Helio sought to capture the hearts, minds and wallets of its target market-young, affluent, tech-savvy, Web-browsing and messaging enthusiasts-by designing a handset that would deliver ease-of-use in a stylish package.
Pantech, which has sought a higher profile and greater sales in the United States, had already made the Hero handset for Helio as well as MVNO Disney Mobile’s first handset. It had an established foothold at AT&T Inc. (then Cingular Wireless) and Verizon Wireless.
With a dual-slider design in hand, including the all-important hinge mechanism, a three-dimensional mockup and a raft of user-interface requirements, Helio tapped Pantech for a device that became the Ocean, now its flagship device selling at $300. The device manages to pack in many of the features that Helio is using to lure subscribers who tend to rack up relatively high data ARPU.
Helio’s J.W. Kim, a former employee at SK Telecom, one of Helio’s corporate parents (the other is EarthLink), was intimately involved in the project from its inception. The dual-slider design, he said, offered a way to combine phone, entertainment, messaging and Web browsing functions for Helio’s 18- to 32-year-old target audience.
Taking risks, aiming for rewards
“We wanted to hit the commonalities between young consumers and prosumers, combining productivity and fun,” Kim said. “But we didn’t want to turn the device into a business phone.”
A “pill” form factor-think rounded edges on a rectangle-addressed this concern, though Pantech scrambled on the placement of internal components. According to Kim, Pantech had been entertaining a “QWERTY vision” at a time when Helio sought a new design. Thus the two parties had “an alignment of visions,” Kim said.
“Pantech had to take a lot of risks to participate in this project,” Kim added, in reference to the process of translating visions into a tangible product. “We really wanted a ‘wow’ factor device to lead our portfolio.”
Pantech USA executives were traveling last week and unavailable for comment.
(Helio also offers two other handsets, both by Samsung Electronics Co. Ltd.: the Heat at $100 and the Drift at $145, prices which include two-year contracts.)
Kim said the Ocean addresses ease-of-use issues and pointed to the five-tab response to the handset’s search function. Type in a word and the user can select from five branded responses including Yahoo!, Google, Amazon, Wikipedia and Yelp, The user can flip between these without re-entering the search term.
“It’s a more approachable technology,” Kim said.
This, of course, is the key promise of the much-hyped iPhone due next month from Apple Inc. The Ocean, designed well before the iPhone’s announcement in January, reflects that usability (imagine!) is on a lot of minds in the industry. Now that Helio has what it believes is the right approach for the high-end of its portfolio, the Ocean will serve the MVNO as the first in a family of iterations. Over time, its feature sets will be driven down into the more phone-like handsets in the MVNO’s portfolio, Kim said.
True to form
Tuong Nguyen, handset analyst at Gartner, sampled the device at CTIA Wireless 2007 in March and spoke with Helio about its business model.
“I like the way they’re going about it,” Nguyen said. “They’re offering devices, like the dual-slider Ocean, that are different. So are their services. Their target demographic is familiar with MySpace, messaging-all the neat knick knacks that operators would like all of us to be using. That’s partly how they manage to get their high ARPUs.
“The problem I have is their pricing,” the analyst added. “It’s a little hefty. The service plans are kind of high and, on top of that, you’re paying for devices with little or no subsidy.”
Nguyen gave the MVNO points for refreshing its portfolio-the Ocean is its fifth handset in a year-with a device that closely aligns with its evolving services.
“They launched with two devices, one of which was a bit chunky for a cool device,” the analyst said. “So they’re upgrading their offerings. They’re sticking with their commitment to launch new services and devices to cater to their customer base.
“The question is: how long can they do it? They have to operate in the red for at least two more years before they see solid returns. When they launched they talked about getting three million users. They’re just not on pace to attain that.”
With Helio’s demographic possibly focused on data, Nguyen suggested that the MVNO might recast its four basic service plans (plus an a la carte offering)-$65/500 minutes, $85/1,000 min., $100/1,500 min., $145/unlimited min.-with fewer minutes, at a lower cost. At $300, the flagship Ocean also will be compared to more subsidized offerings elsewhere.
“They could de-emphasize voice and bring prices more in line with consumer expectations,” Nguyen said. “You have giants out there. Consumers have been trained to not spend more than $100 on a handset here.
“Helio has a good thing going,” Nguyen concluded. “It’s just a question of how long can you maintain your funding to serve an audience that’s not served by the top-tier carriers’ mass-market approach.”
