The New Relationship Between Operators And Handset OEMs

Although wireless data currently plays a small role in wireless carrier revenue, it plays a larger strategic role. As voice service commoditizes around the world, voice margins drop, and more importantly the carriers' ability to differentiate services with voice becomes nil. Differentiation will be in services, and here data plays a significant part. As data services increase in complexity and diversity, the handsets that carriers require from OEMs increase in functionality, complexity, and lead time required. Major Global carrier Vodafone says "services matched with technology will fuel growth", but technology for its own sake will flop. I recommend clicking through to this article, since it covers some important pieces of Vodafone's MSFT strategy, terminal strategy, and success of the LIVE! service. What's not written in the article is that with the increased necessity of handset customization, two classes of wireless operators are emerging: those who have the purchasing clout to tell Nokia, Motorola, or Samsung what customizations they require to differentiate, and the smaller carriers who must accept the stock models the OEMs offer. Basically, if a carrier has fewer than 10 - 15M subscribers, they lack the clout to muscle customizations out of OEMs. OEMs, for their part, hate carrier customizations since it increases operational complexity and costs. This puts smaller carriers in a bind, since data services must match the terminal, but they cannot get customized terminals, and therefore cannot easily offer differentiated data services. Some possible solutions for smaller fish to reach scale are: Pan-Global consolidation (ex: Vodafone), cooperation (ex: iMode), or alliances (ex: Bell Mobility/Sprint PCS or Orange, TIM, Tel Moviles, T-Mobile).
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