DENVER, United States-After several months of fruitlessly chasing the horizontal market of international roaming business users, Iridium announced a refocused marketing plan aimed at the vertical industrial segments and a new pricing plan featuring flat-rate airtime costs and cheaper handsets.
Iridium’s new chief executive officer, John Richardson, called the refocus “a new approach designed to address the lessons learned in the first months of service. We now believe we have the right recipe for success going forward.”
The new marketing plan targets the vertical markets of maritime, agriculture, forestry, heavy industrial, governments, military and disaster relief. Richardson said these customers are more accustomed to satellite services and are familiar with their uses and limitations.
Consumer market users expected the Iridium phones to function like any other cellular phone, which led to disappointments with the handset’s size and service restrictions-such as poor in-building and urban use.
Richardson estimated the vertical industrial market has 1 million potential users.
Iridium also intends to develop solutions specifically for each of these segments, offering packages that include extra hardware like batteries and antennas. Iridium hopes to reach these users through resellers already involved in each industry. This marks a departure from distribution through cellular companies, a tactic Richardson called a mistake.
Finally, the company unveiled a new pricing plan that features dramatically lowered airtime fees and product costs, which it planned to begin implementing 1 July.
Under the new pricing structure, international calls will cost a flat rate of US$3 a minute. Domestic calls, or calls within a given country or region, will cost between US$1.50 and US$2.50 a minute. Finally, calls from one Iridium phone to another, which use only the Iridium network, will cost US$1.50 a minute.
“We feel this will prove attractive to the industrial customers concerned with the state of the landline infrastructure in their area,” Richardson said.
Plans call for Motorola and Kyocera to lower the costs of handsets so they have a suggested retail price of less than US$1,000, while Iridium pager costs could fall to US$350.
Richardson said Motorola-which has an 18-percent investment stake in Iridium-has committed a sales force of 200 to help sell the service to the industrial market. This, along with the lowered handset pricing, suggests Motorola intends to stick with the struggling company in the face of speculation it would abandon Iridium to minimize its losses.
Richardson said Iridium will continue to sign up business users requesting the service, and plans to re-address that market once handsets shrink in size and price to more closely match that of traditional wireless phones.
“All these efforts to reach these industrial customers does not mean we have given up on the business customer,” Richardson said, although its US$250 million branding and advertising campaign aimed at this market no longer exists.
While Iridium remains in negotiations with its lenders, the company said to expect a positive announcement in next few weeks, which analysts believe means the company will reveal a restructured debt framework.
