V by Vodafone Set to Reap Reward

But Operator Must Be Prepared for Long-Term Commitment

Over the past weeks, CCS Insight has been trialling V by Vodafone, the operator’s first foray into the market for connecting consumer objects.

The service launched into four European markets in November 2017, including the UK. It initially focused on four main areas: automotive, surveillance, pets and luggage. Today, Vodafone revealed that it’s expanding the offer to also include an emergency alert wristband and a smartwatch for children that enables parents to track their location.

In an earlier blog, my colleague Ben Wood shared his experience using the V-Pet tracker (see Vodafone’s Bet on Pet Tech). Here, I pen my thoughts on the V-Bag, a device aimed at tracking luggage. I put it through its paces in the UK and abroad.

V by Vodafone aims to overcome life’s most common worries, and according to research commissioned by Vodafone, misplacing bags or belongings is the second-biggest stress among UK consumers, behind losing a wallet. At £3 per month, it’s slightly less expensive to use than the V-Pet service (£4 per month) and costs roughly the same to buy outright (£59).

Firstly, the main weakness in my experience with the V-Bag: I found set-up really cumbersome. Inserting the V-Sim was frustratingly fiddly, and customers have to download two separate apps before they can finally use the service. This might not put off tech enthusiasts, but for a new technology to gain widespread appeal, getting going needs to be quick and straightforward. People can easily become disillusioned if a product doesn’t work the first time.

V-Bag by Vodafone, also known as Alcatel Movetrack

Supplied screwdriver and tiny screws for inserting the V-Sim

Once finally up and running, I was impressed with the V-Bag’s performance. The app is clear and intuitive and the service proved accurate and reliable through rigorous testing. Importantly, I encountered no glitches during recent business trips to Spain and Greece. The device itself, which is manufactured by Alcatel, is nifty and lightweight and offers a more than acceptable battery life of three to four days.

But the V-Bag feels a little like a solution looking for a problem. I expect there’s a small niche of business customers keen to track the location of their luggage or laptop bags. But even then, the international scope is limited to the areas covered in which Vodafone operates, which crucially excludes major markets like the US. In my view, Vodafone’s pet tracker can tap into a wider potential market.

In reality, consumers are likely to use the V-Bag to track a range of other items, for example, bicycles, designer jackets and even people.

The latter is an interesting potential application. Today’s announcement of two dedicated trackers to monitor people with mobility problems as well as young children is a logical step. But it is conceivable that they could also be used with malicious intent, so Vodafone needs to tread carefully in its positioning.

I doubt the operator makes a significant margin in selling the trackers, but if it can attract a creditable number of users, its service could make an impact. For instance, the fee of £3 per month for V-Bag would represent a near 20 percent rise on average spending by a Vodafone UK customer. As telecom operators seek new revenue opportunities in the face of falling use of traditional services, this could prove significant.

Furthermore, being a unique product in the market, V by Vodafone could play an important role in customer acquisition and retention. This is vital as Vodafone hopes to regain standing in the UK after several years in the doldrums (see Vodafone Embarks on Long Road to Recovery in the UK).

Vodafone should consider its move into the consumer Internet of things space as a long-term journey and its first steps as an experiment. The market is undefined and immature, and the company will need to continually refine and improve the offer based on customer feedback. It would do well to adopt the “fail fast” mentality shown by many companies in Silicon Valley, which introduce new features regularly, but quickly discontinue those that fall short of expectations.

A leading challenge will be to convince customers that buying V by Vodafone will bring a tangible improvement to their lives. But if the operator remains patient, committed and prepared to make long-term investments, it could reap reward.