UK 3G operator, 3, is about to launch two Euro 9 ($10.75) handsets into the Irish market, according to The Sunday Times.
Signing up for its Euro 60 a month package ($71.74) entitles you to either a Sony Ericsson K608i and the NEC 338. This undercuts Vodafone by c. Euro 40 for the SE model.
While heavily subsidised handsets are nothing new in the industry, it’s interesting that 3 is resorting to the only tactics that seem to work for the company – discounting the hell out of its products. It famously struggled in its early marketing in the UK by trying to persuade us that we should all go 3G to get mobile video calls. Finally, they were forced to abandon this and simply offer cheap voice rates.
Of course, signing up subscribers with attractive price-led packages isn’t necessarily a poor strategy. If people sign up to one thing (cheap voice calls or handsets) and then discover all the other compelling benefits of using your service, they may remain loyal in the future. However, if your service has little to differentiate it from that of your competitors’, price-led activity leaves you very vulnerable as users will simply switch to cheaper offerings as they emerge.
It’s too difficult to say if 3 has a compelling and sustainable competitive advantage, but my current feeling is that they probably don’t in comparison with the fearsome competition in the UK and Ireland.
Time will tell.
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