Vodafone announced its 1Q10 results on Friday and they make very interesting reading. The figures are always a useful guide to how the mobile industry’s faring and Vodafone pointed to many areas of its business that are improving after a couple of indifferent years. Turkey, India and South Africa all improved dramatically in the first quarter, a recovering Spain remains under pressure and the UK appears to be steaming ahead once again. Unexpectedly, Italy’s slipped alarmingly in the early skirmishes of what looks like a price war and seems set to overtake Spain as the European operation Vodafone will need to keep very close tabs on this year.
More interesting, though, were the constant references to a “new strategy” by CEO Vittorio Colao. He summed this new thinking up as “the data bet is the right bet”. The full details will be revealed later in the year, but Mr Colao dropped some heavy hints about the new direction. I’ve set out the most important ones below.
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An avalanche of smartphones and an explosion of data on its networks are driving this new thinking within Vodafone.
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Vodafone is confident that it can cope with demands for data capacity and is so “comfortable with the economics” of smartphones and data traffic that they will form the core of this thinking.
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Typical Vodafone subscribers spend €2 to €10 more each month once they get a smartphone.
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Vodafone is investing heavily in new billing platforms to address the challenges of pricing data tariffs.
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It intends to charge for data based on “time, speed, amount, family group and even by device” as these new billing platforms become available.
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Vodafone will step up its smartphone strategy to reach all segments of the market from low-end to high-end users.
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It’s been very encouraged by initial results of a Spanish trial of pricing data according to quality of service, and it intends to roll it out to more markets.
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It expects to focus much more heavily on data in emerging markets.
What struck me about all this talk of a new strategy was that it only focussed on network access and how to charge for it. Content, applications and services weren’t discussed. They may come in the announcements in the autumn, but there wasn’t even a hint of them in the results announcement. Indeed, Vodafone360 was not mentioned once.
The Vodafone 360 product has been hugely troubling for Vodafone. It’s desperately trying to get its flagship service to a mass market, but it’s being met with overwhelming indifference from a public that wants smartphones — just not Vodafone smartphones. It’s difficult to imagine people queuing up outside stores for the next Vodafone 360 device. And that’s the network operator’s challenge.
The mobile industry’s changed more in the past 18 months than the last 18 years. Just ask Nokia. Vodafone’s trying to find its place in this new world and I wonder if the new strategy will see it beginning to acknowledge that while it’s still a master of the operator universe, people are looking for much more than just a mobile network now.
I don’t see how Vodafone can meet these broader requirements — others do it much better. Vodafone live!, Vodafone 360 and other services have failed to take off in the way the operator had hoped. It may be time for Vodafone to think about being the best network operator it can be and providing the best returns for its shareholders by doing what it was always built to do.
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