Following up on the previous posts about the Marks & Spencer MVNO – first post, second post – I contacted FutureText and asked if mobile industry expert Tom Weiss could give a perspective. Tom was Vice President Key Service Introductions at T-Mobile until August 2005 and was responsible for the launch of T-Mobile premium services across Europe, including the T-Mobile Euro2004 campaign. So he knows a thing or two about mobile — and in particular, is well placed to comment on the M&S MVNO and wrote a good few pages about the subject in his recent book, Mobile Strategies.
Here’s Tom’s view:
This is not M&S’ first move into the mobile space – they originally launched an indirect access based product targeted at M&S card holders only – so I’m not surprised that they’ve gone down this route.
In terms of strategy, they are probably sensible to adopt a price driven MVNO as they have little product synergy – required for a bundling approach – and their brand is probably not strong enough to attract the high volume users necessary for a brand driven MVNO.
Basing their service on price, they need to take advantage of their low-cost distribution network and piggy back cheap phones and a good network deal with users who will make a lot of calls, and therein lies the rub: Except for their food products, M&S still appeals predominately to the older generation, and are unlikely to get a decent proportion of high volume users on their network.
Enough of the theory, let’s check out their package: they are indeed offering low cost phones on a pre-pay deal. Either they or the Operator are subsidising the handset by around £20 each item, and M&S will be getting about a third of the revenue from the mobile phone bill for themselves. The service would therefore make a profit after a customer has bought £60 worth of top-up vouchers. Although not much for a young phone user, is a lot for most of the potential customers that M&S can bring in, and I would expect a lot of users to buy the phone for incoming calls only. Now, if M&S has negotiated a percentage of the termination fee from T-Mobile then the whole package could be a lot more attractive.
Overall I think I’d give it 5/10 – very strong on distribution and with a good cost advantage over traditional operators, but weak on the customers that they are likely to attract. Whether we’ll see them around in the long term will depend on whether they can generate sufficient revenue from the customers they are attracting.
There’s a lot more industry commentary of this quality at Tom’s site, http://www.mobilestrategies.futuretext.com/. I thoroughly recommend adding it’s feed to your collective.
As for M&S Mobile… well, let’s see how they get on shall we?