I have been meaning to blog about this for a while.  And that’s the rise of Telecom vs Vodafone in NZ, and who wins in the cool stakes.

Actually I should take a step back, let’s first talk about the FALL of Telecom.  When Bell South came along in NZ it got a whole bunch of high end business users, but was not regarded as mainstream by many.  From memory, estimates were it had around 10% market share.  It also had coverage issues, especially in Auckland.

When Vodafone bought Bell South in 1998, their market share begun to steadily climb, for a whole bunch of reasons:

  1. It had a superior product (GSM sim card based tech vs CDMA)
  2. Better phones (more GSM handsets from the then market leader Nokia)
  3. Telecom was the atypical monopoly, and people hated them, so anyone who wasn’t them was perceived as better
  4. Most important, IMHO, Vodafone was COOL.  Telecom was boring, old and .. well, not cool.  Vodafone marketed this very well at the time.

I think the last one is, at least in the long term, perhaps the most important.  Being cool may not matter (much) for a corporate buyer**, but teenagers of today are the IT tech guy of 5 years from now, and the IT Procurement Manager in 10 years time (or as they might tell you, in 6 weeks time, but that’s Gen-Y for you eh?).  Within 10 years Vodafone owned over 50% market share.  With XT Telecom clawed some of that back, and then lost some again, but I still think latest stats show Voda as ahead. 2Degrees also hit Voda more than Telecom, but that’s a diff story (and I have to say 2Degrees is the coolest of the three, but right now their product isn’t QUITE there for me).

** Actually I almost wanna take back my statement that being cool doesn’t matter for a Corporate buyer – coz it DOES matter for those who work in companies – think Apple/iPad/iPhone.  Who wants to work for a company that gives it senior execs Sanyo cell phones?  I mean REALLY, what does that say about you?   Anyway .. I digress.

Here’s the rub … IMHO Vodafone is no longer cool, and Telecom is kinda getting there. Voda is no longer cool coz of their attitude to customers, in my opinion (and the opinion of lots of others) it stinks.  But more important is what’s happened to Telecom.  XT has helped, and while their whole launch fail issue did bite them, in the cool stakes that doesn’t matter (it does matter to the savvy user, but that’s not what I am talking about here).  Case and point, Apple is universally regarded as cool by many.  At the same time lots of people hate them.  Microsoft is NOT cool, but still heaps more people buy from them (and Internet Explorer is still the #1 browser world wide despite being buggie, prone to malware/virus attacks and from a very not cool company).

My point is that COOL and THE BEST are not always related (although of course it helps if you are both!).  In the long term COOL beats THE BEST most of the time (I will put a wee disclaimer here and say this assumes the product is at least GOOD, it doesn’t have to be great, but it can’t be crap).

So yeah .. Is Telecom finally cool? Well based on the # of teenagers that have 027, it might just be.  10 years ago hardly any did (well OK, they didn’t have 025, since that’s what was around then).  Of course this is just based on people I know, so hardly a comprehensive survey, but I can only go on what I know. My prediction is within 2 years Telecom will be back on top (market share of mobile space), and within 10 it it will be more like 50/30/20 to Telecom/Voda/2 Degrees (currently its more like 48/49/3)

Oh, and before anyone says it, I know having a pic of the Fonze is showing my age.  Also most teenagers would not say he’s cool (or even know who he is).  But I don’t care – I don’t need to be cool.  I don’t have anything to sell :-)

What also helps here is that Telecom now has a superior product with XT (albeit one that broke a few times).  For years Vodafone kicked Telecom’s behind in the product game – both handsets and GSM/Sim cards tech, not anymore.   As long as XT holds up for 12 months without any more major issues they should regain their credibility, and then they can re-market their we are better message (although a whole lot of techie people on blogs are saying it for them already).  Ask any geek/techie who has an iPhone which network they prefer – I can’t find any that say Vodafone anymore (and geeks may not be cool, bit they know their tech stuff).

But what’s even more important is that I think even Telecom get this.  Check out their latest ad.  Clearly marketed at the younger market, and the ad is very fun and .. I won’t say cool, coz if I say it’s cool then it’s not, so I will just say it’s on target.

Aside: It’s kinda a shame about the whole XT launch fail.  Coz they can’t use the XT name too much right now coz of the association with we screwed up. XT was a chance for a new brand/new image.  For now they will have to do that with the Telecom brand, but it means they will have to work that much harder since Telecom too has its share of baggage.  Note the ad above is Telecom, not XT.  I think we will see this for a while.

Black and White: It wasn’t that long ago that Telecom was not only inferior product, but very uncool.  IMHO that’s now flipped on its head.  Time will tell how much cool will matter.

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