Will handset manufacturers lose their brand?

Will handset manufacturers lose their brand?

An increasing number of mobile operators are trying to differentiate themselves from their competitors by using branded mobile handsets.

There are two types of branded mobile handsets, operator branded handsets and co-branded operators handsets. Operator branded handsets only have the operator’s brand name or logo on the them, while the co-branded operator handsets have both the handset manufacturer’s and the operator's brand name on them.

One example of operator branded mobile handsets is HTC. HTC's handsets are marketed under the brand of the operator that sells them, to make the operator brand more visible to their customers. In Germany, T-Mobile markets HTC's mobile handsets using the name MDA, while Orange uses the name Orange SPV (Sound, Pictures and Videos) for the same mobile handset. HTC's mobile handsets are also sold by 02, either using the name XDA or Xphone.

It has primarily been the smaller manufacturers that have agreed to operator branded mobiles. The larger handset manufacturers, such as Nokia, Sony Ericsson and Motorola have chosen to co-brand handsets.

Operators would prefer to brand handsets themselves, instead of co-branding them with the manufacturers. However, it is only in the past few years that operators have become strong enough to be able to take advantage of co-branded handsets. Previously operators did not have this option.

But now there is a trend towards them now successfully purchasing mobile handsets from manufacturers.

The operators have a higher risk when offering branded handsets, as they have to be extremely good at forecasting the sales of individual handset models, otherwise they risk ending up with too many or too few models in stock.

In other words, mobile providers that choose to use a branded mobile handset strategy will have a higher stock rotation risk - a risk that is already increasing because of so many new handset models being launched.

Not all operators can take advantage of offering branded mobile handsets because of the larger costs. A certain volume needs to be reached before it becomes attractive for the operator to offer branded handsets. As a result, it is mainly the large, global operators, like Vodafone, T-Mobile, Orange, that are able to offer branded handsets.

For smaller operators the risks and costs of offering branded handsets are still too large and outweigh the advantages of using this handset strategy.

But there is no doubt that brands are becoming increasingly important on the fragmented mobile market - the question is whether the future handset brands will be Nokia, Sony Ericsson or Motorola, or whether they will be Nike, Disney or MTV - or a combination of the above brands?

The handset manufacturers are starting to wake up to a completely new reality in the mobile value chain, where the roles between them and the operators are being redefined. The handset manufacturers can no longer count on operators more or less directly marketing the handset manufacturers' brands via differentiated handset subsidies and large advertising campaigns. Instead, handset manufacturers increasingly have to persuade the operators that their handset can generate value for them.

Written by Mobile Today
Mobile Today


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