Handset Customization Takes Hold
By Carlo Longino, Tue Nov 09 22:45:00 GMT 2004

Carriers have swung a big stick at top handset vendors to get them to offer customized products that emphasize the carriers' brands -- and vendors are getting into line.

Operators have made several of moves to prove to established handset makers they were serious about customization -- sourcing white-label devices from smaller Asian rivals, forming the Open Mobile Terminal Alliance and funding SavaJe to develop a Java OS -- but the biggest motivation has probably come down to economics. Researchers Canalys say between 60 and 80 percent of handsets in Western Europe are bought through carriers, that figure even higher in other countries. But whatever's caused it, vendors are paying more attention than ever to carrier demands.

Analysts say one reason for operator interest is that in saturated markets, they want to differentiate their services from rivals to both keep their own users and also steal away rivals'. It can be hard to do this when users feel more loyalty to their handset brand than their operator, and getting devices from those popular brands, then linking them to special services from the carrier offers some hope. And while vendors have resisted, offering users specialized new devices might help spur replacement sales, the lifeblood of the handset industry at the moment.

When Vodafone announced the launch of its UK 3G network a couple months back, it showed off 10 handsets built around global specifications it had dictated to device makers -- a significant sign that the tide was turning -- and mobile software is evolving to make customization easier. Nokia's recent strategy preview serves to reinforce the notion. The company says it will introduce 40 new models in 2005, with 90% of them supporting carrier customization, and a quarter of them will be offered exclusively by certain operators.