August - September Round Up
Mostly September and a bit of August...
On the first year (ish) anniversary of this Substack, I’m considering whether to continue with the monthly Round Ups or not. Whilst I try to add some colour to the new items, the number of daily or weekly newsletters for the sector has proliferated and I feel my monthly take is regurgitating old news. An alternative might be to respond to key items on a real-time basis via the Substack Notes function. If you’ve got any input, please feel free to ping me (here or LinkedIn), or respond to the poll at bottom of this post. In the meantime, here’s a round up of items on periphery that interested me over the last two months…
Market
I read everywhere that the latest Apple event was awe-dropping1. Was it? What would be awe-dropping was if Apple cleaned up their act2 , stopped whining and began innovating again to protect their market share rather than rely on their part in an existing duopoly. In addition to blasting the EU Digital Markets Act3, they’re getting feisty at the UK’s CMA in advance of upcoming October announcements. Competition is good, some of Apple’s app store practices are extremely sharp. Whatever the designated Strategic Market Status4 means, Apple and Google clearly warrant it, and the additional scrutiny that comes with it.
The GSMA announced that the key to getting getting a further 1.6 billion people connected to the internet was a $30 phone5. The Director General is calling for the mobile industry, device manufacturers, policy makers and financial institutions to collaborate via the Handset Affordability Coalition6. I may be biased, but I didn’t see one secondary market organisation directly represented, nor did I see any mention of refurbished or remanufactured devices in their own analysis7. Another report available on the website from the Digital Development Partnership did investigate the secondary market but found significant limitations8 including the current high-end focus, a price-point mismatch and cost structure barriers. I think the GSMA needs to look a bit harder at the processes developing in this sector.
Doing my bit to further highlight the Restart Project’s excellent work, in this instance the irony of Microsoft ending support for Windows 10 on International eWaste day. Perhaps Microsoft misunderstood the brief.
Companies
Up until very recently, at the bottom of almost every carrier trade-in website you’d find it was, in a very 90’s dot com boom way, “Powered by Ingram Micro”. That dominance has just taken a dent. After the rumour mill was buzzing in early summer, O2 recently relaunched their O2Recycle site and at the bottom is a far less 90’s “Service provided by Likewize Services UK Limited”9. I’ve not seen any press, maybe they’re in the soft launch phase.
Sticking with Likewize for a moment, after a brief pause in sales, Barclays Tech Pack, the bank distributed device protection offer, relaunched with some new pricing. The entry product, Tech Pack Lite, covering two products for accidental damage only, goes from £9 per month to £13.50 per month. The premium product, covering up to four devices for accidental damage and loss goes up to £17.50 per month from £14.50. The majority of the rise will be down to claims inflation, there’s only so much insurers (in this instance Aviva) can take, but still, an additional £36 - £48 per year is going to make some consumers question their cover.
Bolttech continued their path to global domination announcing a partnership with UMobile in Malaysia for Device Care10, a new subscription service that allows you to swap your protected device for a new or refurbished replacement up to twice a year. The monthly subscription is based on the device RRP and starts at 4RM (0.89EUR) per month up to 30RM (6EUR) per month. The service fee (also based on device RRP) is payable directly to Bolttech each time you request a swap. If UMobile’s Device Care programme performs anything like the WindTre Reload programme11, we can expect approximately 180,000 subscribers with around 6,300 switches taking place per year. Additionally, Bolttech entered the Kenyan market with a protection product for finance company Loop DFS on their BNPL product Loop Flex12 and partnered with Globe in the Philippines13 for another device upgrade programme. I have to hand it to them, they’ve certainly got momentum and that counts for alot.
Aurelius appear to be wasting no time in tidying up their Exertis acquisition14. It might be nothing, but I noted the MTR Group entity was shifted out from under Exertis UK and up to Exertis (Holdings). Watch this space, I guess?
Good news for Recommerce as they announced a multi-market trade-in partnership with Xiaomi15. The programme will cover 12 countries and looks to improve the customer journey by putting the trade-in options into the Xiaomi product pages. Good stuff. Recommerce were also in the news getting Vodafone’s Partner Shop online in Germany16. The dedicated refurbished device store stocks around 500 models and up to 40% cheaper than new. All devices come with a 24-month warranty.
Odido upgraded their insurance offer to include AppleCare services with Assurant covering smartphones, watches and tablets17. There’s the usual two flavours of cover: damage only and the higher premium all inclusive with loss and theft cover. There’s also an extended warranty covering mechanical faults beyond the statutory period as long as the policy is active. This makes sense given increasing use phases.
I am not sure the Appalachian Wireless device protection18 deal is going to help Servify justify their rumoured IPO valuation as they chase their American Dream19. With an estimated 135,000 subscribers in eastern Kentucky, I hope the programme at least covers launch costs. On the flip side, it’s another proof point.
Back Market announced a €3bn GMV forecast for 202520. That put’s them way ahead of any other (organised market) European marketplace. They also announced an interesting repair partnership “powered by” Evy, the product protection platform. I like the way that Evy appear to have platformed the protection value chain, including repair services, which Back Market are taking advantage of. The service will initially launch in France, Germany and Spain. One to watch.
Investments
Despite Corning’s efforts to placate the EU over their dominant market position, the relationship with Apple is highly unlikely to unwind with the news of a further $2.5bn investment to expand the partnership21. According to the CNBC article, all glass for Apple Watches and iPhones will be manufactured in Corning’s Kentucky production facility. Just goes to show in reality how limited the European regulatory influence can be in this instance.
Matt Green (iOutlet) and Sam Hargreaves (sold TRG to Rebuy22) have joined forces to acquire the Envirofone brand from SK Tes23. The team are planning a revival with the iOutlet maintaining a marketplace focus and Envirofone concentrated on consumer trade-ins. There’s also some European expansion penned in, which with current profitability is a brave step. Good luck.
If you’ve got this far please consider letting me know if the monthly round ups are worth it, perhaps you could indulge me…
Finally, welcome and many thanks to my new subscribers and especially to those that chose to pay. It is very much appreciated.
Peace,
sb.
Fair point about GSMA's call for a $30 phone, only way phone makers can subsidize the loss selling that cheap is earning that back from the data or services, which is not easy in very low income countries. It makes a lot more sense to leverage the used phone market to supply that demand.
Regarding uMobile swap program, a lot of the success will hinge on their retail executuion, user awareness for such programs is still low in Malaysia so its not likely a customer will just click to add this online or request for it at the store. It requires floor sales staff to explain the features and answer questions on the conditions of the program (what are the conditions they can or cannot swap for, are they getting a new phone or used phone when swapping, etc.). Usually this also requires floor sales staff to be incentivized or given some form of commission as it is extra work to explain all these to a customer.