SFR Takes on iTunes: Competitive Realism Kicks In

On November 8th SFR significantly undercut its per track music download pricing from EUR 1.99 per track to EUR 0.99, in line with iTunes’ own per track pricing. SFR has also undercut iTunes’ own whole album download pricing with a new EUR 9.90 rate, as opposed to iTunes’ EUR 9.99. SFR also offers a pack of 20 track downloads per month for EUR 14.90, bringing the per track average price to EUR0.75.

Recommended Competitive Responses

► Bouygues Telecom must recognize and address this price offensive, and react accordingly, as SFR’s new pricing strategy now makes its more competitive than L’offre Musique via i-mode on both counts of lower-price and superior speed (3G).

► Universal Mobile has failed to evolve into the music-centric brand which was once anticipated for Bouygues Mobile’s subsidiary brand. Despite its strong Universal Music connections, the headline proposition of this brand is still cheap voice and SMS. Bouygues Mobile now needs to think seriously about its mobile music strategy in for 2007, when it is anticipated to start rolling out 3G and HSDPA.

► Orange France must launch a major marketing campaign to match SFR’s pre-Christmas aggression, and effectively address SFR’s claim that it is the ‘first mobile and PC music service’ head-on. Orange France should not underestimate the strength of SFR’s ambition in this space.

► iTunes France must anticipate a wave of competitive response from other mobile music players, namely Orange France and Bouygues Mobile – and should start considering its options for a potential price war.

► iTunes France should consider going on the competitive offensive by cutting its pricing for its non-music content downloads, notably its ‘talking books,’ video clips and Podcast services. Mobile operators may be able to match iTunes on per track and album pricing, but they will be less willing to lower pricing on other content at this early stage of the market.

The Vodafone Group Unveils Its ‘Three-Platform Strategy’

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.

Recommended Competitive Responses

► 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.

3 Group Aims to Disrupt Market with X-Series

On November 16th 3 Group announced the global launch of the X-Series from 3, in partnership with Skype, Sling Media, Yahoo!, Nokia, Google, eBay, Microsoft, Orb and Sony Ericsson. 3 Group will launch X-Series through all its 3 markets in the coming months, starting with 3 UK on December 1.

Recommended Competitive Responses

► Although 3 Group has yet to unveil the X-Series pricing flat-rate, competitors should steel themselves for an especially low-price mobile data challenge.

► Competitors should not disrupt their own Mobile TV strategies on account of 3 Group’s Sling service. SlingBox uses a bandwidth intensive TV streaming technology (especially on the upstream) which will make for unsatisfactory viewing over a 3G network, on a 3G device. However, in the mid-term, this capability will become more challenging as 3 Group rolls out its HSDPA network, with HSDPA-enabled handsets.

► T-Mobile International should recognize X-Series as the most compelling and complete competitive response to its own T-Mobile Web ‘n’ Walk strategy to date.

► Competitors have been given early warning of X-Series’ arrival (the initiative isn’t expected to appear in non-UK 3 markets until 2007), and should prepare a competitive response accordingly.

► Competitors should be ready to point out the weaknesses in this X-Series initiative, namely its inability to address the mobile data international roaming cost challenge, and the lack of announced messaging client interoperability.

► The one, immediately addressable challenge within 3’s X-Series is its ‘unlimited IM’ proposition. 3 Group’s new aggression in this space may force some operators to market quicker than anticipated.

Recommended End User/Customer Responses

► Consumers attracted by the prospect of free Skype-to-Skype calls on a mobile phone should be aware that this is one of the first (if not, ‘the’ first) mobile operator initiatives on a Symbian handset, and should expect other mobile operators to follow suit shortly.

► Consumers are strongly advised to avoid Skype Mobile calling from within a foreign market, as the mobile data roaming charges are highly unpredictable.

Motorola Buys Middleware Vendor Good Technology to Further EM Strategies

On November 10th Motorola announced its plan to buy Good Technology, a leading provider of mobile middleware with 12,000 enterprise customers. The vendor promises to maintain Good’s multi-device strategy and hopes to advance its position as a provider of seamless mobility.

Recommended Competitive Responses

► Other middleware vendors should be quick to point out that Good may no longer be viewed as device-agnostic in comparison to their own solutions.

► Sybase should point out how, with the exception of devices themselves, it provides the most robust solutions set (Information Anywhere Suite) of application enablement, email enablement, device management and security offerings for large enterprises.

► Nokia still needs to work on its messaging for its own integrated solutions for enterprise customers. While Intellisync had a good reputation for not only mobile email but for device management and file synchronization solutions, Nokia is not getting the traction it should have from the acquisition.

► Palm should work with Motorola on a joint statement to Palm Treo/Good customers on the future of the middleware platform.

► RIM should tout its own integrated solution set with IT management capabilities, as providing both the best purpose-built email platform and IT management platforms, which are possible due to the tight integration between software and hardware.

Recommended End User/Customer Responses

► Good customers should ask Motorola/Good about support for their non-Motorola devices and make sure there is no reason to worry about the intended upgrade plans that Good has had for its middleware. Palm customers in particular should make sure there is no reason to switch solutions.