The Vodafone Group Unveils Its ‘Three-Platform Strategy’

| November 7, 2006 | Wireless Services - Europe | Competitive Update | Client Access

Analyst: Emma Mohr-McClune

Current Perspective: Positive/Neutral
Vendor Importance: Moderate
Market Impact: Moderate

Event Summary

On November 6th The Vodafone Group announced a new terminal platform agreement with Microsoft. Microsoft Windows Mobile will participate in Vodafone’s three-platform strategy to reduce operational costs while improving services to customers. Vodafone has signed an agreement with Microsoft to develop software to enable the speedy and cost-effective roll out of new services on mobile phones. Over the next five years, Vodafone expects to focus on supporting three standard terminal platforms across its portfolio of mobile phones: Microsoft Windows Mobile, Symbian/S60 and Linux.

Analytical Summary

• Current Perspective: Slightly positive on the Vodafone Group’s new ‘three-platform strategy,’ which essentially names Microsoft and Linux as preferred device platform partners going forward, together with Nokia’s Series 60, as announced earlier this year at 3GSM Barcelona. Limiting the number of platforms for future service initiatives will allow The Vodafone Group to develop and launch products faster and cheaper, win software development complement privileges for further service differentiation, and accelerate its mobile-PC integration plans.

• Vendor Importance: Moderate to Vodafone, as this announcement expands the number of Vodafone-preferred platforms from one (Nokia’s Series 60) to three (with the inclusion of Microsoft and Linux), although the significance of the new additions is difficult to gauge at this point. Both Microsoft and Linux platforms are virtually unknown in the European consumer market – the vast majority of Microsoft Windows Mobile initiatives to date have targeted enterprises, and Linux handset sales outside Asia Pacific are unsubstantial.

• Market Impact: Moderate on the consumer mobile media market, as this latest announcement underlines a key trend in which service providers, such as Vodafone and Orange, are now choosing to streamline smartphone platform development options and work closer with preferred partners to bring new services to market quicker, and at lower cost.

Recommended Competitor Actions

• Vodafone’s ‘three platform strategy’ makes sense in terms of cutting the cost and time to bring new, next-generation content and integrated mobile services to market, and competitors should now reassess their own policies to retain competitiveness into the mid-term.

• Orange should claim that Vodafone’s ‘three platform’ strategy is nothing startlingly original. Orange has also announced a similar relationship with Nokia’s S60 for platform customization, and is also a key member of the Linux Phone Standards (LIPS) Forum which pre-dates the newer Linux foundation, featuring Vodafone.

• 3 Group should look to become a member of the new Linux mobile platform foundation, as Linux’s innovative spirit and low-cost open source business model is well aligned with the 3 Group’s ambition to reinvent itself as a ‘mobile media and entertainment’ provider for the consumer masses.

• All competitors should understand that platform rationalization will also allow the Vodafone Group to better support its multimedia customers, at lower cost, and ‘over the air’ in the mid-term.

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