9/9/2009 3:03:00 PM
The moment of truth – a portrait of the iPhone
If you view the iPhone through the eyes of an operator, there is no
doubt that in many ways it is an attractive product – provided that the operator does not give it more attention than it deserves and that it focuses on how to create a healthy business case in the short, medium and long term.
Operators that have moved a great deal of marketing activities, subsidies etc. to the iPhone, will find the device itself is a poor business case. Operators will discover that the focus they give the iPhone will result in them forgetting to service their 99% remaining customers who, in reality, are generating the cashflow that is paying the operator’s bills every day. We recommend that operators carrying the iPhone do the following:
1. Reduce or discontinue subsidies – the iPhone is not as price sensitive as other mobile handsets. There is no money to be made in selling handsets under cost prices. Revenue should come from traffic.
2. Ensure that the iPhone is a healthy business case during the subscription period. Operators have no guarantee that customers will stay after their subscription expires.
3. Ensure that you have a wide handset focus. The iPhone is just one of many devices on the market and is far from being the best cash cow.
4. Become better at measuring where revenue is coming from and
where the costs are – do not view the iPhone in isolation, but in a larger perspective.
5. Analyse the iPhone segment more closely and find out which customers are churning and why?
6. Analyse which channels are producing the best iPhone customers and contemplate selective distribution of the iPhone.
7. Ensure that you offer Sim-only products, targeted at the iPhone segment, and go hunting in competing operators’ customer bases.
8. Accept that MVNOs are a bigger competitor than the other MNOs on the market that are offering the iPhone.
9. Use CRM actively and ensure that you have an ongoing dialogue with your customers.
10. Place demands on Apple. Ask for a revenue share from its App Store, or alternatively ask Apple to implement operator billing.
We can easily understand that operators have viewed the iPhone as a product that could help differentiate themselves from their competitors. On the other hand, it is obvious that in Apple’s strategy, the operator is not so much a partner, but rather a naive friend that is helping Apple reach its goal – regardless of whether its ‘friend’ benefits from the relationship.