The Effects of Consumer Preferences for Wireless Internet Services on the Demand for Mobile Devices

Abstract

Recently, smart phones such as the Galaxy S and IPhone, and tablet PCs such as the Galaxy Tab have been introduced and become widespread in the market, thus the environment for wireless Internet services has been improving. As the market has improved, consumer preferences for mobile devices and the relationship between these devices and wireless Internet services regarding consumer preferences have become a very important issue. However, although there have been a considerable number of studies on the demand for mobile devices, it is not easy to find previous studies on the relationship between consumer preferences for specific attributes of wireless Internet services and the demand for mobile devices. The main purpose of this study is to analyze which mobile device is more likely to be preferred or become the main channel for wireless Internet services and how the demand for each mobile device is influenced by consumer preferences for specific attributes of wireless broadband Internet services used on it, and to induce managerial implications based on the main findings. To derive the results on consumer preferences, conjoint analysis is used. The survey was conducted using 1,000 Korean consumers. In the survey, respondents are allowed to choose more than one hypothetical alternative representing a mobile device combined with a certain type of wireless broadband Internet service if they desired. To estimate the consumer preferences quantitatively, a multivariate probit model is used. According to the estimation results, owing to their portability, smart phones are more likely to become a major channel for wireless Internet services despite their drawbacks in terms of display size and performance. Portability is the most important factor affecting the choice of a mobile device when using wireless Internet services. Therefore, manufacturers of mobile devices for wireless Internet services should improve the overall functionality and performances of mobile devices without negatively affecting portability. However, at the same time, consumer preferences for specific attributes of wireless Internet services are found to affect the demand of each mobile device much differently. Therefore, the prediction that smart phones will be the prevalent mobile device for use of wireless Internet services can be somewhat changed, depending on which and how wireless Internet services are provided to each mobile device and how they affect the demand for each mobile device. As mentioned above, there are significant differences between mobile devices with regard to the effects of mobility, data transfer speed, type of contents or Internet interface for wireless Internet services. It is found that the mobility of wireless Internet service is highly valued for smaller devices, but not much for notebook PCs. In contrast, data transfer speed and similarities in the type of contents or Internet interface to those provided by fixed broadband Internet services become more important for larger mobile devices. Thus, it is necessary for wireless Internet service providers to differentiate and optimize their contents and Internet interfaces properly for various mobile devices. Additionally, it is reasonable that manufacturers of smart phones focus on mobility and portability (or convenience) rather than adding sophisticated functions or pursuing higher-level specifications. Further, for smart phones, for which mobility and convenience are important, wireless Internet service providers should develop and provide easy and convenient programs, rather than advanced programs that require high device performance. Lastly, with respect to individual demographics, young and highly educated people are more likely to be consumers of newly introduced mobile devices for using wireless Internet services. Therefore, these young and highly educated consumers should be considered a major target for manufacturers of mobile devices for wireless Internet services.