Update: Helio has cut a 100 jobs out its total workforce of over 700 employees, in an effort to streamline its operations and refocus its field sales team towards direct sales, a company spokesperson told us this afternoon. The vast majority of these changes came in field sales. Few changes were made back at Helio headquarters.
The company also plans to increase the company owned kiosks from 30 to 50. Helio spokesperson claims that the company had its best month in July 2007, and is currently on track to do $100 million in revenues. The company plans to keep introducing new devices through 2008. Helio’s “reallocation of resources” (their words not mine) comes close on the heels of a major restructuring at Earthlink.
My original post is after the fold
Helio, the mega-mobile virtual network operator backed by Korean telecom giant SK Telecom (SKM) and EarthLink (ELNK), is rumored to be contemplating job cuts. Our sources indicate that it could happen sometime this week, and there have been some hush-hush meetings today, but it isn’t clear what’s being talked about. It is also not clear at this stage how many jobs are going to be slashed.
EarthLink, of course, just announced 900 job cuts in an effort to reduce costs; I suspect the rumored Helio cuts are a ripple effect of EarthLink’s move. Despite having raised more than $640 million and boasting both cool devices and a reliable service, the MVNO hasn’t been a spectacular success. The company has focused on the top end of the younger, hipper demographic, with the tag line: “Don’t call it a phone.”
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20 trackbacks so far
3:10 PM PT
[...] Malik is reporting today that Helio is on the brink of some job cuts, after Earthlink said it would cut 900 people (and much more) earlier this week. So far, the track [...]
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[...] We talked to Helio today and confirmed the reports that the MVNO is laying off about a hundred people from its workforce of about 700. According to Helio, most of the employees being let go were needed during its initial launch period (remember, Helio went official early 2006); about 80 jobs in regional field sales offices were included in the cut (Helio says that’s due to the fact that the bulk of their sales are coming from just a couple of offices) and about 20 jobs at HQ, which are post-launch redundancies. Given EarthLink’s financial dire straits right now (and the firm’s financial ties to Helio as a co-owner), we’d be worried, but Helio was quick to reassure us that sales are booming (July was their best month ever, and August is about to top July), no Helio flagship stores are closing, and the number of Helio kiosks will increase from 30 to 50 this year. Helio’s bottom line: “we don’t want to burn cash like some MVNOs do”. Fair enough — we’re ALL looking at you, Amp’d. [Via GigaOM] [...]
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[...] 最近のMVNO関連はAmp’dの会社更生法申請、Helioの100人規模の人員削減などの話題が目立ちました。それだけに、今回のKajeetの資金調達はちょっと意外な気もしました。 [...]
5:45 AM PT
[...] . And so yesterday as the Disney MVNO announced it’s closing this comes as no surprise. Helio cut jobs a month ago, and lost one of its largest investors last week - so it looks like its just a matter a [...]
22 comments so far
11:23 AM PT
…..which begs the question, which MVNO has been successful??? Helio seems to have a good product but I’ve never met anyone who actually had one much less even heard of the company.
11:27 AM PT
some of the mvnos that are focused on low end of the market have been successful mostly because of cheap plans. but this whole market is riding the coat tails of boost and virgin mobile.
1:45 PM PT
The problem with amp’d wasn’t their business model, but rather the demographic they targeted… which turned out to be notorious for non-payment; urban playas and gangstas, both real and wanna-be. It may not be Politically Correct, but it’s true. Compound this with the company’s refusal to diconnect users despite bills in the range of THOUSANDS of dollars for fear of hurting their “street cred” and alienating their chosen user base, and you get programmers and systems administrators being handed piles of overdue invoices and asked to call customers because customer service can’t handle the sheer load of delinquincies. The customer laughs at them, hangs up, and continues to rack up a bill they have no intention of paying since the company won’t cut them off.
There’s nothing wrong with the MVNO business model, but it’s been executed as a dot coom boom model rather than a careful exercise in efficiency and profitability that it should have.
Having worked in the Helio building on Wilshire and experienced the incompetence first hand, I’m surprised they’ve survived THIS long.
2:56 PM PT
I hear Tracfone is also doing pretty well.
3:43 PM PT
Earthlink, Helio, Amp’d, etc… demonstrate to those who weren’t “business aware” during the CLEC crash that buying wholesale and selling retail in the telecom space is VERY difficult.
Om, you say that Boost and Virgin are successful with cheap plans, but neither is profitable. Virgin’s numbers are deteriorating (higher SAC & churn with decreasing margins). They exist because Sprint wants the additional subscriber revenue, without having them be a drag on their metrics (They have had enough problems with the Nextel churn). They are just doing accounting magic.
4:29 PM PT
Tom, there are far worse reasons for MVNOs to exist than allowing the big guys to do accounting magic. Telecom pretty much runs on accounting magic and it always comes home to roost eventually, see Lucent, Nortel, Worldcom, and many others. What I like about MVNOs is that in addition to performing a needed service for the network operators they also have the potential to do something good for consumers — drive features and rate plans. Amp’d might have failed and Helio may soon follow, but it is very likely that they put pressure on carriers to improve their own content offerings. Hell the thing that killed ESPN Mobile is that carriers started offering what was tantamount to the same service as a simple bolt-on to any data-enabled plan.
4:41 PM PT
While flawed business plans and unrealistic ambitions will kill any company, MVNO is not a fundamentaly flawed ‘category’. Unique takes like Sonopia [www.sonopia.com] have a good chance to succeed with a better business model vs. Helio which has no seeming business benefit to anybody
6:20 PM PT
Helio’s failure is entirely due to Helio and not the larger MVNO space. They had an incomprehensible marketing strategy and they got scooped by the iPhone as the true innovative product. The lesson is, go big or go home!!!
6:43 PM PT
Thank God .. Apple did not go mvno with the iPhone.
7:18 PM PT
In truth any good Marine will tell you “never loose the initiative in Battle” and Helio lost it a long time ago. Nice try, really! They are in a slow death spiral which they can not recover from Day 1.
11:25 PM PT
Jesse — I agree that the presence of MVNO’s accelerate new rate plans and feature adoption, but the MVNOs are not the ones diving it. The carriers use MVNO’s to test new offerings that they themselves may want to offer. It is a low risk strategy to throw something into the market and analyse the economics without looking foolish if it fails. If it turns out to be wildly successful, the carriers just pull it into their mainstream offering.
The MVNOs are not pressuring the carriers to change. Every feature they offer has to be pre-approved by the carrier. The are what’s called a “stocking horse.”
(link)
8:52 AM PT
@Tom: I believe you mean “stalking horse”. Regardless, it’s probably not a bad metaphor. It certainly held true in the case of Boost.
12:33 PM PT
I’m a Helio dealer and allow me to confirm that July was a “FABULOUS” month for Helio and the Ocean..”The iPhone Killer!” That’s how I’ve sold plenty, haha (no offense to you die -hard Apple suckups!!!) Whether Helio survives or not…I don’t care as long as they bring out KEWL handsets for me to sell until they die!!! I can’t keep enough Oceans on hand to keep up with the demand…
2:10 PM PT
There’s an obvious answer to this - they project softer sales due to the iPhone. They might have a better phone, but Apple is just cooler.
3:32 PM PT
Many have said that they have not met anyone with a Helio. I have 2 Oceans and the wife and I love the thing. Texting is very easy. If she is at the store I can just text her what else we need. Another thing that happened was that we wanted to see Harry Potter at the IMAX. Which is over 50 miles from home but only 10 from my work. After some trial and error I sent her a Buddy Beacon signal and her and the kids were able to use it to find the place. Really neat. I don’t know how they will do but the product is good.
6:02 PM PT
The only MVNO, that has executed on its business plan and is growing month by month, is Tuyo Mobile. The target segment for this entity is the Latino market. It has the strength of IDT’s calling card customer base, to draw from and the wireless angle, is a natural migration path, for this segment. It has come up with some creative offers and capabilities. The other positive aspect, is that all of the back office capabilities are in-house. No reliance on third parties, other than for wireless network and fulfillment.
7:24 PM PT
David, they don’t have a “better” phone. They have a phone with more “features”. The iPhone has much more quality and expandability. Just watch a video of anyone browsing the web on a Helio Ocean, and dare to call it a better phone. It’s a terrible joke. A pre-school toy.
Whereas the iPhone’s feature set will only grow over time (I won’t go into the tri-fronts of web apps, Apple, and nascent 3rd party support), Helio runs its business at a loss in attempts to make its exhorbitant operating costs as an MVNO payoff by locking customers into its network and building a base.
Verizon’s 3G network has its series of “gotchas”. The most recent being the YouTube kerfluffel. Clearly allowing its users access to online video scared them, considering their underlying service fees through Verizon. Helio dropped its barriers when it started generating significant customer outrage (they’re reputation is their most valuable asset). Just smells like total system failure a’ brewing. Try to get a “smart” phone on Verizon’s network and see what they begin to charge you. I pay $60/mo. for my iPhone.
10:49 AM PT
I agree that the Ocean is not a better phone but until Apple can justify the $500 to $600 for their iPhone w/o GPS and 3G network not to mention the battery issue/class action lawsuit , the iPhone will sit on the shelves for many more thousands of potential buyers!!!
10:51 AM PT
Let’s not also forget the many other lawsuits like the screen patent infringement lawsuit. And the recent survey about how cumbersome the touchscreen QWERTY keyboard is…Don’t knock what reputation can do to a company just entering into the wireless foray!
11:30 PM PT
I work for Helio, I prefer to be called “mentally special” over incompetent. We’ll last while we can but I’ll probably end up working in a Pokemon factory in Korea to pay back SK for all that funding. There’s probably that kind of clause my contract.
I’ve heard Korea is a beautiful place in the Spring…
9:05 AM PT
What i dont get is why Helio is being compared to Boost or Virgin mobile since Helio is not a pre-pay system. Helio is contract and more and more i am seeing people with it. I have one i love it. Everyone i show falls in love with all of it features…. Helio may no be so heard of or popular but they sure as hell are starting to get out there. i laugh in the face of amp’d, boost and virgin mobile…. HAHAHHA
9:37 AM PT
Helio has literally the worst customer support ever, and makes the phone (which is great) not worth having. They lied to me and said they cancelled my account and refunded my charges after incompetently failing to port my number for three months and 25+ hours on the phone with them. Now I have debt collectors calling me saying I owe 400 dollars!
DONT SIGN A HELIO CONTRACT, you’re signing away all hope.
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