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Friday, February 09, 2007

Vodafone: MySpace + YouTube + eBay = Not Enough

There is no doubt that Voda is looking at its endemic market share in the UK youth market and planning a spring or summer offensive. O2 is currently the youngsters networks of choice and Voda will have to work a lot harder to make them churn.

Personally, I think the key tool for the youth is messaging – currently they use SMS on the phone, MSN instant messaging at home on the computer and HotMail for email. HotMail can be delivered via Voda branded push email technology. Seeing that Voda’s revenues from this segment is currently limited, it hardly runs the risk of cannibalising its own revenues and therefore can do something radical like bundling all three together and fixing the price. Also, in terms of pricing monthly charging is only of use where parents are paying, why not offer a weekly fee which could be paid via the top-up network or even paypal which is turning into the internets currency of choice.

The next important point is the handset. Most youngsters would rather die than have a naff handset. Why don’t Voda do something different and a little risky? They now have Huawei as a vendor who will basically build anything that Voda requests. Or Voda could go and break the T-Mobile/Danger partnership with the Sidekick. What seems incredibly important is that Voda puts a lot of investment in making the device “trendy” and used by the style gurus. It is not having a large range that is important, just a couple of handsets one aimed at each sex will be suffice.

The next thing that is important is Music and the youth don’t like paying for it. It would be impossible for Voda to put an application like Limewire on the handset, because p2p networks will not be economic over the air and Voda would spend the best part of the next decade in courts being sued by the record companies. The next best thing and the clean hands approach is to provide access to home computers. Orb is the perfect tool for this and Voda have experience of it in Germany. One this they must not do is to price data out of the market and they must think of matching T-Mobile Web ‘n’ Walk pricing.

MySpace will add street credibility, but it will hardly make people churn from current networks. And this must be Voda's aim - an increase in market share in the Youth market. The YouTube deal is a bit of a joke with only a selection of the videos available. The eBay access is hardly earth shattering and probably more applicable to non-Youth segments.

I would also consider doing something really radical like only making the product available over from Voda Internet Store to cut distribution costs and make customer support only available via text or email.

3 have basically developed and priced the X-Series to target the Tech Savvy Segment, Voda needs to put its own package together to target the Trendy Teen Segment. I believe it is an interesting market because every year 600k new users enter the market and also they have very little loyalty and therefore will churn if a great package is offered. Now the mobile market is maturing we will increasingly see packages of services developed to met different customer segments.