When Mobile Virtual Network Operator (MVNO) Amp’d declared bankruptcy earlier this week, a lot of people pointed to competitor Helio as the next one to fall.
There are suspicious similarities between the companies. Amp’d launched in the U.S. in December 2005. Helio entered the market just a few months later, in May 2006. Amp’d raised $360 million in capital, Helio raised $440 million from parent companies Earthlink and SK Telecom.
Amp’d claims 200,000 subscribers, and says it grew so fast that its back-end infrastructure couldn’t keep up with demand, requiring the bankruptcy filing. But Amp’d is a MVNO and uses Verizon’s cellular networks, suggesting that there may be a bigger, or at least an additional, problem. Industry insiders point to poor financial management and credit terms that were so easy that a good portion of Amp’d customers aren’t paying their bills.
I spoke to a company spokesperson for Helio today to see how they are doing. They are riding high on the launch of their new Ocean device (also pictured above), a high end dual slide phone that flips up for a number pad and sideways for a full QWERTY keyboard. They claim to have nearly 100,000 customers and are on pace to generate $130 million in revenue over the next twelve months.
Helio’s service is pretty cool (I have a couple of demo phones that I’ve tested). Integration with IM networks and MySpace is seemless. The devices are actually designed by Helio and built to their specifications, whereas Amp’d devices were off-the-shelf varieties that customers could get from any carrier.
Helio was also the first cell phone company in the U.S. to offer phones with GPS capabilities, allowing users to see where they are, get directions to places they want to go, and also see the physical location of all of their friends who use Helio. That last feature has proven to be viral, the company says. As soon as one person gets the phone, a few friends are likely to join soon thereafter.
A lot of Helio’s revenue comes from download purchases, such as music videos. Users can also gift downloads to friends, or beg them to give them one as a gift. It all results in more downloads, and more revenue for Helio.
Helio may end up with the same fate as Amp’d, but there is at least some evidence that the company may have a rosier future.
At least until the iPhone launches and puts the hurt on everyone else in the industry, that is.
For more on MVNO’s, see our coverage of Sonopia (build your own MVNO) and Google’s rumored MVNO in the UK.
See the Helio fact sheet for more.
“Helio was also the first cell phone company in the U.S. to offer phones with GPS capabilities, allowing users to see where they are, get directions to places they want to go, and also see the physical location of all of their friends who use Helio.”
While the social aspects of having GPS on-device may have been new with Helio, GPS was available on Nextel devices as early as 2002. I recall playing with a J2ME API for Nextel devices back in 2004 and the i730 at least could tell you exactly where you were whenever you wanted (provided that you waited 30-60 seconds to get a fix).
I don’t want to downplay the importance of Helio’s social location features, but on-device GPS simply isn’t a new thing.
The MVNO business is tough. Helio might well be doing ok, but that are still expecting to make more losses of between US$330 million and US$360 million in 2007, up from US$192 million in 2006 (source: Helio annual report). This may well be as per planned, but they are big numbers.
To me for a MVNO to succeed they need to have a real niche that drives up the average revenue per unit. Helio has this with their products like Buddy Beacon. Targeting low spend customers definitely does not seem to be a good strategy (they dont spend much, they don’t get the “value add” services and debt can be a bigger issue). The Amp’d home page has an advertisement specifically doing this….
First time I’ve heard about those GPS features. As creepy as that might be to some im sure the younger demographic loves it. That could be a huge selling point if they are able to launch location based services like you see in asia.
The Amp’d slogan is now ironic: Try not to die!
http://coolstuf....php?itemNum=13
The iPhone will not hurt EVERYBODY… only those competing in the $500+ handset territory. Helio’s parent company, SK Telecom, is huge in Asia with money to burn. It’s just a matter of how long they’re willing to bleed while they build their brand. Virgin Mobile and Boost didn’t happen over night either. It took them years to build their audiences. Helio needs smarter marketing and to streamline their operations. I’ve seen their work force and it is scary. They don’t need 100 people doing marketing.
Yeah
– Helio would already be down the drain if not for its parent companies; propping it up
-Rbowles
I had an Ocean for awhile and I thought it was a great phone, just not quite smart enough for me (can’t install 3rd party apps, calendar/contacts not full featured enough, video playback was glitchy no matter what I tried). I can see them really hitting a niche of hip tech savvy kids though and really taking off. I think their main problem will be a chicken/egg question. If most of your friends were on Helio it’d be great, but if they’re not then things like the Buddy Beacon and more importantly free M2M don’t really mean anything. Getting people to switch providers seems like a huge challenge to me.
deep pockets are one thing, margins and business models are another. helio has great PR..they deploy The Hammer; but I think AMPd Chap 11 will make a lot of folks think twice about partnering with Helio and thats sure going to hurt…DeadPool is a 50/50 bet.
What else would say?
Mobile social networking has to be cross-platform and cross-network or it is doomed to fail. Amp’d was in a way moving in that direction by licensing it’s user experience to KDDI for example. The most interesting thing about the Ocean besides the cool hardware is the “contact list meets the buddy list” integration provided by Fastmobile. Helio is doing some great stuff but the high cost of customer acquisition for MVNOs is the killer.
The retail location in Santa Monica which is really sharp is really empty… all the time! Compared to the Apple Store down the block or any store on the Promenade it is perhaps the slowest shop on the entire strip. I suspect the Apple store will only be busier once the release of the Iphone. One positive thing about the Helio store setting up in Santa Monica is that it appears that the management must have gotten some help from the city about keeping the homeless from setting up sleeping bags in front of the store overnight and there are generally fewer vagrants sleeping on the Promenade overnight.
The only phone “built” from the ground up to Helio’s specs is the Ocean.
The rest of their devices are re-branded Samsungs or Pantechs that receive *some* degree of customization.
IN_THE_KNOA isn’t quite in the know. The devices from Samsung and Pantech are specific to Helio, no one else has them. Further, the binary on the phone is built by Helio. The Ocean is the same way, with more features.
“SEEMless”… is that a pun?
A seem is a portion of nonvolatile memory, usually small in size, containing operational data and parameters. Typical modern Motorola phones include a seem, although they are usually slightly different between manufacturer chipsets.
I have a Drift (got it for free–understand why) and lot of problems with their customer support. The reps don’t know a thing, and the phone’s apps are limited in features and number. No third party apps or games, (including Gmail), pic mails sent to Flickr vanish as if Helio had a competing product, SMS to email and back is a joke, and promised Apple support vanished. The in-store reps promise the phones do more than they do just so they get their commission and it all rides on the poor signal of Sprint’s towers. I regret day 31 on of my two year contract. Funny thing is they will go bankrupt and I will be back at Sprint.
LOL, #13.
Let’s see …. teh Samsung / Helio “Heat” = the same as the Samsung E900/E906 GSM. The drift has a GSM equivalent.
Let me guess, your next several phones are Samsungs that are already available / will be available in GSM form? Meh.
#15 is right. The “binary” is crap. I wouldn’t be too proud of the fact that you built it.
Not sure where all of the “facts” you’re getting for this article are coming from, but TeleNav launched on Nextel devices back in 2003, and developed a ‘friend finder’ feature in addition to voice guided navigation.Nextel has had LBS applications available since 2002 and not just for businesses (TeleNav has about 65% consumer penetration).
Sounds like the Helio PR folks are giving you incorrect info, either that or there is some other bias.
Helio has a good thing going with the MySpace Crowd!
Wow, like they say a person is smart, people are stupid. I remember a time when there was another type of wireless company everyone said was a niche and wouldn’t last called PCS (Now Cingular, Sprint, and T-Mobile). Let’s face it Amp’d was doomed from the start, their post paid, then they offer pre-paid oh wait then a hybrid, not to mention they whore out every one of their departments to third party vendors like their BILLING department! c’mon! I mean they were backed by VCs who if anyone knows anything about business are just loanshark mobsters behind a desk. I have had my Heat for 2 months and have had 0 issues. At least Helio has a proven management and business plan and is backed by some corporate sponsors who have actually had success in the wireless industry. I think Disney and Helio may be the lone survivors in the MVNO wars of 2007!
i hope you’re right rey rey, but i can tell you that as one of the original helio subscribers, the difference between the service now and the service when i first signed up is night and day…the first ten months i had the service i loved it…now im having all kinds of problems with the company including overcharging on my monthly bills (last month they debited me for over $1600 US this month 800)…their customer service department, so courteous and proficient a year ago, is now staffed by people that only seem to know the phrases “im not authorized to do that”, or “theres nothing we can do to help you” this company is done…im just going to eat the phone cost and change back to one of the mainstream companies…even one of the new ocean phones is not worth the trouble…nice try helio, but you screwed it up somehow…
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