Who owns the loyalty of the wireless customer, the carrier or the handset maker? As Vodafone launches branded handsets, handset makers open stores, and the iPhone changes the game, increasingly the two sides that together control the mobile industry, are starting to push at the edges of their integral and formerly defined relationships.
The WSJ points out some early success for Vodafone’s own branded handsets, which launched in Europe last year and have now sold 750,000 in that market. Vodafone launched other low cost branded handsets in Africa this week. Nokia and Motorola can’t be too thrilled by the competition from the world’s largest carrier by revenue.
Vodafone already owns the mobile lifespan of the customer, has a valuable retail presence, and can undercut the cell phone maker’s prices — as little as $25 in some markets. Moto for one doesn’t need any more competition on cheap handsets.
And especially when Vodafone is eager to paint itself as a threat in the press:
“Our main intention is to stir up the market,” says Jens Schulte-Bockum, head of Vodafone’s handset strategy. — WSJ
An interesting aspect will be if Vodafone can attract customers with other features for its branded phones, not just rock bottom prices. The company is working on a more design-focused model with Sagem. I don’t buy Safeway’s generic food line, but I do buy Safeway’s Organic line. The bottom of a higher-end, targeted line can be a valuable niche.
Motorola and Nokia are sensing the shift and have been opening up retail outlets in integral markets looking to win over brand loyalty with a hands-on experience. Motorola went to Shanghai, Nokia in the U.S. and Samsung to NYC.
Then there’s Apple and the iPhone, which has basically taken the branding out of the hands of both sides of the traditional mobile equation. From the sound of it Cingular isn’t really even getting that good of a cut, just access to the hottest phone of the summer (for 5 years according to USA Today), and Motorola and Nokia are both struggling to roll out iPhone killers.
7 comments so far
12:41 PM PT
The carriers and manufacturers can only dream that they owned the customer. The reality in the wireless industry - there is no loyalty. With regard to the iPhone - if successful - other manufacturers will look for “applesque” conditions in negotiations that have typically favored the carrier.
12:50 PM PT
I think the handset guys need to be independent and innovate on their own.
The providers can do this as well, but not in handsets.
1:36 PM PT
I haven’t seen any proof anywhere (other than plenty of sites such as your own repeating what ONE source, USA Today of all things, said) that the iPhone is a =5 year= exclusive to AT&T (Cingular).
1:44 PM PT
Herman,
USA Today is a pretty credible source and they won’t print it without checking. Secondly, if that wasn’t the case, we would have heard a denial from Apple by now. Regardless, you do bring up good point about ONE source.
1:46 PM PT
I call shenanigans! Seriously, if telecoms companies want customers, then why on earth would these companies be engaging in corporate hi-jinks such as vendor lock in, disabled features, long term contracts, and the ubiquitous worthless customer service?
Is there anyone out there offering cheap VOIP/Wifi enabled phones which are vendor neutral, work on a variety of networks, is impervious to heat/frost/water up to 100m in depth?
You know what would impress me? A phone with a NIC and an ethernet jack. Yeah, that would just say : screw you telecom, I was created to empower the customer.
Anyway, guess we’ll have to roll our own, or buy on the cheap if we want price/performance.
1:47 PM PT
Herman, for clarifications sake, I added in the USA Today link.
9:39 PM PT
It really depends how much R&D the carriers are willing to spend to make the handsets more interesting.
Unfortunately its not in Vodafones DNA to make the user/handset experience better, to them its just a cheaper handset period and to put pressure on the manufactures to come up with better pricing.
In asia on the other hand there are huge R&D investments by the carriers to get a real new and better handset/user experience. Vodafone is not near that and probably never will.
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