Margins squeezed in aggressive Xmas battle
The market this Christmas will be one of the most aggressive in years as retailers and manufacturers scrap for share and operators continue to support prepay connections.
'The battle lines are drawn; some are going to go heavily on prepay. The mobile retail specialists will try to get more than their fair share and that's a recognition of how strong the non-specialists have [become] in prepay,' said John Barton, sales director at LG.
'Carphone is going to be very, very aggressive,' said another handset manufacturer who asked not to be named, 'They will hit the market hard with some incredibly aggressive deals on prepay. Music will feature in their propositions and there will also be some bundling.'
LG is aiming to double its market share to 10%, while Samsung is aiming to nudge its share up to 25%. Sony Ericsson and Nokia will also have strong ranges and ambitious plans.
Barton added that the operators would continue to support prepay with strong discounts: 'I hear that networks will continue to support prepay; there is a desire for connections. I'm absolutely sure the wholesale price won't lead to the prices retailers want to achieve, so the second part of the jigsaw is networks' pricing.'
The intensity of the competition is expected to push margins down as players fight hard to get their share.
'It will be an aggressive time – everybody I speak to is saying that. It's going to be more competitive than ever before. Margins will be squeezed. There are decisions to be made. You decide to play or you don't. It's about having a plan that you realise – even if it's less profitable,' said Barton.
Carphone Warehouse and Phones 4u are also tipped to fight more strongly with Argos and Tesco for prepay connections than in previous years. 'They have tended to let the non-specialists have their way in previous years. They won't do that this time,' tipped a senior industry source.
source
'The battle lines are drawn; some are going to go heavily on prepay. The mobile retail specialists will try to get more than their fair share and that's a recognition of how strong the non-specialists have [become] in prepay,' said John Barton, sales director at LG.
'Carphone is going to be very, very aggressive,' said another handset manufacturer who asked not to be named, 'They will hit the market hard with some incredibly aggressive deals on prepay. Music will feature in their propositions and there will also be some bundling.'
LG is aiming to double its market share to 10%, while Samsung is aiming to nudge its share up to 25%. Sony Ericsson and Nokia will also have strong ranges and ambitious plans.
Barton added that the operators would continue to support prepay with strong discounts: 'I hear that networks will continue to support prepay; there is a desire for connections. I'm absolutely sure the wholesale price won't lead to the prices retailers want to achieve, so the second part of the jigsaw is networks' pricing.'
The intensity of the competition is expected to push margins down as players fight hard to get their share.
'It will be an aggressive time – everybody I speak to is saying that. It's going to be more competitive than ever before. Margins will be squeezed. There are decisions to be made. You decide to play or you don't. It's about having a plan that you realise – even if it's less profitable,' said Barton.
Carphone Warehouse and Phones 4u are also tipped to fight more strongly with Argos and Tesco for prepay connections than in previous years. 'They have tended to let the non-specialists have their way in previous years. They won't do that this time,' tipped a senior industry source.
source
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