Newly announced by the world's largest mobile phone provider, is Vodafone 360 set to eclipse Apple's iPhone?
If the proposed merger of France Telecom's Orange and Deutsche Telekom's T-Mobile goes ahead (and though it is being looked at by the telecoms regulator, I'd be very surprised if it was halted), Vodafone (LSE: VOD) would be placed in the possibly embarrassing position of being only the third largest mobile operator in its home market.
It would be behind the new merged company in first position, and Telefonica's O2 in second place. That's despite Vodafone actually being the world's largest.
Not just a dumb provider
Also, while Vodafone has a good track record of increasing its penetration in developing parts of the world, the more mature markets are pretty much commoditised when it comes to mobile phone technology, are very price competitive, and there is no longer any real chance of increasing market share by offering a bewildering array of subscription packages and a free phone every time you renew a contract.
But at the same time, nobody can have missed the success that Apple Computer is having with the coolest, most desirable, mobile phone on the planet -- the iPhone (currently the sole preserve of O2 in the UK). If it is to avoid becoming just a 'dumb provider', Vodafone is going to have to move into this value-added market and find some way to compete.
And that's exactly what it intends to do, having this week announced ambitious plans, under the brand name Vodafone 360, to provide a set of new services encompassing both mobile phones and personal computers.
Ambitious new services
The heart of the new services will be technology to bring together all of a user's contacts in one place, providing one-stop access your email address book, your Facebook friends, your Google Talkers, your Tweeting Twitterers, and all those other social tentacles that place such demands on the thumbs of today's wired-up communities.
This common address book, known as Vodafone People, will work on a wide range of common phones, and across all networks. In addition, Samsung will be building two dedicated Vodafone 360 mobile handsets, which are intended to provide the best user experience of the new services.
The final component is a new range of internet services, covering music, games, mapping services, etc. In direct competition with Apple's phenomenally successful App Store, Vodafone is starting its own Vodafone Appstar service, which will launch with a competition offering a total prize fund of €1m to inspire the best developers to produce applications for the new platform.
The first phase of it all is expected to be launched by Christmas, in eight European countries.
This all sounds good, but has Vodafone missed the boat, and can it possibly catch up with Apple's lead?
Will it succeed?
Firstly, it's good to see that Vodafone's new technology is open, and will be work across all networks and from a large number of different mobile phones. And also, that the technology will provide direct access to all of today's net-wide communication services, rather than to a Vodafone-specific community.
We saw, what seems like a lifetime ago now, how the early development of the Internet went in the direction of providing closed communities, with services like Compuserve, AOL, MSN, and others offering their own proprietary content to their users.
Of course, that's not what people wanted. We wanted open access to the World Wide Web and email, and that's what we got -- and now the world's fixed-line ISPs are little more than bandwidth providers. (And considering that we have since seen how that approach failed miserably, it is hard to remember that, little more than a decade ago, none of use was really sure which way things would turn -- even The Motley Fool's online presence started as an AOL service, only later moving to the web).
Any mobile operator that tried to launch a closed service along those early internet lines now, would be dooming itself to failure right from the start.
Beating the best?
And how about competing with Apple? While Apple has clearly set the benchmark against which the competition will be judged, the iPhone is a high-end product. Apple has always gone for the higher-margin end of the market, trusting its high quality products (like its Macintosh computers, which are this writer's favourite by a long way) to attract those willing to pay higher prices, and I can't see Apple attacking the lower-budget market anytime soon.
That means there's a huge low-to-middle market segment that's wide open for a quality set of integrated mobile phone services and applications, just such as those proposed by Vodafone. Perhaps I'm biased, because I own Vodafone shares, but I think if the pricing is right, if Vodafone 360 really does turn out to be as open as they seem to be claiming, and if Vodafone application development is as open and as easy to access as Apple's, then the company might be on to a winner.
We'll know better how to evaluate it when we get to see it at Christmas.
More from Alan Oscroft:
> Alan owns shares in Vodafone.
