iPhone, The MVNOs have got the message
|– let the operators subsidise the iPhone and then steal the customers by offering low prices and an aggressive SIM-only strategy.|
A number of European MVNOs have chosen to focus on the iPhone segment using the strategy: “Bring your own iPhone and we will give you cheap traffic”. The philosophy behind this strategy is to offer customers the best deal, when customers are looking for a SIM only solution. Many of these players have been marketing themselves via aggressive PR, telling potential customers that they cannot offer cheap IPhones, but that they instead have the market’s best prices on voice, SMS and data.
On a market with a great deal of hype surrounding the iPhone and with a number of aggressive MVNOs using an aggressive PR to profile and attract customers, there are many possibilities to combine these two businesses. This is especially the case when iPhone partner operators choose to sell heavily subsidised iPhone’s at high monthly costs. Simply put, a market player that does not have expenses for subsidies or retailers and that is using the Internet to offer their customers primarily SIM-only solutions, has the possibility of portraying themselves as the iPhone customer’s best friend.
In Strand Consult’s new report The moment of truth, a portrait of the iPhone we have examined how four successful MVNOs have focused on the iPhone and been very successful at attracting high consuming new customers, but without the same expenses as operators using the Apple partner strategy. The four MVNOs we have examined in this report are Simyo in Germany, One Call in Norway, and BiBob and Telmore in Denmark.
A German T-Mobile iPhone customer can save between 600 and 1200 euro a year by choosing a SIM-only offering from Simyo, instead of purchasing a T-Mobile iPhone contract. T-Mobile has a 317 euro SAC on a German iPhone customer. Simyo pays under 30 euro for a customer.
The largest Norwegian tabloid newspaper VG recently featured the following headline on their front page:: “Save 5000 NKK (586€/860$/537£) on your iPhone subscription” and with the subtitle of “Dine Penger (the title of the section) has compared the annual costs of purchasing and using an iPhone. In 5 out of 9 cases, it proved to be cheapest to switch subscription to a One Call subscription.
One Call’s results are impressive. Out of the 200,000 customers One Call currently has, (there are 4.5 million people in Norway), 5% of their customers are iPhone customers, corresponding to One Call attracting 10,000 iPhone customers – without having to pay one single Euro in iPhone subsidies.
In Denmark an operator is only allowed to bind a mobile customer for six months. This is a very short period for operators to recuperate their SAC and there is thereby a large risk of customers perceiving operators as cheap handset providers and after six months switching to one of the many Danish no-frill MVNOs that are primarily focusing on SIM-only solutions. Today, 25% of all Danish mobile customers are using SIM-only solutions from an MVNO.
Just before the six-month anniversary of Telia’s Danish iPhone launch, BiBob and a number of other MVNOs launched on the market, offering customers to switch from Telia’s poor 3G network to a better network and at the same time offering significantly cheaper prices. From a PR point of view, BiBob took the best possible advantage of the situation. With their offer of customers being able to choose data at 2 DKK (0,27€/0,39$/0,25£) per megabyte or alternatively 1 GB data for 48 DKK (6,45€/9,47$/5,93£), BiBob were in reality delivering unlimited data for 48 DKK, although it does state in their terms that the 48 DKK only covers 1 GB data.
The results of BiBob’s efforts are impressive. BiBob currently has 60,000 customers, of which over 7% are iPhone customers, corresponding to 4700 customers.
In our report The moment of truth, a portrait of the iPhone Strand Consult uncovers the truth about the 10 largest iPhone myths. We have collected information and financial figures from all over the world and we can document that the iPhone is a financial challenge for many operators’ business cases. Read more about the 10 iPhone myths and receive your free copy of the report : CLICK HERE.
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The moment of truth, a portrait of the iPhone