We’ve written about the ramifications of the penny-pinching climate on the mobile industry already, but the evidence this week is that more companies are going down the value route. Let’s start with churn. Deals that can only be described as ‘insane’ are being thrown at customers not to leave the network, suggesting a swipe on margins later in the year and the complete dearth of new contract customers up for grabs.
T-Mobile has reinvented the ‘Orange Value Promise’, and after three years of undercutting rivals, now claims that it will match anyone on £30 tariffs. Elsewhere Virgin appears to be putting all its efforts into Sim-only; a segment of the market that has grown from virtually nothing, and is emblematic of the current money-saving spirit among consumers.
In the prepay market, Asda is on the rise and is positively revelling in the tight economy. The budget supermarket expects to capitalise on more consumers ‘downgrading’ their shopping habits and looking to save money. The extra footfall is expected to boost Asda’s mobile sales. The supermarket has made no apologies for the fact that it sees sales in the down-and-dirty end of the market, epitomised by its £5 phone promotions.
All of this flies in the face of the ‘increasing customer spend’ mantra. While there is nothing sophisticated in offering cheap products, it does capture the needs of today’s consumer. For an increasing number of consumers, there appears to be a move away from the fascination with the fanciest phone on the market, and more on the best available deal. It puts incredible pressure on operators who need to increase their revenues and margins. The current market will now identify the strongest and most inventive of the operators.