Partnerships key in mobile handset industry

July 22, 2009

Patrick RemyPatrick Remy is deputy vice president of devices at Orange. The opinions expressed are his own.

The economic downturn has played a significant hand in the recent decline in mobile device manufacturers’ profits, but it’s not the only factor at play.

The economic environment has certainly changed the way consumers are behaving towards their devices. We’re seeing our customers hold onto their handsets for longer and think twice before upgrading. The result, quite obviously, is that the industry is left shifting less handsets.

One of the most visible consumer trends we as operators are seeing is the polarisation of the handset market. High-end and low-end devices are both performing well; this is where the greatest opportunity is now and is likely to continue over the coming 12 to 24 months.

The high-end of the market received a significant injection of life with the launch of the iPhone, which proved – and continues to provoke – demand for interesting, relevant services. In this higher-device bracket, consumers are demonstrating a healthy appetite for new services which they will pay for, regardless of the credit crunch.

Simultaneously, the low-end of the market is driving consumer demand whereby optimising value for money is the key criteria. Consumers are sacrificing additional device features for lower cost devices, but they are still expecting quality services. With features such as touchscreen technologies and widget players becoming increasingly available in these devices too, there is a very real opportunity at this end of the market to innovate by mirroring the service offerings in the higher-end devices, particularly mobile multimedia services.

Whether device manufacturers are choosing to target the high- or low-end of the market, they must look at new ways to partner with operators if the industry is to continue to grow. The relationship between manufacturer and operator has always been symbiotic, particularly in a consumer culture focused on services and value for money. The right combination of device, services and tariff is a formula that works.

Operators can – and have a duty to – offer device manufacturers insight into our customers’ behaviours and their requirements. We understand our customers and have strong, existing  and trusted relationships with them (e.g. billing); operators are in the best position to provide valuable customer knowledge to help manufacturers fine-tune their product development to best suit end user and market demand.

In turn, manufacturers can offer operators innovation and support in meeting joint-growth objectives. Within the ecosystem, manufacturers and operators  must strive to align strategies, finding ways to work together to deliver the best and most relevant experience to customers. This includes delivering reliable devices.

The average device return rate at Orange is under two-per cent a month. However, we have recently seen several high-end products failing at around six-per cent, and some even higher. This is a cost burden that affects the entire eco-chain and has implications across the industry – we all can ill afford to provide consumers with a poor mobile multimedia experience.

Partnerships and collaboration between manufacturers and operators therefore remains key in moving the industry forward. Different manufacturers have different attitudes towards partnerships. But it is more critical than ever that we work together as a collaborative unit to ensure the future success of the industry.

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