Mobile Sands

January 26, 2009

Nokia to launch MVNO in Japan with Vertu

Filed under: Uncategorized — AJ @ 10:58 pm

Nokia, so far, has not succeeded in penetrating the Japanese phone market, so it is understandable that they might want to enter the market using the MVNO model.  What surprises me is that they are creating an MVNO around Vertu – their luxury phone line better known for the diamonds used on its keyboard than for what it does, rather than creating one around Ovi – their applications platform.

Voce, the one luxury MNVO that was launched in the US, did not do great. It was launched in 2005 with a $1500 origination fee and $500/month voice plan. By the time it closed in 2008, the sign-up fee was $500 and the unlimited voice plan was $200/month.  Still they did not have enough subscribers.  Not only was the service too expensive, Voce did not support data. Yes, that means no Blackberrys.

For the MVNO model to succeed, the MVNO needs to target a market segment:

1. Where the MVNO will have a lower customer acquisition cost than its network operator partner

2.  That the network operator really does not want to go after because of any number of financial or structural reasons

3. Is willing to pay more per-minute (or per-MB) for the service than what the network operator charges.

Virgin Mobile, Tracfone and Jitterbug are three US MVNOs that have been reasonably successful in the US market and all of them meet the criteria above.  Others like Voce, ESPN and Disney did not.

Most likely, Nokia’s market research shows that there is a large number of very rich Japanese customers who just want a bonafide luxury phone to make simple phone calls.  They would love to buy this phone in a luxury store in Ginza, and will willing to pay more per minute to do so. But I would be surprised if  NTT DoCoMo (Nokia’s network operator partner) would not want to go after this segment themselves with a diamond-studded Panasonic phone.  For now, I will give the smart guys at Nokia the benefit of doubt and wish them good luck.

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