Fonehouse managing director Clive Bayley on the year ahead for the dealer market, and the complexities and pitfalls that await it
“There will be consolidation but it will also be a year when new ideas to combat recession and to compete in a changing market are tried.
“A lot of large companies will look to downsize or merge, and spend more on brand and less on organic growth. But in a scramble to dominate or hold on to market share, new attitudes and corporate philosophies will emerge.
“The old guard will become prudent, and newer brands will appear adventurous.
“B2B will still dominate the ‘how-do-I-earn-a-living’ psyche as it is easier for smaller companies to grab share [that way].
“And predators will look to buy up those who gain traction [in B2B] as it is cheaper for them than getting sales themselves. Targets can be more easily valued now because of ongoing revenues.
“Time, perhaps, for B2B dealers to increase their sell-out price.
“Franchising will continue to grow. There will be a lot of healthy competition in that area. New ideas and formulas will emerge. The channel will get more complicated, and its players will need to analyse activity very carefully.
“Competition among network operators will intensify, and airtime prices could increase because of the dominance of smartphones and the massive costs they impose on operators to maintain and improve their infrastructure.
“Higher VAT will hike prices this month (January). At the same time, Wi-Fi links may help pull airtime bills downwards as people learn more ways to connect more cheaply.
“Which leads to this eternal question of how long subsidy, the lifeblood of our industry, will remain in place? Certainly, handset subsidies will flow less at the point of sale as the industry looks to hang onto cash.
“It will be a dangerous year for some, and an entrancing one for others. Just make sure you deal in reality in 2011 as dreams may turn to nightmares for the risk takers and the too trusting. Having said that, 2011 will make some people very successful.”