Windows Phone system have reached a market share of 9% a mere 1,5 years after their launch.

In the United States, however, more than 30% of the smartphones are iPhones while Android has a similar share – 50% – as in Hungary. On the imaginary podium, Blackberry handsets manufactured by RIM take the bronze medal due to the popularity of their business services in the US market. The lack of localization, however, means that these phones are preferred by only a very small group in Hungary.

FIGURE 2 SHARE OF SMARTPHONE PLATFORMS IN HUNGARY AND THE UNITED STATES

Source: comScore, eNET

In the use of operating systems, Hungary greatly differs from international trends. This is probably due to its different economic situation: Apple’s handsets, typically available in the premium price range, play a lesser role in Hungary where financial options are more limited.

Bigger Screen and Higher Resolution

Rather than targeting technological break-throughs, developments in the last 18-24 months were aimed at improving comfortable usability. The fight is on for the bigger screen and higher resolution of the camera. Fundamentally influencing user experience, these features are even more important for users than e.g. the clock signal. As a clear tendency, screens are getting bigger and the resolution is higher, coupled with an ever increasing range of usability.

Constant Online Presence

Owners almost always carry their smartphones with them and typically use them frequently and for short periods of time. This so-called spare time usage is most typical on-the-go, e.g. while commuting, but any period of even a few free minutes is suitable for the users to consume content on their smartphones.

Peak usage periods generally occur in the morning and late afternoon when users cannot access their television or home computer yet but have already left their work computers. Smartphone users have spontaneously embedded these activities into their daily life, making online presence a natural part of their everyday lives.

In addition to the growth of subscriptions, network traffic per device is also expected to undergo a major uptick, fuelled by the ongoing expansion of mobile content consumption.

TOP 6! Listening to music, playing games, e-mails, navigation, social media sites, reading online news

eNET’s survey conducted in November, 2012 reveals what smartphones are used for in Hungary besides their basic features. For users consuming content at least once a week, the top activity is listening to music with games coming in second place, followed by reading e-mails, using maps and navigation, and finally social media sites and reading the news.

FIGURE 3 MOST FREQUENTLY USED SMARTPHONE FUNCTIONS (OTHER THAN BASIC FUNCTIONS)

Source: eNET

Mobile games are one of the most dynamically developing mobile content category, highlighted by the fact that half of the most popular free applications available on marketplaces belong to the category of games. It is especially interesting that in Android’s store nine out of the ten most profitable applications are game applications, of which six can be downloaded free of charge and users only need to pay for extra content within the game.

Social media services are also growing in popularity. In addition to providing communication and social interaction, these pages are also the key places of content sharing between Internet users, considerably influencing content consumed on mobile phones.

eNET – Telekom

]]> http://gkienet.hu/en/news/christmas-presents-getting-smarter-smartphones-are-all-the-rage/feed/ 0 http://gkienet.hu/en/news/tv-eaters-iptv-on-the-rise/ http://gkienet.hu/en/news/tv-eaters-iptv-on-the-rise/#comments Mon, 16 Jul 2012 06:00:21 +0000 gkienet http://gkienet.hu/en/?p=819 In Hungary leisure time at home has become synonymous with television viewing in the last 25-30 years. Watching TV is a typically passive activity for which content providers found no antidote for a long time. Attempts to involve the viewers occasionally worked for certain programmes, e.g. through voting by text message. In the last three years, however, IPTV, a system which delivers television services via the Internet, has experienced dynamic growth. Viewers who used to switch channels only have rapidly learnt to like IPTV services, including video on demand, recordable or time-shifted television and the electronic programme guide, more and more actively shaping their television content consumption, reveals the GKIeNET–Telekom Report on the Internet Economy.

Half of our free time is spent watching TV

Television plays a primary role in how the Hungarian population spends their leisure time at home. According to GKIeNET’s data there is at least one television set in each household: 50% of households had one TV set, 35% had two, 11% had three, and 3% had four or more at the end of the first quarter of 2012.

The average Hungarian viewer spends over 1,5 hours of their leisure time watching TV on weekdays and even more, 2,5 hours during the weekend. In the majority of cases they watch TV in the company of others, spending nearly half of their available free time in the front of the television.

Entertainment content preferred

In terms of programme structure, 92% of TV owners over 14 years old watch news programmes at least once a week, a somewhat smaller percentage, 70% watch popular science shows and 33% choose political debates. Entertainment programmes, in particular shows, are watched by 65% of the population. Sport programmes account for 49% and music programmes for 45% of the viewers.

Viewers spend the highest amount of time (almost 7 hours per week) watching movies, 4 hours viewing TV series and 3 and a half hours on news programmes. Popular science shows account for 2 and a half hours of weekly television, while entertainment shows take up 1,9, sports programmes 1,8 and music programmes 1,3 hours of the viewers’ time. In the past year no significant change occurred in viewership habits as regards the time allocated to different programme types. Television provides relaxation and entertainment to viewers whereas the Internet is mainly used for searching for information.

Active and passive television viewing

Viewing television can be an active or passive activity depending on the way we watch TV. In active television viewing, the viewers’ attention is focused on the TV, making it their primary activity with a strong absorption of content. In passive TV viewing, television is just a background distraction to another activity therefore the viewers’ attention is fixed on the TV only occasionally. There is no or only a partial absorption of content, or it occurs simultaneously with the use of other devices, such as computers or, recently, smart phones and tablets which are used to consume other content. According to GKIeNET’s survey, the ratio of active and passive television viewing in the whole population is 70% to 30% irrespective of the day of the week (weekend or weekday) but the share of passive television viewers continues to grow. In the under 18 age group and the age group of 30-39 years this share already rose to 50-50% by 2012 thanks to the increasing role of the Internet and the personalized content it offers. (GKIeNET, 2012).

Interactive television involves viewers

The consumption of television content is massively influenced by the expansion of smart devices and the growing role of the Internet in households. The purpose of the fight is to hold the viewers’ attention. The integration of the Internet and television has produced a substantial change in content consumption as the use of interactive television services enables viewers to stop being a passive observer of content. From time to time, when they wish, they can actively participate in their own entertainment, signalling to service providers and programme producers which programmes they are interested in at a given moment. In addition to earlier „recipient” television viewing, interaction and viewer involvement have emerged, providing consumers with the option of managing and controlling content.

The rise of IPTV brings the Internet and the digital television platform closer and intensifies the ongoing competition between television and Internet content. By combining television and the Internet, IPTV offers viewers a new experience which will likely boost the use of interactivity (video-on-demand, play-back TV) in television in the future.

Extensive IPTV growth

In Hungary, the traditional television audience has just started to show a stronger interest in the new service. This trend, however, will accelerate as consumers become familiar with the capabilities and benefits of the new technology. Due to intensive infrastructural developments IPTV has already gained momentum with subscribers surpassing 276 ,000 by the end of 2011 in Hungary. Moreover, the growth of IPTV services is an exciting trend because it has the potential to stop the rising share of passive television viewers through its growing number of interactive television services.

The survey conducted by GKIeNET in spring 2012 found that mainly young people and less „mature” family groups, especially those aged 20-39 years and under 18, show a keen interest in interactive television, in particular in IPTV. Based on economic activity, active earners and students show an extra interest in the service as well as viewers who consider television a less important part of their life.

The direction we are taking

For its consumers, IPTV chiefly offers the experience of television uncontrolled by broadcasters. Interactivity in television conveys the experience of freedom and independence to consumers, giving it an extra edge over traditional television.

Thanks to its multitude of value added features and the slow but steady change of consumer content consumption habits, IPTV faces as brilliant a future as its „basis”, broad-band Internet did in the early 2000s when users first enjoyed the thrill of fast, unlimited content consumption compared to dial-up Internet.

GKIeNET – Telekom

Media reports and statements about online bonus/coupon sales appear almost daily. The interest is justified: this market, valued at 4.2 billion forints, grew out of almost nothing in the course of 2011, and despite all suggestions about its impending demise, the dynamic growth shows no signs of slowing.

At the time bonus/coupon sites started up in late 2010, GKIeNET and the Infocommunication Department of the Corvinus University of Budapest set a goal of measuring the performance of these pages, and that it will present its findings reflecting the developments in the competition. This document is a summary of the research covering the first five months of 2012.

The long tail phenomenon in effect

The long tail effect described by noted author Chris Anderson in 2008 can be observed among bonus/coupon companies as well. Most data points measured at the 20 companies currently being observed (number of offers, number of bonuses/coupons sold, revenue, number of Facebook followers, etc.) clearly indicate that the performance of the top tier is outstanding compared to the rest. In terms of the number of offers, the first three sellers have captured one-third of the market, while in terms of revenues they represent 70%.

This does not mean that the companies with lower revenues are less skilled than the top three, but it was the first market entrants that succeeded in becoming known brands, which in turn is key in attracting merchant partners and masses of consumers. Signs of specialization are more clearly observed in the middle tier of the market. These companies often concentrate on individual segments and special target audiences. Sites in this tier include Babakassza.hu, targeting mothers of babies and NeMaradjLe.hu, exclusively offering travel deals, but Citybrands.hu is also in this category, as it offers a limited number of services to a well defined consumer segment.

Bónusz Brigád in the lead

The top sellers have monthly sales volumes of several hundred million forints each.

In the first five months of 2012 Bónusz Brigád achieved the highest revenues, with bonuses sold worth over 927 million forints. Kupon Világ was the runner-up at nearly 831 million forints of coupons sold, while Napi Tipp came in third with 211 million forints.

A hundred thousand coupons sold monthly

Companies emulating the success of the American Groupon and LivingSocial had approximately 5,000 offers in the first five months of the year, selling about half a million bonuses/coupons (an average of a hundred thousand bonuses/coupons per month), with a combined value of over 2.5 billion forints. What this also means is that, based on the original price of the goods and services involved, the real value represented is 6.9 billion forints, leaving 4.4 billion forints in the pockets of consumers. Based on the data of the first five months, the market is on pace to be doubled from last year’s 4.5 billion forint turnover. There are no signs of abatement in the dynamic growth. Deeply discounted goods and services continue to be attractive to Hungarian consumers.

Consumers spend 5,500 forints on an average bonus/coupon, and the average discount is 64%. The vast majority of the offers are available in Budapest; only about one-fifth of the offers (outside of those involving travel) were targeted at consumers outside the capital.

Of the approximately 5,000 offers comprised in the total market, 2,140 are tied to the three major players. About half of the latter number was made up by Bónusz Brigád, with its 1,248 offers, meaning that the company had more offers in the first five months of the year than the second and third runners-up combined.

The top three companies are also dominating the market in terms of sales volume, thanks to their 355 bonuses/coupons sold, representing 67% of the market total in the first five months of 2012.

Of the top three market players, Bónusz Brigád alone has widespread and regular activity outside the capital. In the five months under consideration they had a total of 350 offers in seven cities (Debrecen, Győr, Kecskemét, Miskolc, Pécs, Szeged, Székesfehérvár), selling a total of some 22 thousand coupons. In contrast, number two Kupon Világ had only five offers outside the capital, while Napi Tipp had none at all.

Primarily services

Almost all bonus and coupon sites offer discounted products. However, the vast majority of offers at the three retailers in focus were services rather than products.

Beauty care offers are the most popular in terms of the number of offers and the sales volume, while travel tops the list in terms of revenues (given the above-average price of 20 thousand forints per bonus/coupon).

 Among the top three market players, Bónusz Brigád had the largest number of beauty care offers, specifically 322, selling 33 thousand coupons in this category. Kupon Világ, ranked 2, and Napi Tipp, ranked 3, had similar figures in beauty-related offers, 100 and 103, respectively. Their combined sales volume, however, falls short of that of Bónusz Brigád.

Community building is important

Active presence on the largest community site is part of the business model, which is not only an excellent communication and advertisement channel, but also a forum where customers can share their comments and experiences with other members of the community, boosting brand loyalty that is crucial to these online sites.

Over the first five months of the year, the three largest market players have shown a marked improvement in this area as well. Between January first and the end of May, the Facebook groups of the three companies grew by 22 thousand new followers, and presumably, the majority of these followers have already made a purchase or will eventually shop on one of the bonus/coupon websites.

 Customer reviews are key components of the community activity, providing feedback and responses to questions, which may help potential buyers. Most bonus/coupon sites use Facebook for these purposes as well, since the external module allows users to add comments to a specific offer on the website using Facebook’s commenting feature. The sellers and service providers also benefit from this solution, as it allows the actual merchants to respond to potential questions or comments. However, not all bonus/coupon companies take advantage of this opportunity. Of the top three firms, only Bónusz Brigád and Napi Tipp do.

In terms of community growth, Bónusz Brigád exceeded all others. Its follower base of 304 thousand, which is remarkable on a national scale, continued to increase by another 10 thousand, to as high as 314,250 by the end of May. The follower bases of Kupon Világ and Napi Tipp increased by 6 thousand people each over the past five months, from 145 thousand to 152,055, and from 83 thousand to 89,474, respectively.

GKIeNET, Corvinus University of Budapest Infocommunication Department

Following two difficult years in Hungary’s retail’s sector (both online and offline), the forint volume of sales increased slightly in 2011, exceeding the 2008 level. Yet, it was only the sales of food and mixed food-type products that rose; non-food sales fell short even of the 2005 level.

Retail sales in Hungary (in millions of forints)

Source: Central Statistical Office

At the same time, the internet retail sector in Hungary continues to expand dynamically. The overwhelming majority (almost 80%) of all internet users are using the web to get informed prior to making a purchase, and the number of people initiating transactions online is rising every year as well. At the end of 2011 the number of people having made an online purchase in the past year was 1.4 million, which is about 35% of over-14 internet users. This percentage is much higher in the Czech Republic, but it is lower in Romania, for instance. The survey makes it clear that it is worth buying online: not only are prices easy to compare, but many retailers offer discounts or value-adds on products sold online. In 2011 155 billion forints worth of products were purchased by consumers, which is 2.4% of the total Hungarian retail volume. If the expectations of retailers are met, this figure will continue to grow in the forthcoming years, reaching 2.9 to 3.0% of the total retail volume, representing 175-180 billion forints in online retail sales. (This data series includes internet sales of products only, excluding services.)

Online retail volume in Hungary (millions of forints)

What do we like to buy?

Food and food-type products continued to have the largest share of online sales volume. Computer products are number two, while entertainment products, electronics and appliances are number three. The category of books, newspapers and magazines came in fourth place, while apparel was in fifth place showing a remarkable growth. The two latter product groups have seen a significant rise in sales over the past two years, which can be attributed to the appearance of new business models (e.g. customer membership clubs) as well as the growing presence of female shoppers. The average value of an online purchase amounted to approximately 7.000 forints in 2011.

We like to pick up our online purchases

The best example for the price sensitivity of Hungarian customers is the fact that online retailers see an increasing percentage of products picked up by customers in person. This does not mean that the number of packages delivered by couriers is declining (on the contrary). However, it indicates that an increasing number of online customers choose to sacrifice their free time to pick up products rather than paying for delivery. As a result, the so-called Pick-Pack Points have become very popular over the past two years, offering customers the opportunity to pick up the purchased products at 87 locations throughout the country to those who want to save money on delivery. At the same time, many retailers who had been offering only online sales in the past have been opening up retail spaces so customers can pick up their products in person.

Growing trust in bank card payments

Online bank card payments are increasing every year, but they are still making up as low as 5% of all payment methods in the retail industry (the ratio is much higher, some 12%, if we include services as well). The most frequently used payment method in the retail sector is charge on delivery, indicating that the majority of Hungarian customers are not eager to pay for a product until they actually receive it.

Gender Balance

In the past year the number of customers making online purchases was 1.4 million as of the end of September. The male/female ratio among internet customers has balanced out, and it is expected that from 2012 onward, more women will make purchases online than men. Internet retailers must increasingly be ready to serve female customers, which often implies a site redesign as well.

Coupon Deals

The focus of media attention in 2011 was clearly on online coupon sales. Although Groupon successfully pioneered this business model worldwide in 2007, the Hungarian market didn’t catch on until the second half of 2010, and the true breakthrough happened in 2011. Coupon sites have undergone a fast and spectacular development: the market, which had only a handful of participants at the beginning of the year, had nearly 60 competitors by the end of the year. Deal hunters can choose from up to 200 active daily offers.

FIGURE 1. LARGEST PARTICIPANTS IN THE HUNGARIAN ONLINE COUPON MARKET FOLLOWING THE GROUPON MODEL (BASED ON THE OCTOBER 2011 STATUS)

Source: GKIeNET survey (offers in Budapest and nationwide between October 1 and 31, 2011). Note: Lealkudtuk.hu, operated by Allegroup, is also a significant participant, but they are not based on the Groupon model.

When Hungarian coupon sites started (in late 2010 – early 2011), they offered only services, typically at a discount of 50% or more. Since impulse buying is primarily typical of female customers, the offers mainly target them. Accordingly, cosmetics offers alone number nearly 300, but travel and wellness offers are also very popular, and many restaurants also feature discounts to entice customers. In the fall discount offers started including products as well.

Contrary to media reports, the business model is excellent, and the large discounts have enticed many customers to make their first online purchases. GKIeNET has reported that the market may have a 2011 sales volume of 3-3.5 billion forints, about three-quarters of which will be divided among the three largest market participants.

Online Buyers’ Clubs

Coupon sites were not the only ones in the Hungarian online retail sector to come up with daily offers. 2011 was also a year in which discounts offered by buyers’ clubs took off. These sites are typically organized around an exclusive selection of premium products. Members can choose from the greatest fashion brands at outlet prices, with discounts up to 80%. Advertising these deals, however, requires a much more serious infrastructure and organizational background (logistical storage facilities, individual contracts with the brands), so the Hungarian market currently features only two large participants (Brands.hu and Fashion Days). However another large participant is expected to enter the market in 2012. Exclusive buyers’ clubs are expected to have a 2011 turnover of 1.5 billion forints, while the speed of growth is reflected by the fact that the 2010 volume was less than 1 billion forints, and in 2012 an expansion of another $1-2 billion is not beyond the realm of the possible.

The secret of the model’s success is in the campaigns and in the artificial restriction of access. Each sale only lasts for a few days, and is restricted to a given inventory, encouraging impulse buying among the members of the club. Information about the sales itself is restricted to club members, who can join by invitation only. New invitees are kept on waiting lists for weeks on end, thereby increasing the excitement of making it into the club. The operation of these exclusive buyers’ clubs helps brand owners as well, who can quickly and spectacularly unload unsold, limited inventory. This business model has been just as successful around Europe as in Hungary.

Buyers are typically fashion-conscious, under 40 buyers seeking name-brand items. The gender gap is smaller in this segment, owing to the fact that the emphasis is on the product, unlike in the case of coupon web sites. The most popular items are clothes, shoes, jewelry and watches, but there is also great interest in household appliances. At the same time, some exclusive services also made it to the portfolio of the clubs in the second half of the year, such as luxury trips and Caribbean cruises.

Online Classifieds Market in Flux

The year 2011 not only heralded the success of new sales models, but it also featured the rediscovery of old ones. The online marketplaces, which have been successful participants in the Hungarian online retail market, were challenged by the general classifieds sites. It has always been clear that these specialized sites had both worldwide and nationwide success in the real estate, job, car and dating markets, but general classifieds sites were less widely accepted in Hungary, mainly because of the popularity of the auction marketplaces.

Worldwide demand for auctions has been waning since 2010, and the marketplaces have increasingly featured fixed-price sales. As a result, the largest participants, eBay among them, have opened up to classified advertising. This trend reached Hungary in early 2011, and general classifieds sites are becoming more and more popular. Their impact is so strong that a significant percentage of the secondary, consumer-to-consumer (C2C) trading volume has migrated to these sites.

FIGURE 2 – CLASSIFIED ADVERTISEMENT MARKET (AS OF DECEMBER 17, 2011)

Source: GKIeNET
Note: the number of advertisements does not, in itself, reflect the popularity of the websites. For example, many sites do not let their advertisements expire in an effort to keep the number of ads high, which in turn results in less relevant hits for customers browsing the classifieds.

The reason for the popularity of the classifieds pages is that they are not transaction-based, meaning they do not ask for a commission based on sales. In fact, many online classifieds sites are offering free services in order to build market share. On the other hand, maintaining the quality of hits is a huge challenge for the operators of these sites, which may even result in the current growth period being followed by a return of customer interest to the auction marketplaces offering immediate transactions.

Of course, nothing is free, and eventually the Hungarian operators will introduce some payment system, but placing an ad itself is expected to remain free. International examples indicate that the most likely scenario is one where buyers pay for more on-target results, or sellers may pay a fee for an enhanced presence. In addition, there are examples where certain premium categories (such as real estate or jobs) require a payment. Hungary is currently in the phase where participants divide up the market. Never have classifieds sites paid this much for brand promotion as in 2011 (hundreds of millions of forints).

Online hypermarkets are on the rise

The year 2012 will likely bring at least as many changes and challenges in online sales as the previous year did. Media and telecommunication companies will put an increasing emphasis on the online sales of the services and products they offer, which is likely to result in major improvements and acquisitions over the next few years. Meanwhile, the largest internet retailers in Hungary continue to expand their product lines, and although they started out with the sales of different products and achieved their success through various sales strategies, all stores are currently working toward the creation of online hypermarkets, also known as ’web plazas.’

Aimed at the ’one-stop-shopping’ model, virtual shopping centers offer an increasingly wide range of products. More often than not, firms sell their own products and services, but there are already sporadic examples of stores serving as brokers that, in traditional terms, provide shop windows for professional retailers. This sales philosophy, just like in the case of their offline counterparts, can potentially transform our image of internet sales in the future. These developments are further boosted by the largest online retailer, Amazon.com, which is currently building its distribution warehouse in Slovakia to serve the Central and Eastern European market.

GKIeNET Internet Research and Consulting Co.

]]> http://gkienet.hu/en/news/768/feed/ 0 http://gkienet.hu/en/news/players-with-handsets-handsets-that-play/ http://gkienet.hu/en/news/players-with-handsets-handsets-that-play/#comments Thu, 24 Nov 2011 16:57:52 +0000 gkienet http://gkienet.hu/en/?p=756

Currently the most popular items in mobile app stores are mobile games. Games of skill and logic are the most popular among users, especially if they also have multiuser capabilities. At the end of August 2011 there were 2.4 million smartphones in use in Hungary, which is 25% of the 9.6 million total inventory, reveals the GKIeNET – T-Mobile Report on the Internet Economy.

The decision is with the player, not the handset manufacturer

Ever since the nineties, mobile games have played a key role in the overwhelming success or rapid failure of mobile handsets. The breakthrough for players, however, came with the emergence of smartphones, which are capable of running programs with graphics and processing requirements that are more complex than earlier ones. In order to unleash the creativity of game developers, however, it was necessary to find an environment where the choice about which game was popular lay with the consumer rather than the manufacturer. This kind of freedom has been achieved with the emergence of platform-specific app stores, where the only requirement is that developers adhere to the baseline standards of the platform owners. The emergence of the application markets was a true breakthrough relative to the earlier Java-based games that were also freely installable, because of improvements in usability and simplicity. Today anyone can produce and sell games for smartphones, making it possible for games to develop independently, without interference by the handset manufacturers.

Competing platforms and app stores

Mobile games mushroomed in this environment, and they are currently the most popular products in mobile app stores. Categories include athletics, cars and motor sports, role play and strategic games, as well as logic games and massively multiplayer online (MMO) games and even card games and games of skill. A 2011 Nielsen study states that gaming apps make up 64% of the downloads from the app stores of the three currently most popular platforms (iOS, Android and Windows Phone 7)

Share of games in the most popular applications by category on android market

Top lists of applications are mostly made up of gaming apps. For example nine of the ten most popular mobile programs in the App Store are games. It is particularly interesting that three of the ten most lucrative apps on the Android Market are also gaming apps, and all three of them are free meaning that they generate revenue for the publisher and the online store through their micro-transaction services.

Mobile games have also become social experiences

Games of skill and logic are undoubtedly among the most popular downloadable mobile games, which is due in part to the extent of this category; these are the most widespread games (card, sports and competitive games are considered specialized groups). The success of the popular games is largely attributable to their addictive nature or the humor involved. At the same time, complex control techniques are becoming more and more crucial for users due to the built-in motion sensors in smartphones,

The implementation of social functions increasingly motivate players to rerun games. The old “I played and succeeded” mentality is now often being replaced by the desire and possibility to share among those who play on smartphones: players have the opportunity to compete against each other by sharing their scores, while single-player games have a “Hall of Fame” function. Game developers and game publishers are trying to transform their games into new experiences that allow the sharing of results, creating a stronger bond between the game and the players. In terms of social model, games can be categorized in four groups.

1. Single-player games. Games played by one player alone; does not allow or support the sharing of scores. Results achieved by a player do not stimulate other players to get better scores.
2. Result share games. Single-player games that allow or support a function to share game results; scores stimulate other players to do better.
3. Contribution games. Multi-player games in which players play the game alone, more or less independently from other players, however, their actions can affect other players.
4. Player vs. Player games. Live multi-player games in which players play together simultaneously through continuous data exchange or Internet connection.

Position of the most popular mobile games in the  android market in terms of social model

Price does make a difference

In the case of fee-based games, pricing also plays a key role when it comes to choosing the users. Card and gambling games are the most expensive ones on the top lists of each category (4 games in the TOP 5 cost more than 1,000 forints). The majority of non-free games can be purchased for the equivalent of 400-600 forints on average (prices are already listed in forints on the Android market). Top lists in the categories of skill and logic games offer the least expensive items, which is a necessary but not sufficient condition for the overall success of these categories.

Smartphones on the rise

As seen elsewhere, mobile games have been rapidly gaining popularity in Hungary, as well, thanks to the increasing penetration of smartphones. 26% of all mobile phone owners play on their handsets on a regular basis (at least once a week). The population aged between 18 and 49 years makes up the majority of players, although there are no exact data on the percentage of regular players under 18 years, given that the devices used by children belong to their parents according to the contract.

Based on data available to GKIeNET, 84% of the Hungarian population used mobile phones at the end of August 2011; the number of people above the age of 18 with a mobile phone contract totaled 6.8 million. The number of active mobile handsets amounts to 9,6 million (not to be confused with the number of active SIM cards), while the number of smartphones in use is approximately 2.4 million, making up 25% of the total number of mobile phones in use. On annual average, smartphone sales will likely account for some 40% of all new cell phone sales in 2011, (domestically, new mobile phone sales are expected at 2.2-2.5 million this year, of which some 900 thousand to 1 million are smartphones).

What’s a Smartphone?

Service providers and handset manufacturers alike are using the phrase smartphone to describe the latest generation of phones with many capabilities not found in traditional phones. However, in order to have a unified (international) framework to track usage patterns, it would be necessary to have a unified definition behind the expression. In GKIeNET’s view any mobile phone with the following characteristics is a smartphone.

• It runs an operating system: smartphones are capable of running one of the 6 large operating systems (OS). The common feature of these is that they have been optimized for hardware items characteristic of mobile environments. Also they have a development environment (SDK) that makes it possible for third parties to write apps that take advantage of the hardware in the phone.
• Apps can be downloaded: as indicated in the previous section, simple mobile phones are only capable of running functions integrated into their software, meaning they can only be functionally expanded by the manufacturers. By contrast, if a mobile phone is running an OS, anyone can expand the range of products on offer (in efforts that are usually independent of the maker of the phone or the operating system).
• It has internet access: the mobile phone is capable of accessing a third generation and/or next generation mobile network. In addition, many smartphones can connect to WiFi hotspots as well.

Optional but important smartphone characteristics:

• Full keyboards: most smartphones these days have a full QWERTY keyboard where each letter has a button of its own, meaning that each letter is accessible directly, without using special function keys, making text entry faster. Depending on whether the phone has a touch screen, the keyboard can be physical or virtual.
• E-mail clients (can) run on them: in addition to text messaging, which is available even on simple mobile phones, these smartphones also offer access to various email clients (partly because of the downloadable applications), making it possible to handle electronic mailboxes in real time.

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