Dollars drifting down the value chain and the fight continues

Handset OEMs seems anxious about increasing commoditization of products (all the phones at a particular price carry similar features.. am i wrong?), decreasing costs, competition from new corners (mind iPhone & Blackberry) and the most worrisome cause seems to be their one time interaction with the buyer. Handset developers want to acquire a larger share of customer’s wallet by having a continuous interaction with the handset buyer through handset’s lifecycle. Nokia’s OVI, Apple’s iTune and Samsung announcing its intention to enter into mobile content business at MWC 2008 underlines this development. Apple’s Steve Jobs showed  his sharp business acumen when he launched iTunes clearly emphasizing that it is an uphill task to survive in a business where your customer does not come back to you. He knew its not possible to run a profitable business continuously by just selling iPods, he wants them to come back to Apple even after buying iPod. NOKIAs and Samsungs are late to understand this fact.

These recent developments of handset OEMs getting into mobile content business  also starting another war between OEMs and Operators. Operators worldwide want increasing share of their revenues and profits from mobile content and OEMs entry into their turf is signalling conflict of interests. This conflict seems to turn real if we believe this report T-Mobile to Ditch Several Nokia Handsets – Report (http://www.cellular-news.com/story/29663.php).

It would be interesting to see how NOKIA reacts to such moves by operators and how many operators follows T-Mobile. One thing to be noted down is, ‘in developed mobile markets handsets are offered bundled with mobile plans unlike India’.

One thing is clear OEMs are not happy with just one time hardware purchase and operators just dont want to act as ordinary “PIPE”.