With unemployment numbers at a 17-year high and few signs of economic recovery on the horizon, Mobile News asks the dealer channel about the challenges it is facing
With the economic stagnation and little chance of a recovery in sight, the mobile industry might be expected to have the state of the economy at the top of its agenda.
And with unemployment rising, firms are cutting rather than raising the number of work mobiles that they need.
Firms serving the public sector are likely to be especially hard-hit, as cuts are expected to result in the loss of 610,000 public sector jobs between 2010 and 2015.
While the Government insists that the private sector will eventually expand to fill that gap, there is little sign of that happening in the near future.
Most of the losses are hitting lower paid workers who are less likely to carry a work mobile, but the evidence from our panel suggests that at the very least, the majority of firms have stopped upping their connection requirements.
Add to that recent news that growth in the economy overall was just 0.1 per cent in the April to June quarter, and continuing market turmoil suggesting things will get worse, dealers could be forgiven for being pessimistic about demand for their products.
Yet although one of our panel said the economy was his primary concern, and the majority said the poor state of the economy was having an impact on their business, for the rest a range of issues far more specific to the mobile business were considered a greater challenge.
One of the key issues was convergence and the move towards unified communications. This was seen as a challenge, in that it requires new skills and conversations with customers. Something that, of course, costs money.
Explaining to customers the benefits of convergence was seen as a major hurdle, and an area where there could be more help from operators, especially those who are pushing their own converged services through the channel – notably O2 and Vodafone through Joined Up Business and One Net.
But convergence is also seen as a solution to the interlinked problems of slim margins and fierce competition.
Cross-selling services reduces churn and opens up new revenue streams from existing customers, said our panel.
The move towards convergence is also a way to get ahead of the competition, offering new ways to win business previously captured by other dealers.
One of our panel highlighted having a broad portfolio as key for dealers hoping to take advantage of convergence.
What all our panel agreed on was that convergence was happening, but that the road to becoming a unified communications provider is unlikely to be smooth for most.
Lack of support
Our panel also raised long-standing concerns about the level of support and service they received from operators and other service providers.
Most dealers rely on an operator partner for both the funding needed to pull in new customers and the quality of service that they are judged on by those customers.
A theme from some of our panel was that this support was inconsistent at best, and inadequate at worst. Some felt too much of the squeeze on profits was being passed on to the channel.
Yet partnerships with operators and other providers are vital to dealers. One of our panel said forming a close relationship with one operator partner was the best way to survive as a large dealer. Without such a relationship, the market can be a lonely place.
And unusually, one of our panel cited the whole sales approach taken in the mobile industry as a barrier to his own attempts to build up a mobile business.
Our panel made it clear that dealers are facing major challenges in terms of the economy, technology and their relationships with the networks and other service providers.
Yet despite the range and scale of the challenges, our panel see these issues as something they can overcome, given enough effort and the right approach.
Full article in Mobile News issue 506 (January 30, 2012).
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