Exclusivity is Not the Answer

Posted Oct 06, 2012 at 3:21 am in Threads > Opinions

At one point in time, there was a need for exclusivity and it helped manufacturers and carriers differentiate themselves from the pack and also was a way to promote their services and brands. For example, the Droid series by Verizon was one such exclusive set of Android smartphones and at the time it was practical for Verizon to be able to market the Droid series and have their devices recognized in a sea of other Android smartphones. It was a way of differentiating their phones from those that were carried by the likes of AT&T, Sprint, T-Mobile, and others. The Droid series worked to Verizon’s advantage and brought them new customers and retained old customers because they were the only carrier that had those phones and people wanted them. Each carrier had their own set of exclusive devices and not a much larger degree, this was a way of battling the iPhone and other top-tier smartphones.

A second example is the Evo series from Sprint. Sprint introduced the HTC Evo 4G as their flagship and it hailed in a new era in terms of a new 4G network and a large 4.3 inch screen that made it stand out from the rest of the pack of Android smartphones as well as the iPhone that was still relegated to AT&T. Sprint touted their Evo device as the first of it’s kind with 4G and they showcased it for the world to see through many elaborate advertisements and it eventually paid off handsomely, with Evo becoming their best selling device ever and this in turn made HTC’s brand more recognizable and brought them much success. Soon, you has a solid partnership forming between the two, whereby, flagships and certain mid-level HTC devices would be sent Sprint’s way. AT&T at the time had an exclusive contract with Apple to carry the iPhone and the same thing was happening over there. T-Mobile had it’s own set of devices that were exclusive to it and though they did not have the same recognition as the Evo or Droid series, they still were framed by the same principles of differentiation and being the only carrier to have a particular device.

Another aspect of this exclusivity was that manufacturers were being paid for make certain devices exclusive and they were heavily promoted and marketed by their exclusive carriers. This lead to great partnerships forming among carriers and manufacturers, whereby, one flagship devices from one manufacturer would go to one carrier and another flagship from a different manufacturer went to another carrier. This was the way things were and it seemed to work for everyone except for the consumers, who were being forced to decided to change carriers for better or worse in order to use a flagship device that was not being carried by the existing carrier.

This leads me to the heart of my little spiel and that is the end of exclusivity or at least manufacturers finding/needing to find out that it is to their benefit to have their flagship devices on as many carriers as possible. This began, I would say with the Samsung Galaxy S, which was presented to Sprint, T-Mobile, Verizon, AT&T, and US Cellular as the Epic, Vibrant, Fascinate, Captivate, and Mesmerize, respectively. What Samsung had found was, the holy grail, a way of bringing their flagship to as many people as they could and still managing to differentiate the Galaxy S with respect to the carriers. Samsung did a great job marketing their Galaxy S and showcasing their flagship as being the best and people believed it and bought it and the Galaxy S soon became a household name and Samsung’s brand recognition and customer base increased substantially. Then came the arrival of the Galaxy SII and this cemented Samsung as the top smartphone manufacturer and their brand recognition went through the roof. Clearly, Samsung was doing something right and they were being reward for it, handsomely.

Samsung’s ability to provide their flagship to all the top carriers made them stand out and instead of customers having to change carriers or wait months and months for their carrier to get something worthy of being called a flagship, they could now get the best phone on their carrier. The evidence of Samsung’s success is pretty clearly, they have sold over 25 million Galaxy S’s, 30 million+ Galaxy S II’s, and are now selling one of the hottest and best smartphones, in the Galaxy S III. Also, what distinguishes Samsung now, is that they are able to provide their flagship to all carriers without having to change it’s design or specs. One flagship to rule them all.

Personally, I am a big HTC fan and have been for a long time but I am getting annoyed and irritated by their strategy because I want them to succeed as much as Samsung and I know that they can. However, their problem lies in the fact that currently, their flagship, the One X is exclusively on AT&T and the just announced One X+ is also an AT&T exclusive. I know they are probably getting a lot of money from AT&T but I don’t see how that could possibly be better than all the customers they could be getting if they had place the One X or One X+ on all carriers like Samsung. I think that in this day and age, it is imperative that manufacturers like HTC, Motorola, LG, and others, learn from Samsung and even Apple and what they have done with their flagship. There is so much opportunity for growth and expansion within the North American markets and worldwide, if only they learned that exclusive flagships are a disadvantage that could pose and is posing big problems on these OEMs. Success comes when consumers are happy and continue to buy OEM’s smartphone because they like the brand and what it has to offer.

Samsung has found the formula that is giving them great success and they are
utilizing it to their advantage, while the rest of the Android OEMS are sitting in meetings and conferences trying to figure it out. This should be a big red flag for HTC, Motorola, LG, and others. If you want to continue to succeed then it is imperative, that you stop signing exclusive contracts with carriers and be independent and do what is best for your company and most importantly, what is in the best interest of the consumers because without us supporting you, you will ceases to exist. This should be a learning moment so take advantage of it and change for the better.

  • Sever

    its not that simple though.

    the reason why samsung were able to do it is because they already had a fanbase that was over 30 million strong from the s1 and s2. everyone knows its popular, so basically everyone has to do what samsung wants. samsung chose to release the s3 the way they wanted it to be released. if you (the carrier) didnt like having the same phone as every other carrier, then too bad, you lose your share of the 30 million strong fanbase. when a single manufacturer comes that close to a monopoly, its not as good for everyone as they would think.

    every other manufacturer automatically becomes second best compared to samsung. the only way for other manufacturers to stay in the game is by signing into exclusive deals with carriers. this way they are guaranteed income as the carrier must purchase the devices directly from the manufacturer and then customers can purchase subsidised devices from the carrier. HTC, motorola and LG dont have the 30 million strong fanbase that samsung has. they dont have as high of a demand as samsung. if they dont sign into an exclusive deal, they risk digging their own grave by cutting off their own guaranteed source of income.

    to be honest, whilst i do like samsung products, i am not 100% behind them, mainly because they are that close to reaching a monopoly.

    when most manufacturers experience good sales, their newfound wealth is shared between multiple manufacturers as they often must purchase parts from other manufacturers.

    however, with samsung, most of their parts are made inhouse. they make their own displays, storage, memory, SoCs, etc. when samsung experiences good sales, it doesnt get spread around as much. they might spend a bit on patent royalties, but almost all of their money goes back into samsung.

    if samsung end up achieving a monopoly, they will essentially own their customers.

    • jamal adam

      If I remember correctly, at one point, HTC had the largest market share of Android smartphones. They could have done the same thing as Samsung and provided it to all carriers but they didn’t and Samsung got it done first, which is one of the reasons why they have the largest market share. They earned those 30 million users by putting their flagships to a wider audience and look at the results we are seeing today. Also, Samsung is nowhere near having a monopoly. In order to curb this, it’s important that other manufacturers do the same thing and give Samsung competition on all carriers.

  • redraider133

    I agree. By creating various variants for each carrier it only ultimately leads to even longer time to update not to mention less accessories, etc if the phones arent the same. Plus it takes away from potential customers that the phone could have attracted. The One X is a perfect example. I guarantee many on verizon and tmo wanted that phone but never had the chance to get it.

  • http://www.focuszonedevelopment.com Homncruse

    I couldn’t have said it better myself. Unfortunately though, I doubt that anyone other than Samsung has the clout to make such mandates.

    HTC: We want to offer a single global device across all major U.S. carriers.
    Verizon: Okay, but we want to call it the Verizon DROID Incredible 4G LTE Touch, and can you put an NSA-grade encrypted bootloader on that?
    HTC: …
    Sprint: Get out.
    HTC: But…
    AT&T: We’ll take it. Have some money. Grab one of the suitcases over there on that wall. It’s filled with cash.
    HTC: Okayyyy…
    T-Mobile: Do you have anything, I don’t know… not as good? We’ll take that. We don’t want to compete with AT&T, not directly… we want to be sneaky about it — hey, AT&T, can you plug your ears and hum to yourselves for a minute?
    AT&T: *plugs ears and hums “Living on a Prayer” by Bon Jovi*
    T-Mobile: We want customers to bring their AT&T phones to our network! First, they’ll buy their phones from AT— hmm… maybe we didn’t quite think this one through…
    HTC: Listen, everyone, if we could just–
    Verizon: Are you guys still here? Go on now, daddy has some things he needs to take care of.
    HTC: *le sigh*

  • CTown

    You are right in that “exclusivity is not the answer” because of the success that the iPhone and Galaxy S phones have. The problem is T-Mobile. I don’t think that they want to carry many high-end (and thus expensive) flagships anymore. T-Mobile has the GSIII and the One S and it seems that they are fine with it. Plus, T-Mobile will always be compatible with the Google-sold Nexus devices.

    I think that Verizon, AT&T, and Sprint will each carry most of the flagships released by the big OEMs. Though, I doubt they will carry all of the flagships at the same time. For example, Verizon already has three or four Droid Razors and the GSIII, do they really need a LG flagship?

    However, the no-contract carriers have a different overall strategy. They don’t expect to wow anyone into a two-year contract by using show casing a high-end device. So, buying to many high-end devices could cost them a lot of money (even if they are subsidized enough by the OEM). So, it can financially make sense to get an exclusive deal with AT&T if the other carriers are not interested in buying your device in bulk (because the other carriers might have enough flagships or don’t expect to sell expensive phones on contract).

  • Dr.Carpy

    My suggestion is one that some may hate. I buy an unlocked phone and ride it out for 2 yrs. Think about the new Nexuses or Nexii. When sold on Google Plus, the carriers get cut out. Which is the best way I think. Phones get in the hands of the people who want them. Updates are predictable for end users, and the bloat or skinning done by carriers get stopped which then creates better user experiences. Carriers have too much power and influence over the end users experience and unfortunately it’s usually to the detriment of the device and the manufacturers.

    • jamal adam

      I think that’s a smart idea and something that many customers should do but as you’ve said carriers have a lot of power and influence and therefore people are usually stuck to one carrier or another. Also, many people don’t know too much about unlocked phones because they go to their carriers first in order to buy a phone.

      I think it would be nice to have the ability to choice your phone first and then you carrier. This would be the most effective way but problem near impossible here in the United States.

  • SGB101

    All phones launch on all networks in UK, this makes great competition and prices have never been so low, plus on contract all phones are free, non of this $199 upfront. And price ATM are about £33pm for all you can eat everything almost.

    I’m unsure why and how US providers get the big manufactures to make changes. Pushed the prise up for everyone.

    • jamal adam

      If only that were the case, here in the US. AT&T and Verizon have such a large monopoly that it makes it difficult to succeed in the US market without penetrating their customer base and in order to do that manufacturers bow down to these giants and do their bidding.