Ground Floor: I recently ended my flirtation with a Motorola mobile phone and returned with relief to the Nokia fold. The Motorola looked lovely but I was utterly unable to use most of the features as the menu was too user-unfriendly, writes Sheila O'Flanagan.
And by features I don't mean taking panoramic megapixel photos or anything like that, I just mean answering the phone and sending text messages! I know that I'm way outside the catchment age to be able to use mobile phones in the way that manufacturers and networks want, but I'm really not too bad at technology and so I did feel that texting shouldn't be beyond me. But it was. Back with the Nokia all is well again (though if anyone can tell me how to make it ring for longer than three seconds before diverting to my voicemail I'd be eternally grateful.)
I was thinking about mobiles in general when the news came through in relation to the voting at the Vodafone agm last week. Years ago, when I first wrote about the money mobile networks were spending on licences and 3G and all the other bells and whistles, I wondered how long it would take for consumers to spend in the quantity needed for the companies to justify the costs. The answer seems to be: a lot longer than the networks expected.
Last May Vodafone announced the biggest annual loss in UK corporate history at £14.9 billion (€21.8 billion) and admitted the marketplace was "increasingly challenging". The upshot was cuts at head office and more pressure on Arun Sarin, at the helm since 2003.
And although he commented that the results for this quarter were "robust" and that revenues were in line with expectations, individual shareholders are incensed at the fall in the value of their holdings (from 155p last year to around 115p now), while some institutional shareholders have voted against the acceptance of the board's remuneration package and the reappointment of Sarin as chairman.
The two key institutional investors involved were Standard Life (notoriously critical of companies in which it invests) and Morley Fund Management. Standard Life said its vote against Sarin and the remuneration report reflected the "importance we attach to leadership at Vodafone and our concerns about Vodafone's remuneration policies, which in our opinion provide significant awards for achieving unchallenging performance conditions."
I believe far too many companies provide significant awards for achieving unchallenging performance conditions and it is the shareholders who are left adrift as a result. In the case of Vodafone, the remuneration committee (headed by Luc Vandeveld, not noted for his ability to hit performance targets at Marks & Spencer) proposed reducing the qualification for bonus shares to earnings per share growth of 5-10 per cent from 8-16 per cent.
Given that Vodafone is operating in an "increasingly challenging" market, the committee is basically saying that things for the company have got more difficult so let's make it a bit easier for the executives to get their bonuses. Why? If revenues are down it doesn't make any sense for the executives to get what they got before - or more!
Sarin's mammoth company is behind the pace and still struggling with the strategy of the previous chairman, Christopher Gent, who pursued a dash-for-growth policy that turned the company into the largest wireless operator by revenue, but which left it saddled with expensive acquisitions, including Mannesmann in Germany, Verizon in the US and J-phone in Japan. Vodafone aggressively pursued the provision of 3G services but they haven't brought in the expected income and now the company has cut the subsidies on feature-full 3G handsets.
3G may be a generational thing but the handsets are too expensive for those people who would use them most. Most of my contemporaries simply couldn't be bothered to buy a phone that downloads media clips. A recent report found 63 per cent of adults couldn't care less about 3G functionality and a further 18 per cent were only vaguely interested. Only a third of people with a 3G handset had ever made a video call and most people said they wouldn't pay extra to watch mobile TV.
Maybe things will be different when the next generation of people, rather than phones, have the spending power. My sister blithely informed me that my teenage nephew doesn't possess a watch because he has a mobile phone. Perhaps he'd be a big buyer of a phone with mobile TV and an alarm clock feature.
Given that nearly 10 per cent of shareholders voted against Sarin, with 5 per cent abstaining, the vote was a definite cage-rattle. In another blow, director Bill Morrow, recently appointed head of Vodafone in Europe (and previously head of the Japanese operation) and a supporter of Sarin, resigned to return to the US and "spend more time with my family".
I believe that mobile phone technology will ultimately replace land lines completely. But both the networks and the phone manufacturers still have to concentrate on what people actually want rather than what they would like them to want. I back easy-to-use phones and cheaper calls to keep people talking. But maybe I'm still a mobile dinosaur.
www.sheilaoflanagan.net
