Vodafone to Sell 1st Self-Branded Phone

Vodafone Group will introduce what could be its first mobile phone to carry its own brand exclusively, and not that of the phone manufacturer.

A Vodafone spokesman confirmed that the phones will be introduced at an event in Hong Kong on Thursday, but would not provide additional details.

The handsets will likely be made by China’s Huawei Technologies, which said in February that it had signed an exclusive deal to provide Vodafone with its own brand of 3G phones. The phones would be sold in 21 countries, Huawei said, with the first handsets expected to hit the market in September.

The deal with such a large operator marks a significant step for a Chinese manufacturer in Europe, which has been dominated by device makers from Europe, the U.S. and Korea.

Vodafone already sells self-branded phones, but they also carry the name of the manufacturer. The handsets for its Simply offering, for example, feature the operator’s logo prominently, but the name of the manufacturer, Sagem, is visible as well.

Phones that carry an operator’s brands exclusively are typically made by less well known phone makers. The operators often use them to improve their bargaining position with the top handset manufacturers, said Ben Wood, an analyst with Collins Consulting in the U.K.

“A good [self-branded phone] strategy by network operators is a very effective stick to beat the major manufacturers with, to make sure they hit pricing in particular, but also the technology and functionality curves that the network operators want,” he said.

The self-branded devices are unlikely to steal much market share from the big handset makers, however. “It keeps them on their toes but I don’t see it as a big threat,” Wood said. “It’s highly unlikely that the network operators can ever get the brand resonance on an own-branded device that manufacturers like Motorola, Nokia and Samsung get.”

That’s partly because phone makers often spend several million dollars marketing a new phone in a single market, and operators are unlikely to match that, Wood said. In addition, end users aren’t always happy with the service they get from their operator, so the self-branding may not instill loyalty.

Operators typically offer self-branded phones tactically, to target a specific segment. For example, Orange sells a self-branded line of high-end phones targeted at business professionals. O2 offers a self-branded phone for the low end of the 3G market. The new Vodafone phones may also target low-end 3G users.

-Nancy Gohring, IDG News Service (Dublin Bureau)

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