Interesting article in last week's edition of the UK Mobile trade magazine, Mobile Today. Apparently O2 is considering a revenue-share plan with handset vendors, where they would only pay 50% upfront for devices, with the remainder geared into actual customer expenditures over the life of the contract.
Presumably this would be intended to encourage vendors into loading features into phones that are service revenue-generative, rather than which work standalone (eg camera, memory) or "independent app provider" fashion (eg Ovi).
I'm very doubtful about how this might work in practice, and I'm struggling to think of any other (physical product) industry in which a similar model works, as clearly manufacturers have to pay their own suppliers, and getting bank loans to cover a 12-24 month gap between costs and cash seems highly doubtful to me. I can't see EasyJet telling Boeing it would only pay for 737's based on future passenger load & revenue figures.
In fact, I can see this type of move drastically backfiring - it could well tip the balance to device vendors switching to an Asian-type distribution strategy, where customers buy handsets through separate channels to their SIMs and service strategy. While this would reduce pressures on operators to pay out in subsidy, it would reduce the ability of operators to supply customised handsets with their favoured applications and UIs.
If handset vendors are going to face a cashflow hit, they might as well just offer consumer finance themselves for handset purchases - "Buy your Nokia XYZ in 18 convenient payments of £10 a month - comes preloaded with Skype, Ovi, Facebook and Music - just add a basic SIM with voice and data access".
There might be a very few cases where there is a win-win from this scenario, but I'm struggling to think of any off the top of my head.
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