Style Phones Are Self-defeating to Carrier Operators

Implications: Style phones are self-defeating for carrier’s subsidizing devices with two-year contracts for the following reasons:
    1. Obsolescence and wear of the phone;
    2. Free built-in features of the phone;
    3. Optional services dependent on the phone.

Analysis: Style phones, distinguished by color or shape, are self-defeating to carrier’s marketing of two-year contracts.  The phone appearance is likely to become obsolete.  And the phone with multitasking features is unlikely to last two years.  Presently, an existing customer will initiate a new two-year contract in order to get the latest phone at the carrier’s low subsidized price.  But with the phone being “stylish”, the customer will tend to pay the retail price of the phone rather than commit to a long two-year period.  Renewing and extending contracts by phone upgrades has enabled the carriers to reduce churn.
Loaded with free built-in’s such as maps and music, the phone gains priority over network features.  Basically in cellphones evolving to smartphones, the end user also becomes smart in choosing the wireless device.  The user will first determine their phone, and then select the carrier.
Optional services such as push-to-talk and navigation further reinforce the priority of the phone.  The carrier might try to control customer retention by on-deck content billing instead of off-deck platforms.  However, the end-user is more cognizant of what the phone does than the carrier’s billing.  As the cellphone evolves to multitasking handsets, the carrier’s dominance in phones will be placed by other distribution channels of wireless devices.  Could Dell set the stage for direct distribution of stylish and heavily-featured wireless solutions?