Vodafone ultra low handset strategy: let's see

VODAFONE Group offer of ultra-low 2G handsets is a move to follow further developments in the mobile market. Vodafone UK latest information on subscribers net addition shows that almost 500,000 new customers, out of 700,000, were pre-paid, however, with very low ARPU. With this move Vodafone is clearly targeting low budget segments and people that are not confident with high-tech technological and complex phones. In Switzerland a similar move of Swisscom Mobile two years ago has been not as successfully as expected. No frills and virtual operators are offering old models of Nokia mobile phones at less than €10 with €10 pre-paid credit. Swisscom mobile handsets were too expensive (€120) and able to offer only basic functions, such as, voice and SMS.

However, the GSM association forecasts that this segment could be a incredible opportunity for acquiring new customers. It has been demonstrated that voice become a commodity for many customer segments in Europe, however, low wage customers have higher then the average price elasticity for making calls as they still think that the benefit of 'mobility' is higher that its relative cost. Let's see the Q1 2008 for a critical analysis of this move.