Talk is cheap

If at the start of the 21st century you had been asked to make a list of the technology businesses sitting on the proverbial pot of gold, you may well have put mobile phone companies at the top.


As mobiles completed their startling, technology-led charge from brick-sized luxury to everyday gadget, it would have been fair to ask ‘how can they lose?’


The ‘they’ in question, of course, being the manufacturers that produce the handsets and the network operators who were, at that time, signing up previously mobile-less citizens of every developed nation by the tens of million.


For the network operators in particular, the future looked bright (and indeed Orange). Invest heavily in your network, sign up your customers and then sit back and watch the cash roll in. Just pity the poor old legacy firms whose major assets are in fixed-line telecoms. I mean to say, lines going into the side of your house? How very 20th century.


And a lucrative business mobile turned out to be for the likes of Vodafone, Orange and the rest.


This week, however – just six years on from the millennium – the question being asked of Vodafone is not ‘how can they lose?’ but rather ‘how did they lose £15bn.’


The huge loss announced by the UK-based telecoms group is a complex affair, owing much to the finer points of corporate accounting and the effects of expansion over the last few years.


Underneath it all, Vodafone and its rivals are great, profitable businesses. But the mammoth headline deficit underlined how any notions of the mobile telecoms market as a bottomless money pit are way off the mark.


These days, the mobile network operators are talking about getting back into fixed-line telecoms. Because, as things turned out, the line into the side of your house is the one that gives you broadband. And broadband is the new mobile, at least for the next few years.


For anyone involved in technology-led businesses, especially in consumer markets, there is no starker example of how even the most spectacular examples of innovation can be assimilated effortlessly by the world economy, and become a commodity in the blink of an eye.


Andrew Lee


Editor


The Engineer & The Engineer Online