What’s up with all the analysis of Vodafone recently? The slow uptake of its W-CDMA service and failure to keep up with Au/ KDDI’s cdma1x/WIN service in terms of new subscribers has some press and analysts questioning the carrier’s strategy. But let’s look at the larger picture: Vodafone had 93,200 subscribers at the end of November — its first year of 3G service. That’s hardly a “ringing” endorsement of VGS (Vodafone Global Standard.) On the other hand, it’s not bad at all for a service which has not had the benefit of a high-profile promotional campaign. In fact, Vodafone has only put out a few low-key displays at official shops. In contrast, NTT DoCoMo had 142,400 subscribers at the same point in the life of FOMA and it had been promoting FOMA every chance it could. Now it has decent handsets at bargain prices and a network that it claims covers 99.6 percent of Japan’s population, DoCoMo is adding about 300,000 subscribers per month. So let’s not forget that it’s really still very early days for Vodafone.
Bottom line: I feel that it’s not impossible that Vodafone will likely reach the 1 million subscriber point faster than the 2 years that it took for FOMA to reach the same level.
Of course, we note that Green san has become very shy of talking about 3G subs recently. No matter how smooth the transition of J-Phone to Vodafone has been on the surface, the Japan end of Vodafone has been clearly been too bogged down in sign swapping and admin to do what J-Phone did best– beat DoCoMo to the punch with great new PDC handsets. But I feel this misses the point.
And what of all these comparisons of Vodafone’s monthly net subscriber addition with that of competing carriers?
Sure the carrier made a mistake by trying to reduce its line-up. We all know that carefully coordinated launches of series of phones are crucially important for customer understanding. DoCoMo’s launch of the 505 may have been a bit delayed, but what an impact the 505 had on the market!
Aside from any other reasons, Vodafone should have realized that fewer handsets means less shelf space in stores. That’s not a good message to the customer. It makes you look like a smaller carrier. And Japan’s customers demand choice. Tourists who visit electronics shops such as LaLox in Akihabara are wowed by the hundreds of handsets on display.
Vodafone is now putting the lack of choice issue right, and so it will start broadcasting a better message to consumers.
But was missing an iteration of new handsets over the autumn a fatal error? Is Vodafone now in a Tu-Ka-esque downward spiral? Has it lost substantial ground to competitors?
At the end of November, Vodafone still had a 18.49 percent share of the Japanese market, a fact that leaps out of Japan Telecom’s recent first-half financial results. I’d like to remind people that Vodafone’s best-ever market share, achieved in June this year, was 18.70 percent. So, in terms of the number of mobile phones in pockets, Vodafone is still far from being off track.
That said, where Vodafone is stumbling and where Au/KDDI is racing ahead is attracting the subscribers that are leaving NTT DoCoMo and Tu-Ka.
In the six months that Vodafone lost 0.3 percent share, Au/KDDI added 0.8 percent to its customer base. That’s a hot 1 million users, give or take a couple of thousand.
So, I submit that Vodafone had fumbled, but not dropped the ball. By not keeping up with the frenetic pace, and real need to tempt subscribers with new batches of handsets, Vodafone has paid a price. But new handsets are on the way. The new Happy Packet discounts make Vodafone considerably cheaper than rivals for many of its users.
It might be a bit early to write-off Vodafone.. yet.
– Ken Gai.