Verizon Wireless' botched Shared Everything launch could sink carrier
- 13 June, 2012 17:24
Verizon Wireless botched the launch of its Share Everything voice, texting and data plans by making too many drastic and costly changes at once, analysts said Wednesday.
"Big steps like [Share Everything], particularly when they come with sharp [price] increases, tend to scare the hell out of existing customers, and Verizon might actually lose a bunch as a result," said Rob Enderle, an analyst at Enderle Group.
The widespread negative reaction by customers on various Web sites seen after Tuesday's announcement "is similar to the Netflix mistake last year that almost sunk that company," Enderle said.
Netflix raised rates last July for DVDs delivered by mail, and later abandoned plans to rebrand DVD mail deliveries under the Qwikster unit after a customer outcry.
In a blog post after the debacle, Netflix CEO Reed Hasting admitted that the rebranding change had come too fast.
In Verizon Wireless's case, the company hasn't yet effectively made the case that customers with multiple devices can save on monthly service costs under the new program, analysts said.
Some of the outcry stems from questions about what happens to current unlimited data customers. Many customers are simply worried that 1GB of data per month will cost $50, the cheapest price for shared data, analysts noted.
"Folks started to freak over the increases," Enderle noted. "This [program] needed to be presented much more strongly on the benefits to have a chance of working. They didn't do that."
The new Verizon Wireless plan could prompt a "customer revolt," Enderle argued.
"The way Verizon made this step suggests they likely need to either better train, or replace, some key decision makers before they sink the company. Verizon should learn from Netflix and rethink this move so they don't bleed a ton of existing and particularly future customers. They just made AT&T, Sprint and T-Mobile much happier than they'd intended," he added.
AT&T might not agree with Enderle's assessment, since its CEO, Randall Stephenson, Tuesday said the carrier is weighing whether to create a similar plan.
"Verizon's pricing that they announced this morning is exactly what we have been kind of signaling in the marketplace for the last couple of weeks," he said, in comments reported by the Wall Street Journal and confirmed by an AT&T spokesman.
A Verizon Wireless spokeswoman said early Wednesday, one day after the launch, that the carrier is "very pleased with the response to our announcement."
Jack Gold, an analyst at J. Gold Associates, said that Share Everything plans tend to restrict new customers' choices and wondered whether "Verizon can leverage this Share Everything as a marketing plus, or will users simply balk?"
Carrie MacGillivray, an analyst at IDC, said the Share Everything plans were expected for at least a year and are generally a good move -- except for the impact on average consumers. "I think it's going to be daunting for customers, especially consumers, to understand," she added.
The plan will work best for a family with several smartphones or a technology-savvy user with multiple 3G and 4G devices, she said. "The vast majority of consumers have one smartphone and a few Wi-Fi-only devices, including tablets," and they would not necessarily be helped, she said.
MacGillivray said the first adopters of such plans will likely be business users who want to lower connectivity costs by sharing connected devices on a single account.
Even so, a Verizon Wireless spokeswoman said Tuesday that business colleagues on separate accounts will still face penalties for ending those separate contracts early if they want to join a Share Everything plan, a move which might reduce any potential savings under the plan.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed . His e-mail address is firstname.lastname@example.org.
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