It’s been said that football is a game of inches, a description that might also be applied to the handset market.
And, as in football, a team – in this case a pairing of Virgin Mobile USA Inc. with its first handset from Samsung Electronics Co. Ltd. – can employ any number of strategies to make that incremental forward progress.
Samsung’s Slash, a compact slider with VGA camera and Bluetooth, is available at Virgin Mobile USA for $80 with the mobile virtual network operator’s pay-as-you-go service approach.
New avenue
For Samsung, the deal provides a new MVNO relationship and millions of new potential customers with yet another demographic: this time, a youthful, multimedia-oriented, cost-conscious crowd. (Samsung has served numerous MVNOs, though several have bitten the dust.) That serves the vendor’s no-stone-left-unturned approach to the United States market and provides yet another opportunity to gain a few inches in the volume-based revenue and market share battle.
“We’re making a phone for each target demographic,” said Kim Titus, a spokesman for Samsung Telecommunications America, the Korean giant’s American arm. “We’re aiming the Slash at a youthful market, 10 to 20 years of age.”
Titus called attention to the Slash’s messaging options with auto-text option to program frequently used words.
That’s one from the football playbook of progress by the inch. The big picture is obvious.
“We want to get Samsung phones at all price tiers into as many hands as possible,” Titus added. “This brings out the Texas philosopher in me: we’ll shoot everything that flies and claim everything that falls. We’re on pace to launch about 60 handsets this year in the U.S.”
Calling the play
For Virgin Mobile USA, Samsung’s willingness to collaborate on design, feature sets and the user interface – not to mention Samsung’s brand allure – makes the handset vendor an attractive partner, according to Bob Stohrer, chief marketing officer for the MVNO.
Stohrer cited in-house research that showed gains in popularity in the U.S. for the slider form factor and the Slash’s messaging options as a few of the specifics behind the handset’s launch.
Those factors, combined with the “right” price and service, provide the much-sought-after subscriber stickiness sought by all carriers, Stohrer said. For Virgin Mobile USA, the “right” price generally falls at or well below $100, he said.
“We think our existing customer base will migrate up to this handset for a long-term relationship with us,” Stohrer said. “We’re seeing movement toward QWERTYs and sliders.”
Mutual benefit
The mutual attraction of the two parties is obvious, according to analyst Avi Greengart at Current Analysis.
“The reason a handset vendor goes with an MVNO is to drive volume sales,” Greengart said. “Virgin Mobile is a successful MVNO with literally millions of subscribers; they’re a target for any major handset vendor.”
“I’m surprised that it’s taken this long to work with a CDMA MVNO like Virgin,” he added. “But I think they’ll sell a lot of phones there. At Virgin’s end, having Samsung broadens their handset brand selection.”
The Slash in particular represents a compact, modern slider form factor, which is attractive to American consumers, the analyst said. Greengart did point out that the “fake chrome” on the face of the handset diminishes a sense of value.
Tough competition
Greengart is taking a “slightly negative” stance on the handset in the context of Virgin Mobile USA’s portfolio, however, because the VGA camera-equipped Slash competes with two lower-priced camera phones – the Kyocera Wireless Corp. Cyclops, a $50 clamshell with a one-megapixel camera but no Bluetooth, and the UTStarcom Corp. Super Slice at $50, a thin bar-style handset with VGA camera and Bluetooth.
Nonetheless, for Virgin Mobile USA’s demographic, Samsung may indeed achieve the sought-after volumes, the analyst said. Volume sales typically are cited as a metric favored by Wall Street, Greengart said, but volume also is important to vendors to keep component prices low and shoulder a portion of overall advertising costs.
Should Virgin Mobile USA and fellow MVNO Helio L.L.C. merge – talks are acknowledged – Samsung will respond.
“Whatever the outcome, we’ll be happy to provide handsets to the new entity,” Titus said.
