The business and culture of our digital lives,
from the L.A. Times

« Previous Post | Technology Home | Next Post »

T-Mobile's Philipp Humm talks prices, tablets, and how Steve Jobs and the iPhone 'fundamentally changed our industry'

February 17, 2011 | 10:03 am


Philipp Humm, the new CEO of T-Mobile USA, has come from sister company T-Mobile Germany to try to boost the carrier's fortunes in the U.S.  Humm is visiting dozens of cities around the nation, holding grassroots town halls with employees to get a sense of where they feel the company should be heading.

Humm sat down with The Times recently to talk up his plans to make smart phones affordable, to get everyone a tablet, and how he'll face off against his bigger rivals in Verizon and AT&T.  He also has a few words about the iPhone (which T-Mobile doesn't yet have) and Apple's Steve Jobs. 

What is one of the more important lessons you learned from operating in the European market?

The best way of being a good challenger is by having played defense for a while.  Now you know how the defenders play the challenger game.  Back at the time in Germany we had very good challengers attacking us.  Looking at how other people attacked you is a very good way to determine how you’ll make your next attack.

How did they attack you back then?

At the time, as the incumbent, we had a very high [average revenue per user], and the company that attacked us did so by offering an unlimited plan -- one that was below our average, but significantly above their average.

So we had a hard time reacting because for us it would have cost a lot of money to compete with them, but for them it was accretive.

What are some of T-Mobile’s weaknesses that you’d like to remedy?

The key thing for us is to start bringing clarity to the brand.  The brand has been very strong on two aspects: value leadership and the quality proposition.  We lost a little bit of the profile on both in the past.  So what we’re doing is making sure that we gain back on value and on quality.  Quality means that our customers and non-customers know that we have a superior 4G network.  And because we were late in the data game, the perception among non-customers is that we have an inferior network -- so it’s really correcting a misperception in the market.

On the value side, we want to focus on making smart phone usage affordable.  That means looking at having rate plans that allow you to use smart phones for very little money per month.  Our data plans start at [an industry-low] $10 for 200 megabytes -- for which the average user can do all the surfing, navigation, and e-mailing they need to.

And we’re also trying to make smart phones themselves more affordable.

How would you do that?

We announced [at CES] that we’re going to launch a 4G smart phone during the first half of this year that is below $100 retail.  We already had four [3G] smart phones that were below $100 last quarter.

This is an area where our industry tends to over-engineer products.  People say they want a smart phone, but what they’re really saying is that they want to use it for Web surfing and navigation.

So the idea is to work with our suppliers to identify more standardized products that are very good smart phones but are maybe not the most expensive and the latest technology -- maybe six or nine months older, but on a very mature technology.  That’s the same principle that’s used in the automotive industry and others.

Are you concerned that there are so many smart phones coming out now that they’ll all blur together for consumers?

Yes.  If you go into a shop you see a lot of devices that all look the same. You have tons of black screens sitting there looking at you, which isn’t very appealing.

Two things have to happen in this market.  The first is a stronger differentiation on the designs.  The iPhone was a very unique and distinct design -- it’s now been more and more copied, but it’s still an iconic design.

And the second is bringing the operating system to life. What you’ll see changing in the market is we’ll spend more time explaining to customers what they can do with devices instead of just telling them, OK, this device has this technical aspect, this speed or this camera, etc. -- and focus more on the content and services.  Today we’re not doing a great job on that.

How do you see Steve Jobs’ role as a technologist and his contribution to consumer technology?

Steve Jobs has created an empire and brought Apple to fantastic heights.  It’s amazing what this man has done for the business.

I remember when I was at business school in ’82, we already had two series of business cases on Apple versus Microsoft.

Now he’s made a fantastic breakthrough on the phone.  He showed the wireless industry what a user interface should look like -- he fundamentally changed our industry.

Is the tablet going to change the industry as well?

Yes.  The tablet is [going to be] the classical second device.  Either the 7-inch version which we’ll have with Dell and Samsung, or the 11-inch version which Apple has, and that we’ll have with LG’s Honeycomb 4G device.  We really believe that every customer will eventually have a tablet, and that they’ll largely replace the netbook or PC.

Are you going to get the iPhone?

Apple, at the end of the day, are the ones who distribute the product. 

We would never say we'd turn an iconic device down. Even with the superior performance of the Android platform, there will always be one segment of the market that wants an iPhone.  So our job is not to reduce choice but to increase choice for our customers.

-- David Sarno

Photo: T-Mobile USA's chief executive, Philipp Humm, photographed at the Los Angeles Times. Credit: Al Seib / Los Angeles Times