Vodafone's plans to revamp Internet services critical to future success

Faced with being labelled as little more than a dumb pipe, Vodafone is expected to announce a significant overhaul of its mobile Internet service. The move will see the Live! brand replaced with Vodafone 360, with a focus on social networking and mobile payment services.

The company, which has been increasingly viewed as having fallen behind rivals such as Apple and Google in mobile services, hired Pieter Knook from Microsoft last year to head its mobile internet group and devise a new strategy for Vodafone.

The plan will see the company improve access to social networking sites, providing subscribers with the chance to integrate several social networking sites on their mobiles, so they can see what their friends are doing without having to switch between different applications.

Included within this new strategy will be a move into using the billing relationship that Vodafone has with its customers to help them purchase apps and other content without the need for a credit card and the associated risk of online fraud. The company CEO, Vittorio Colao, gave his blessing to this approach, commenting that "I truly believe mobile accounts are a fantastic payment platform for all digital goods."

The challenge Vodafone has set itself has to be seen in the light of its lack of success with past attempts to turn consumer-focused mobile Internet services into a large revenue generator. Terence Sinclair, an analyst at Citi, estimates that 10 per cent of the company's £3.1 billion of data revenue in 2008-09 came from services such as music downloads, and a further 10-15 per cent came from e-mail. Sinclair added that about 75 per cent of Vodafone's data revenue consisted of monthly charges for providing basic access to the wireless Internet.

For more on this story:
Financial Times

Related stories:
Vodafone: Losing market share, drops Live! branding
Vodafone results: Maintains guidance, hints at consolidation, would 'love to have iPhone'
Social Networks: Orange, Vodafone up the pace
Femtocells: Slow uptake of Vodafone's Access Gateway triggers discounts

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