The distributor is expanding its presence in the unlocked smartphone market, to give solution providers more options, and to keep them well positioned in the event of a shift away from major carrier solidarity on the subsidy model and its phone plans.
The unlocked smartphone market in Canada is still small. Moreover, until one of the top-tier providers moves away from the subsidy model, the chances for a major increase in market size is somewhat limited. Nevertheless there is a market, and while the commercial market is primarily retailers and e-tailers, there is also some VAR interest as well. Accordingly, Tech Data Canada is deepening its presence in unlocked smartphones, with an agreement with smartphone maker Noetic, to better serve all these markets.
The market for unlocked smartphones in Canada is smaller than in the U.S., where estimates have it just under 10 per cent.
“In Canada, we are still in a very locked market with Bell, Rogers, Telus and Wind owning 97 percent of the market and also owning the subsidy model,” said Wendy Franklin, Director, Mobile Solutions and Retail, Tech Data Canada. That model offers consumers an often steeply discounted price on the phone, in exchange for a multi-year contract to provide the service.
“Estimates from the Canadian Wireless Trade Association is that the Total Addressable Market for unlocked phones is between a million and a million and a million and a half devices,” Franklin said.
Most of this is still consumer business.
“Unlocked is still in its infancy in the commercial market today, driven mainly by Apple having a direct purchase program both in-store and online for their unlocked devices.”
Much of the unlocked product Tech Data will handle will go to retail and e-tail channels – but not all.
“It is primarily retail and e-tailer at this stage of the game, but we are experiencing some demand coming from the VAR community for BYOD opportunities with their end users,” Franklin said.
That collection of opportunities has led Tech Data Canada to make their play in this space.
“We have three other brands and some forthcoming announcements, but this the first one we are going to market with, and introducing to all our customers,” Franklin said. “Vendors have to get Industry Canada certification, and some vendors are still working on those details. We will have a full portfolio of unlocked devices.”
Franklin said that Noetic has been very aggressive from both a price point and feature spec benefits, and have had some success with retailers. Their products have premium features including dual SIM 4G LTE, OTA [over the air] updates, Industry leading warranty of two years, full GMS [Google Mobile Services] Certification, a full line of accessories, low return rates and MAP Policy for margin control.
“Almost all their devices are LTE, which is a big differentiation from some of the other unlocked vendors,” she said. “The only one that isn’t is their flip phone.”
While Noetic makes its products for the consumer market, ultimately Franklin said that doesn’t affect their relevance for commercial use given how the devices are utilized.
“These are designed for an end user, but at the end of the day, it’s the consumer who makes the choice about what phone to buy,” she said. “Unlocked handsets can be pretty much be bought by anyone. The way that this would work for a VAR is that they would have a client who gives employees a stipend for the cost of their mobile plan and they can get what they want and bring it on their network. The VAR can sell these to the client to provide an unlocked alternative.”
Franklin said that the unlocked market will only truly take off when one of the big Canadian carriers decides to move away from subsidy models, which are fairly expensive for them.
“There is market demand for unlocked devices, but in Canada it will remain limited until one of the carriers moves away from subsidy models,” she said. “We have seen in other markets, that when one makes that choice, others follow quickly thereafter because of the cost of the subsidy models. There has been lots of discussion about if a Canadian carrier will ever do that. They have some fear in moving, because the subsidy model does provide customer stickiness and loyalty with that carrier. On the other hand, consumers want some choice. They don’t know true price points because of their monthly plan, and some have moved to financing models, especially on higher end phones. What Tech Data is doing is enabling greater readiness for change, and providing more choice.”