Verizon slims handset offerings: goes smartphone-heavy

Less noticed in the hubbub was Verizon’s additional announcement that it had dramatically reduced the number and variety of handset models it offering customers, from 80 SKUs to 50, and that it hopes to reduce the number of SKUs again, and significantly, over time. As it narrows its number of product choices, Verizon will increase the number of smartphones represented. It is doing this quickly. It has 20 new smartphones slated to add into the lineup during this year.

Verizon’s new distribution strategy reflects market and business trends similar to those driving the rate plan changes: these trends include the commoditisation of voice, the main function of feature phones that Verizon is deemphasising; the rapidly increasing penetration of smartphones, which is stimulating the lucrative data traffic that Verizon is preparing to exploit; and the welcome opportunity that smartphone data usage now gives operators to offset their declining voice revenues.

Unlike mobile service pricing rivalries, however, where a strategic move by one influential operator here is often followed by another operator there, U.S. operators have not yet responded to Verizon’s new distribution strategy. Some assumptions on how this may play out, however, can be made.

“The next one to watch is T-Mobile,” said Avi Greengart, research director, consumer devices at Current Analysis.

T-Mobile, which has built its business on low-priced voice services, has traditionally offered the largest variety of free or inexpensive voice phones that reflect its value-oriented advertising.