2/6/2008 12:45:00 PM
Can Orange share the love?
Is Orange stepping away from Carphone Warehouse in signing a massive two-year deal with Phones 4u? The answer to the most intriguing question of the week is no – for now. Orange made all the supportive noises this week when asked if both Carphone and Phones 4u would be equal ‘strategic partners’.
But as one (possibly polygamous) executive pointed out: ‘Have you tried having two wives? It’s impossible to keep them both happy.’ An inappropriate analogy perhaps, but given that Orange is trying to cut its indirect acquisition budget, rather than grow it, it is unlikely that Carphone and Orange will both see an increase in volumes. Orange says it wants to increase market share in both, but if it wants to do that it will have to out-bid rival networks on commissions, and take an even bigger hit on margins.
Orange is also entertaining two very contrasting strategies.Phones 4u’s approach is to pin down networks into long-term deals, and hone in on the 16-24 year-old demographic that the networks’ crave, and that their vanilla-branded stores miss out on. Carphone, undaunted by the Vodafone withdrawal, is sticking to its strategy of building market share on the high street by bulldozing the market with more stores and the biggest and best range of phones, and in theory forcing the networks to play ball.
All of this also takes the focus to Orange’s own retail stores. Vodafone, O2, and even 3 and T-Mobile have all tried to shift the emphasis away from independents and to their own stores. Given that Orange is still so prominent at Carphone, Phones 4u and in the dealer community, it makes you wonder how effective Orange retail has been.