Telepocalypse

Is that a carphone in your pocket, or...

Today was Re-flash Your Mobile Day here in Edinburgh. I've been having a few issues with the new memory card in my Nokia smartphone, and noticed in the online forums that some of these issues may have been addressed with a software update. Since my phone was pre-release with antediluvian firmware, I didn't feel too put out. However, it transpires that unlike many manufacturers, the only way of getting your Nokia updated is to entrust your precious jewel to the sweaty hands of some teenager in the back of the local phone shop who will plug the innocent dear into some mind machine out of The Matrix. Luckily I live right in the centre of a major city, so on the way to playgroup I dropped it off at my local Carphone Warehouse.

For the uninitiated, they're the #1 independent retailer of telephony goods in the UK, and are currently engaged in a nuclear holocaust against the landline telcos by reselling their products at or below cost. They make up the difference by flogging you handsets, mobile phone insurance, calls to overpriced non-geograpic numbers, early termination fees, and cross-sell to their own MVNO. Then multiply by infinity to account for volume. What the average American pays for 1Mbit/sec broadband gets you 8 times the speed, plus unlimited calls to the UK and 27 other countries at any time. (Vonage's entry into the UK market offering "low cost telephony" at a price greater than zero is probably a pending nominee for the business Darwin Awards.)

What struck me is that Nokia are really screwing up their direct and indirect sales channels here. Your best customers are the ones who buy the unlocked generic handset right from Expansys at full retail. They're the same people who upgrade every time there's a month with an 'r' in the name. I suspect that once they've been stung with a wasted morning trekking to town to do a flash update, the next phone's a Sony Ericsson.

Even worse, because this falls under the warranty, Nokia are paying Carphone Warehouse for the privilege. A double loss.

In their battle for the customer with the network operators, this is a small but significant sub-market. At the very least, it's a nice bargaining chip. If a carrier starts to get stroppy, fill up the direct and independent channels with discount phones loaded with nasty Skype clients, open SIP stacks and do-whatever-you-like settings. It's worth getting this channel right, because it's only going to grow.

Whilst I'm on about good 'old Carphone Whorehouse, here's a snap of their London Waterloo Station store with the latest promotion:

My top favourite patent-pending co-invention at Sprint was the affinity faceplate for mobiles that would remit a revenue share to the chosen partner. Looks like someone has gone one up and made the whole phone an affinity/lifestyle statement. Firstly, note that this is the new slim/pink. No phone, content or communications features are being promoted. "The deflector shields are keeping out the innovation Captain, and the Developers have been repelled." The challenge for the handset makers trying to dodge the clammy dead operator hand is how to optimise their supply chain and software for the myriad variants of this affinity theme.

Posted by Martin Geddes at 8:08 PM

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