The battle for consumer mindshare in 3G could hit the established mobile handset manufacturers.
Since the mobile consumer space is now defined by replacements rather than new sales, the emphasis is on customer retention rather than acquisition, both for device manufacturers and network operators.
Mobile operators are all trying to build global brand names to build a strong customer base to take their 3G services. Players such as Vodafone and NTT DoCoMo are already well known globally, while BT is also trying to get in on the act, spending a small fortune on rebranding its mobile operations as ‘O2’.
The continued uncertainty surrounding the future position of all the players in the 3G value-chain makes the branding equation complex, especially for device manufacturers. With network operators selling the handsets of a manufacturer whose own portal is vying for users, there is brand overload.
The last year has seen the presence of established manufacturers such as Siemens, Panasonic and Sagem, as well as newer companies Sendo and Danger Inc., rise noticeably. This could hit established manufacturers. If consumers can tolerate operators branding white-label handsets from smaller manufacturers with their own logos, all but the largest will find their brands too strong for operators to stomach.
At the same time, manufacturers have been securing partnerships to offer solutions including applications and content rather than commoditized technology. Yet partnering with an AOL Time Warner or Manchester United also has serious brand-diluting potential. Similarly, the Sony brand could well overshadow Ericsson in their new joint venture.
The smaller manufacturers might again win out from such deals, as they do not dilute their partners’ brands. One example is 18-month old startup Danger, whose ‘Hiptop’ is built on the Microsoft mobile OS. The product will be available to operators at cost price, with Danger instead gaining revenue from monthly usage charges from its software.
At present, manufacturer brand remains strong, despite the drop in handset sales. Brand initiative examples from lesser-known handset manufacturers are few. Yet as 3G network operators come online and attempt to establish their brands, the opportunity for the white-label manufacturers will come of age.
