O2 breathes life into GCC handset market

Having achieved remarkable success in the Asia Pacific with its handset range, O2 is targeting markets in the Middle East to fuel its global expansion. Aaron Greenwood spoke to O2 Asia Pacific CEO Mark Billington at the launch of the company’s handset range in Dubai last month.

  • E-Mail
By  Aaron Greenwood Published  June 13, 2006

|~|Mark-Billington-200.gif|~|O2 Asia Pacific chief executive officer Mark Billington expects Dubai to be “massive” for the company’s business in the Middle East.|~|The emergence of O2 as a major international cellular service provider has been impressively swift. Established as an independent business following its demerger from UK parent company British Telecom (BT) in 2001, O2 has grown to become one of the biggest players in the European and Asia Pacific cellular markets. This growth has fuelled the company’s ambitions in peripheral sectors, most significantly of which has been the ‘smart’ handset market, in which it has also achieved impressive growth in market share. O2’s Asia Pacific division, which boasts a considerable geographic reach stretching from Australia to India (and now the Gulf region), has been responsible for much of this success. O2 Asia Pacific’s chief executive officer, Mark Billington, who joined the company in July 2003, has played a key role in the company’s emergence as a major force in the burgeoning ‘smart’ wireless handset market. Billington’s strategy has been defined by his push into emerging markets across the Asia Pacific, expanding the company’s presence from three countries just four years ago to 17 countries today. “For our future growth it’s important we get the customer experience right first and foremost,” he says. “So rather than spreading ourselves thin across the region, and not giving consumers a premium brand experience, we’d rather go deeper into specific regional sectors from the outset. “This strategy has proven very successful across the greater Asia Pacific and it’s something we’re determined to bring initially to the countries of the GCC and later to other territories in the Middle East.” Billington also attributes the company’s success to its primary focus on developing “premium smart wireless devices” and pitching them at emerging markets characterised by a tech-savvy consumer demographic. “We’ve achieved great success in the smart devices handset sector in the Asia Pacific,” he says. “IDC figures last year showed us as being number two in the smart devices category in the Asia Pacific excluding Japan, and if you take into account we didn’t have a distribution deal in China at that point, that gives you a pretty clear indication of our market potential.” Billington is now turning the company’s primary focus to the Middle East, a region he describes as commercially “very interesting”. “Our entry into the Middle East market represents a natural evolution of where we’ve taken our business in the Asia Pacific and what has worked for us there. “In terms of geographical expansion, the obvious choice for growth is the Middle East. It also boasts many of the key characteristics we’re looking for, including a tech-savvy consumer demographic and high net wealth,” he explains. “The O2 branded cellular network has been a huge commercial success in Europe, but in the Asia Pacific, we’re known primarily as a handset device brand, not as an operator. A geographical region sitting between the two such as the Middle East makes it an ideal location for us to exploit our growth strategy.” Billington is hugely confident O2 can build a successful business in the Middle East leveraging its recently revitalised range of smart handsets. The company officially launched its first handset, the Xda atom, to much fanfare in Dubai and Jeddah last month. The Xda atom boasts a range of firsts in a PDA-style handset, including a two-megapixel camera with built-in flash and an FM radio tuner, which is supported by O2’s proprietary MediaPlus application, which the company claims is the first integrated multimedia centre designed for a PDA device. MediaPlus provides a range of innovations, including audio graphic equaliser settings for Windows Media Player 10, in addition to providing a unique interface for listening to MP3 digital audio files or for viewing digital video data. The Xda atom also features a 2.7-inch 262K-colour QVGA TFT-LCD touch-screen, Windows Mobile 5.0 OS software, a built-in wireless LAN, and support for EDGE GSM/GPRS, Bluetooth SIG v 1.2, Infrared, mini-USB and ActiveSync.||**||Market aesthetics|~|Xda-Atom.gif|~|O2’s Xda atom is the first of up to 10 smart mobile handsets the company plans to launch in the Gulf region over the next 12 months.|~|Billington sees strong demand for smart devices that also boast strong aesthetics such as the Xda atom in the Middle East. “Demand for smart cellular devices has been taking off across the world,” he claims. “There’s been a decline in demand for traditional PDA style devices and a huge increase in demand for PDA phones. Windows Mobile OS now has more than 50% share of the smart phone market, with much of this growth occurring in the past year. O2 was Window Mobile’s fastest growing brand in 2005, and in the first half of the year, we shifted more data devices than any of our competitors globally. “Our product roadmap for the Middle East will focus on three distinct sectors of the market – the smartphone sector, the high-end (heavy user) big-screen device sector, and the lifestyle sector. The Xda atom fits into this latter category. “We plan to expand our presence in each sector, building on new technologies whether it be hardware or network focused (such as 3G) and expand our portfolio of products. “In our lifestyle handset range, we place a great emphasis on style. Functionality is really important, but it is not the fundamental reason consumers buy devices in this category – they are attracted to them because they are aesthetically beautiful devices that say something about them personally. “Our handset range destined for the Middle East will consist solely of smart devices, and the challenge with that is that what might have been considered a smart device two years ago may now be considered a glorified feature phone. But that gives us some breadth to expand the portfolio in the future. “The way going forward is to develop our product range based on the Windows Mobile OS and develop products based on consumer demand.” Despite massive consumer demand for entry level handsets in the emerging markets of the Middle East and Africa, Billington says the company harbours no ambitions in the sector. “Low-end handsets don’t really play to our strengths. We have a premium brand and we have no intention of bringing out 30 to 40 handsets hitting each sector of the market – we leave that to other companies as we appreciate how difficult a challenge this can present. What we’re really good at is developing premium devices that are stylish and innovative, but also come at a price premium,” he says. “We’re not trying to be everything to everybody. Over the next 12 months we’re going to release eight to nine products with some variances between them, and we’ll be looking to introduce them around this time of year and at Christmas. “Twice a year we’ll be looking to refresh the range and roll out improvements across the portfolio.” In terms of major competitors in the smart phone sector, Billington remains adamant that O2 has the product range to take on major players such as Nokia and Motorola. When questioned about how he felt taking on hugely successful Dubai-based PDA phone vendor i-Mate – which was established by former BT executive Jim Morrison – on the company’s home turf, Billington’s response is interesting to say the least. “There’s two types of competition that we face – firstly, there’s localised competition from ‘me-too’ brand companies. We don’t play in that market – we design our own products, we build our own applications around them, we have unique ‘IDs’ that have global reach – and we own the ID for atom worldwide so we can launch it anywhere we want to,” he says. “While you might get localised competition, it’s not real competition. The big challenge is competing with brands such as Nokia and Motorola. “What we’ve achieved in the past four years in the smart phone sector is to be recognised as the number one brand in PDA handsets. We’ll work to leverage this success in every market we enter into. The key is to educate consumers to appreciate your brand value as part of a major muiltinational company.” In terms of distribution, Billington says 02 has forged important alliances that will serve the company’s growth in the GCC. It has already appointed S2 in Saudi Arabia and Unitech in the UAE, and will look to establish similar distribution deals to service other countries in the region in the future. “We’ve got a great distribution partner here in the UAE with Unitech, which is providing us access to power retailers and IT retailers in the country,” he explains. “We’re confident – we have about 75% of the retail coverage we would hope for in one quarter, and in the next quarter we’ll be looking for around 90% retail coverage in the region. Wherever you would expect to buy an O2 device you’ll be able to find one. “In terms of regional expansion, we’re planning to work with key partners servicing individual markets across the region. “Our strategy is to work with strong and focused localised distributors rather than cross-country regional players. We don’t always look to work with the biggest names in the business.” The fact that O2 selected Dubai for its official corporate launch in the Middle East provides firm indication of the level of importance the company is placing on the booming Emirate for its initial fortunes in the region. Billington confirms that he expects Dubai to be “massive for O2’s business”. “One of the interesting things for us is that we noticed a lot of O2 products coming on to the grey market in Dubai long before we looked to establish a local presence,” he says. “We’re looking to capitalise on this interest. Saudi Arabia, Bahrain and Kuwait will also be key markets for us in the initial stages.” Billington also explains that the company will be looking to establish licensing deals with local cellular operators in the region. “Our initial goal is to focus on building brand presence and awareness of our product portfolio,” he says. “However, we’re also SIM agnostic. Our position in the device business represents a great opportunity for the network operators to team up with us.”||**||

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code