IT and Business Insights for SMB Solution Providers

Profiting from Unlocked Phones

The key to success with unlocked phones is finding appropriate use cases and customizing the devices to suit those models. By Hank Hogan

UNLOCKED PHONES—ones that are not tied to a mobile carrier—can be cost-effective, making them attractive to a growing number of customers. Consequently, such phones could be a source of new business for system builders, VARs, and managed service providers. But users need to be educated about unlocked phones, and understand that the tools for mobile device management, or MDM, may still need time to mature.

As is the case with selling PCs and laptops, increased profits and new business won’t come from moving hardware. “It’s an entire solution; it’s not just about the device,” says Tiffany Severance, director of product marketing for client and mobile solutions at wholesale technology distributor Tech Data Corp., of Clearwater, Fla. “A lot of it is starting with the software and the applications and the security around the device,” she says.

The Market for Unlocked Phones
In December 2016, market analysis firm The NPD Group put unlocked phones at 12 percent of the total U.S. market, or about 28 million devices. That number is expected to grow at double-digit rates, driven by frugal consumers who want more for less and business buyers who seek customization for a differentiating edge.

This growth is being pushed along by a changing market, notes David McQueen, research director for consumer devices at ABI Research. Carriers are moving away from a subsidy model for handsets. As for users, they are “finding a better available choice and price range of smartphones online, many of which are unlocked,” McQueen says.

According to NPD Group, the unlocked market is dominated by Android devices, which account for 62 percent of these phones. Tech Data’s Severance says that in considering unlocked phones, VARs, managed service providers, and system builders should think about use cases, the vertical markets into which the devices are being sold, and how the phones might solve customer problems.

A hair salon or restaurant might, for instance, use unlocked phones and card readers to process credit card payments. For the first, that broadens the clientele pool. For the second, it reassures customers because they can keep their cards in sight and therefore minimize the potential for theft of personal information. Transportation is another vertical that could benefit from unlocked phones, Severance says.

Phones + IT Services
Kevin English is director of mobile at Somerset, N.J.-based SHI International Corp., a reseller of software, hardware, and related services to businesses and governments. English says SHI does a small unlocked phone business now and he expects that to grow significantly over the next three to five years.

He sees unlocked phones as fitting into SHI’s portfolio and that a business deployment of these devices can benefit from his company’s IT knowledge. “When you’re using a mobile phone in a work environment, you’re going to need Cisco access points, certain security products, [and] certain licensing,” English says.

SHI can also offer the option of specialized mobile application development. Capabilities like that and a background in the mobile world give SHI an advantage over telecom carriers whose origins are in landlines, according to English.

There are some caveats to keep in mind, however, when considering unlocked phones. For one thing, users need to be educated on the true cost of the devices, which carriers have hidden for years, English says. Also, the configuration, tracking, updating, management, and if necessary, wiping of handhelds, must be cost-effective. Today, the means to do that leave something to be desired, says John David Kistler, owner of managed services provider J&B Technologies Ltd., of Maryland Heights, Mo.

The company offers some handheld device services to its customers, but it has no plans to participate in the unlocked phone market, due to a poor fit with other products and services. Also, although one is promised soon, currently there no suitable MDM solution. “In my opinion, there aren’t really good tools for it yet,” Kistler says.

Image source: Pixabay

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