Helio L.L.C. made its long-awaited debut in the wireless marketplace last week with two high-end handsets linked to social networking site MySpace.com and plans to have its services available through 1,000 retail locations by the end of the month.
Helio’s target audience is young and will have to be affluent, given the MVNO’s prices. The mobile virtual network operator’s two exclusive handsets, the black Hero and the pearly Kickflip, will cost consumers $275 and $250, respectively. Helio offers three All-In service plans that include all of its data services, including the MySpace.com connection, a reviews-driven game channel, 3D games, messaging services, and the ability to ask for and give other users content—or in Helio terms, “gifting” and “begging.”
“Helio is custom-built for the lifestyle of young people who have their mobile device at the center of their universe,” said Sky Dayton, Helio’s chief executive officer.
Helio’s service plans start at $85 per month for 1,000 anytime voice minutes, then bump up to $100 for 1,500 minutes and $135 for 2,500 minutes. The plans include unlimited use of all Helio data services and unlimited night and weekend calling. The MVNO also has an a la carte plan that includes 500 anytime voice minutes for $40 per month; multimedia services are pay-as-you-go with data transmission at 2 cents per kilobyte and messaging ranging between 10 cents for text and 25 cents for multimedia. All Helio games can be “rented” for a week for $1 or purchased outright for $6.
According to Stuart Redsun, Helio’s executive vice president of marketing, people involved in the company’s consumer research told Helio that “they’re really tired of having to pay all the additional things just to text message or video message.”
Helio also introduced a service it calls H.O.T., or Helio on Top, which allows users to choose live content feeds to be pushed to their phone’s idle screen when updates are available. For hipsters who opt to buy both Helio’s handsets, the company promises that it will be simple to sync and activate whichever phone they choose to carry that day.
The first products available from the MVNO are actually aimed at the Korean-American segment under the “Helio powered by SK Telecom” brand., tying in with parent company SK Telecom that along with Earthlink Inc. funded Helio to the tune of $450 million. The Korean versions of the devices have Korean-language user interfaces and keys with Korean characters, and were available when the service launched last Tuesday in markets such as New York and Los Angeles.
Helio’s handsets and services are available through its Web site and a toll-free number, and the company said it plans to roll out nearly 1,000 retail locations by the end of this month and about 3,000 by the end of the year. The MVNO has distribution arrangements with companies such as Fry’s Electronics, Tower Records, FYE, Sam Goody and Suncoast. According to Helio, its services also will be available at more than 100 college and university bookstores—though most students are about to head home for the summer—and through stores such as Wireless Giant and Wireless Toyz, plus master agents across the country. Redsun also said that the MVNO “will have a number of Helio-owned stores by the end of the year.”
Helio said it has relationships with both Verizon Wireless and Sprint Nextel Corp., but its first two phones run on Sprint Nextel’s CDMA2000 1x EV-DO network. The roughly 27,000 legacy Earthlink Wireless customers that have been turned over to Helio have devices that run on Verizon Wireless’ CDMA network.
Redsun said that “over time, we certainly will have access to both” networks.
“The pricing seems quite high, if you were just looking at it for the voice minutes,” said Yankee Group wireless analyst Marina Amoroso, who added, “Helio isn’t really selling itself on the value of the offering. It’s really trying to sell itself as a lifestyle experience.”
Amoroso noted that the youth market that Helio is targeting has an even higher penetration rate than the general population—around 90 percent—and that according to Yankee Group research, less than 1 percent of cellular customers are willing to pay more than $199 for a handset. Also, Amoroso pointed out, it will take some time for Helio to gain enough scale to support its gifting and begging feature—since the feature is only available through the handset. Redsun said that Helio is working on making the feature available through other applications.
With competition both from traditional wireless carriers and other upstart MVNOs trying to target the lucrative youth market, Redsun said that Helio is confident it will stand out from the crowd.
“The one thing we’ve seen from other entrants in the MVNO space trying to target similar consumers is, they are making their differentiation only in one area, and that’s content,” said Redsun. “As long as that content is available on TV, on a Web site, in print or in other [places], consumers have told us … it’s not that compelling.”
In contrast, Redsun said, Helio has exclusive content and applications, the coveted MySpace connection, a custom user interface, and a brand approach “that consumers already told us they love.”
And Helio is relying on those customers to share the love. Rather than a huge media campaign, Redsun said, the MVNO plans some advertising in Korean-focused media but mostly wants to take what it calls a “fuel the fire from the inside” approach and “[let] our core customers sell Helio and promote Helio for us.” According to the company’s Web site, Helio customers who refer new customers will receive a bill credit equal to the value of the service plan that the new customer activates.
