Through the end of the year, the high profile U.S. men’s clothing retailer Jos. A. Bank is offering a free Android smartphone with the purchase of a suit. To use the handset, the customer must be over the age of 18 and must subscribe to a new two-year contract.
Some analysts were chuckling at this offer because of the fact that Jos. A. Bank is known for its outlandish promotions, such as the famous “buy-one-get seven-free” deal. However, many other reputable companies, including those in the apparel, banking, cosmetics, electronics, restaurant and sporting goods industries, have also offered this kind of free-smartphone deal. Some of the more well known include Guess Jeans, Regions Bank, Redken Fifth Avenue NYC, Canon, and Chili’s. These consumer product and service companies would appear to have only upside from such a promotion. The same can be said for their telecom partners. So, while it may be a gimmick, it is one that could pay off financially for all involved.
The mobile operator in such promotions is typically an MVNO, with the promotion being designed by third party firms that service MVNO providers. From our vantage point, these promotions serve to spotlight that the primary, if not sole, selling point for the average MVNO is price. Being a low cost option is in fact their raison d’être.
However, in today’s rapidly evolving mobile marketplace, having to rely on price to compete is actually their Achilles heel, and not a strength.
We believe strongly that in order to prosper in the future, and the relatively near future at that, mobile operators have to move up the value chain by providing more advanced, value-added, data-intensive services. The days of being able to succeed by simply offering basic, low cost service are rapidly coming to an end. That does not bode well for the future of most MVNOs, and these types of gimmicking promotions will do nothing to forestall the inevitable. MNOs should take note, as they too are not immune to the macro trends reshaping the mobile landscape.