Why Carriers Still Hold the Key to Handset Sales

Microsoft last week was forced to pull the plug on the Kin, a two-phone lineup that debuted on Verizon Wireless just a few weeks ago. As I discuss in my weekly column over at GigaOM Pro, the move is just the latest piece of evidence that, when it comes to selling handsets, carriers still hold the key.

The Kin handsets drew some positive reviews (Gizmodo called them “The best handsets you’ll never buy”) and quickly became cheap, thanks to desperate price cuts, but they failed to gain traction due largely to a lack of promotion by the nation’s largest carrier. And as Kevin noted last week, the Kin was a feature phone whose sales were shackled by Verizon’s full-featured data plan pricing — an albatross that might not have existed if Microsoft had better relations with the operator.

Microsoft isn’t the only manufacturer to have taken its lumps for weak carrier relationships. Among Nokia’s many troubles is its inability to bend to the will of North American carriers. And last month, Google’s Andy Rubin conceded that his company’s bold experiment to sell the Nexus One directly to consumers failed “to fundamentally change the way phones are sold.” Palm produced a top-notch platform in webOS, but its fate was sealed when Sprint — then Verizon, then AT&T — declined to back the Pre and Pixi with big marketing campaigns.

Meanwhile, Verizon has consistently demonstrated its ability to drive handset sales. Its $100 million ad campaign for the Motorola Droid launch was an unqualified success, fueling Droid sales that outpaced the Nexus One by a factor of nine in its first 74 days on the market. The carrier’s aggressive “buy one, get one” promotion played a huge role in the success of RIM’s BlackBerry Curve, which made headlines last year by outselling the iPhone in the first quarter of 2009.

Of course, the iconic iPhone is a glaring exception to the rule that carriers must be actively involved in marketing for a handset to become a hit. There is only one Apple though, and other manufacturers have neither Cupertino’s promotional acumen nor its deep pockets. So even as the Apples and Googles of the world elbow their way into the mobile space, network operators are crucial to successful hardware sales. Astoundingly, that’s a lesson some manufacturers have yet to learn.

Read the full post here.

Image courtesy Flickr user ~Brenda-Starr~.

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