Vodafone to unveil self-branded mobile phone
By CASSELL BRYAN-LOW (WSJ)
Updated: 2006-09-27 17:06

http://online.wsj.com/public/article/SB115930210354774666-SInOlGbgyOZD9GDGTqhMtYBIikA_20061004.html?mod=regionallinks

Vodafone Group PLC plans to introduce its first Vodafone-branded consumer cellphone, highlighting the growing interest among some cellular operators to reduce their dependence on big-name handset makers.

Vodafone, the world's largest cellphone-service provider by sales, plans to announce as early as tomorrow a phone aimed at consumers that will carry only the Vodafone brand. Like other large service-providers in Western Europe and the U.S., Vodafone typically offers phones bearing the manufacturer's logo as well as its own.

The new handset, made by Chinese equipment maker Huawei Technologies Co., also underscores the rise of a new class of Asian manufacturers and their spread beyond Asia. Known as white-label manufacturers, the companies make equipment to be branded by others as well as under their own brands. While carriers in Japan long have branded their own phones, it is only in the past few years that some of their Western European and U.S. counterparts have shown interest.

Part of the appeal for Vodafone is price. Jens Schulte-Bockum, group director of terminals at Vodafone, says the new handset costs about 30% less than the roughly $285 to $380 the company would expect to pay for a similar phone from a large equipment maker. Vodafone also can get a customized handset that will give customers easier access to services such as music and games that Vodafone sells through its own Internet portal. The new handset, for instance, has a button that takes customers straight to Vodafone's music services.

Such customized handsets account for a very small portion of the handset business in Western Europe and the U.S., where customers typically look for the manufacturer's brand when shopping for handsets. But carriers may use the handsets as a bargaining chip with their traditional suppliers. They will likely "use these devices to extract better pricing from the larger handset makers," says Hugues de la Vergne, an analyst in Dallas at research firm Gartner Inc.

Vodafone has experimented with a company-branded product targeted at business users, made by Taiwan's High Tech Computer Corp. Mr.Schulte-Bockum added Vodafone plans to launch two or more similar phones next year. About 3% to 5% of the handsets offered by the company would then carry only the carrier's brand.

Cellphone-service providers want consumers to become attached to their brands, and therefore less likely to switch to another service provider. As part of that effort, many large providers have invested in building branded Internet portals where consumers can download music, games and television clips. Such services have struggled, Nomura analyst Richard Windsor said in a recent research report. "Operator-branded experiences have largely failed to capture the imagination of users," he said.

Carrier initiatives to push their own handsets also will struggle unless they are willing to go further in terms of what services they offer, Mr. Windsor added in an interview. For instance, providers need to offer a wider Internet experience rather than effectively restricting access to their own portals as most still do. Because large service providers work closely with the handset makers to design how handsets for their network operate, they influence both the software and hardware that controls how customers use their phones.