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Can Vodafone make femtocells a sexy sell?

Or will Apple's iPhone do it for them?
Written by Natasha Lomas, Contributor

Or will Apple's iPhone do it for them?

It's not every day a mobile operator relaunches a product. Natasha Lomas digs deep into Vodafone's motivations for rebranding its network-boosting box - and finds, of all things, Apple.

A little morsel of news rolled into view this week - of the product launch variety. Or rather a product relaunch - and that's what made me sit up and take notice of this particular missive from Vodafone.

In large on the press release was the name of something called 'Vodafone Sure Signal'. However a line at the bottom shed light on my growing feelings of déjà vu: "Originally launched by Vodafone UK as Vodafone Access Gateway in July 2009."

So 'Sure Signal' is just the new name for Vodafone's femtocell offering - which launched last summer and remains the only commercial consumer femtocell from UK operators. The name change is accompanied by another novel development: a cheaper price.

The original product cost either £160, or £15 per month; the rebranded product costs £50, or £5 per month. Quite a deflation in six months.

But what's a femtocell when it's at home, I hear you cry?

It's a box that sits in, well, your home and boosts 3G reception by piggybacking on your broadband connection. Of course if you don't have broadband a femtocell will just be a small plastic box of uselessness. Likewise if you don't own a smartphone you might as well spend cash updating your board game collection instead. (For a more nuanced explanation of femtocells, check out silicon.com's Cheat Sheet.)

The problem is this: femtocells are as unsexy as they sound. Apple's CEO Steve Jobs will certainly not be getting up on stage at the Yerba Buena Center for the Arts Theatre in San Francisco next week to pull the veil off a revolutionary, paradigm shifting, game changing 'iPhone Reception Booster Box' - even if many iPhone owners would give their eye teeth for better 3G reception.

And as for 'Vodafone Access Gateway', such a technical name was never going to win friends and influence people. Doubtless it merely left the majority of consumers scratching their heads in confusion.

So little wonder that Vodafone went back to their marketing department for a rethink. A cool sounding name can make the difference between getting your product off the shelves or not. Don't get me wrong: 'Sure Signal' is light years away from cool but at least it's clear what this nondescript box actually does. And there's no bigger crime in retail than a muddled product.

But a name change and a price cut in one fell swoop? Surely the obvious conclusion is that Vodafone's femtocell has not exactly been flying off the shelves. Rebrand it, cut the price and hope to persuade the consumers who ignored it before, right?

Quite the contrary, says the company. A Vodafone spokeswoman claims its consumer femtocells have in fact been "fantastically popular" - although we'll have to take her at her word as the company's keeping its femto sales figures to itself. "We simply don't give out that sort of commercial information," the spokeswoman told me.

So what other reasons might be influencing Vodafone's price rethink?

Product price cuts can happen for many reasons, not least because the cost of making the thing has come down. So perhaps femtocells are a bit cheaper to make than they used to be - it's true to say that technology at least does tend to get cheaper over time.

More people buying a product can also bring the price down - if the retailer shifts higher volumes then economies of scale can kick in, making it possible to charge less. So a growing user-base might indeed be an influencing factor, as Vodafone claims.

There's also the issue that selling femtocells to consumers is always going to be an uphill battle. The basic problem is that you, the network operator, are asking me, the customer, to pay even more money to plug holes in a service that I already pay you for. As a sales pitch it's 'challenging' at best.

So cutting the device's price could be an attempt to bring it in-line with customer expectations for femtocells - in-line in the sense that a reduced cost is closer to zero cost. Femtocells will only be a mainstream technology when they are free - i.e. when operators are prepared to subsidise them entirely, handing them to data subscribers by default. And judging by how much Vodafone's femtocell has dropped in price in just six months such a utopia might be mere months away... (More realistically, try a few years away.)

But might there be something else on Vodafone's mind too? Something more pressing, perhaps?

Only last week the operator finally got its hands on Apple's iPhone - a 3G smartphone that gobbles data like kids eat sweets. For all the praise heaped on the device the iPhone has also been associated with more than its fair share of - and here comes that phrase so dreadful to operators and smartphone users alike - 'network issues'. Hello: dropped calls, slow connections, lack of 3G reception etc, etc.

And with Vodafone shipping at least 50,000 iPhones on day one you could forgive them for seeking to ensure their network copes with an influx of data warriors. Or, put another way, that it finds some way to keep the network gremlins at bay.

So, who's for a 'Sure Signal' now?

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