As reported in This is Money, the strategy includes selling mobile broadband to home workers who have moved to more rural locations and need reliable connections, and gadgets and devices made popular by the pandemic such as film projectors.

Robert Finnegan, Three’s CEO, said they are not going after the Curry’s market but it’s certainly a strong statement of intent that there’s a market to be had.

It might also be making a few analysts scratch their heads – Is it flawed logic or complete genius? So many brands that have played in this market have left the high street in recent years. CPW was the latest casualty so investing in a retail footprint will have mustered some courage.

That seems to have been fuelled by a trial in Ireland. Trials are always sensible when making such a bold move. But from experience of working in Ireland, I can testify that the Irish market is very different to the UK’s. Plus, the Three market share is greater in Ireland which could skew results.

Even so, selling broadband connections is sensible. Both Carphone Warehouse and Vodafone moved into the space. They had big customer bases and wide-ranging segments to work with. Vodafone reported figures this summer of 940,000 connection[1], with 467,000 of those converged. However, could the pandemic have had an influence on things? Do we need to see a ‘normal’ year to know whether it’s been a real success?

The move to broadband is sensible and fits with the Three portfolio that’s centred around selling services. Plus, as we know, acquisition in the air. Robert has said they are looking for the right brand to come along. When you consider Hutch has the financial muscle power to help, diversifying the portfolio might not be such a risk. Rather it’s a move that is complementary to the products and services that the short list of targets sells.

Whatever the planned outcomes, this needs to be a success. It’s not a cheap exercise and converting the strategy to revenue will be watched closely.

Certainly, there’s a big challenge ahead in terms of re-positioning the brand from one that sells to individuals, to one that sells to families and households.

Reinvention is not impossible by any stretch. The insight they gathered in Ireland will be providing the impetus to suggest it can make the move. But whether Three can make it happen in the UK, and in quick time, to compete with the established players remains to be seen.

[1] https://www.ispreview.co.uk/index.php/2021/07/vodafone-uk-reaches-940000-fixed-broadband-isp-customers.html

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But it seemed to pose more questions than it answered, not least for iD Mobile, the Dixons Carphone MVNO.  The team there had to put out a statement to confirm that the deal doesn’t impact the iD brand or its agreement with Three, the network behind the MVNO.

Of course the big question is why Vodafone, and why now?

Over my wholesale career I’ve had dealings with both of the brands and I can see a plan in play. Yes, you might think this is a last throw of the dice from Curry’s but actually it’s savvy on the part of Vodafone.

Why’s that? On the surface, you could argue that Vodafone had exclusivity already. All the other operators had abandoned Carphone Warehouse, which had significantly impacted its ability to offer impartial advice.

But you have to consider that Vodafone is likely to be playing a long game. Firstly, it knows from experience that this channel has the potential to drive connection volumes and there is no doubt that the Currys brand still captures a lot of footfall and web traffic.

Secondly, in its distant past it left CPW only to return later. The press coverage back then asked if the brand would last. It clearly did. And that’s why Vodafone’s strategy is so interesting. Could the exclusivity be a smart way to ensure others can’t get in if the channel continues to perform? I’d wager the conversation has been had.

Then of course there is the brand and product fit. Curry’s customers are likely to have more in common with the Vodafone core consumer demographic, and when you factor in the Vodafone ‘V’ smart devices you can see some real synergies. It certainly makes more sense as a retail partnership than the retail trial O2 announced with Next back in 2019.

And speaking of the long game, let’s speculate for a moment that maybe Vodafone is thinking that over time it may be able to win the iD MVNO business. It certainly measures up well. It has a substantial customer base and is proving its value in the market. It targets a different market to Vodafone so passes the incremental customer test any MVNO goes through when being assessed by an operator. It would also give Curry’s customers another choice.

Those with you that have been around a while will remember that Vodafone and CPW had an MVNO in the past. So this deal, and recent market statements that confirm Vodafone’s commitment to MVNOs, makes me wonder if they could mount a bid to win the iD business from Three when the contract is up for renewal.

iD’s statement would suggest otherwise, plus there’s Voxi, Vodafone’s youth sub brand, to consider. Though we don’t know the full details, if the exclusivity deal includes Voxi then that presents genuine competition for iD and means it could potentially lose customers in the Curry’s channel.

I can’t see anything radical happening tomorrow, or even by the end of the year. But I wouldn’t be surprised if there’s more to this than meets the eye and we find ourselves analysing more exciting moves with these brands in the future. For now, there will be much to do to make the new partnership work and hit the numbers.

My overall sense on this is one of encouragement – it’s good to see that telecoms is still important to Curry’s, and there’s long-term intent to make its mark in the market. And if nothing else, it continues to give consumers choice, shareholders optimism, and provides relief for iD.

Do you have questions about the deal? Think you need to run a strategic review or recut your segmentation as a result? Drop me a line, I’m happy to give you my perspective and some strategic counsel.

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To think Britain no longer has an independent large brand for mobile sales on the high street seems unthinkable. But it’s happened. Once the brand than operators fought so hard to get in with is now lost and forlorn.

The writing has been on the wall for a while. Networks have filed out the door. Branches have had to close, the Irish operation pulled altogether.

My immediate thought was for all the people who now join the job market. And I hope operators, distributors and vendors will see the value they can bring to their operations.

For consumers this is bad news. It’s bleak on the high street. There’s now next to nothing in terms of choice for consumers. The few electronic retailers that there are pose no real threat to the operators. Customers won’t have an easy task of shopping around especially if they are the high percentage of people who still like to touch and feel a real phone before making a decision.

You’ll also have to weigh up the sales pitch – four operators each with different and conflicting sets of advice. Of course we all know CPW wasn’t truly independent given the sales incentives and targets. But in its heyday, it did offer relative impartiality and give consumers space to make a choice.

Looking at the market now, it’s my opinion it won’t be long before Curry’s winds down its mobile category. It’s not really got the right ingredients, environment or brand, to appeal to the more mobile savvy consumers who probably still prefer some specialist assistance. It’s top of mind for the latest Samsung washing machine not the latest mobile.

But as an MVNO expert I have to also turn my attention to what it means for iD Mobile. It was a great business at launch and gathered pace well. But now, it’s likely to face the challenge of dramatically reduced customer acquisition. I expect there’s a frantic look by management going on, assessing how other channels to market, be it online or other retail partnerships, can shore things up.  Could it exit altogether? Don’t bet against it. Today’s news is a reminder of how tough things can get and the tough decisions market forces provoke.

And as for Currys? Well sadly it wouldn’t surprise me at all to see it going the way of Rumbelows and Comet. Yes, remember them? It’s a brand I hold a lot of affection for having been a store manager for Currys, Dixons and their CPW competitor The Link – a brand Curry’s exited from about 20 years ago. But it’s going to take a huge amount of effort to salvage.

It’s all a reminder that having a clear brand vision and focus on specific customer segments, as well as innovation in service is absolutely essential to thrive and grow.

If you’re interested in discussing what this means for your company, or need help with segmentation, and/or operational turn around drop me a line…..

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My biggest observation was that the speed of change curtailed the amount of time retailers had to respond to the competition let alone the situation. In normal times, copy-cat services and introducing new ways of shopping would have been finely tuned, but no one had that luxury. The consequence was that several large retailers went into administration and many well-known brands left the high street. If you couldn’t keep up you really were left behind.

Much of this is related to the store to head office feedback loops that management teams rely on. Retailers need the ‘frontline’ to help assess performance and gauge the success of offers and marketing – word of mouth from store teams and customers is helpful to apply to statistics. But it simply hasn’t been possible or practical and it’s been telling as to which had the best models to adapt, be agile and perform.

Of course, online retailers were quick to swing into action and those that were already operating strongly in this space with established and robust systems in place took centre stage. The smart retailers didn’t let retail closures stop them and switched tack by using the store footprint to act as mini distribution centres or teamed up with brands that could stay open to provide a click and collect service overnight.

That form of innovation is an indicator that just as there were losers, there were also winners. Lockdown played into the hands of grocery, bike and outdoor retailers, home improvement, craft and gardening sectors, and pushed other sectors into innovation such as Michelin star food to go. The other upside was that local shops saw a resurgence with many benefiting from customers not wanting to travel and switching allegiance to the under-dog.

What’s in store for 2021? Five things stand out:

Looking ahead to next year there are some big challenges ahead:

1. Firstly Brexit. Already a huge challenge for those selling products sourced in Europe but even more so as we still don’t have a deal to plan against. Things like imports and tax will be all consuming and it would be naive to say there won’t be teething problems (an understatement…). And if you’re in the tax free shopping market and reliant on tourists you’ve got to assume you’ll have a tough start to the year.

2. Next year will be all about the survival of the fittest. If you’ve made it this far then you’ve been doing something right, but it’s still up hill until things stabilise. When customers are allowed to travel and engage in the high street again then I suspect they will in the droves. It’s a fabric of life that’s been missing for so many people and it’s this that presents an opportunity for retailers to re-engage and remind their customers, new and old, of their values, and how exciting shopping is. It also goes without saying that there will also be incremental revenue opportunities for the retailers who survived as they fill the gap left by the retailers who have closed permanently.

3. Online will continue to dominate things so retailers need to consider the change in consumer behaviour as a more permanent fixture – pandemic or not – and accelerate the delivery of a ‘seamless’ customer experience. Online has been on all of their agendas for some time, now there is no excuse not to make it happen properly.

That said, online won’t take over entirely. Instead, we’ll see a re-balancing so stores will make the majority of sales in the future but online will make up a greater share of revenue than before 2020. This re-balancing will happen as things ease, and in the way retailers respond with pop-up shops and ‘experiential’ strategies.

4. Without doubt successful retailers will really know and understand their visiting customer and will deliver a service that matches and surpasses expectation.

That will most likely influence where their shops are located too – can they capitalise on being close to the bigger destination stores even if it’s in a very small unit? Will people reconsidering car use and where they work make a difference to where stores are? How is footfall likely to change in the future as things re-set? Using technology and insight to understand this context will be vital. (We have developed a tool to help with this)

5. While there will be many people chomping at the bit to go carefree shopping there will also be those more reluctant. Town centres need to think about what they can do to give these people the confidence to return to the high street and keep the community of local shops alive – it might be free parking during quieter times of the day, or better cycle provision. All of these things have been talked about for a long time but now there is a pressing need to make them happen and to compensate for the shift towards online.

 Independent shops will likely come together to tackle this themselves too. Many customers are appreciative of how the local shop responded to this year’s challenges so this works to their advantage. However, they need to continue to provide something unique, great service and engagement so that the momentum keeps going, and make sure online services are in place should they come to rely on them for weeks at a time.

If you need help defining a strategy or want to find out more about our services and tools then please get in touch.

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It’s evident that retailers are among those closely following this mantra. Criticised in the past for bringing out Christmas goods too early, this year it seems the public is receptive. Christmas trees can already be seen through windows in our neighbourhood and recent research by M&S found that Christmas-related searches had increased on its website by 80%.

We are now well into the ‘Golden Quarter’ for retail when most will deliver the majority of their annual sales and profit. Without a strong Christmas we will see challenging retail outlooks in the new year. It’s therefore justifiable to meet an unusual customer demand for an early Christmas.

The sense of needing something to look forward to in a lockdown, and a hesitation to queue outside a shop in the cold or rain or be in a crowded place when it lifts will drive people online. Consumer confidence figures and redundancy numbers also indicate a large number of people will be budgeting more this year, buying special long-life foods and treats to get ahead, and gifts for friends that can be delivered for them.

This Christmas will be a true test of ‘omni-channel’. However, I believe it will be the retailers that still try and achieve a feel good Christmas experience for their customers that will win more than any other. Shopping is a sombre transactional affair right now and adding magic and sparkle really is so important.

So how do you translate the normal Christmas retail atmosphere into an online setting? Virtual Santas, Zoom gift elves, virtual tours of the shop floor, the use of video and music all have a role.

Of course, it’s important to accept that footfall will be way down on normal levels and for the customers who do brave it after lockdown there should be the reward of receiving a special Christmas experience. From carol singing, mulled wine and chestnuts to stunning lights, it’s the retailers who deliver this that will be on the good list.

In some ways that’s the easy bit. The biggest challenge will undoubtedly be planning stock and resources around the lockdown and into tiered levels again. It’s why I think we’ll see more retailers centralise their stock and use online, and click and collect (or when we can, instore ordering) to manage the risks.

Helping customers get what they want in a timely way will help differentiate the brands that do well and those that struggle. Much of this will be about supply chain planning and technology, staff training and great communication so people know what to expect and receive a consistent and positive experience.

In some ways the rules haven’t changed – deliver the best experience, a great line up of products (not necessarily exhaustive but perhaps original), competitive pricing and easy ordering and delivery models. It will rely on going the extra mile with supply chains that are clockwork and employees who are super engaged in the plan, more options to pay, extra resource to provide help and support, flexible delivery options and longer return periods.

It won’t be easy, but it is possible if you understand your customer, can anticipate their needs and find ways to deliver the extra mile.

Get it right and it can be a case of ‘winner, winner, turkey dinner’.

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TEAM

It’s been said a million times before, engage your team and they will engage your customers. Now like never before this should be your number one focus over the next 100 days of trading. If you are banking on a Christmas windfall then you must start here.

Store teams are on the frontline in these unprecedented times. They are frightened, overawed and confused. They may feel exposed. And the same is true of customers. So how do you ensure that store teams feel supported, engaged and motivated so that they can deliver an extraordinary experience in these extraordinary times? Four things that must be in place. If it’s not your forte get someone in who can help you. It’s a very worthwhile investment.

• Communication – regular, clear and accurate. Get into a rhythm of sharing updates and helping people feel confident and supported, with opportunities to ask questions and get honest answers.
• Establish easy to use help lines. I’ve seen the power of this. Ones that are manned every hour the stores are open provides a sense of ‘we are all in this together, there for one another’.
• Lead from the front. If you can change work from home to work from store some of the time then do. You’ll need to look at the practicalities, but if your teams are prepared to do it, then so must the management team.
• Motivate, excite, engage. Just because this year is different it doesn’t need to be full of dread. Be creative, make retail fun – there are so many brilliant people out there who can help you achieve this. Get it right and it will be infectious, customers will value it.

IN STORE

Understandably there are wide ranging ‘rules’ that have been introduced across all of retail. Some imposed, like masks and 2 metre distancing, some unique to brands, from whether you can or can’t try on/touch something, and whether it would be quarantined afterwards, to the number of people in a store etc etc.

It can be confusing for customers and turn them away. So help customers to feel comfortable:

• Keep it simple. Strip back and have as few rules as possible so that customers understand what they have to do.
• Make space. Are there non-essential products and fixtures that could be removed, would signage to say they are available on request be a better alternative so your high margin, high turnover items are always available?
• Windows. They are more important than ever in bringing alive what customers will find in store and a brilliant way to inject some theatre into your brand and stand out.
• Innovative services. Where are your pinch points and where do they overlap with the customer’s concerns? For example, can customers book an appointment with a store member in advance of visiting so they get what they need quickly? What other services can you offer – gift wrap and delivery from store after your purchase. Secret Santa or office parties ‘at home’ kits could be a winner now.

DIGITAL

Gifting is what the next 100 days are all about so do everything you can to be front of mind:

• Transforming your entire digital experience may not be possible right now but there are smaller changes you can make that will have a big impact – is the menu and layout easy to navigate? Is it fast to load pages, do images have ‘wow’ impact, how many clicks do I have to make to get from home to checkout via a purchase? Get these right as soon as possible.
• Is the site optimised for mobile? Such a win-win that I still can’t believe how few retailers have it in place.
• Are you always ‘on’? Web, social media, chat… we have to approach digital as we do stores. When customers come ‘in’ they should be engaged and inspired from the first click. This is going to be a huge area of emphasis. People will browse and possibly never make it to store, converting them is essential.
• Are you translating all of the normal seasonal experiences onto digital? Skinning digital platforms so they have seasonal impact is so important. You need to create that digital winter wonderland. But don’t stop there, what about trick or treat? Ultimately think about how you help people enjoy winter events at home this year.
• How do you ensure customers still browse? Can you use pop ups for suggested ‘add ons’? Could you create a gift market on the home page? Could you design a digital version of the Christmas shop where customers are able to virtually walk through the store and make selections?
• Finally, but most importantly, is the operation robust? From selection to warehousing to delivery it’s absolutely essential you build in the capacity now so you can deliver on a memorable customer experience people will recommend.

The next 100 days will be different, but brands have an unbelievable chance to do something completely new, engaging and exciting for customers. If you need help developing your strategy then speak to us. We’ve developed successful, award winning marketing campaigns for retailers around the world.

The post The next 100 days will be the toughest ever for retailers. How can brands stand up to the test? Peter Scott our head of retail consultancy takes a look appeared first on Graystone Strategy.

I follow Asda closely – like a teacher likes to hear how a pupil succeeds in later life, I like to know how the brands I helped launch grow.

I was aware that Asda was reviewing its options and commercials but considering how poorly the move from Vodafone to EE went some years back, I was, to say the least, surprised by this return.

I’ve already been asked what I think is really going on, and I see a few possibilities here.

Asda has always struggled to grow to a size that befits the size of its retail business. Part of this can be attributed to its prepay only offer, but more recently it’s a symptom of a declining market now representing only 28% of all mobile subscribers. When it originally launched in 2007 it was almost double that.

Asda has also struggled to link Asda Mobile intrinsically to the grocery shopping experience. Sainsburys, which I also launched for Vodafone, did it through the Nectar scheme rewarding mobile customers with double points on their groceries. Tesco has done a similar thing and continues to link the categories it owns.

So why go to Vodafone, what materially changes? Well, what I hope to see is some exciting SIMO post pay propositions coming to market. There were hints of ‘digital experience’ in the announcement, and so we might see some innovative ways of linking the value you give in one category to another. It’s this sort of innovation that makes Vodafone attractive.

However, there is one major hurdle – migration. This can be painful at the best of times. Asda customers will have to do a SIM swap and that’s no mean feat on a prepay MVNO where Asda won’t have all the customer details.

It’s also likely to trigger some sizing up by customers. People are highly likely to re-evaluate the service they get and consider the other options. There are some great deals out there right now and Vodafone’s VOXI will be a big competitor.

Coverage is also likely to be a point of consideration. Customers who have coverage on the EE network won’t necessarily get it on the Vodafone network. That’s just the challenge of mobile coverage. This too will cause churn.The upshot is that if they manage to only lose 20% of the base in the migration they will have done EXTREMELY well.

Of course, an announcement like this doesn’t stand alone. There will be ripples. EE/BT, has so far ‘played 3, lost 2 won 1’. It lost its biggest wholesale customer Virgin to Vodafone, (who is then likely to lose it due to the proposed Virgin merger with O2 , then it won a five year extension of Utility Warehouse, but losing Asda will be a blow. Just goes to show you can’t ever rest in this business.

Overall, it drives a lot of work for EE/BT as it will need to put in place a team to support the mass migration of the two MVNOs. It could definitely be a distraction from winning new ones.

Overall, I expect to see yet more movement in MVNO wholesale deals. There are a few more out there to compete for. The prize that may just be up for grabs is Sky, triggered by the O2 and Virgin JV. It’s not beyond the realms of possibility, so I will be staying glued. And it’s probably enough of a reason for anyone else in mobile to stay tuned too.

If this shakes up your plans and you think renegotiation is likely then get in touch. We can help you understand the games being played and the moves you can make.

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In our recent blog about O2’s rationale for leaving CPW and what it meant for the market, we speculated that BT/EE could win extra share of the category. But it appears that EE was unable to agree terms.

There’s no doubt now that EE’s decision will cause a chasm for CPW. Firstly, it could prompt a wobble with Vodafone. Secondly, the group of consumers that once gravitated to the high street darling because it was independent, might not be so willing to do so now. After all, if your line up only represents 40% of the market (one MNO and a handful of MVNOs) you can’t be considered an independent advisor.

It all feels like very bad timing when CPW has relatively only recently announced it will leave the high street. A strategy designed to get CPW stores in Currys and PC World working harder. But now you have to say the outlook is pretty glum. Granted, no one could predict a pandemic but now that strategy really falls flat.

You could argue that it still has its MVNO iD (on the Three network) to fall back on. True. It’s grown the brand significantly and has well over 1million customers. It’s a success story. But the model for acquisition has always been through the CPW stores. With 531 fewer stores on hand, and less of a consumer pull to go into a shop today, iD no longer has all the options it did at launch. Safe to say, I think we’ll see iD’s acquisition number start to slow significantly.

But could it be part of the plan? Does Dixons Carphone already acknowledge this risk and could it be is warming up to sell off the iD family silver? They have done this before with previous MVNO Talk Mobile (sold to Vodafone) and when Three’s CEO Robert Finnegan talked about consolidation a way to realise immediately value from iD may have presented itself. Extra customers for Three would give its retail numbers a boost not to mention the retail revenues (Though I admit the consolidation ambitions Robert has, might be grander than this!).

What is clear is that there is a very real risk of CPW being consigned to history, like the previous Dixons mobile phone retail chain The Link. Remember them? I do, I opened their first store, but that’s another story…

Overwhelmingly the pressure is on Alex Baldock now. Dixons’ mobile revenue for its 2019/2020 financial year saw a 20 per cent annual decrease to £1.589 billion. Yet commitment to the sector remains, citing mobile as the number one technology for customers, therefore it will continue to work on being the number one destination for tech. There’s even talk of more flexible transparent mobile offerings in 2021 to give customers better value.

But it can’t come soon enough, especially when there is a question mark over whether the brand will still be a destination or even relevant next year. Already retailers that sell unconnected hardware are filling the void using services like C-Tech that does all the operator and credit checking integration for them. It makes it easy to take advantage of the extra commissions for selling connected services with relatively minimal effort. No brainer.

So, the short story on all of this change is that CPW has to act fast or it will face the music.

If you need help working out what this means for you then speak to us. We know this market inside out and can help you work out a clear path.

The post Can Dixons Carphone survive now BT/EE has pulled the plug? appeared first on Graystone Strategy.

Six main themes came from my thinking and, in short, if you are in mobile then there are some positives to grasp. Innovation, investment and income are very possible despite the backdrop.

1.Is mobile recession proof? Not entirely but telcos by their nature of being subscription businesses are insulated to an extent. The last few months have shown that resilience comes from continuous regular revenue. Without understating things, the majority of revenues have not dramatically changed by new acquisitions – at least not for the established players.

In terms of parallel industries, Disney+ hit the market just at the right time. It’s now got 57.5 million subscribers ‘far exceeding what was predicted’. That’s undoubtedly been helpful for Disney when other parts of its business have slowed or paused entirely this year. It made for a much better earnings call than anticipated.

But what’s interesting is that this stability in subscriptions from long established players has sparked other businesses to think subscriptions too, and without the need to become a full blown MVNO. Look at Argos. It now sells SIMs to online customers with the credit checking built in. It adopted clever plug-in APIs from CTech and Experian to do this and I think it’s a trend we’ll see continue. You no longer have to be an MVNO to get regular income – you can get a slice of the operator revenue and improve margin on the handset sale.

2. Are margins a worry then? Not really. We may see that margins decline slightly or flatten. This will largely be related to reductions in spend as companies furlough and/or cut back on marketing. Plus, operators don’t have the high acquisition costs right now as the shiny new smartphones are in shorter supply with many anticipated launches delayed. Overall, I wouldn’t expect a massive hit to mobile network margins unless they were over-reliant on enterprise revenues from industries hit by lockdown such as retail or hospitality.

3. What about the smaller outfits? My answer is get ready for acquisitions. Some smaller companies that don’t have large retained bases or were struggling pre-pandemic will have suffered and they may make good acquisition targets. The recent ruling in Europe on CKH and the O2 merger (and subsequent appeal) hints that the European regulators are worried about consolidation. But at a local level, governments are likely to support anything that saves jobs and supports the economy so I would expect to see acquisitions waved through.

4. Is there going to be any spending for growth? Yes, and my money is on a global upturn in innovation. If at the start of the year you had told a COO that they would have to move all of their call centre teams to work from home it would have been tabled as an 18 month transformation project. Yet everyone did it within a few weeks when the pandemic hit and service levels, after an initial blip, were largely maintained. It’s one example of the numerous projects companies undertook to stay operational. A huge amount of innovation and digital transformation happened so it’s now legitimate to ask the question ‘why wait?’ or ‘why can’t this be done in a fraction of the time?’.

New technology adoption is far more likely now too. There will be an appetite for making things easier, faster, more reliable and solve problems that we have to face up to for the short- to mid-term. IoT solutions a case in point. They will be adopted on much larger than anticipated scales for routine process, not just the future world stuff. We’re talking things like security gates that check your temperature. A prime example of where necessity is the mother of invention.

5. Is investment for a scale-up too optimistic? No. With this context VC funding is still going to happen and the prime candidates are those start-ups in the wider ecosystem that are leading the effort to solve world problems. With the right management teams in place they will be seen as a safer bet. VCs may even go so far as to step in and support businesses that have developed great IP but are struggling to grow, if they think the underlying economics can be fixed.

6. Should we look beyond the borders for opportunity? Yes. In less developed countries, where people had less opportunity to access the digital tools that smoothed the impact of the pandemic, I would expect to see targeted investment. The sort that focuses on extending digital networks to make the economy more resilient.

For instance, this is likely to be done using tower companies rather than through individual operator infrastructure investments. We have seen some interesting collaborations to increase coverage both at an operator and government level eg relaxing some regulations. Expect to see more of this ‘flexibility’ to help keep economies connected and on the world map. The same also goes for IoT innovations – smarter agriculture could really take off now that the precarious nature of supply chains has been exposed. If you’re in that market, or indeed smart cities, then there are definitely options.

If you need help to develop your business network and your pitch so you can speak to the right people about your innovations and ideas then get in touch.

This blog was inspired by comments provided to Capacity Magazine this week – you can read that piece here

The post We are officially in recession – will the mobile world now implode? Six opportunities to seek out appeared first on Graystone Strategy.

Consumer customer growth will slow further

We’ve seen Covid-19 effect major launches so 5G handset supply was always going to be tricky this year, but this is quite a spanner in the works for any operator with desires to grow their 5G base in 2020.

It’s not helped by the fact that 5G is quite a niche proposition for consumers and that’s even for the really early adopters. We’re talking about the ‘Tech trailblazers’ (30% of the market) wanting 5G to begin with. That said, it’s not an insignificant number so the operators will have planned to attract them early to help showcase the possibilities, and get the revenue in the door. Their initial growth strategy will be pinned on business applications (see final point below) and these Trailblazers. But like 3G and 4G, 5G will go mainstream as more handsets become available and, in particular, once Apple is able to supply a decent quantity of 5G iPhones.

Network complications

Handsets is one thing, using it on a working network is another. This week’s decision will undoubtedly impact the speed of the rollout of 5G coverage. Networks have built plans around the availability and supply of Huawei kit, and now need to see if the more likely suppliers of Ericsson and Nokia through to re-emerging brands like Fujitsu, NEC and Samsung can help fill the gap.

Will they be able to make up the deficit quickly enough? My guess is it will be a perfect collision of not enough kit from any of them quickly enough, and delays on taking out the existing kit. That all adds up to a slower than planned growth of 5G coverage, and, as networks will ultimately need to extract the kit they have already installed, there will be disruption to existing 5G service.

Overall it’s going to be an interesting race between operators to change quickly and with limited impact to customer experience. And it’s a race it will be difficult to judge as networks seldom publish their plans in any great detail, so we won’t really know how they are progressing against the initial plan they had.

Will Customers pay the new 5G bill ?

The cost implications of replacing kit are most likely to be felt by consumers. The availability (or lack of) alternative base station kit may drive up market prices and therefore costs to deploy networks. Plus reversing out already purchased Huawei kit has a double whammy effect, the original investment is wasted and you are effectively installing, de-installing and re-installing which all has associated costs. That has to be financed somehow and while I don’t expect data pricing to go up I do expect data pricing to stabilise and the steady decline we’ve seen over the last couple of years slow down.

It’s very likely this will cause some networks to re-evaluate their 5G pricing strategy. Consumers should therefore expect 5G to be at a premium in terms of handset costs and possible the available tariffs for 5G.

But as ever, it always pays to shop around. MVNOs like Sky Mobile (on the O2 network) already have access to 5G and with recent developments in the MVNO and MNO market, and the announced merger between O2 and Virgin we may see some good deals in the short term.

What do consumers think and what will they do?

The news has made every front page and it’s likely consumers will now be concerned about buying Huawei branded devices as a result. They are likely to think more about the trade-offs than they usually would when investing in a new phone.

Huawei is likely to extend its range of very cost effective 5G devices competing against the more expensive Samsung or Apple (once available). It remains to seen whether price over perceived security wins out.

My hunch is customers will take longer to adopt 5G anyway, simply because we have a shrinking economy and people will be keeping an eye on their discretionary expenditure.

MVNOs left in the cold?

All the complexity in the practicalities of delivering 5G and the added pressure on economics might have mid-term consequences for MVNOs. The big question is will operators offer market parity to their partners? A delay in parity would help ensure 5G is synonymous with the big networks. Yet, MVNOs exist for the very reason that there are sets of customers operators will never reach. Extending 5G to MVNOs early (as some Operators have already done) could boost market traction.

It would not be a huge surprise if Operators take this opportunity to review the 5G MVNO strategy and whether they can delay MVNO access. Their cost base has changed significantly so the question is, do they drive for volume and include MVNOs or pursue a premium strategy for their direct customers only?

I imagine wholesale and finance teams are working intensely on business case calculations now.

Private networks may stall

Finally, we can’t look at the ramifications without talking about the impact on enterprise. This is where the real 5G business case lies, helping companies become more efficient and innovate. Any delay to 5G means a delay to some aspects of digital transformation, which is a strategic imperative at the moment.

The development of private networks, which is probably one of the most interesting use cases, will also take a hit. Private networks are not covered by the legislation but as Huawei has targeted this market and built some innovative RAN solutions I can see another potential problem.

All businesses are very concerned about security and data protection in line with legislation, and as a matter of reputational necessity, so I imagine any business in need of a private network, will be intently reviewing the perceived risk, seeking alternative suppliers and again increasing demand on more expensive alternatives to Huawei. The question is will that blow the business case?

As you can see there’s a lot at stake and as the points above show the strategic choices operators face are complex. From performing technical change through which propositions to define and price first, to whether to launch with MVNOs.

Few will have predicted the scenario five years ago, but real it is and it won’t be reversed. Navigating the short-term upheaval for long-term gain is now the name of the game.

If you need help working through your strategy in response to these changes then get in touch.

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