DUBLIN, Ireland—The imminent launch of the XDA, an O2-branded mobile device manufactured specifically for that operator, is clear evidence that European operators are demanding more input into handset development. However, it is more likely to be an extreme but isolated example of operator control in a fragmented market where vendors will continue to have the greatest input into handset development than a sign that other operators are about to muscle in on the vendor market.
The XDA is undoubtedly an interesting concept from a marketing perspective. The personal assistant product has been specified by BT Cellnet, the forerunner of O2, and will be built by Korean electronics firm HTC, but will carry no HTC branding. For the first time, a European operator is marketing a device developed specifically for its customers without a vendor brand in sight.
It is not unusual for operators to have exclusive deals with vendors on certain products. For example, T-Mobile has three months of exclusivity on a new Sony Ericsson-branded Bluetooth pen it plans to launch later this year. While the product was not developed specifically for that operator, the fact that it has secured guaranteed exclusive supply means that few non-T-Mobile customers will get their hands on it before 2003.
But having a handset tailor-made is uncharted territory, and many observers are unconvinced that it will prove successful. John Fletcher at Analysys in London feels other operators are unlikely to pursue a similar strategy.
“There are some instances of operators customizing handsets. (Orange has worked closely with Nokia to customize its handset interface to Orange specifications in the United Kingdom.) But the only other example of an operator having a unique handset was Orange’s mobile video phone, which was developed to run on GSM and HSCSD (High Speed Circuit Switched Data) and was not a commercial success,” Fletcher said.
There are other reasons why Fletcher believes the O2 handset will struggle to meet the operator’s expectations. “The O2 brand is completely new to consumers, so what is the value in putting it on a handset? If the company had secured an exclusive deal with an established vendor such as Nokia, it would be much more attractive,” he added.
“O2 is not a strong enough brand to compete with the likes of Nokia or Ericsson and could not compete with their economies of scale. Perhaps the XDA is the unwanted legacy of a decision made by BT Cellnet management.”
The only similar confirmed development among other operators is at Orange, which announced last September that it is working with Danger. Danger is a U.S.-based company that is developing a combined data device called the Hiptop—a purpose-built unit combining phone and personal digital assistant (PDA) capabilities, Internet browsing, instant messaging, e-mail, personal information management, streaming video games and camera capability, according to its developers.
Like the XDA, the Hiptop is designed for use on a General Packet Radio Service (GPRS) network, and Orange expects it to retail for around
