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Business Model from Hell

Have you ever travelled abroad and found yourself technically transported 15 years back? Not because the country you are visiting is not as developed as the one you have come from, but rather because you are not able to use your mobile devices in the same manner as you are used to doing at home.

From being used to having a map in a smart phone and a array of apps that help you find your way with relevant information, you are forced back to a paper map, looking at the weather report at the hotel front desk, and to scouring the city to find a Wi-Fi network.

The other week I had the pleasure to travel to the US. When I arrived I received information from my cellular provider in Sweden, that I could surf and call for an outrageous price. The amount of data that they give for free would just about cover one download from a newspaper website. The phone calls are around $2,5 per minute. All due to the exorbitantroaming fee.

They say that the cellular providers are not interested in changing the high roaming fees due to the high revenues they provide. I believe that it is Dinosaur-thinking it is counterproductive. It is the same strategy as was employed by record companies and movie companies, when met by new technology such as the cassette player, VHS player, CD player, DVD player, and Internet.

Instead of making it easier for people to use their services and to use them at a higher frequency, they make people use them as little as possible becausethey cannot afford normal usage. They do, however, make money from those using their service. Apparently a lot of money, otherwise they would have changed this strategy long ago.

How do their customers cope? They find alternative ways of getting their service, and that service is not coming from the cellular providers, it is coming from a third party. New players, like broadband operators, can step in. The old players currently make good money, but this can only last for a short time. The alternative market is growing, and it is one that they are not a part of. Suddenly they are cast aside and will find that the new players have their old business.

What did I do? I turned off my roaming on the phone and then as I moved around the city I found Wi-Fi at Dunkin Donut, Starbucks Coffee and other future oriented thinking companies. Sometimes they got me to buy something from their store and sometimes I only used the complementary Wi-Fi. People are drawn to them as honey draws bees.

So, my cellular provider and their partner in US, did not earn a cent from me during my week long trip. I performed all my communication with my family and friends over Skype, not connected to the 3G/4G network but to the Wi-Fi – free of charge for me, except maybe an extra donut. I used these free hotspots to get all the information I needed.

Are you also trying to lock in your customers, or do you try to give them as much value as you can? Are you trying to make the same money from an obsolete business model that the customers do not like, or are you taking lower revenue for the moment to be able to make more money in the future?

To your Excellence!


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