Tuesday, July 13, 2004

PAYG Killer

Commenting on a journal I suddenly realized that if Wal-Mart went into the Pay-As-You-Go (also known as Pre-Paid) cellphones, they might make a mint. It would be perfect: they could bulk order huge amounts of handsets from Hong Kong or Korean OEMs, and resell left-over network capacity from any US GSM carrier for probably peanuts considering their projected volume. They have outlets and sales-points everywhere, they could outsource all the billing and customer support to someone else, and the physical product is so easy to ship it is ludicrous, and their market would be so conservative with regards to features their handsets would have a shelf- and production-life measured in fractions of a decade.

In fact, as soon as the merger with Cingular has happened and Cingular has absorbed the subscribers and the infrastructure of AT&T Wireless Systems (AWS), the current owners of that AT&T Wireless brand, which will not be owned by Cingular, actually wants to use their brand-name as a network reseller, using their brand to resell to consumers time on whatever cellular network they can buy blocks of capacity on for the lowest price, like Virgin Mobile currently does. They could do worse than partner with Wal-Mart. "Wal-Mart now brings you pay-as-you-go cellphone service from AT&T, the name you trust with telephones. No plan, simple phones, clear calls. Wal-Mart, always low prices."

I'm a genius. Enough of a genius that if my current company asked me if it was a good idea to supply for this venture, I'd tell them to stay far away, even if we already have whole design- and production divisions for low-end markets in developing countries. Besides having to compete with Taiwanese suppliers ripping our phones apart and Wal-Mart's near-homicidal terms for their suppliers, the level of service is just not one we should want to be associated with: it has been my experience thathowever bad the network is in dropping calls and under-prioritizing roamers and re-sold airtime, consumers always blame their phone first.