All the way back near when it was founded, I wrote a post about giffgaff, an MVNO with a twist running on (and actually owned by) the UK operator O2 (which is of course now owned by Telefonica). The twist with giffgaff is that it termed itself as being “people-powered”. Nice buzzword, huh? When I wrote that post, it was pretty much on the basis of early news, PR and not much more. Now, though, I know better what it is because, you see, I just swapped the phone deals for my two children over to giffgaff (away from Vodafone where they were on a 30-day-rolling contract).
No Frills
So, here’s what it does (and, more significantly, doesn’t): giffgaff doesn’t have shops, it doesn’t have sales reps, call centres, etc. In other words: it doesn’t have much overhead. It does have a network (not its own, it piggy-backs on the mothership, i.e. O2), simple tarifs, very low prices and the quickest way I have ever ordered any phone product online.
Beating the Power Law of Distribution (?)
But how, do you ask, can they run a network with all its customer queries, moans and whining, small and big problems? And that is exactly where I originally voiced concerns: You see, they use fora instead. If you have a question, just post it to their forum and the users will answer. According to the power law of distribution, this is a tricky one as only very few users contribute a lot and most contribute nothing. However, by the looks of it, they answer a) more quickly and b) more competently than a poorly paid, poorly trained, probably somewhat frustrated (whatever happened to the glistening career) call centre worker. The MVNO has a programme for users encouraging to participate in the community. They will earn points (convertible in additional phone credits) for spreading the word (marketing) and helping out other users on the fora (customer service).
So (and here’s a theme for me): giffgaff effectively used some basic tools from the social and commercial toolbox to drive customer acquisition and customer service: incentivise people and, in doing so, make sure you align their commercial interests with your own.
And whilst there seem to have been growing pains, it seems to work more or less really rather well. And all this for £12 per month for a “bucket” of 250 minutes, unlimited texts and unlimited (!) data. Can’t beat that!
Is There More?
This then got me thinking: what if they would expand on this bucket (and, perhaps, forum) ideas and start customizing them for the more “discerning” user. Something for SME for instance, travelers, professionals, etc. Higher bucket prices but better tailored for business needs. Premium buckets for, say, dedicated concierge services (the crux is that the customer service required for that is quantifiable and directly accountable). With the basics still covered (cf. supra under “No Frills”), it should still be possible to run the basic service at similar margins (and note that I assume that they have positive margins) but start building in the fatter bits of the market in return for the higher reliability, security and no hassle that business users require. The thing is, you see, they do not require tedious and generally hopeless customer service over phone lines you have trouble even finding or reaching (20 minute waiting time is not rare as we probably all know).
Such a service would probably not for everyone but. You would have to be comfortable to transact your business online (but more and more people – and, yes, probably 100% of readers of this blog – do so anyway), you would arguably have to have at least a basic understanding of some tech issues (again, cf. supra) but, hey, you would be targeting the growing part of the economy, i.e. the one that either is purely digital or successfully leverages (terrible word, I know) digital outlets for its business. Bingo!
There Are Blueprints Galore!
Come to think of it: it is exactly how so many of the online stalwarts disrupted traditional businesses. And it seems almost ironic that this has not yet happened in an industry such as mobile telecoms! Amazon (first books, now almost everything), Zappos (first only shoes, now part of Amazon and, well almost everything), eBay, PayPal, First Direct and any other number of online banking services), Charles Schwab, eTrade and those folks (stock trading), Okado (groceries), Money Supermarket, confused.com, etc. (insurance brokerage), etc., etc., etc., etc. Virtually all e-commerce business models rely on realizing higher efficiencies through digital scale combined with lower overheads.
And virtually all of them originally were told that this was a niche for a few, that only geeky people with no money would use it. And in virtually all those cases, the doubters were wrong. So, then, O2, let your “gaffer” (that’s the title the giffgaff CEO goes by) lose and go for it. There’s money to be made (and I might just be persuaded to leave Vodafone, too).
To the others (Vodafone, are you listening?): it’s not too late. Get in whilst you can!
Recently, previously civilized and subtle top executives of the world’s big mobile handset makers took the gloves off and became, well, a little more outspoken. What sticks from this is, of course, always only the most figurative snippets. Because all of these esteemed people have the most vested of all vested interests, their statements tend to distort reality a little. And because of that, we have increasingly lively debates at hand. But, alas, these debates may not necessarily lead to enlightenment.
When one looks at the world map and then listens to the good folks cited above (and others), it appears that there is not one but many little worlds out there. Nokia is sitting high and dry in overall handset rankings with over 35% market share across all handsets. It is 
The situation is a little more serious for other single-segment OEM. RIM used to live off the fat of the land in the enterprise sector. And it continues to thrive there. In recent years, it has seen a huge upswing amongst kids – because of the now almost legendary BBM (Blackberry Messenger for the uninformed). However, can you successfully build or expand on a single feature? And then on one that could really also be mimicked, worked around or substituted by something similar? Tricky.
Tricky in a different way is the situation for the likes of Motorola, HTC or Sony Ericsson: they have all committed their life to the Android platform. With Google’s muscle in the Open Handset Alliance, this means that they depend more and more on hardware design only. It feels a little like the movie business: hit-driven. And that is a tricky situation to be in. HTC looks good at this: this is home turf for it. On top of this, it has quickly started to try some gentle steps to distinguish itself (HTC Sense; Google Nexus One, etc) from other Android makers. Motorola’s Blur was less successful initially. And Sony Ericsson has yet to show its hand.
All this does of course not bother Android (and perhaps also Microsoft’s Windows Phone 7) as they have the advantage of being able to bringing many weapons to the battlefield. Android’s huge advantage is one of price due to its open-source nature: For Windows Phone 7, you need to pay a software license. Android is – basically – free. Both have multiple OEM that fight their corner though. Which is, or at least can be, good. Google will not really care if the next killer phone is produced by HTC or Motorola or Sony Ericsson (or Foxconn directly for that matter).
Does this matter much to Apple? Possibly not. The margin discussion will, in all likelihood, be one that Apple execs will happily take. They will look better at it. However, will it manage to break the old Mac vs. PC pattern? Probably not. However, Apple’s position looks much brighter than it did in the decades of 5% OS-share mediocrity. The company has perfected the hardware-software-service-sex-appeal equation, which looks likely to cement a much more comfortable niche for it (just have a look at its market cap).
Step 2: tariffs. With an unhealthy amount of traveling abroad to do, my main cost item on phone bills regularly is data roaming, so this is where my sensitivity lies (because of the eye-watering bills I regularly get, I am not bothered about 600 or 900 UK any-network minutes costing £5 more or less), and it became clear quickly: Orange, T-Mobile and 3 are out of the race (their charges are even higher than O2′s). Vodafone looks good (about 1/3 of O2′s rates) but O2 claims to still have their Blackberry tariff for international data roaming (although I struggled to find it on their website). Now, THAT would bring my bill down by a cool £150-200 a month or so. Enter Blackberry. The 
And then I started to compromise: anything exclusive to Orange, T-Mobile or 3 was out of the question (because data roaming is pretty much a killer for me), which boils it down to Blackberry and O2 or any of the others on Vodafone (which would mean that I couldn’t get what started being my favourite, the Samsung Omnia 7). Hang on: I compromise over some shoddy pounds? Is the handset then not so all important as one might have believed when reading all those blogs, news blitzes and tech publications over the last months?
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Last week, I moderated a panel at 
An example: a couple of years ago, we shipped a whole suite of X-Men 3 content, game, wallpapers, tones, you name it. The launch was, of course, around the movie launch (which was tremendously successful) and we had carefully crafted marketing plans including many brand partners (20th Century Fox, Activision, Panini, etc). We managed to drive some exceptional campaigns to which carriers in a lot of countries contributed serious marketing dollars. Did they do this in order to obtain an SMS-margin-matching ROI? Not in the strict sense. To them, this was brand extension and affiliation. And, boy, did it work!
Quick facts: I am an iPhone user. I wanted one, I am based in the UK. What to do? Switch to O2, which had the exclusivity for this. This post is not about bandwidth, 3G availability or anything like that – I have not (much) to complain about this actually. It is not about the iPhone either.
Back story: I have an iPhone 3G on a £45/month plan, which gives you countless voice minutes and lots of SMS and unlimited data – in the UK that is. In short, I do not normally have to pay anything for (UK) calls and texts, hence the tariff. Now, if you dare travel with your iPhone, you’re in for nasty surprises. The only thing O2 UK has to offer is slices of 10 or 50MB of data for some hefty sum.