The history book of the mobile handset industry has gone through two turbulent chapters to date; the first na ve years of manufacturer rule ended abruptly in late 2002 with the launch on Vodafone Live! In the second chapter, mobile operators in Europe and later in the US seized the upped hand in their dealings with handset suppliers.
Without exception, OEMs and ODMs have been willing to produce customised handsets given a minimum purchase volume commitment.
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The status quo To date, tier-1 operators have been issuing handset manufacturers with long lists of requirements specifying not only the branding and device settings, but also custom applications that ship with each handset model.
For example Vodafone group have been issuing terminal requirements every six months that comprise 4,000+ lines of requirements.
The operators motivation for handset customisation has been threefold: – brand devices with the operators’ favourite red, orange, yellow, blue or magenta to (hopefully) increase customer loyalty.
– build-in support for operator services such as T-Mobile’s Web ‘n Walk or Verizon’s Get It Now to increase ARPU.
– bring services to the ‘front page’ of the user’s attention as with Orange’s Home Screen or Alltel’s Celltop, in order to increase discoverability and accessibility of services, and thereby ARPU. Operators have been using three approaches to specifying the handset features and behaviour to handset manufacturers: – use-case-based specification, as with T-Mobile UK’s list of websites that must be rendered and the time-to-render, for compliance with the operator’s Web-n-Walk service.
– technology-based specification, as with T-Mobile US’s My Faves list of technical feature specs that have been reportedly passed to manufacturers for creating the My Faves experience – vendor-based specification, as with Orange’s preference of the Abaxia Mobile Portal client software on all of its Signature handsets based on Windows and Symbian.
Application-based customisation has been becoming a popular among operators – at the Handsets World conference in May Vodafone’s Patrick Chomet presented Vodafone’s new strategy for handset customisation, which includes provisioning four types of applications on handsets: a) a small number of core applications with a ‘deeper’ user experience, b) a full internet browser, c) an on-device portal for browsing and buying content and d) an application launcher and store-front for service discovery.
These methodologies have been practiced by tier-1 operators who have had the purchasing power to commit to handset volumes required by handset OEMs in turn for the copious efforts needed to implement the hefty operator specifications.
Tier-1 manufacturers have typically demanded 100,000+ volume commitments which are achievable for operators with B handset investments per year like Vodafone, but not so for tier-2 operators with one or two millions subscribers.
Consider the following two examples: Orange in early 2006 reported that it had convinced five out of its top-10 handset suppliers to support a controversial high-capacity SIM feature, leading the market one year before a similar standard was even adopted in the market, and four years before the (USB) standard is expected to reach mass-market penetration.
On the other hand consider the example of a tier-2 Austrian operator who in early 2006 had to discontinue the on-device portal application which had been featuring on the operator’s open OS handsets for almost a year, because of the 4-6 weeks time-to-market delay that was caused by the acceptance testing for each new handset model featuring the software client.