Budii up!
The telecommunications sector is becoming rather crowded. The sector has been traditionally dominated by Telstra and Optus, but a string of acquisitions has seen the market shares of iiNet, TPG Telecom and M2 Telecommunications surge in recent years. Now that this period of consolidation is slowing, these companies will require a greater focus on organic rather than acquisitive growth in order to sustain their impressive earnings.
iiNet in particular is distinctly aware of this issue. Since inception, the company has focused exclusively on providing a quality service to its customers at the expense of developing a strong sales force. Management can no longer use acquisitions to grow their top line, and are instead hoping to increase sales through the cross-selling of products and services to its existing customer base. iiNet has the second largest subscriber base for DSL broadband (Telstra has the most subscribers by a country mile). When you consider that iiNet also provides phone, television and business solutions, it makes sense for iiNet to leverage this customer base.
This brings us to discuss the company’s latest product – Budii™. According to the company’s website, “…Budii is a comprehensive NBN-ready, entertainment and network hub, home smartphone, and tablet all-in-one package…The future applications for the home, combined with the way it connects devices from a single compact unit, make Budii an Australian-first innovation, that is not only very clever, but also a most attractive addition to any home.”
Management believe that Budii will be a perfect medium to encourage cross-selling within its customer base, so the launch of this product will be critical for the long-term prospects of the company.
So with this in mind, let’s take a look at the advertising campaign that iiNet is using to launch the product. iiNet’s brand revolves around its key figurehead called “Finn” – the politely spoken Irishman who discusses iiNet’s services and products in a quirky and fun manner. Finn has been used to launch Budii, but in a break from tradition he is sharing the ad with …. his family. What better way to encourage cross-selling within households? The marketing campaign has been running for over a month now – for those that haven’t seen the commercial you can watch it here.
What I am most curious about is whether this commercial has had the desired impact – Did it capture enough of your interest to ultimately want to buy a Budii? And do you think it conveyed the same description of the product as displayed on the company’s website? I for one was left scratching my head about the product’s functionality (and also slightly bemused by iiNet’s depiction of the modern family).
You may remember Telstra launching a similar advertising campaign to launch their T-Hub™. Like iiNet, Telstra didn’t directly focus on the functionality of the T-Hub (the Dad only uses it in the ad to check the weather), but it was effective at getting people talking and appealing to the “functional family”.
Do you think Budii’s launch is effective? Let us know your thoughts in the comments below. It’d be great to hear from those that have purchased a Budii to see if iiNet’s renewed focus on sales is proving effective.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
INVEST WITH MONTGOMERY
Andrew Legget
:
In my opinion T-hub has an advantage as telstra own half of Foxtel so they can link this in with it which may make it more attractive to families and give it extra flexability to add extra packages around what type of channels etc it would like.
I think the space for similar items like budii and T-hub will only get more crowded, rumours so far are that the newest xBox and Playstation apparently due out in December will share some similar capabilities.
I think these type of devices will become the norm so it will be interesting to see how this changes the market. The question might be will customers put their loyalty to a particular provider first and purchase their hub, will they change providers based on who has the most attractive offer in terms of the hub, will companies like microsoft, sony and possibly Apple even in the future just come in and stampede over all of them by offering more technologically advanced systems which can be linked to any provider.
Asher Jebbink
:
I think you’ll find it isn’t how “technologically advanced” the systems are – it’s about the content (the amount/quality of the content) at a reasonable price. And none of that is controlled AT ALL by the device manufacturer/provider. It’s all managed by the studios.
Take a look at the US. They have services like Netflix which are thriving. Australia has sort of similar (eg: iTunes) but the prices are ludicrous as has been exposed numerous times, yet nothing changes.
I can’t see any service/device like T-Hub or Budii working in Australia until deals are made with all the big studio companies because without cheap, good content people just won’t adopt. Why buy 3 or 4 different devices for a single use each when you can have a single computer that does all of it (and cheaper)
Roger Montgomery
:
Content is King!