Juha Saarinen: Vodafone tries to be smart with handsets

A mediocre threesome from Vodafone: the Smart 7 handsets. Photo / Juha Saarinen

It's tough to be a telco in 2016. The only thing people want is a reliable and fast data connection, with everything else like voice minutes and texts being neither here nor there.

That's the "dumb pipe" situation that telcos are scared to death of: they get to sell capacity on costly infrastructure as a low-margin, high-volume business, and that's it.

The likes of Google/Samsung and Apple meanwhile own the high-margin device and app store markets, and over the top providers make sure nobody has to talk on the phone, or send messages, with one eye on the meter as in the past.

Vodafone's worked hard to avoid the "dumb pipe" trap and is hoping to get a slice of the device market action with a new range of Android smartphones that are priced competitively and offer a decent range of features. This is the continuation of an effort that started a year ago, when the first Smart range of devices came out.

It's a bit hard to work out from the naming which phone is which: I was sent the Ultra 7, the Turbo 7 and the Mini 7 handsets - the last one's the smallest and cheapest at $79, and only supports 3G data.

You'll pay $149 for the Turbo and the Ultra model with a 5.5-inch 1080p screen goes for $349, and both support 4G.

There's also a Platinum model for $699 coming up that sports a 16 megapixel camera, fingerprint reader and 32GB storage.

The phones are made for Vodafone Group by TCL Communications in Shanghai, China and they are perfectly workable with OK design, but unremarkable. Even with an eight-core processor, the top-end Ultra 7 struggled at times to drive Android and apps, and the 13 megapixel camera's only OK.

And, they're locked to Vodafone's network. They work on Spark or 2 Degrees, but you have to pay $30 to unlock them. That particular "feature" is a bad idea. Thirty bucks to switch networks will annoy customers, and is a vote of no-confidence in the attractiveness of Vodafone's own plans.

Besides, wouldn't Vodafone want to see its devices on other telcos' networks just for the sake of it?

By now you should be able to see what Vodafone worldwide is thinking: Android's good enough, there are plenty of anonymous Chinese device makers that'll put together decent smartphones with Vodafone tweaked software.

Such a strategy cuts established Android makers out of the action as Vodafone has a direct relationship with customers. Vodafone reckons it's sold over 300,000 own-branded devices in New Zealand, and in Europe last year, some 3.4 million.

That's quite a few devices but considering Big V has over 120 million customers in Europe alone, the mediocre and boring own-branded handsets aren't exactly setting the market on fire over there.

The numbers aren't anywhere near enough to make Vodafone appear in market analysts' charts either, as a smartphone vendor that matters.

If Vodafone was serious about becoming a handset heavyweight, it could buy a smartphone company with a reputation for innovation.

Selling your own devices does come with risks like supporting them with security and other updates or face getting sued by irate, hacked customers, but generally, the concept' appeals to telcos as a survival strategy. Most telcos around the world have tried it already, but not quite worked out how to do it right.

If Vodafone was serious about becoming a handset heavyweight, it could buy a smartphone company with a reputation for innovation and doing things differently.

Taiwan's HTC still counts as one of the major smartphone makers, and would probably jump at being folded into the Vodafone family with their devices being in front of hundreds of millions of customers around the world.

Add to that some exclusive plans for the premium, own-branded devices with lots of 4G data that other Android makers and Apple iPhones couldn't have, and Vodafone might be able to dig itself out of the dumb pipe it's in currently.

Except Samsung and Apple might retaliate against Vodafone, now a competitor, and withdraw their handsets which would be a disaster. Customers would jump to another telco in an instant.

More vertical integration is probably not the way out of the dumb pipe for Vodafone or any other telco in other words. It's too late for that, and now they're stuck with customers who won't hesitate to leave them, and who are loyal to device vendors and certain apps.

Vodafone should've seen that coming years ago.