Telstra misses out on popular handsets in Brightstar deal
theaustralian.news.com.au
Michael Sainsbury
June 08, 2006
WALK into any Telstra shop these days and you will be begged to sign up to a new two-year mobile phone contract on its 3G (third generation) network.
You will be shown the latest handsets from the world's No2 and 3 handset makers - Motorola and Samsung.
You will be handed slim-line, top-of-the-range models by those two vendors.
You will be offered a bargain basement price with all sorts of features.
What you won't be offered is a handset from the world's most popular mobile brand: Nokia.
In fact, Telstra has just one of Nokia's six available 3G handsets on a subsidy contract plan. And it has only one of Nokia's 2G handsets on a plan, out of more than a dozen on the market.
But Telstra's customers want Nokias, badly - about one in every two mobile customers in Australia does.
Nokia's market share in Australia is better than its global mark of about 34 per cent. It's somewhere in the high 40s - down from spectacular levels near 70 per cent a few years back but still a mighty performance in an ultra-competitive and crowded market.
Telstra and Nokia - arguably the two biggest mobile brands in the country - are engaged in a bitter arm wrestle. It's over Telstra's decision last year to give Brightstar - a Miami-based company with no previous business in Australia - a contract to source and warehouse its mobiles.
Nokia, LG and most of the rest of the handset makers hated the idea. After all, Brightstar would be effectively taking some of their margin.
Telstra has Brightstar on a retainer with a success fee if they can squeeze savings out of the handset vendors, without the telco getting its paws dirty. Little wonder Nokia and their rivals hate the arrangement so much.
And the industry is still scratching its head on how inserting one more middle man into the supply chain can actually save the telco money. As the Yanks say, you do the math. Nokia's 6280, recommended retail price $699, is the hottest phone in the mobile market right now. It's overtaken the more expensive Motorola VX3 - the 3G Razr phone.
Telstra is not carrying it, but it is flying off the shelves at rival stores.
At least half the new handsets being sold in the market at the moment are 3G due to a massive push by Telstra, Vodafone and Optus as they attempt to bridge the headstart by "3", which has a million users - at least two-thirds of the 3G market.
For those that have been hiding under a rock these past seven years or so, 3G is the name the telco industry has given to the next generation of mobile networks. They offer users a myriad of data services including video calling, email and messaging. They also give the networks substantial cost savings on voice services - still the main revenue driver in the market for the foreseeable future.
As Telstra's affable handset tsar Mike Robey - a rare human being amongst a sea of marketing automatons - explains: "All the manufacturers are heading down the path where they are putting all their research and development into 3G. Some have shut down their 2G roadmap. We are actually providing better value in 3G."
It's an inflection point in the industry that Telstra chief Sol Trujillo is, quite logically, trying to turn to his advantage, by recasting Telstra's relationship with handset providers and building a new national network in the hope of gaining an unbreachable competitive edge.
The battle for brand supremacy between the networks and the handset makers is as old as the mobile industry.
It's a battle Trujillo has fought before.
His head mobile amigo, the well-regarded John Gonner, likes to tell people that while Trujillo was at Orange he pulled the same stunt with Nokia and reduced its market share. So he has form, but Australia is not Europe like it's not America.
Trujillo wants Telstra to be the country's premier mobile brand with its BigPond content - not Nokia, which has its own ambitions in online music and the like, that bump right up against the big T.
For its part, Nokia has always used an open business model. It uses a number of distributors to sell to as many outlets and dealers as it can. Being forced to deal with Brightstar, being pushed around by Trujillo and his team, sticks in Nokia's craw and goes against 15 years of happy partnership with the telco.
Telstra also appears to be flying in the face of industry trends with the Brightstar appointment.
Other carriers say they are working more closely than ever with handset vendors on customisation and making sure the growing range of mobile content works.
This was evident in last year's Optus 3G launch, with the move to have some Microsoft applications "native" on some Nokia handsets. This week Yahoo7 announced a Nokia partnership as well.
Clearly some accommodation will be reached. But at the moment, Telstra's customers are missing out on these innovations and cheap 3G Nokias. Or going elsewhere.
So much for Trujillo's much-professed ardour for his customers.
sainsburym@theaustralian.com.au |
