Why Did VerizonWireless Not Do Exclusive on The BlackBerry Tour?
If Sprint has exclusive on Palm Pre, and if AT&T has exclusive on Apple iPhone, why wouldn’t VerizonWireless want exclusive on BlackBerry Tour?
An obvious question that reveals a shrewd marketing strategy. First of all, exclusivity contracts cost. The service provider typically commits to paying a premium to the device manufacturer in exchange for a certain period of exclusive sales privileges. These inevitably include specific commitments to marketing, subsidization and inventory stocking orders that usually amount to millions of dollars.
Consider Verizon’s Negotiation Position
The only real competitor for VerizonWireless and the device in question (BlackBerry Tour) is Sprint. But Sprint is fully loaded with its exclusivity contract on the Palm Pre, and would not likely be in a position to promote two exclusive phones, so VerizonWireless knew that RIM didn’t really have an alternative to selling the phone through VerizonWireless. They also knew that Sprint would not be particularly interested in promoting the Tour even if it was (which it will be when the phone is available mid-July) going to sell it on day 1.
Consider RIM’s Negotiation Position
This platform would allow VerizonWireless to compete in the summer of smartphone frenzy that had just kicked off with the release of the iPhone 3G S on AT&T and the release of the Palm Pre on Sprint. There would be no other device (Nokia has no CDMA devices and therefore is nowhere, Google Android is too immature to be trusted with a hit device) capable of bring customers into the VerizonWireless stores. No doubt, the retail organization, not wanting to miss the summer fun, had already begun to cry louder and louder to their product organization to do something big, fast! RIM would know this and would push for the devices’ quick approval and adoption.
So, RIM gets to compete with a new, but trusted platform, VerizonWireless gets to compete at lower cost than either AT&T or Sprint and stays out of the Congress’ current ‘regulate it if it is successful’ bent. Basically, VerizonWireless did not do an exclusive deal, because they didn’t have to. It provided no significant advantage.
Successful smartphones sales needs some smart marketing.
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