3 Skypephone Hype

Yesterday the 3 Group presented their 3 Skypephone, for sale at November 2nd in the UK and Italy for about 100 US-Dollars bundled with a pre-paid plan, or free if you choose a 18-months contract. It is basically a cheap Internet-ready 3G mobile phone with a 2 megapixel camera. It doesn’t even have a cool [...]

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- Date: Tuesday, October 30, 2007 Time: 1:11 pm Discussion: View Comments Category: Product and Service Innovation, Telco2.0 Tags: business model, VoIP Print this blog post!

Yesterday the 3 Group presented their 3 Skypephone, for sale at November 2nd in the UK and Italy for about 100 US-Dollars bundled with a pre-paid plan, or free if you choose a 18-months contract. It is basically a cheap Internet-ready 3G mobile phone with a 2 megapixel camera. It doesn’t even have a cool user interface, or special easy to use Skype buttons (other than the big Skype button in the middle).
The group hypes the ability to call or chat with Skype buddies

anywhere in the world, anytime… totally free

this is not entirely true. Skype-to-Skype calling and IM face high roaming charges if the user initiates a call or IM session outside a 3 network. While the phone is bundled with a mobile plan, Skype-Out calls are of course prohibited, as they would cannibalize a mobile provider’s own business – unlike installing Skype on any Internet-enabled phone that can handle the mobile Skype client.

All in all, one has to be careful to hype the phone too quickly:

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The phone is clearly marketed to a lower-value mass market and will push 3 Group‘s X-Series proposition and Mix & Match tariff in the UK. But how many of these target users are used to Skype calls, with the quality still lagging behind very competitive plans by T-Mobile and Orange over a reliable network? Yes, the voice quality is nicer – if you don’t loose some packets, drop calls, and have someone to chat with on Skype. We notice that with the minute plans here in the US, Skype becomes more a last-resort type of voice chat tool, or a quick conferencing tool – a value proposition mobile carriers can and should answer with a better user interface for enabling conferencing calls.

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The 3 Skypephone price tag was established predicting a certain mix between the offering choices of pre-paid versus plan. As a result, the free phone with a plan is highly subsidized and calls for a 18 months commitment. 3 Group has missed the opportunity to strengthen its offer with a short-commitment contractual proposition, and when are mobile operators going away from handset subsidizing with more innovative business models, as discussed and piloted by Sprint?

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The software platform is Qualcomm BREW. Though it has been around since 2001 it was not until September 2006 in Europe that O2 and TIM decided to deploy BREW for their gaming platforms. Mainstream mobile GSM gaming platforms use Java J2ME and Symbian environments.

I think that Vodaphone will counter with their recent innovations at their mobile IM client, and they will revise their Best for Both tariff plans to match up to the minute/SMS quota flexibility – like the T-Mobile Flext rate and 3 Group’s Mix & Match. At T-Mobile on the other hand we will see major improvements to their IM Web’n'Walk offerings before X-Mas, especially around identity management, buddies, and favs. While the T-One phone failed for a variety of reasons, a service offering of using a combined WiFi / 3G / 4G/ DVB-H approach is more likely to be successful from a business perspective. I don’t think that 3 Group’s current offering will substantially eat into the subscriber uptake rate of T-Mobile or Vodaphone.

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