Handsets vs. Operators

Reports last week claimed that Vodafone’s CEO Vittorio Colao is calling his handset suppliers to order, apparently with a view to reducing their number and further standardising the Vodafone “experience”, aka user interface.

Now this is nothing new - the struggle between operators and handset vendors for supremacy and mindshare of the end customer has been rolling on for years, with previous CEO Arun Sarin making similar demands about standardising operating systems at Mobile World Congress couple of years ago. What is interesting on this occasion is Vittorio’s timing; a few years ago, when the handset market was awash with mediocre handsets, you might argue that the operators did have the upper hand over the handset vendors, putting them in the position to call the shots, though this is certainly not as clear cut now. With the number of desirable handsets released over the last year from the likes of Apple, Blackberry and HTC  you could argue that handset manufacturers are now back in the dominant position, illustrated by their ability to secure premiums for exclusive deals and in the case of Apple, the ability to negotiate a cut of the line rental charges, something which was previously unheard of.

This redressing of the ballance was also underlined in AT&T’s financial results (also released last week), which showed that 36 percent of new network connections in the last quarter were from iPhones, the majority of which are high-value (ARPU) subscribers. These moves from Apple have no doubt emboldened  Nokia’s increasing forways into the services space, most recently with its Comes with Music offering - an obvious attempt to compete with the cult of Jobs. However, traditionally operators have been wary of Nokia’s attempts to expand into the services arena - Club Nokia was a failure and Ovi hasn’t had many takers.  Interestingly we now hear that Samsung too are about to launch an appstore at this months Mobile World Congress and it will no doubt be interesting to hear the verbal sparring in the keynote speeches. One things for certain the turf war of who owns what is going to run and run…