Vendor-network stalemate on handset revenue share

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Mobile News understands Vodafone has sounded out certain manufacturers about such a scheme, with potential revenue share arrangements meaning manufacturers would cut handset prices to networks in return for a cut of the users spend.

One source close to Vodafone said: The networks are constantly talking about revenue share with manufacturers internally. But nothing ever happens because the manufacturers wont allow it.

A manufacturer source said: One network has mentioned it, offline. There is certainly nothing concrete, and no manufacturer wants it.

Nokia UK managing director Simon Ainslie told Mobile News Nokia had no interest in cutting its prices. Ainslie said: The operators are always pushing for us to reduce prices. But the three years of development that goes into a device is never captured in these discussions. If youre going to lead breaking technology, someone has to pay for the research and development.

We prefer people to pay good money for our products. The N95 has got more power and capability than a laptop. So its not in our interest to see prices cut and products being given away in that sense.

Ainslie added the complexity of such an arrangement would deter Nokia.

Another manufacturer source said:The UKs subsidy model already means expensive goods are devalued in the eyes of the consumer. The last thing manufacturers want is this to be eroded further by revenue share.

Manufacturers argued revenue share would only benefit the networks, and they would prefer to retain the current pricing structure. There is no extra value to be had in such a deal. It is a win-lose arrangement, said a source.

Manufacturers want arrangements that will build businesses. It doesnt add up, and nothing is going to happen.

But a source close to Vodafone said the networks would not back down: The networks have cut costs everywhere through strategic partnerships and the renegotiation of deals with distributors and retailers. But their relationships with the manufacturers have gone unchanged. The manufacturers dont want change. But the pressure from the networks on them to do so will increase.

Meanwhile, O2 is rumoured to have negotiated a revenue share deal with Apple for the iPhone, which it is widely expected to get the exclusive rights to in the UK. Online retailers are already listing the iPhone on O2. But O2 maintained reports linking it to the iPhone were rumour and speculation.

 

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