There's been an outrage on Vodafone NZ's
iPhone plans. I've been commenting on
Rod Drury's blog on Mark Rushworth's performance on
Campbell Live.
I've known Mark for a good while now and thought he did well given the approach that John Campbell took. Unfortunately for him he couldn't get the really good news out there.
There is a lot of emotion in the NZ market about Vodafone 'ripping people off' and its easy to see how that could happen. The fact is, with the exact same information and a different approach this could be significantly different - and it all comes back to wanting to take the marketing a step further than they needed to.
My hypothesis is pretty simple - Vodafone have Telecom on the ropes at the moment and want to make a killer blow. iPhone is pretty close to that. However instead of landing one massive punch, they have only ended up with a relatively weak hit. And that is as a result of trying to overplay their hand.
The overplaying of the hand was by a two stage release of handset prices and plans.
The announcement of $199 sticker price for the iPhone on Monday was designed to maximise the hype around the iPhone. That price all of a sudden meant that someone on Sunday who thought iPhone was unobtainable found that they could afford the entry ticket. That would have got a lot of people very excited (hey - we were talking about 2 of them at home!). An implied promise was made - you could afford the iPhone.
The release of the plans the next day broke the promise - it wasn't affordable.
That is the root of this issue - an implied promise was made and then broken.
When you look at it in more detail, its a like a fighter who has swung to land the killer blow and then ended up hitting himself in the back of the head. Here's why.
1. There was no benefit in splitting the plans and the headline price - the people who are most upset now are the people who would have ruled themselves out of buying an iPhone already based on their expectation of the price. Vodafone have upset their next tier of customers down. By launching the sticker price and the plans on the same day these customers would not have even been in the conversation.
2.These upset customers are looking very deeply into Vodafone plans - the issues around prepaid, $1 a day data and lack of total customer choice means that Vodafone is getting more scrutiny that it would have expected and is having to defend this.
3. What has been missed is that the $250 plan, when compared to existing Vodafone plans is actually very sharp. It's a 10% saving on an equivalent plan for the same bundle - it costs less. No-one has picked that up. In fact most people seem to think this is somehow a rort. So Vodafone has actually cut some prices but is not getting any credit for it.
4. Instead of basking in the glow of iPhone solely, it opens up an opportunity for Telecom to do something different with mobile data pricing. Whether it takes this opportunity is a moot point - this is an opportunity that simply was not there at the start of the week.
My view - launching these plans in one hit at an event would have given Vodafone a pretty strong position. Trying to milk it has led to an instant loss of trust.
Will be interesting to see how Vodafone learn from this - that is the next challenge - my guess is that they are locked into an Apple contract that gives them limited flexibility at this point and will just have to tough it out.
Disclaimer - I am working for Telecom Wholesale today, 9th July 2008 (and for the next two days). These opinions remain my own and do not represent any company position.
