Malaysians not fired up about 3G, yet

Market is warming up to the latest mobile services, but it'll take more than low-priced handsets to drive mass adoption.

3G mobile services have finally arrived in Malaysia, with its promise of snazzy multimedia services, Internet access, streaming video clips and videoconferencing. But industry players and research analysts say mass market adoption in Malaysia will not take place this year.

Collin Leow, assistant country manager at market research firm GfK Asia, told ZDNet Asia that an estimated 11,000 3G-enabled handsets were sold in the first half of 2005.

He added that of the 3.5 million mobile phones estimated to be sold this year, 48,000 or 1.3 percent will be 3G-enabled units. In 2006, Leow projects that out of the 4.04 million mobile phones, 60,000 or 1.4 percent will be 3G-enabled handsets.

According to Maxis, it has garnered 7,000 3G users since the launch of the service in July this year. The mobile operator also claims that interest in Malaysia is strong, according to a sample research study it has conducted. The study showed that 40 percent of Maxis' 850,000 GPRS users expressed strong interest in migrating to 3G, said a Maxis official.

For rival Celcom, which launched its 3G service in May, it is too early to tell with any certainty. The operator, which claims to have 500,000 GPRS subscribers, told ZDNet Asia that it was unable to predict the take-up rate of its 3G services.

Leow pointed out that most Malaysians are typically not early adopters, citing SMS as an example where mobile phone users did not adopt the service till much later.

"It's still too early to tell if 3G will be successful. If WAP and GPRS technology are anything to go by, I would not put too much high hopes on the success rate of 3G mobile services," he added.

And even for the more tech-savvy, Leow reckons there would have to be strong reasons for them to adopt 3G services, especially with the proliferation of Wi-Fi hotspots in the country. He pointed out that tech-savvy Malaysians, who probably have a Wi-Fi enabled device such as a laptop, PDA or smartphone, can easily--in some places--surf the Internet for free at Wi-Fi hotspots without having to subscribe to 3G services.

Pricing matters
According to industry observers, mobile operators seem to think that the availability of cheaper and good handsets would be the single biggest reason for mobile users to move to 3G. But until 3G handset pricing drops to below RM1,000 (US$265), it will be a slow migration. Today, most 3G handsets are retailing above RM1,500 (US$395) to RM2,800 (US$738).

Leow said that despite factors such as the availability of cheaper and parallel import models that affect pricing, the price of 3G handsets will not erode at the same rate as non-3G phones. Prices of non-3G phones have fallen between 15 percent and 20 percent on a monthly basis.

Leow added that in terms of industry developments, what's worth taking a look at is WiMax, the 802.16 wireless broadband standards. WiMax has a range of up to 30 miles and can deliver broadband speeds of up to 75 megabits per second, which is more than 20 times the speed of the fastest wired broadband available commercially.

"While Malaysia has just launched its 3G services, albeit later than scheduled by its two leading mobile phone service providers, our neighbor across the Causeway is already talking about the replacement and competition to 3G services that is already operational throughout the island," Leow said, referring to industry talk that WiMax could be the next standard in wireless communications in Singapore.

Cordelia Lee is a freelance IT journalist based in Malaysia.