The Walt Disney Co. empire is the latest, and biggest, consumer brand to plunge into the hot cellphone market, but wireless carriers are expected to hold their own — even against Mickey Mouse.
Industry players forecast Disney and other mega-brands will have to remain satisfied with carving out a niche position, such as the primary school set. Wireless companies have their own strong brands among consumers and businesses, and are expected to keep the lion's share of the market.
“Clearly the big carriers with their brands have enormous power,” said Jan Waereby, head of sales and marketing at Sony Ericsson. “Their brands are typically in the top 10 in every country.”
As wireless carriers seek to attract customers who have ignored their overtures so far, they are actually teaming up with these mega-brands, letting them use their networks in order to establish new cellphone services. Retail and entertainment brands are entering the cellphone market because there are still many new users to sign up. For example, in North America, a smaller percentage of the population subscribes to wireless services compared with Western Europe and Asia.
The cellphone market is also an opportunity to make these brands more relevant to a new generation of consumers, and to drive revenue with value-added features, such as ring tones, according to Kaan Yigit of Toronto research firm Solutions Research Group.
But these well-known brands are going up against communications behemoths, including Bell Canada, Telus Corp. and Rogers Communications Inc. in Canada. These cellphone brands, in the minds of many consumers, represent a certain standard of phone service and a track record the new upstarts can't automatically match, according to one communications consultant.
“There's a trust level involved that's been built over time,” said Brian Sharwood of SeaBoard Group in Toronto.
Another difference that will keep consumer brands from overtaking the established wireless carriers is their customer base, according to industry observers. Wireless carriers target all age groups, while entertainment and retail companies that enter the cellphone market tend to focus on one.
Virgin Group PLC, known for its mega-stores that carry everything from music to electronics, introduced a cellphone service in Canada this year that targets the youth market. Rogers Wireless introduced MuchMusic-branded phones last year that are probably most popular with teenagers and young adults. Disney's new wireless service, which will launch next year in the United States, will focus on parents and their children.
What these outside companies offer is a new channel to the market for the established wireless players. Retailers, for example, have extensive chains of outlets to sell these services and marquee entertainment brands such as Disney or MuchMusic can attract customers with specialized content, such as ring tones and graphics.
“I think the major carriers are wanting to do deals with big brands to drive incremental revenue to be able to reach and sell services that they can't with their own brand,” Mr. Yigit said.
Rogers Wireless is open to agreements with so-called mobile virtual network operators (MVNO), companies that usually don't have their own network and resell wireless services. A major attraction for Rogers Wireless when it looks for a potential partner is the ability to bring in new customers, says John Boynton, vice-president and chief marketing officer at Rogers Wireless.
Rogers Wireless is not the only carrier open to such agreements. If the right MVNO opportunity came along, Telus Mobility would take a look at it, according to company spokesman Mark Langton.
