Vodafone last week announced its new web-based services, Vodafone 360. The announcement is large and complicated and leaves lots of questions unanswered. But it clearly throws down the gauntlet to Nokia’s Ovi and puts Vodafone into competition with Facebook, one of its potential key partners.
Vodafone 360 is a suite of services consisting of:
- People - at the centre of the offering, a social network aggregation tool built on technology from Vodafone’s acquisition of Zyb. It will feed social address books on 360 phones, and special apps on others
- Shop - an app store
- Apps - applications built on the standards created for LiMo (another Linux operating system for mobile phones, mainly backed by operators) and the Joint Innovation Labs (JIL), an alliance of Vodafone, Verizon Wireless in the US, China Mobile in China and Softbank in Japan.
- Maps - a mapping and navigation service provided from Vodafone’s acquisition of Wayfinder 10 months ago
- Music - the latest incarnation of Vodafone’s music services, also announced last week with DRM-free downloads from the 4 major labels.
In addition to the services Vodafone announced 2 LiMo handsets with software designed by Vodafone around the services, and built by Samsung. There is also an app for Nokia Series 60 phones to use the services, with versions for the iPhone and Android expected in future.
The phones and the services will be available before Christmas this year, and will be sold and supported by 25,000 staff in the stores owned by Vodafone in Europe and some key partners. Phone prices and tariffs for the services will be available nearer the launch.
The services will initially be available in 8 markets: – the UK, Germany, Italy, Spain, Portugal, Greece, Eire and Russia. During 2010 they will be further rolled out to Turkey, India, the Netherlands, South Africa, Australia and some Vodafone partner networks.
Analysis: Think of a big social network brand, with more than 300m users, popular in more than 30 countries, used addictively many times a day by its users to connect to their friends in a variety of ways. Facebook, right?
Now think of another one that meets similar criteria, but that also has annual revenue of over £40bn, an EBITDA margin of 35%, operating profits of more than £11bn and annual free cash flow of almost £8 bn. Must be Vodafone, right?
That seems to be at least some of Vodafone’s thinking here.
We have known for some time that Vodafone was warming up for a push into web services. Like most network operators it is terrified of being relegated to a bit-pipe business by people using the web rather than its services. That is a reasonable fear – stories are circulating about a major switch of users’ data traffic from 80:20 on the operator portal 2 years ago to a similar proportion now that is off-portal to other sites in the web, such as Facebook.
In gearing up for 360 Vodafone has run a social network in Italy, bought another called Zyb, bought navigation software provider Wayfinder, run music services, re-organised its network to deliver web services, re-organised its portal around a widget-based custom home screen, started implementing a full re-branding around the Web 2.0 theme of “Power to you”, announced the opening of some network APIs and kicked off a developer competition.
With the 360 announcement Vodafone is not revealing the full extent of its ambition, but there are some clues in the way it talks about what it is launching.
At the heart of 360 is People. This is basically a service that aggregates updates and photos from Facebook, Windows Live Messenger, Windows Live, Google Talk and Google Mail. More services will be added, such as Twitter. This stream is fed from Vodafone 360 to the phone – either to the contacts book in the case of the two new phones, or to a special app, or it can be used on the web through www.360.com.
There are now a number of other services and apps that do some or all of this job such as Friendfeed, Nimbuzz, Ovi Lifecasting.
Where Vodafone differs is in talking about the “Vodafone 360 Community”. Members of 360 will enjoy higher functionality in dealing with each other, than in dealing with people on the other social networks it aggregates. The additional features will include automatic contacts and content backup, automatic sync across multpile devices and automatic GPS tagging of photos. The People app will also work on other network operators’ phones, so that – for example – T-Mobile users can join up. This addresses the biggest dilemma for network operators, which is that social networks do not map neatly onto their own user bases. Vodafone seems to be aiming to build up a significant community of users, across networks, who prefer to use 360 because it offers higher functionality than using, say, Facebook.
And this will put Vodafone in head-to-head competition with Facebook, which is a position Nokia recently backed away from with its Ovi services.
At present there is no business model associated with the People app – users will get it free and will not be charged extra for using any part of it. Vodafone is doing this part for differentiation and loyalty reasons, aiming to provide a better experience than other operators. In turn this should lead to more communications and a higher average revenue per user (ARPU)
Less detail was given about the other services in 360 at this stage, with much greater emphasis being put on the phones, which were pitched as the first 2 of a growing portfolio.
Here Vodafone is throwing down the gauntlet to several of the handset manufacturers. The software on the 2 Samsung phones looks and feels very different from other devices, with lots of innovation built in.
The major new area is around the contacts book. Yes, like other phones coming onto the market, the contacts book is socially connected so that it shows the latest updates from your contacts on their various social networks. But Vodafone has departed radically from existing phone software and has implemented a contacts book in which your most popular contacts float to the front, while others drift to the background – borrowing some design ideas from the Social Pond invented by TAT in 2007.
This thinking reads across to the view of calls made, which will also act as a unified inbox, showing incoming calls and messages from all contacts.
Vodafone is aware that some people may prefer the classic approaches to the functions of their phone, so it will be possible for users to set the contacts book to boring old list-mode and the calls view to show phone calls only.
It has also gone for a non-standard button layout on the device with buttons for calling, people, apps and search. And it has allowed apps in the apps menu to have 3 states rather than 2: closed, open (full screen) and “expandable”, in which they are active (like widgets) in the apps menu area and take up more space than a single icon. Up to 5 apps can be in expandable mode at any time. Here Vodafone is neatly combining ideas from other areas.
Vodafone 360 is a big and important move by the company and it raises a number of issues.
First, only around 20% of users currently have a data plan, so many people buying into 360 will need to take a data plan first. In order for this not to be a barrier, Vodafone will probably need to bundle the data plan with the phone. That’s relatively easy while 360 is a contract offer, but how will it work as 360 expands and moves into pre-pay?
Second, 360 is a complicated proposition with lots of ifs, buts and maybes. Not all the features will be available in all phones or will work on all operators. It will be a major marketing challenge to put across the full concept of Vodafone 360 at launch without raising artificial expectations or confusing people hopelessly.
Third, Vodafone is not yet aggregating that many social sources. Where are MySpace, Bebo, Flickr, LinkedIn, Plaxo, Yahoo!, Orkut, Ning etc? In order to give 360 maximum usefulness and appeal Vodafone will need to enable a full list to be aggregated in a short timescale.
Fourth, how will the Maps and Music offers integrate with the rest? Vodafone mentioned that it will allow people to tag, rate and share locations along the lines of Brightkite or Foursquare, suggesting quite high integration with the People app. How will that read across to Music? Will the Music integrate with the Maps (which of the bands that I like is playing near here in the coming weeks?). How will Vodafone manage the development of the Maps app so that it remains competitive with current market leaders such as Nokia Maps, Google Maps and Telmap? What business models are going to exist to support the services? Will other social location based service be integrated?
Fifth, will people want their operator also to be their social networking provider – will they trust them that much? Vodafone argues that it has a close relationship with its users, thanks to the billing link, and that users already trust it with a lot of private data. I believe that many operators over-estimate the strength of the relationship they have with users and that trust is not a strong aspect of their brand values.
Lastly, is it a good idea to compete with Facebook and other social network partners? It is early days for social network aggregation on mobiles and it’s not clear if those services will provide enough functionality, or if users will prefer to carry on using their existing Facebook / MySpace / Flickr / etc application. Similar to Nokia’s stance, when it announced Ovi, Vodafone says it will not be exclusive and prevent other applications being used – it wants to give users the choice – “Power to you”. But there is a basic conflict of interest when competing with your partners, and I expect Vodafone’s position to evolve in this area.