The trend toward unlocked and contract-free phones will be great for businesses
T-Mobile launched its new "uncarrier" model today, In addition to announcing that it will finally sell the iPhone and roll out its higher-speed LTE network.
The company's new model, which eliminates the two-year contracts and subsidized pricing of mobile devices, could shake up the mobile market in the U.S. on its own. Combine that with possible legislation to legalize the unlocking of devices and a resurgence of pre-paid choices in the market and a major shift in how individuals and business select, buy, and use devices seems inevitable.
Each of these three factors -- an emphasis on contract-free devices, the legal ability to unlock devices for use with multiple carriers or buy devices unlocked, and an active market for low-cost pre-paid and other flexible plan options -- represent new opportunities, particularly when it comes to telecom expense management.
T-Mobile's launch of contract-free devices and its support for unlocked GSM phones and other devices brings the carrier closer to the mobile market in Europe. Customers pay full price for a new device with the option to change or terminate their contract at any time. To make this model more palatable to American consumers, most of whom are used to new top-of-line device like the Galaxy S III or iPhone 5 starting at $199 or lower, T-Mobile is allowing customers to finance unsubsidized devices.
The iPhone 5, for example, will be available for a $99 down payment and $20 monthly payments that will be added to a customer's monthly bill. Once the loan is paid off, users will see their monthly cost drop as a result (similar to paying off a car loan). Highlighting the fact that this is a loan and not a traditional mobile contract, users can leave T-Mobile before their device is paid off and move to another carrier. If they do, they'll still be responsible for paying back the rest of the loan. Users should also be able to upgrade at any time, even if the loan for their current device hasn't been paid off. In that case, the user would essentially be responsible for paying off the loan for the original device and the new device.
While financing is intended to help consumers afford the latest devices by limiting the initial cost, anyone is welcome to pay cash for a device at the outset. That's an expensive prospect for consumers, but it may be ideal for businesses.
By purchasing a device without a contract, businesses will gain flexibility in terms of allocating devices as well as choosing or modifying service plans. That could lead to significant savings during periods where mobile demands on a workforce or light because plan options could be reduced (and plans for some devices could even be canceled temporarily). It also allows selection of plans based on actual, rather than perceived, usage. If you discover that someone is using significantly less mobile data than you expected, you can adjust the plan and recover some of the monthly cost.
Beyond managing the plan and expenses, buying phones outright will also allow a company to stockpile and create a pool of backup devices that can immediately replace a lost or stolen device. Stockpiling could also ensure that extra devices are available and ready to use should their be an influx of staff or a project/event that requires greater contact and collaboration among mobile team members.
Unlocked devices offer even more cost-saving options, particularly for companies whose employees travel internationally on a regular basis. An unlocked device can generally be used on any carrier in the world that supports it. That means that someone traveling through Europe on business could purchase a SIM card for a local carrier in each country that he or she visits. The big payoff here is that usage is billed to the local carrier, avoiding expensive voice or data roaming charges.
Even within the U.S. there are advantages to an unlocked device. Most unlocked devices are likely to be contract-free devices purchased outright with no subsidy (either from a carrier or other channels like direct from a manufacturer). That means that a business has the same flexibility I described earlier. In choosing plan options for an unlocked device, a business can consider plans from all the available carriers and pick the best based on coverage as well as cost.
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