[mobile business briefing] Should mobile operators be putting time and resources into the development of devices? Following Vodafone's recent decision to abandon the development of dedicated phones for its 360 suite of mobile Internet services, surely the answer must be ‘no’. Shall we move on?
Not so fast. Japanese mobile operators NTT Docomo and KDDI's deep role in the development of handsets has been a key factor in Japan's global leadership in the adoption of mobile data services and these operators' ability to generate some of the highest ARPUs in the world. Docomo and KDDI have been able to ensure that the devices and services they sell work really well together, creating a good experience for their customers.
Moreover, the success of both the iPod and the iPhone is partly due to Apple's success in creating an intuitive and complete package through its control of both the handset and related services via iTunes and the App Store. RIM's initial success was also due to its tight integration of its devices and push email services.
These were probably the very valid arguments made within Vodafone when it conceived the idea of handsets optimised for its 360 suite, which includes contacts aggregation and back-up services, plus an app store. But Vodafone's announcement earlier this week, in which it said there will be no further development of bespoke Vodafone 360 handsets, appears to have been driven by a more realistic assessment of mobile operators' role in the mobile Internet value chain.
"From now on we will be focusing all efforts on expanding the range of handsets and platforms that support Vodafone 360 and in developing and enhancing the suite of Vodafone 360 services," said Vodafone in a statement Monday.
That is surely the right decision - in the mid-to-high-end of the handset market, in which Vodafone's initial 360 devices were positioned, there is just too much competition and brands such as Apple, Android, BlackBerry and Nokia carry much more weight than Vodafone and the operating system it favoured, LiMo. Better to focus on making 360 services work well with the various versions of Android and Symbian, than to try and shoehorn another platform into a crowded and competitive market.
Indeed, Vodafone's decision to stop making bespoke 360 phones is a major blow to LiMo, the Linux-based handset operating system, which was already struggling for traction, while two other mostly-open operating systems - Android and Symbian - have become much, much better established in the marketplace. LiMo's biggest advantage is the backing of many of the world's leading mobile operators, but that alone clearly isn't sufficient to ensure its success.
Should operators be involved in the devices business?