WIND Business Model: Cost of Acquisition Much Higher Than Cost of Churn

[$lvl@¢k]

Wind is destined to fail from the start. Their business model is based on lowering immediate Acquisition cost by having the customer pay upfront. This replaces a contract, but does not eliminate churn which is deadly to any startup mobile company/network.

Customers can leave Wind at will and still sign up for 2-3 years with a contract provider, and benefit from not having to pay the retail price of a new handset. (And sell the handset purchased from the provider to another customer 3-4 months down the road, before the handset depreciates too far in value).

This is only the tip of the iceberg in terms of poor market penetration tactics. In +/- 5 years, the new entrants will not be profitable and too far in debt to continue operations without positive cash flow.

Also have to keep in mind that a 65% foreign owned company like wind is not necessarily the best way for canadians to invest their hard earned money, best to buy Canadian to keep the canadian economy strong for generations to come.

Indeed this generates jobs for the canadian market, but remember if this company is ever profitable.. The return on investment will mostly be going in the pockets a very wealthy Egyptian.

$lvl@¢k

[onemorecanuck]

really?

[kEiThZ]

Oh please. I am tired of the Big 3 wrapping themselves in the flag while they ship jobs overseas. Globalive has a 100% Canadian workforce. If you want to support Canadian jobs support them.

[kEiThZ]

As for their business model, if the customer is paying for the phone, how is acquisition cost higher? I think you are using Big 3 logic here. For them, churn is way cheaper than acquisitions. Hence, the retentions plans for old customers and free phones for noobs. Wind doesn't have to play that game. Everyone is treated the same. New and old. It keeps them on their toes cause they have to compete for you to stay. That's why they'll do well. The other guys lock you in for three years and throw away the key.

[LOUDNOISES]

Oh wow. There is a slight chance this might be a really covert troll attempt, but to me its just a bad post without logic.

[stealmycar]

Wind is destined to fail from the start. Their business model is based on lowering immediate Acquisition cost by having the customer pay upfront. This replaces a contract, but does not eliminate churn which is deadly to any startup mobile company/network.

Customers can leave Wind at will and still sign up for 2-3 years with a contract provider, and benefit from not having to pay the retail price of a new handset. (And sell the handset purchased from the provider to another customer 3-4 months down the road, before the handset depreciates too far in value).

This is only the tip of the iceberg in terms of poor market penetration tactics. In +/- 5 years, the new entrants will not be profitable and too far in debt to continue operations without positive cash flow.

Also have to keep in mind that a 65% foreign owned company like wind is not necessarily the best way for canadians to invest their hard earned money, best to buy Canadian to keep the canadian economy strong for generations to come.

Indeed this generates jobs for the canadian market, but remember if this company is ever profitable.. The return on investment will mostly be going in the pockets a very wealthy Egyptian.

$lvl@¢k

You want to talk attrition rates to debt factor, have you ever competed with another company for anything, I have, maybe you have too, but the first thing you do is forget what you were taught in business school, if you want I'll get into it with you, but I really don't feel like typing long winded posts.

[$lvl@¢k]

Exactly Keith, and this is the downfall for Wind.

By using this as the difference maker on the current market, Wind is betting the farm on Eliminating Acquisition cost by having the customer pay the handset full cost.

But at the same time, you said it best as Churn is the money maker or breaker. By leaving this to be decided by the customer is a very high risk.

To recap: Indeed, everyone knows Churn is the breadmaker.. And thats the downfall of Winds Business Model as Wind is attemping to cover their possible churn costs due to the company valuing Acquisition over Churn.

This is a good acquisition gimmick, but does not provide secured income for the long term as loyalty to company these days can only bring you so far due to competition.

$lvl@¢k

[jasonvw]

I know Id take all my business advice from someone who goes by the name $lvl@¢k. Too bad Wind got their advice from L77TH4XX0RZ.

[stealmycar]

Exactly Keith, and this is the downfall for Wind.

This is a good acquisition gimmick, but does not provide secured income for the long term as loyalty to company these days can only bring you so far due to competition.

$lvl@¢k

Everybody wants secured income, the problem is most companies have to fight for their food, you can only secure yourself for so long, the moto is changing, if you want to eat, you have to be better and cheaper, just as long as there is no race to the bottom.

[Robrr]

Exactly Keith, and this is the downfall for Wind.

By using this as the difference maker on the current market, Wind is betting the farm on Eliminating Acquisition cost by having the customer pay the handset full cost.

But at the same time, you said it best as Churn is the money maker or breaker. By leaving this to be decided by the customer is a very high risk.

To recap: Indeed, everyone knows Churn is the breadmaker.. And thats the downfall of Winds Business Model as Wind is attemping to cover their possible churn costs due to the company valuing Acquisition over Churn.

This is a good acquisition gimmick, but does not provide secured income for the long term as loyalty to company these days can only bring you so far due to competition.

$lvl@¢k

Due to the lack of competition in this country they should be set.

In all honesty though, customer satisfaction is really where the money is at. Sure there are always the cheap skates looking to save every penny they can but a lot of people will stay loyal to a company as long as they are a happy customer and their needs are met by the company.

Wind's biggest priority is making sure their customers are happy and the business model they are using shows that.

[mikelin]

" best to buy Canadian to keep the canadian economy strong for generations to come." EH? i would if the " big 3 " has reasonable prices but you know what they do instead? rape our wallets like there's no tomorrow. is this how you treat your fellow canadians? if you rip us off then why should we " buy canadian? " does that even make sense? we as consumers of course look for bargains, who would want to pay more for the same services we get elsewhere for cheaper rates? until the big 3 put their act together nobody is going to BUY CANADIAN

[kEiThZ]

LOL

So you're argument that they'll fail is based entirely on the fact that they're not like the other guys?

I would argue that the bulk of the population thinks that's a good thing.

Do you really think they haven't done their homework? I am pretty certain they aren't lying when they said most Canadians told them they don't want contracts.

As for phone costs being a barrier to entry. That's BS. Not everybody is going to want a Bold. People will easily sign up for the Huawei or the Samsung, if it means saving 20-30% on their current bill. I really think you insult Canadians by assuming they aren't smart enough to do the math.

As for churn being a risk. Of course it is, when there's no contract. But somehow, companies all over the world seem to do fine with the same constraints. I see it as an advantage. Wind doesn't have to create complicated pricing structures and tiers to lock in customers. They'll simply administer one set of plans and adjust as required. That'll keep new and old customers happy. Aside from that, the only way a customer will leave is if they are getting a better deal from the Big 3. So far the Big 3 don't seem all that inclined to compete. Few customers will fall for the shiny free phone. But I dont think people are as dumb as you or the Big 3 think. If plan prices don't come down, customers won't switch back from Wind.

[kEiThZ]

By the way, which of the big 3 do you work for? I have heard these same talking points from friends who work at Rogers. I don't buy it.

[Vagabond142]

To the OP:

Well, their "horrible business model" will have me plopping down a little over $500 today at the Wind store in Kensington in Calgary (Bold 9700 + Always Shout + Infinite Blackberry on prepaid). Oh well. :P

[$lvl@¢k]

WIND = FIDO

Wind is not the first to have tried this as Fido had a rather unsuccessful go at No Contracts (I believe it was Fido without a Leash?)

How many times do you have to see a company attempt the same business model and fail before we admit that Canadians would rather have a largely Subsidized or Free handset and not mind using their services for 2 years.

Wind has nothing new to offer in reality, as the so called 'freedom' has been attempted already.

The current price plans are nice on paper, but so was the so called 40$ cityfido at the time. Plus it will take a few years before Wind can make sure their Network is optimal (Network coverage, quality, gaps, handoffs, dropped calls.. ) and Billing Platform is up to par. This is where the Churn comes into play and the loyalty factor will backfire on Wind.

Only difference is the initial financing has come from very deep foreign pockets, but this may be shortlived as any investor be it short term or long eventually will like to see some ROI within a few years.

$lvl@¢k