3G Apple iPhone Speed Dilemma: Why Steve Jobs is Praying

It's buzzing out there in iPhone land. While rumors run rampant about the "3G iPhone," enabling fast Web surfing, gaming and other applications, neither AT&T, Apple, Steve Jobs or God know how a 3G-enabled iPhone will perform on AT&T's broadband network. (Well, maybe God.)

My previous experience with AT&T's broadband network--slower than Verizon and Sprint's EVDO nets--leads me to believe there's trouble brewing due to the iPhone's large screen, 3G chipset and battery. That's the main reason, per Jobs, the iPhone wasn't designed for 3G in the first place. (See my iPhone review for background.)

3G mobile phones on AT&T's 3G net already stall and drain batteries quickly when streaming video or surfing the Web. Version one of the Samsung BlackJack is a good example. When first released, the underpowered battery drained like an SUV's fuel gauge. Samsung then released BlackJack II with a more powerful battery, but the trade-off was a thicker phone. (See "Batteries Draining at CES in Vegas.")

Enter the iPhone with its large, high resolution screen--twice as large as the BlackJack II. Each screen pixel from top-to-bottom must activate to render a viewable screen. The larger the screen, the more time it takes to fill it. And, if I'm correct, new iPhone purchasers, who've experienced Wi-Fi on the iPhone, will be greatly disappointed, especially while streaming video on AT&T's 3G network.

Power drain on Verizon's Voyager and Sprint's original CDMA Touch phone and new Touch Diamond, scheduled for release in June, are less problematic due to EVDO's faster data speeds. The Voyager most closely matches the iPhone's screen size and the Touch's screen is considerably smaller. (Click here for a Phonescoop comparison.)

As I've commented previously, Apple entered the mobile phone market without any wireless experience. The company has struggled to please customers and carriers by lowering prices, changing internal memory and trying to understand international mobile phone distribution. Meanwhile, hackers continue unlocking the device, Apple counters with new firmware to disable hacked iPhones and dissatisfied customers continue dropping iPhones on eBay.

Taking advantage of Apple's troubles, AT&T announced an iPhone price reduction on its own, after discovering that 40% of iPhone buyers are new AT&T customers. Training its reps to better understand customer needs is also in the works, due to customers' numerous dismal experiences. AT&T, along with other carriers, continues testing new pricing and contract strategies.

Wireless competition is undeniably fierce. Manufacturers and carriers must strike a balance between form factors, functionality and price. Meeting customer expectations is the key element for success in the smartphone market.

eBay iPhone Sales Continue Climbing Amid Buyer Confusion

eBay iPhone listings, although difficult to ascertain due to sellers using multiple categories, appear to have risen to 3,410. (This number, to the best of my ability, doesn't represent lots.)

Latest eBay worldwide summary:

• 3,410 total listings (again, most are single units, some are multiples).
• Around 600 of the 3,410 listings appear under two sellers who are acting as "aggregators." When clicking on these two listings, individual seller listings appear.
• 334 iPhone sellers claim their phones are "used," the rest "new," although many sellers continue to list their iPhones as "new" because they were "just used for a week or month." These are clearly "used" iPhones.
• 1,459 of the 3,410 are "unlocked"--43% of the total with sellers claiming that, of these, 92% are "new."
• Average sale price of "new" units overall is $528 (skewed by large numbers of iPhones for sale and 16GB iPhones that are growing rapidly on eBay)
• Average sale price of "used" units overall is $380, a significant drop from my observations during the past few weeks.

The accuracy of the total number of iPhones for sale on eBay is impacted by sellers listing in multiple categories. By far, most sellers are listing under "cell phones." But others are listing under "smartphones" and "PDA's. The majority of sellers listing under "lots" represent iPhone accessories. I doubt that many individual eBay sellers are listing in multiple categories due to the extra listing fees.

After reviewing several pages in all categories, I conclude the following:

• The vast majority of unlocked iPhone sales--new or used--reflects problems or confusion over 1.1.2 to 1.1.3 firmware issues. In many listings, sellers warn buyers not to sync with iTunes to avoid re-locking the phones. This alerts buyers who are becoming concerned about how unlocking affects iPhone functionality.
• Most sellers are listing single units, many used, from weeks to several months, indicating that buyers and sellers are becoming concerned about unlocking issues or dissatisfied with their initial purchases.
• 50%+ of of all iPhone sellers don't reveal why they're selling.
• Of those who do reveal,  a growing number of sellers claim they've bought 16GB units and therefore are selling their 4GB and 8GB models.
• The remaining sellers who reveal their reasons for selling say they are still under contract or have switched to other carriers, their companies bought them phones, relatives purchased a second iPhone as a gift plus other reasons. The validity of the claims is spurious.
• Most eBay iPhone sales listings look unprofessional. Photos, if taken, are blurred and item descriptions are hazy. Many iPhone sellers clearly don't know how to write an effective eBay listing. As a result, many of the listings I reviewed were incomplete and unconvincing.

I continue to believe the growing number of iPhone eBay listings represents a significant marketing challenge for Apple. Viewing blurred photos of scratched, unlocked iPhones and cut-off SIMS is the antithesis of Apple's slick advertising campaign.

Apple's iPhone: Will it Make It in 2008?

Troy Wolverton, writing in the San Jose Mercury News, gave accolades to Apple's iPhone as "...the product [having] the most impact this year on business and technology." 

As I've written in my blogs and in response to other Mercury articles, the introduction of Apple's iPhone by Steve Jobs at MacWorld was a marketing strategy to pre-announce Apple's first mobile device quickly, then tantalize potential buyers for six months before its release. 

When Jobs and Apple realized they wouldn't make the June deadline, thousands of programmers, who otherwise would have continued working on Leopard, Apple's new operating system, were diverted to iPhone development. Meanwhile, HTC was developing its Touch phone, approved by the FCC in July, concurrent with other handset makers, furiously designing innovative Windows, Linux and Symbian-based smartphones. 

Tim Bajarin from Creative Strategies, whom the Mercury News quoted as saying " ' Apple proved they could deliver the Internet in your pocket, ' " is greatly overstated. Once iPhone buyers learned that Job's MacWorld web surfing demo used WIFI rather than AT&T's slow EDGE data network, the balloon began to burst. That's why FLASH was not designed into the first release. AT&T's EDGE data network can't support the required broadband connection. 

After new iPhone users complained about slow browsing, including David Pogue of the New York Times, Jobs tried to wiggle his way out of the dilemma claiming correctly that 3G chipsets would have increased battery drain, a sore point with iPhone customers because its battery requires factory replacement. 

That Apple has met its quota of iPhone sales is based on customer loyalty and price reductions. Meanwhile, Apple and AT&T attempted, until recently, to restrict third-party developers, who would bring innovative mobile applications to the iPhone. 

Despite serious concerns about Google's entry into wireless with its support of the Open Handset Alliance and Android/Linux-based mobile devices, Google had "the most impact this year on business and technology" in mobile space--not Apple. 

As I've written in my MarketingBeyond blog, Android-based mobile devices in 2008 will dominate the mobisphere, while Apple, at best, will release a 3G iPhone globally, competing with Nokia, Motorola, Samsung and others. Whether Apple can pull it off is a question mark.

eBay iPhone Worldwide Listings Skyrocket - First 3G $1,500 Listings Appear

As predicted, eBay iphone listings jumped dramatically the day before and day of Apple's 3G release. The vast majority of the increase is clearly from the non-gray market--Apple customers who are selling their first generation iPhones to pay for the 3G version.

But there's clearly a second group of iPhone buyers who are willing to pay $450-$650 for unlocked 8GB and 16GB USED first generation iPhones. Since all iPhone owners will benefit from software version two just released by Apple, the lure of an unlocked iPhone that operates on most GSM carrier networks far exceeds the perceived value of higher download data speed and GPS. The shortage of unlocked iPhones (just over 30%) is also driving prices higher.

The locked iPhones listed in the past 48 hours may be a litmus test for Apple and AT&T in the U.S. Sellers of these used locked phones will most likely sell at substantial discounts over unlocked ones. Sellers may also find it difficult to sell the locked units unless buyers are willing to purchase the unlocking software.

Despite buyer proclivity to pay higher prices for used iPhones, the iPhone, in my eBay experience, is the first smartphone to maintain high perceived value and final selling price. Until now, most used mobile phones on eBay have sold at significant discounts from new ones.

Scalpers began appearing during the 3G launch, attempting to sell the first 3G units in the $1,000-$1,500 price range with Buy It Now, and auction bidders quickly began bidding up 3G iPhone offers close to BIN prices.

Here are the eBay iPhone stats as of Friday, 7/11 @ 10 p.m. Pacific on eBay Worldwide. Keep in mind that other sellers around the world are also selling unlocked iPhones. eBay is only indicative of trends.

• Total iPhone listings reached an unprecedented 4,000+ units *
  
  
  • Used = 3,461 (86%)
    
    
  • Unlocked = 1,453 (36%)
    
    
  • 16GB Units = 1,776 (42%) - Percentages in this breakdown based on 4,247 units
    
  • -8GB Units = 2,151 (51%)
    
  • -4GB Units = 330 (8%)
    
    
  • Selling at Auction = 3,522 (75%) - Percentages based on 4,674 units
    
  • Buy It Now = 1,052 (23%)
    
  • Best Offer - 100 (2%)
    
    
  • Free Shipping = 1,031 (22% - Unusually high)
    
  
  
• 3G iPhones = 410 (10% - 2/3 16GB models - based on 4,000 units )
  
  
  • -210 already have 10+ bids
  • -29 claimed as "unlocked" already by sellers

As of 10 p.m. tonight, eBay worldwide shows 63,879 total cell phone listings. iPhone listings remain a drop in a very big mobile phone puddle.

* Disparity in the numbers is due to spurious numbers by one lot seller and eBay including accessories in the cell phone & PDA category. To calculate the percentages, I used the advanced search feature in eBay, tried to account for approximately 1,000 units for sale by the lot seller and disregarded any accessories or software included in the wrong category.

iPhone Sales on eBay Worldwide: The Glutting of the Gray Market

Yesterday I reported on eBay USA iPhone sales. Here's an update based on today's worldwide iphone listings on eBay with a comparison to other mobile device listings.

• iPhone LISTINGS (includes lots) = 2,453
• One seller is offering a lot of 800 units.
• 64 other sellers are offering lots (mostly 3-5 units).
• This excludes unlocking software totaling 293 listings.
• 16Gb iPhones are selling worldwide at an average price of $750
• Comparable mobile device listings
• Nokia E90 = 29 units
• Nokia N95 = 348 units
• Sony Ericsson (All phones @$400+) = 94

Observations:

• The $400-600 mobile phone market on eBay is glutted with iPhones.
• Lot sellers are trying to dump at least 1,000 units on eBay Worldwide
• Competitive mobile device listings in the same price range are minuscule compared to the thousands of iPhones currently on sale.
• Excess inventory is driving down iPhone sale prices on auctions and Buy It Now

As an eBay mobile device seller, I've never seen so many high-end cell phones for sale at the same time. Once the same mobile phone model reaches around 500 units on eBay, the price drops dramatically and sellers must re-list one or more times at lower prices to ditch the phones.

I believe, as I've mentioned before, Apple has a distribution problem.

Update on 2/18/08. I Googled "unlock iphone imei itunes sync 2008" and got over 11,000 hits. iPhone owners who want to unlock are clearly confused about iTunes synchronization, IMEI numbers and software and firmware updates. In addition, while eBay listed 706 unlocked iPhone listings (not including lots) on the day of my first blog post, eBay now has 2,129 unlocked listings and 2,909 total listings (including lots) on 2/18/08. SIM card listings have risen to 61 for the 1.1.2 firmware upgrade only.

iPhone Dumping Continues on eBay: Sellers Worry Over 3G

Apple released its promotional Apple 3G video today, touting the improvements of the 3G iPhone. Meanwhile, rabid dumping of iPhones on eBay continues unabated. Some sellers have resorted to "Sayn Design" gold 16 GB iPhones, selling in lots of 10 for $8,500.

While calculating total iPhones for sale on eBay is time consuming, due to CECT, HTC and other's including "iphone" in the listings, here are my best estimates of iPhones for sale on eBay worldwide as of July 1st, just 10 days before Apple releases the 3G version.

Total iPhones = 2,800 (800 in lots, mostly the 16GB "gold" version)

Total Unlocked = 2,500+ (very few locked iPhones are now available as 3G approaches)

16GB Model = 1,300

8 GB Model = 1,000 (few in lots)

4 GB Model = 139

The total number of iPhones clearly doesn't total 2,800, due to listing in a category other than "cell phones & PDA's" and unclear listings about number of units.

The BIG change: According to my estimates, 90% of iPhones advertised in the past week SOLD, compared to 30% two months ago before the 3G announcement. iPhones sold through other non-eBay stores, I believe, raise the total dumping above 3,000 units.

When July 11th hits, there's no reason to believe that iPhone unlocking and re-selling through unauthorized channels will continue. Demand for unlocked units is so high that the total 8GB price of $199 + $36 activation + $175 early termination fee + $30 unlocking ($440) will not dissuade continued out-of-channel sales.

As I pointed out in an earlier post, this will hurt AT&T the most in the U.S., but will impact international carriers as well, as unlocked iPhone purchasers break contracts and purchase multiple SIM's to obtain cheaper rates in European countries and elsewhere around the world.

Moreover, with over 300,000+ unlocked iPhones already operating on China Mobile, iPhone use will rise as additional unlocked 3G units become available in the open market.

While China Mobile never signed an agreement with Apple and will benefit from further activations, other international carriers and AT&T in the U.S. will experience higher initial financial losses than expected through the subsidy. T-Mobile's emerging 3G network in the U.S. will also eat into AT&T profits as it aggressively rolls out its broadband network and iPhone users switch to T-Mobile.

Laughing all the way to the bank will be Apple, which finally realized selling iPhones at high margins, as with Macs, will bring home the bacon.

iPhone Failed Marketing Strategy: Unlocked Devices and Apple Greed

Apple entered the mobile phone business without any experience and now it's paying the price. In a previous post on Mobile Telephony Innovations: "Google Rises, Apple Falls--Poor iPhone Marketing Strategies, I summarized Apple's deal with AT&T, price reductions, Google's Android initiative with the Open Handset Alliance and sales of iPhones on eBay.

Today's announcement of one million unlocked iPhones (nearly 30% of units), reducing Apple's continuing revenue share with AT&T and massive unsold inventory reveals all is not well. Analysts estimate that for every one million iPhones sold, Apple loses $300M to $400M in future revenue and profit. Convincing overseas carriers to accept a revenue share is now hampered. Witness China Mobile's recent rejection.

The main reason for the failed strategy is Apple's greed. If it had never linked iPhone activation to iTunes and followed AT&T's standard activation procedures, iPhone buyers would have been locked into AT&T's 14 day (30 in California) return policy with a two year contract. During the purchase, AT&T would have also obtained the original IMEI number  and buyer information. 

Since Apple chose iTunes for activation, hackers immediately jumped in to unlock the device, followed by Apple's ineffective software update to stop them. The product itself, although flawed, is a significant advance in touch screen mobile devices. (Read my review.) But Apple should have followed standard carrier activation procedures until established in the global wireless market.

Update on 2/18/08.  I Googled  "unlock iphone imei itunes sync 2008" and got over 11,000 hits. iPhone owners who want to unlock are clearly confused about iTunes synchronization, IMEI numbers and software and firmware updates. In addition, while eBay listed 706 unlocked iPhone listings (not including lots) on the day of my first blog post,  eBay now has 2,129 unlocked listings  and 2,909 total listings (including lots) on 2/18/08. SIM card listings have risen to 61 for the 1.1.2 firmware upgrade only.

Worldwide iPhone eBay Listings Rise: The Glutting Continues

iPhone eBay sales continue to rise as buyers purchase new ones and sellers ditch the 4GB and 8GB models, possibly for purchase of Apple's 16GB model. (Since one aggregator, selling around 500 units, is grouped separately, the stats are based on best estimates.)

Listings as of March 31, 2008 on eBay Worldwide show:

• 2,712 total iPhone listings (based on "cell phone," "smartphone," and "PDA" categories)
  
• 72% of iPhones are listed as "new"
• 16GB Model = 811 Units--30% of all iPhone listings, a dramatic increase since MTM's last tally
  
• 8GB Model = 1,713 (63%)
• 4GB Model = 188 (7%)
• Approximately 74% (2,000 units) are unlocked, with sellers claiming 1.1.4 firmware updates
• Quality of eBay listings varies from professional to poor, although pictures and phone descriptions are improving. Some sellers continue listing damaged iPhones as the picture above shows.
  
• More "free" iPhone listings appear in auctions whose winners are instructed how to obtain a "free" iPhone. The legitimacy of these listings is questionable.

In comparison, eBay Worldwide lists:

• 151 Nokia N95-8GB Smartphones (121 New)
  
• 66 Sony Ericsson's selling for $400+ (62 New)
  
• 75 Samsung's listed at $400+ (68 New)
  
• 66 LG's priced at $400+ (45 New)
  

Compared to Nokia and other smartphone manufacturers, the gray market glutting of iPhones continues rising on eBay Worldwide. There are now 18 times more iPhones for sale than the Nokia N95-8GB, the closest iPhone-comparable smartphone.

iPhone Sales on eBay USA

MTM reported on Apple's iPhone marketing challenges recently--specifically, the number of unlocked iPhones for sale on eBay USA. Today, I reviewed iPhone sales developments on eBay USA and discovered some interesting stats:

• As of February 16, 2008, there are 3,627 iPhones for sale (auctions and Buy It Now)
  
  
• Of the 3,627, 1,154 are locked to AT&T and other Apple approved carriers and 2,473 (68%) are unlocked. 702 unlocked iPhones were for sale during my last count.
  
  
• Looking at the most recent completed sales (I used averages from the first three listing pages)
  
  
• 65% of all iPhones sold while 35% did not.
• 67% of all unlocked iPhones sold; 33% did not

Observations:

• The 16GB iPhones have hit eBay, potentially lowering the closing prices of 8GB models.
  
  
• Over a third of all iPhones don't sell on eBay with the first listing, whether locked or unlocked, forcing sellers to re-list. iPhone buyers may also be waiting for the 16GB model or purchasing their iPhones through authorized channels.
  
  
• The number of unlocked iPhones is skyrocketing rapidly.
  
  
• More than a third of all iPhones listed on eBay are used, possibly revealing product dissatisfaction.
  
  
• Only a few sellers are engaged in large lot sales of 50+, but a growing number of sellers are offering up to 5 units, the maximum number obtainable from an Apple store in a single visit.
  
  
• Buyers who purchase unlocked phones are willing to pay a premium of $100 or more rather than use unlocking services. Most unlocking service listings I counted did not sell.
  
  

As Apple seeks additional international carriers to market iPhones, its marketers need to better understand the gray market for distribution of this mobile device.

Welcome Back!

It took me a second or so to realize I have two blogs on mobile telephony here at Google. When I saw "2005," it firmly hit home that I've neglected this site in lieu of others. Since they're no comments to the original posting, I'll assume that no one saw it and this is a whole new site devoted to mobile telephone marketing. The key word in this blog is on "marketing." They're tons of blogs on cell phones and mobile devices as the manufacturers and carriers deluge us with "better" (usually meaning more expensive) mobile devices. The Apple iPhone is the extreme of the extreme and I wrote about it elsewhere. To read my prophetic blog in January after MacWorld, check out http://blogs.ebay.com/bwilsonbp/entry/Apple-iPhone-Consumer-Electronics-and-Icons/_W0QQidZ133427017. And, as a follow-up to the iPhone's marketing, take a look at http://blogs.ebay.com/bwilsonbp/entry/Apple-iPhone-Fever/_W0QQcommentsyncidZ0QQidZ264907017. That should get this marketing blog off to a good start again. As always, I welcome your posts. Brian

eBay Worldwide iPhone Listings at 2,700--30% Used--HTC Touch Diamond To Market

Update on eBay Worldwide iPhone sales. Latest stats show around 2,700 iPhones of all types for sale, 30% of which are used.

HTC and other touch phone manufacturers force Apple to compete in the global handset market. "Cool" and "awesome" no longer bring home the bacon. Functionality and price will determine winners and losers in a mobispheric world.

The full story on MarketingBeyond.

16GB iPhone Company Advertising on Mobile Telephone Marketing

Update: Looks like UnlockedFones.Com is advertising via Google Adsense an unlocked 16GB iPhone on MTM. Per the ad, all you have to do is insert your SIM from any GSM carrier and, voila, it works.

So much for eBay. Nokia, Sony Ericsson and other mobile phone purchasers outside the U.S. don't have to worry about unlocked phones because, with a few exceptions, they're never locked by the manufacturers, eliminating the unlocking nonsense Apple is now experiencing.

Steve Jobs Knows What I Want and "I Need a New Phone"

Amusing. Due to the globe spinning, the 3G iPhone hit Australia, then Europe, then the U.S. It appears so far that phone activations in all countries except the U.S. are going fine. AT&T and Apple--unprepared for the onslaught--experienced software activating glitches, requiring iPhone buyers to complete the final activation at home using iTunes. Ah....well...

The fun continues on Mobile Telephony Innovations...

Apple 3G iPhone Impending Profit Loss for Mobile Carriers

AT&T will now subsidize the 3G iPhone, paying Apple $200 for each 8GB model, but AT&T and other carriers will no longer pay Apple a share of revenue, Apple's original profit estimate will drop.


If the unlocking contnues, as expected, AT&T's expected revenues and profits from the device will also drop. But international carriers will face the largest profit loss as millions of their customers purchase unlocked iPhones and multiple SIM's for use outside each carrier's service area. The full story on MarketingVisions.

Mobile Handset Sales Rise to 1.1 Billion in 2007

Mobile device sales continued unabated in 2007 with Nokia reaching a 40% market share. Sony Ericsson's increased sales to over 100 million handsets was also notable.  iSuppli Marketing Intelligence above reveals the intensive worldwide growth in mobile devices. 

Motorola continued its downhill slide to 159 million handsets, down nearly 38% from Q4 2006 to the same period in 2007. Samsung, LG and "others" accounted for the remaining total.

The 1.1 billion total should humble Apple with its iPhone. Even if Apple ships 10 million iPhones in 2008 to the U.S. and overseas, it's puny by comparison to a world increasingly dominated by much larger players.

"Keep the Customer Satisfied": Spread the Word

MarketingBeyond blog readers may have noticed I have a category called "customer service marketing." Why? Because, as I've pointed out in numerous posts, companies are losing billions due to poor customer care--and ALL industries are impacted from cell phones to computers to consumer appliances.

Cell phone companies. I'll boldly claim that quality customer service will nearly always convince customers to stay with a carrier over everything else. Why? Because if mobile carriers, like any other business, can't quickly solve customer problems or issues, their network size or latest razzle-dazzle promotion will fail. While price and other factors are important, customers want service and solutions.

T-Mobile customer care today again convinced me how true this is in cellular. As a mobile geek, I frequently float from carrier-to-carrier to complete phone reviews and assess carrier service. By far, T-Mobile provides the best customer service of all the carriers.

Today's issue was fairly simple. I ported one of my three lines from Sprint to T-Mobile recently so I could rate T-Mobile's new Nokia 6267, a 3G-equipped phone once T-Mobile launches 3G in the U.S. I returned the phone several weeks ago and received my T-Mobile bill yesterday still showing a $36 activation fee. A quick call to T-Mobile customer care and the $36 was credited to my account.

But that's not what impressed me. I knew T-Mobile would credit me for the activation charge, since I'd cancelled service during the "buyer remorse" period (strange phrase, hm...) What delighted me about the phone call had more to do with the friendliness and helpfulness of the CS rep. Despite my leaving T-Mobile (for the time being), she was cordial and didn't hassle me about staying with T-Mobile. My customer experience was totally positive, reinforcing good feelings about T-Mobile.

Case two: Sprint. I ported two lines from Sprint to AT&T when I was testing the iPhone, then ported both lines back to Sprint after a negative experience with an AT&T retail rep. I knew Sprint was (is) in the middle of merging billing systems; so I expected a messy bill, despite assurance from a Sprint supervisor a while back promising me a $400 credit after porting back. Well...my bill arrived yesterday--a mere $687--without the $400 credit and $75 in data charges, due to a screw-up when I changed from the HTC Touch to the BlackBerry 8830.

Sprint must have hired someone with humor in billing, because the new bill pages have titles like "Hello!" on page one, "Details, details (continued)..." on page 10, "Details, details..." on page 9 and "Want a shorter bill?...Switch to summary format..." on page 11. Humor is always good, especially when your bill is $687.

But I felt confident the issue was resolvable, because I kept copies of emails confirming my $400 credit. So I zipped off a copy of the email to Sprint yesterday and today I received an intelligently written email reversing out the $400, plus $75 in data charges and two $26 re-activation fees. (If you have Sprint, by the way, always use email for customer service, because they're still trying to improve their call center operations.)

Cell phone companies, naturally, are not the only businesses with poor customer service. As I wrote in a MarketingBeyond post recently, bad customer service is zapping all sorts of companies. Technical support is also suffering. (Read my tech chat posts on Hewlett-Packard).

Case three (busy customer service day for me): Cuisinart. My coffee maker filter basket flow control fell off. I quickly called Cuisinart, gave the CS rep my serial number and the company is shipping me a new basket at no charge. Let's see...that's one broken carafe and one defective basket (see my Amazon.com/Cuisinart post.)

The March 3, 2008 edition of BusinessWeek has a rating of customer service levels among 25 companies, including Sprint's continuing struggle to raise customer service levels. I believe it's mandatory reading for anyone serious about customer service in this country.

Until the majority of U.S. marketing executives improve their customer service operations, their companies will continue upsetting their most precious asset--the customer. "Keep the customer satisfied" has never been more important than in today's consumer-driven economy.

TechForward's Pricing Strategy: Cash Floats and OPM

The San Jose Mercury's article today on TechForward, a Los Angeles-based company that buys back your used consumer electronics devices, reinforces how gadget-oriented we've become. TechForward's pricing strategy for the new service is a way for consumers to own the latest in consumer technology--the same strategy used in leasing, rather than buying, a new car. The value of the gadgets in our lives varies from day-to-day. I've seen smartphones on eBay, for example, priced at over $500 one week and sell for $400 or less the following week. It's a very slippery market that will intensify in the cellular industry this year, as Google's Android initiative generates waves of new mobile devices, features and applications. Consider GPS and Wi-Fi on mobile devices. Before these features were available on mobile devices, they never determined cell phone pricing. Now that they're become commonplace on mobile devices, such as the iPhone, Nokia's N95 and RIM's BlackBerry 8800 series devices, they raise mobile device value while decrease re-sale prices. TF's pricing strategy makes sense. The consumer must pay a fee upfront to TF for each new device. Second, the buyback amount--whether mobile devices or computers--appears extremely low, even if the item is only three months old. Third, TF determines the item's condition to determine the buy-back price. Scratched and battered consumer elecronics gadgets don't sell, and TF will probably send customers a lot of $20 gift cards for virtually worthless items. Last, getting your check takes up to 60 days, revealing TF's main pricing strategy--floating cash to build TF's business, invest and sell in lots in the wholesale market, including eBay itself. It's the same marketing strategy as PayPal and other financial companies, based on the OPM philosophy of using other people's money. For further information, check out TechFoward's website.

Sprint's Continuing Marketing Problems

It's a tough world out there in mobile land. Sprint today announced significant layoffs and store closures, due to the company's continuing financial losses and customers to the other carriers.  

This is unfortunate, despite Sprint's continuing customer service complaints and lack of a clear marketing strategy. At one time or another, I've been with all the carriers, who've experienced similar problems. I blasted Sprint, Verizon, AT&T (then Cingular) in my December, 2006  eBay blog  for nickel-and-diming us on ringtones, wallpaper and apps.

More recently, however, Sprint introduced the HTC Touch, an EVDO broadband device that comes closest to my ideal Android-enabled phone. I've received excellent customer service from Sprint via email, although telephone CS is terrible. Plus Sprint has the lowest-price unlimited data plan at only $15 per month--$5 cheaper than AT&T's iPhone service.

The analysts are correct about Sprint's lack of a sound product strategy and its less-than-stellar customer base. Its latest SprintSpeed advertising campaigns have confused potential customers, especially ads displaying low-end flip phones.  And today, the Wall Street Journal compared Sprint's 54 million customer base to homeowners who chose sub-prime mortgages and frequently fall behind on payments.

Cellular is a competitive business in the U.S., exasperated by significant churn, rate plans and more sophisticated handsets. (Sprint lost over one million customers in the past five months.)  Unlike mobile carriers in India and elsewhere, U.S. carriers are in a saturated market. Profitability will only increase as mobile users choose data services, largely dependent on 3G and 4G broadband network and compatible handset availability.

2008, due to the Google Android initiative, will determine to a great extent the future of mobile carriers in this country. 

J.D. Power and Apple's iPhones for Business?

Apple proudly announced in a full page ad in today's Wall Street Journal that J.D. Power and Associates, which rates consumer satisfaction in numerous markets, "...ranks [Apple's iPhone] highest among business users."

Apple, however, left out two sub-headers in the J.D. Power release. "One-Fourth of Business Smartphone Users Report Experiencing a Software-Related Issue with Their Current Device."

The story continues on Mobile Telephony Innovations.