02 Mobile Phones announced this morning that from April 1st Phones4u will be banned form selling its contract mobile phones. This is clearly a response to the deal struck between Phones4u and Vodafone earlier this year, which gave Phones4u exclusive rights to sell its mobile phone contracts on the high street, effectively excluding Carphone Warehouse.
The Vodafone deal hurt Carphone Warehouse, the UK’s leading mobile phone retail, in fact its shares dropped significantly on the day the news was announced. We can only assume that this new deal was initiated by CPW as a clear sign to Vodafone and Phones4u that there will clear penalties if they try to mess with them. The 02 deal is a good move, and the city has responded well to the news, shares in Carphone, were 3.6 percent higher this morning.
In the long term this may well be a bad decision for the retailers because it weakens their position as an “independent” source of advice and mobile phones. How can a retailer give you impartial advice if they can’t recommend a particular leading network because they don’t sell it? As the retailers become more reliant on a smaller number of networks their bargaining power is reduced. Look at the Tesco example, manufactures need Tesco’s massive customer base more than Tesco need a particular brand of coffee on their shelves. This means that Tesco have the power to impose their own terms on Coffee suppliers and can squeeze down prices. But Phones4u are now incredible dependant on T-mobile, which T-mobile know and can exploit by reducing commissions and imposing tougher terms and conditions.
02 is currently the UK’s leading mobile phone network, it has more mobile phone customers than all other networks, T-mobile, Orange, 3 and Vodafone, so its will be sadly missing by Phones4u. Also 02’s recently launched tariff is stronger than ever so it’s a bigger than expected blow for Phones4u. Also 02 range of phones is extensive, it includes: Nokia E60, the Nokia N91, the Motorola V3x, the Motorola V3i, the LG Chocolate Sony Ericsson W950i. They also offer several exclusive handsets, which are well equipped with the latest technology such as 02 XDA Atom, 02 XDA Neo and 02 XDA Stealth.
I wonder who will be next to following the 02 and Vodafone example.