O2 launched two clubs for business connectors last week to help it crack the burgeoning UK data market which it claims will be worth £1 billion by 2009.
O2 has invited 15 large B2B resellers and service providers including Affiniti Alternative Networks Azzurri Handheld PCs and Timico to join its Data Centre of Excellence for which it has partnered with Nokia and BlackBerry maker Research in Motion. The basic threshold for entry is 400 data connections a quarter and an average revenue per user (ARPU) of at least £44 a month.
Battersea-based service provider Alternative Networks and Affiniti part of Kingston Communications are the first businesses to qualify. O2 expects five more to join this year and others to step up to the mark in due course.
O2 general manager of business sales Ben Dowd said: The 15 companies that we brought together for the launch are the ones best equipped to get there quickly. These guys are the best in the industry at selling mobile data solutions. They have the reach and depth and expertise in certain areas that we dont necessarily have. Its an exclusive club but we want it to grow.
Relationship
Its 15 channel partners all of which have a direct relationship with O2 also have to appoint two internal pre-sales data specialists sales consultants trained and tested in data solutions by O2 itself who can assess customers needs prior to the sales pitch. They are also required to set up an in-house after-sales service team made up of two data care specialists.
Performance will be rated according to customer satisfaction scores and verbatim customer comments. Membership of the club will be withdrawn if channel partners fail any of the criteria warned Dowd.
Youve got to have the resources in place and youve got to be able to deliver a great customer experience and you have to do that consistently said Dowd. If you dont you get taken off the programme.
As with O2s Advance dealer and distributor schemes data club partners will receive extra marketing support on lead generation promotional activities and incentives as well as help with recruitment and access to kit. Data club dealers will be able to access and share information via an Internet portal. They will also be accredited and awarded a plaque and quality stamp to certify them as preferred data resellers.
O2 follows its Data Centre of Excellence with the launch of an exclusive machine-to-machine (M2M) centre of excellence to channel partners on Wednesday (January 31). M2M deals with technology that reports information remotely to other machines without human intervention such as vehicle tracking.
O2 has identified seven M2M specialists including Azzurri Cybit and Trafficmaster to enter the club but has so far admitted none. Similarly M2M club benefits include a guaranteed marketing fund technical and sales training and support with recruitment.
The two new data clubs M2M connections are classified as data are intended to put O2 on the front foot in the industrys big growth sector. Armed with analysis by Gartner O2 predicts that the data market will be worth £1 billion within two years.
Market penetration is around 15 per cent as it stands. That figure will jump to 70 per cent by 2009 driven primarily by the proliferation of email solutions. O2 wants its connection rate to outpace the industry growth.
We want to overachieve. We want to take more than our number one share said Dowd.
As it stands Vodafone is number one in the corporate sector where most data connections will go. It puts its share of the market at 55 per cent.
According to Dowd however Vodafone actually accounts for closer to 45 per cent of handsets in the corporate market and leads only because of some large contracts within the government sector. O2 which takes around 30 per cent of the corporate market won a large Treasury contract from Vodafone last year and is looking to encroach further on Vodafones public sector monopoly.
Neck and neck
Up until now O2 and Vodafone have been neck and neck in the SME sector ahead of Orange in third place and far beyond T-Mobile with a single digit share in fourth. But O2 with around 30 per cent has just sneaked ahead of Vodafone for handset numbers according to Dowd and is in pole position on all fronts in terms of data connections.
In terms of handset numbers we believe were number one in SME and number two in corporate behind Vodafone. The difference is the government sector and we have that in our sights. If youre looking at data we believe were number one for data said Dowd.
Essex and Hertfordshire police signed a five-year contract for around 4000 handsets with O2 just before Christmas. It is the largest police deal O2 has done and gives bobbies on the beat access to national police register information. O2 now has 21 out of the UKs 43 police constabularies on its books.
Other recent big corporate contract wins include flower wholesaler Flamingo Holdings signed by Maidenhead B2B dealer Handheld PCs and Portsmouth Water signed by Newport Pagnell B2B dealership Interchange.
Dowd expects longer-term contracts typically of two years but also running to three and sometimes five to become the norm. Business customers are now integrating mobile and data solutions into their IT budgets and do not want the hassle of thrashing out new contract terms every 12 months.
Opportunity
O2s strategy hinges on the same basic principle as Vodafones: that the channel is of little use in terms of consumer connections but is still good for snaring SOHO and SME customers.
Quality resellers can reach the parts of the lucrative B2B market that lumbering networks cannot. But O2 does not subscribe to the view as Vodafone does that the larger corporate sector is out of bounds to independent dealers.
The biggest opportunity for these guys is around the SME level said Dowd. Thats around the 500 employee mark. But some of these players have cut through to the corporate sector too.
Nor does O2 plan to ape Vodafone and buy up large B2B resellers and service providers operating at the corporate end of the market claimed Dowd. Its data clubs alongside its Advance schemes for dealers and distributors supply it with good enough access to the key growth sectors.
When you look at the size of the data market we dont need to go buying companies to achieve our objectives he said. A lot of these companies are entrepreneurial and its not a road well go down.
O2s strategy for data sales is to dangle a carrot in the form of entry to its club in front of the dealers nose. The channel has to raise its game to continue to work with O2 but convergence has changed the rules and everyone has to adapt.
When we create these clubs of advance partners and data specialists its meant to be exclusive and its meant to be aspirational because we all have to step up to the mark said Dowd.
Its not just the networks and the dealer channel business customers have to step up to the mark too. They have to get to grips with mobile data so they can achieve a competitive edge over their rivals because these services deliver more productivity.
Why data is crucial to ARPU
The increased importance of the data market is a result of declining voice revenues for the networks.
The immediate growth area for data is email as solutions from RIM Microsoft and Nokia proliferate among business customers. As form factors for data devices shrink more consumers are using them as combined devices as the popularity of BlackBerrys Pearl handset proves. And so networks only need to subsidise a single device for both voice and data.
Gartner bases its prediction that the data market will spiral to a £1 billion industry in two years on the arrival of more desktop applications on mobile phones. Converged devices also offer better combined voice and data revenue than the sum of the revenues from two distinct devices according to O2 general manager of business sales Ben Dowd.
When customers get an email on a converged device they are far more likely to respond either by making a call or emailing back he said. Additional ARPU is created by combining data and voice.
The right mobile data solutions can improve productivity and provide a competitive edge to users.
We need to move the discussion away from price to productivity said Dowd. The benefits that data brings go beyond how much money you can save on your mobile bill. If you start to make sales teams or engineers more productive you actually give time back to the business. Thats where we all need to move.
