As the new No. 1 carrier in the United States, Cingular Wireless L.L.C. is in the position to greatly tighten its control over its handset suppliers. And with a subscriber base of nearly 46 million, the carrier has influence enough to develop a Vodafone-style handset line-up that would elevate its own brand over those of its phone vendors.
Michelle Mindala, executive director of Cingular’s supply chain, declined to offer specifics on the carrier’s post-merger phone strategy, but she did say that the carrier would work to expand its exclusive handset offerings and improve and unify its services.
“I think it’s a natural assumption that Cingular will change their business relationship with their handset suppliers,” said Bob Egan, head of consulting firm Mobile Competency.
Cingular is still in the midst of determining exactly what those changes will be. The carrier today offers a variety of handsets from Nokia Corp., Motorola Inc., Sony Ericsson Mobile Communications L.P., Siemens AG, Samsung Electronics Co. Ltd. and LG Electronics Co. Ltd., as well as smart phones from Research In Motion Ltd. and PalmOne Inc. Through AT&T Wireless Services Inc., Cingular offers the advanced NEC Corp. 525 and two Audiovox smart phones. Cingular also offers two W-CDMA devices, one from Nokia and one from Motorola, in the handful of cities where AT&T Wireless launched its W-CDMA network.
“We definitely want to have the right and wide array of products from the top suppliers,” Mindala said.
Mindala declined to say whether Cingular would drop handset suppliers from its line-up or whether it would add any new suppliers. She said that much of the carrier’s handset strategy is still being worked out.
However, Mindala said Cingular wanted to “continue to drive the Cingular experience,” explaining that the carrier would unify its services and branding through its handset offerings. Specifically, Mindala said the carrier would develop specifications for its handset suppliers that would require Cingular phones to include instant-messaging software, e-mail services and standardized Java application programming interfaces. Most wireless carriers require such specifications for phones sold on their networks, although the size of a carrier’s subscriber base generally dictates how many requirements it can foist onto its handset suppliers.
For example, the world’s No. 1 carrier Vodafone Group plc now requires its handset suppliers to position the Vodafone brand in an equal or more prominent spot on a device than the handset maker’s own brand. The labeling requirements come in conjunction with a bevy of software requirements and a standardized, Vodafone-branded user interface.
In addition, Vodafone and others have begun refining and unifying their phone strategies as a way to improve their standing among customers and decrease churn. Thus, customers will shop on the basis of carrier services rather than phone brands.
As for Cingular, Mindala said the new Motorola V3 is an example of the carrier’s handset strategy. Cingular is the only carrier in the United States to offer the $500 clamshell-style phone. Mindala said Cingular plans to offer additional exclusive handsets as a way to differentiate itself from the competition.
Further, Mindala said Cingular would offer a range of EDGE-capable devices to take advantage of its new network, but Mindala declined to discuss the carrier’s W-CDMA handset offerings. She said the carrier would launch additional W-CDMA services late next year, and it would continue to offer the two W-CDMA handsets from AT&T Wireless in the meantime.
“I think the emphasis now is ease of use and consistency of feature implementation,” Mindala said. “We definitely have designs to promote a well-crafted user interface.”
However, Mindala made a point to state that Cingular would work with its handset suppliers on various specifications and branding issues, and there would be some level of flexibility in how the carrier’s specifications were implemented.
Mobile Competency’s Egan said it would be a “business mandate” for Cingular to use its prestige to more directly control the look and feel of its handsets. Egan said other U.S. wireless carriers like Sprint PCS and Verizon Wireless are taking greater control over their handset offerings, with positive results.
Indeed, Egan said Cingular needs to “stop the bleed” of customers from its network to those of its competitors, and it might be able to do so by taking a Vodafone-style approach to its handset line-up.
“I think you’re going to see them focus more on three or four key suppliers,” Egan said, pointing to Nokia, Sony Ericsson and Samsung as potential Cingular partners in the future. RCR
