3/18/2009 2:04:00 PM
Polarisation of strong and weak
The dealer/distribution sector has often appeared the most resistant to surrender the spirit of the mobile industry. What is viewed as entrepreneurial by some, is interpreted by others as backward and a refusal to modernise and adopt a more professional approach. Such a sweeping generalisation isn’t accurate for the whole of the dealer sector, but it hints at the increasing polarisation appearing in that part of our industry. That distinction is evident throughout the sector as the stronger dealers and distributors pull away from the weaker operations that have been too slow or unable to change.
There are forces at work that are widening the gulf. Many of which can be seen in this week’s pages. Operators and manufacturers are being more selective with who they work with. Greater specialism is required by dealers as the market moves to more complex products and services around IT/mobile convergence. The regulator is demanding stricter practices in mobile retail, and greater due diligence from operators before they let a retailer sell its services.
Then there is the declining economy. As is true in virtually every business sector at the moment, an almost Darwinian effect can be seen as weaker companies are being shaken out. Revenue share is back on the agenda and is another example of a practice that is forcing consolidation.
O2’s leadership with revenue share has thrown open a debate on its merits. The operator’s scheme, or rather its execution of the scheme, has attracted criticism from some quarters. But a crude interpretation is that it is inevitable, and dealers are pushing water uphill if they want it to go away. The details in Orange’s revenue share plan look like they will further expose the weak from the strong in the dealer channel.