New handsets will make or break 3UK

January 26, 2004

The launch of 3G services in Europe last year did not bring with it the range of handsets that would entice consumers to join the next generation mobile revolution. Handsets were bulky and short on battery life plus there was a lack of choice, less than ten 3G models were released across Europe.

Three UK, has had mixed success. It may have achieved the fastest rollout in telecom history but the company has received many complains about its poor services. The only handset from the company that comes close to resembling the size of a 2G phone was the NEC e606, but even this phone was considered bulky.

The company is bringing out the Motorola A925 soon and although it is better than its predecessor, the A920, the size and weight remains similar. The phone has too many functions for the average user and the weight (210g) will put many off. But this first quarter should see the release of the NEC e616 and possibly the SonyEricsson Z1010, two eagerly awaited 3G handsets. The improvements over earlier handsets could interest more consumers to join 3 and could change around the fortunes for the company. The handsets are both smaller and lighter than previous 3G handsets with longer standby and talk time. The Z1010 weighs just 115g and only just short of the average 2G model.

Three's beginning has mirrored that of NTT DoCoMo's start. In Japan, DoCoMo's 3G FOMA service recovered from a poor start after the operator introduced better handsets and improved the network coverage. Three does have a larger coverage than DoCoMo with its roaming agreement with O2 but the call handoff from 3G to 2G areas is far from satisfactory.

The success of the e616 and Z1010 will dictate how well 3 will do this year. Three UK would probably get around a third of the 2.5 million e616 in the first quarter from Hutchison. The e616 is 3's main handset and had originally been planned to be release late last year to replace the best selling e606 and the shortage of handsets during the Christmas sale meant the company could not aggressively market its products. If the handset does poorly then the outlook for 3 appears gloomy.

The Nokia 7600 is another interesting handset in that it will be available on the 3 network in the UK but it will be The Carphone Warehouse providing support for the handset. 3 has chosen not to supply the 7600 because it does not support videotelephony but neither does the Motorola A830, which was available at 3's launch. The UK has a large base of Nokia loyalist and the decision not to supply the 7600 is a curious one and an error in commercial strategy. There are consumers that would sign up to 3 for reasons other than video calling, such as the cheaper voice calls. Video calling is a big selling point of 3G but consumers will need time to get accustom to the technology and therefore mass take-up won't happen straight away.

Three has not confirmed that they will offer any handsets apart from Motorola and NEC but they have not ruled out the possibility in using other handset manufacturers later this year. As for pay as you go mobiles, 3 said they would only launch the service once they have enough phones.