Vodafone will start selling its 710 3G handset in October, the first marketed solely under the operator’s brand. It is manufactured by Chinese ODM Huawei Technologies, but the specification and design have been defined exclusively by Vodafone.
The operator has made it clear this is a strategic move, part of its plan to leverage purchasing power and take control of device specifications. It hopes this will result in lower cost, easier-to-use 3G devices for the mass-market. Operators have been habouring these ambitions for some time, but the idea finally seems to be gaining traction in the 3G market on several fronts: O2 also joined the fray recently with its Ice handset.
The potential impact is significant. Branded handset manufacturers will see an increase in competition, requiring them to demonstrate an edge through either their brand, pricing or technology. Smaller operators which lack the scale to manage a handset project on their own may seek to partner with larger players to benefit from their economies of scale. Vodafone is already working in this way in several markets, where local operators are using the operator’s technology and supply chain.
It is a big win for Huawei too. The Chinese vendor has already made significant progress in the infrastructure business through price competition and technological innovation. With it’s sights now set on the handset market and a global partnership with Vodafone, it is well placed to secure further agreements. It would do well to expand its operator customer base as quickly as possibly: it is hard for manufactures to generate long-term growth from a single engagement.