AH Primetime: Why OEM’s Still Make Exclusive Deals with Carriers, Even Though It’s Bad for Them

May 8, 2013 - Written By Lucian Armasu

While HTC is starting to understand that carrier exclusivity is a bad thing for its brands and sales, most other OEM’s are still happily making exclusive deals with the carriers. When will they learn that this is bad for them?

Samsung learned from this mistake a while ago, when they introduced the Galaxy S3. It was going to be one device for all carriers – or they simply wouldn’t give it to them. I’m sure the carriers tried to persuade them to make at least “slightly” different models, so they can claim some kind of superficial differentiation over their competitors, but Samsung didn’t accept it.

Plus, by the time it arrived in US a few months later, the Galaxy S3 was already popular around the world, and highly anticipated in US. At that point even the carriers may have realized that it would be in their interest to sell such a highly popular phone, just like they all begged Apple to sell the iPhone on their networks before.

The worst part about carrier exclusivity is not that just one carrier gets the phone, it’s that every carrier gets a modified version of the same model. The branding for that phone gets highly fragmented, because instead of getting everyone talking about one phone model, and increasing the word of mouth exponentially, you have several different models, and many of them fail to get viral.

Plus, the advertising for them is a lot less effective, because instead of seeing one phone and brand everywhere, you see several different phones, each seemingly not related much with each other. This is bad for both the OEM’s and the carriers. So why do OEM’s keep doing this then?

It seems most of the OEM’s would rather leave the control of their branding to the carriers, because they see it as an “advantage” to have the carrier pay for the marketing. But as I said, this ends up being a lot less effective. Besides, while the carrier may sponsor a launch campaign for it, they’ll only care about it until the “next big thing” comes up, which is like one month later usually. What happens to the sales for that device after that? They simply fall.

It’s much better for the OEMs to slowly build their own brands, and control the message and advertising for them. And it helps if they make them popular outside US first, before they bring them to US, but they shouldn’t take more than say two months to bring them, otherwise people may just forget they exist, with all the great new phones coming up.

Having strong brands also means they don’t have to compete on price so much (especially when dealing with carriers), and it’s why companies like Apple and Samsung make a ton of profit on their devices, and the others do not. All OEM’s should avoid carrier exclusive deals, and should take full ownership of their phones’ brands.