T-Mobile to Bring MyFaves to Europe

| March 16, 2007| Wireless Services - Europe | Show Update

Analyst: Emma Mohr-McClune

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

On March 14th T-Mobile International announced plans at CeBIT to bring the high-profile T-Mobile US myFaves service to Europe. The myFaves service will launch in Germany sometime this year, and potentially in other T-Mobile markets, too. The service allows users to see the photo or icon displays of five chosen friends or family numbers on the display of their myFaves handset. Tariff details are not yet available.

Analytical Summary

• Current Perspective: Positive on T-Mobile’s decision to launch myFaves in Germany, as this service represents an original and attention-grabbing vehicle for family and friends tariff modelling. myFaves has seen success in its incubator T-Mobile US market, and it will be a visually distinctive, differentiated and ‘fun’ offer in Germany. myFaves will also allow T-Mobile to nurture a new, cooler image for itself – in line with the operator’s strategy to create more brand resonance with this sector.

• Vendor Importance: High to T-Mobile Germany, as reaching out to youth communities and families is a major element of the operator’s recovery strategy in Germany. Although myFaves is neither a ‘true’ social networking nor Web 2.0 tool, it will encourage users to start creating personalized buddy groups on the mobile phone, and that is a positive first step in the right direction.

• Market Impact: High on the German mobile market, because myFaves will challenge all competitors to re-think their propositions for families and friends. myFaves is visually superior to a standard ‘family tariff,’ in that it offers users a highly marketable visual ‘buddy’ display, complete with a photo or icon of each designated number, without the fuss of presence or Push To Talk data connectivity.

Competitive Positives

• myFaves will afford T-Mobile Germany a highly original and visually differentiated family and community tariff proposition. Family and friend tariffs are not altogether unknown in Germany, but none deliver the visual address book marketing power of myFaves.

• In the US, T-Mobile US has extended its myFaves device portfolio to 25 devices offering a high variety of myFaves firmware-enhanced options. In Europe, T-Mobile will be able to draw on this existing portfolio. It is likely that this service will launch with a fair handset choice.

• In the US, T-Mobile US markets myFaves with an ‘Individual myFaves Plan’ and a ‘Family myFaves Plan,’ allowing it to target both the community-oriented youth sector and the more diverse family sector. Although T-Mobile Germany has yet to reveal details of its own myFaves tariff options, it is likely that it will follow the same lines.

• In the US, myFaves has been used to drive interest for non-voice services via myFaves devices. Importantly, myFaves firmware now appears in mobile music and mobile e-mail-centric devices such as the Motorola RAZR and BlackBerry Pearl. T-Mobile Germany could well decide to take the same line, to encourage voice users to upgrade to a feature phone for wider utility and spend.

• The visual component of myFaves makes it highly marketable, and TV spot advertising for myFaves in the US has been comedy-fuelled. German mobile competitors should make a study of all T-Mobile US’ TV spot campaigning to date to get an early taster of the kind of promotion T-Mobile Germany will be undertaking with myFaves (all TV spots are currently viewable on YouTube).

• myFaves will allow T-Mobile Germany to reinvent itself as a youth-centric operator, correcting its brand profile weakness in this sector. Competitors should note that the T-Mobile myFaves online demo is a German-language duplication of the US demonstration, and much of the youth-centric language, sales arguments, patter and visual presentation has been adopted, too.

Competitive Concerns

• It is entirely unclear whether T-Mobile Germany, or any other T-Mobile market, will follow the same myFaves tariff model as the US service. In particular, it is not known whether T-Mobile Germany will implement the same ‘any network’ criteria for the five designated numbers in the same ‘unlimited calling’ context. The appeal and ultimate success of myFaves hangs on such details.

• T-Mobile US has been able to position myFaves as a national service, and roaming is not inclusive in the tariff’s flat rates. Furthermore, T-Mobile US myFaves users have to manually dial the phone number of one of their designated favourite numbers (including the international dial-code) when roaming. Although roaming is not considered to be a big issue in the US, it is a big issue in Europe, where consumers more regularly hop borders. Roaming will be a bigger issue for myFaves in Europe than it is in US.

• myFaves is neither true Web 2.0 nor a social networking tool. It is a fancy visual address book, aligned with a community/family tariff. Deutsche Telekom’s CEO has listed Web 2.0, social networking and mobile-PC service innovation as important ‘next steps’ in the operator’s service development, but myFaves misses the mark on all these prerogatives.

• Subscribing to myFaves, T-Mobile Germany customers (both new and existing) will probably be required to upgrade to a myFaves-enabled handset. At least, this has been the case for T-Mobile customers in the US.

• At this point, T-Mobile Germany has given no indication of its myFaves launch date in Germany, or even whether this service will be made available in other T-Mobile markets, notably the UK and the Netherlands. With every passing week, the competitive response opportunity grows.

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