The Rise Of The Affinity Cell Phone
To serial entrepreneur Juha Christensen, U.S. mobile-phone customers seem strangely neglected. Every year, 80 million or more dissatisfied subscribers switch service plans. And while the penetration rate for cell phones in the U.S. is a lofty 81.5%, according to market researcher iSuppli Corp., that leaves about 56 million people (yes, some of them babies) who don't carry a phone.
How to reach those teeming millions? Christensen's latest venture, a Menlo Park (Calif.) startup called Sonopia, hopes to hook quite a few by leasing radio spectrum from Verizon Wireless (VZ ), then reselling it to other companies who will sign up their own customers. Sonopia's idea is to attract a diverse collection of interest groups--from small churches and Little League teams to rock groups like Barenaked Ladies. Each offers mobile phones and services with help from Sonopia on everything from customized handsets to billing. "Big carriers take a one-size-fits-all approach," says the 42-year-old Christensen. "I want to democratize the sector by enabling even small organizations to offer handsets and calling plans."
Christensen isn't the first to latch onto this resale model, which goes by the clunky moniker "mobile virtual network operator," or MVNO. Virgin Mobile started one of the earlier MVNOs back in 1999, leasing airwaves from major carriers on four different continents. Many others followed, and some made big profits in Europe. But in the U.S., where it has attracted more than 4.8 million customers, Virgin concedes it has lost money every full year since its creation in 2002. Others, including Disney (DIS ) Mobile, Mobile ESPN, and Amp'd Mobile, have closed up shop.
Christensen thinks these earlier ventures got off on the wrong foot by trying too hard to mimic major carriers. They ran their own retail stores, subsidized phones they sold to their customers, and spent huge sums on marketing and sales.
Following a playbook that is standard for MVNOs in Europe, Sonopia eschews hardware subsidies and relies on the Internet for sales and customer support. It also coddles organizations that want to start their own phone networks under its umbrella. "All it takes is 15 minutes to set up and configure our software," says Christensen. "Then, for all intents and purposes, they look like a competitor to AT&T (T ) and Sprint (S )."
Sonopia currently has deals with more than a dozen major brands and 5,000 smaller organizations, from the National Wildlife Federation to sports teams like the Atlantic League's Long Island Ducks in Central Islip, N.Y. Sonopia helps the team supply fans with green Motorola (MOT ) Razr phones, complete with duck emblems and ringtones that quack.
Christensen, a Dane born in Finland, never earned his college degree. Instead, from a young age, he got experience working in his family's small aviation company outside Copenhagen. At 11, he was already piloting airplanes, and at 17 he started a computer reselling business.
For more than two decades, Christensen has been a force in the global wireless sector. Before there was a Palm (PALM ) Pilot, he helped pioneer personal digital assistants at Psion, in Britain. Then he pulled some of the world's top mobile-phone makers into a consortium called Symbian. In 2000, he spearheaded Microsoft Corp. (MSFT )'s global foray into smartphones, reporting directly to CEO Steve A. Ballmer. A few years later, he jumped to Web startup Macromedia Inc. and made millions when that company was sold to Adobe Systems Inc. (ADBE ) in 2005 in a stock deal worth $3.4 billion.
Christensen has splurged on a 5,000-square-foot home in the hills overlooking San Francisco Bay. But he works in a Spartan headquarters with an open office plan. To save money, he hired a Ukrainian team to build the software that sits on the company Web site. "When you start adding all these things up, it makes a real difference," says Christensen. "We have the same average revenue per user as the other [operators], but while it takes them something like 20 months to earn their money back on a subscriber, it takes us only eight or nine months."
By Jennifer L. Schenker