Live! and Kickin'

Vodafone Group plc (NYSE: VOD) is pretty pleased with itself. Having spent millions of euros on marketing its Live! service in a number of European countries, it has attracted some customers (see VOD Offers Live! Update): more than 380,000, to be exact, since the launch in October (see Vodafone Goes Live!).

The service offers games, picture messaging, all sorts of downloads, and access to "walled garden" content on color screen handsets, such as the GX10 from Sharp Electronics Corp. (see Looking Sharp and Live!y). Germany has seen the biggest uptake, with 150,000 Live! handsets sold, followed by more than 90,000 in the U.K., and over 60,000 in Italy. The service is also available in Ireland, the Netherlands, Portugal, Spain, and Sweden, which between them have snagged only 80,000 or so customers. The operator claims it is on track to reach its target! of 1 million Livers! by the end! of the first! quarter of 2003!

Alastair Brydon, director of research at consultancy Sound Partners, rates the offering. "We have been impressed with the Live! service, as it is marketing a package of services and features, such as a color screen with picture messaging and access to popular content such as sports results. WAP was a disaster initially when the technology was marketed, but there is great potential for the uptake of services that WAP enables, and Vodafone seems to have taken this opportunity by the scruff of the neck." And it's going to wring that neck for as much revenue as possible, of course.

But John Strand, CEO of Strand Consult, believes Vodafone will be losing money on the service, as the operators have no viable business models to make profits from services delivered by GPRS. "They hope to make money in the long run, sure, but they have to pay for all the marketing of all the services, and there is no business model for companies to make money by developing content or WAP services," blasts Strand. "Meanwhile, everyone can make money from premium SMS, and everyone can use it. It can be used on all GSM phones and people know how to use it. SMS has a business value chain, but there isn't one for GPRS. All these operators spent money on building GPRS networks, but they don't offer any incentives to the retailers to sell GPRS phones -- there is no extra margin for selling a GPRS handset over a GSM phone."

We're sure this is not the last we have heard about Live! -- or from Mr. Strand.

— Ray Le Maistre, European Editor, Unstrung
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