"Vodafone and SP cellular providers are afraid that Globalstar will erode their most profitable segment."
Hombre - in most major mobile markets there are at least 4 mobile operators fighting over subscribers. It's cut-throat and getting more so every quarter. Profits are made off the top 10% of the subscribers - people with high incomes, plenty of business trips and roaming calls.
In this environment, operators are scared of doing anything that might put them into a disadvantage with the hard-core high-spenders. Vodafone's big advantage is its good coverage of several big mobile markets in Europe. The whole reason for putting together this empire was to provide the best pan-European GSM roaming. Of course Vodafone is now pushing this concept as much as it can. It is the core advantage of the company. Globalstar does not fit into this strategy and never has. This was made clear by Vodafone's lack of support to G already last spring, if not earlier.
Competition of Vod is pushing heavily GMS Worldphones that cover North America, Europe and Asia. This approach gives customers mobile access in all major business centers outside of Tokyo and Soul. Operators like Cellnet have had success with this approach - we know it works. Check out the roaming revenue growth of Voicestream and you see what I mean. European business subscribers are switching to multi-mode GSM phones for their US travel requirements.
Now - if Vodafone would push Globalstar heavily, it would be choosing a very risky strategy. It would mean pushing a product that weighs four times more than Worldphones, has ten times shorter stand-by time and does not function within buildings. It would mean tarnishing the entire Vodafone brand if the project backfired. People can talk about "capacity and voice quality advantages" for years; and apparently they have. But the phone specifications of G still make them uncompetitive dinosaurs. The weight and stand-by times of Globalstar models render them commercially unviable. Consumers don't care if the network can handle four billion subscribers if you can brain a moose with the phone. Many people studiously ignore this basic fact. That don't make it go away.
So - Vodafone has chosen not to take the risk of linking Globalstar with the Vodafone brand in a major advertising push. This decision was rational and clearly telegraphed last spring when a major push was needed and did not materialize. There is no reason to spin a conspiracy fantasy involving Vodafone plotting against G, goaded by secret envy and fear.
A strong Globalstar push would mean taking marketing resources from the Worldphone approach and putting them behind a product with little mainstream appeal. Since last autumn, there has also been a considerable risk of G going bankrupt and stranding angry, high-income Vodafone subs with a pricey service that stops working.
It would be insane for a major mobile carrier to take a sizable risk like that. Vodafone is already gambling on WAP, GPRS and W-CDMA, three untested technologies with unknowable consumer appeal. The last thing any operator needs now is another gamble.
There may be a niche market for Globalstar. The Jungle Phone Booth angle might pan out in some form - though it's bizarre that the company hasn't announced any major deals by now. Actually, it is the failure of the Jugle Phone Booth Project that makes me suspicious of all attempts to blame SP's for Globalstar's problems. You can't pin this one on Vodafone - and this aspect was the one that G management highlighted in December 1999. By doing so, they lulled investors worrying about phone sales into a false sense of security. "Well - never mind the handset sales, just wait until those G booths start popping up in Borneo."
But any talk of a major, mainstream advertising push by Vodafone was always complete nonsense. That was never going to happen and Vodafone made it clear last summer when it refused to back Globalstar strongly in its European retail outlets. Vodafone may be willing to sell the phones to archeologists going to look for the lost treasures of Sheba - but there was never any chance of mainstream marketing. So there is no need for low pricing - because the service is never going to click among business customers or other major consumer segments. The only market is a narrow prospector/safari guide/linguist visiting Mohanjodero segment, which should be price insensitive.
High pricing makes a lot of sense if you operate from the assumption that satellite phones can never be a mainstream market.
Tero |
