Unbundling the Mobile Phone Market

Yesterday I came across an interesting headline showing the rise of co-branded mobile phone special editions - an interesting business design evolution in the mobile phone industry. The magazine Elle is launching the Glamphone in collaboration with Alcatel. The Italian fashion brand Dolce & Gabbana has launched a limited edition of a phone called "Liquid Gold", which is a special pure gold version of a Motorola Razr V3i. MTV seems to be launching a mobile phone with Samsung. The luxury watch maker Tag Heuer of Geneva, Switzerland will launch a model in 2007.

All this alliance activity between strong brand names from fashion, entertainement and mobile device manufacturers strongly reminds me of John Hagel's concepts of the unbundling corporation (subscription required). About unbundling Hagel says on his blog:

In a nutshell, [...] most enterprises today are an unnatural bundle of three very different kinds of businesses – infrastructure management businesses, product innovation and commercialization businesses and customer relationship businesses. By trying to manage the inherently conflicting demands of these three businesses within a single enterprise, executives undermine the potential for profitable growth.

In the mobile phone market two areas, infastructure management and product innovation have already unbundled a while ago. The former is mainly managed by mobile network operators (voice & data services), while the latter is managed by device manufacturers (and their OEM partners). However, network operators, such as Vodafone, Verizon or Orange, currently do not only manage the infrastructure, but they also master a large chunk of the customer relationship. With regard to Hagel's concepts these two areas may be likely candidates to unbundle in the future.

The alliances outlined above might be an indicator of this. Brands such Elle, Dolce & Gabbana and MTV have a much stronger following among their respective market segments than the catch-all brands of mobile operators. Modelabs, a french company, is already capitalizing on this trend and has developed co-branded phones for the Elite model agency and other brand names. The company has a turnover of 150,9 million Euro.

Overall value creation would probably be higher if this unbundling really took place on a large scale - and it would have important implications for business design and business models in the mobile phone industry. For the time being, however, I'd guess that mobile operators will do anything possible to not lose their supremacy over their customer relationship...