Market Insight

Orange continues to pursue diversification strategy

April 21, 2017  | Subscribers Only

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Orange Bank

Orange Cash, launched in France in 2015, marked Orange’s initial foray into financial services in its home market. It allowed users to make proximity based payments and also provided a mobile wallet app. The acquisition of Groupama Banque in 2016 enables Orange to move beyond mobile payments and into a full range of banking services. Consequently, Orange announced the upcoming launch of Orange Bank at the Orange event. It will launch in France in July 2017, following a soft-launch with Orange employees in May 217. Orange claims Orange Bank is the first bank to be designed by mobile and banking experts, and emphasised features such as controlling customers’ payment card directly from their phone and transactions instantly showing in the app. Orange plans to utilise its extensive retail assets to support Orange Bank customers. It will provide additional phone and text support, while also partnering with IBM to provide an AI-powered Watson-based assistant to help customers.

Orange TV - Network Recorder

The Orange TV – Network Recorder will allow subscribers in France and Spain to record programmes in the cloud. This is a solution that Orange already offers in Romania via its Orange TV stick, meanwhile Swisscom and Vodafone Italy have also deployed similar solutions. A cloud-based solution will enable Orange TV subscribers in these countries to access their television recordings on any device at any time, but may require Orange to renegotiate its current agreements with content partners in order to store recordings in the cloud. Consequently, Orange will look to leverage its close relationship with content partners, including HBO. The two companies recently announced an agreement for Orange to become the sole broadcaster of HBO content in France.

Djingo

Orange also revealed Djingo, a digital assistant that can be controlled by voice or text, which will be available in early 2018. Djingo can be used to control Orange TV, make a call or send an SMS, and ask for information or ask a question. It can also be used to manage Orange connected objects, which include light bulbs, thermostats, and smoke detectors. In addition to the Djingo speaker, Orange’s new digital assistant will be accessible through some Orange apps as well as Orange’s set-top box remote control. Djingo has been developed in partnership with Deutsche Telekom, who announced their own digital assistant focused on customer care at Mobile World Congress 2017. At the same event, Telefónica also announced a digital assistant, with similar use cases to Djingo.

Orange Connected Home

Djingo is part of Orange’s wider push into the connected home market. The company already sells a number of connected home products that can be controlled via its Homelive app, which reached more than 10,000 customers in its first year. Djingo can be used to drive usage of Homelive by adding a layer of voice automation to Orange’s connected home solution.

At this year’s Hello event, Orange announced a number of other connected home products, such as the Orange Live Button. A physical button that can be programmed via an app to trigger an action each time it is pressed, it connects via a LoRa or GSM network. Customers can use the button to turn the heating on before returning home or turn the lights off when the family leaves. Furthermore, Orange also announced an Intelligent Wi-Fi solution that embeds new software in Orange routers, and combines this with Wi-Fi extenders around the home, in order to connect each device to the best network access point and frequency range. Finally, Orange announced a TV sound bar that will use Dolby Atmos to deliver improved sound to Orange TV customers. 

Our analysis:

Orange is not the only telecommunication group exploring opportunities beyond traditional telco services. In recent years, Vodafone has introduced its own mobile payments solution in a number of markets and Deutsche Telekom has launched a connected-home platform, Qivicon. However, the sheer volume of announcements separates Orange from other telecommunication groups as the company appears to be pursuing a greater number of opportunities outside of traditional telco services, compared with its rivals. Diversifying through capitalising on its assets is an important part of Orange’s Essentials2020 strategy, which was announced in 2015.

Diversifying into new areas could help Orange build upon the convergence strategy it has implemented in several markets, which has led to improvements in subscriber churn. As of March 2017, there was a 7 percentage point churn differential between converged fixed broadband customers and non-converged fixed broadband customers in Spain, while the differential was 4 percentage points in Poland and 2 percentage points in France. In this statistic, converged fixed broadband customers have at least a mobile subscription with Orange, but the company could look to introduce other services to its multiplay bundles as a consequence of its diversification. For instance, Orange could add its range of connected home services to multiplay bundles, or combine the energy services it offers in Poland with other services. This could help Orange further reduce churn in its core services and provide a boost to revenues.

Orange’s diversification strategy can provide substantial benefits, but it must ensure that its activities are still aligned with its core connectivity business. Telefónica Digital provides an example to Orange of the problems associated with telco diversification. Telefónica Digital was a standalone unit that was set up to develop products and services that leverage the power of technology. Three years after its inception, Telefónica Digital was incorporated into Telefonica’s group structure, as it struggled to find a business case for many of its activities. Orange needs to ensure that its diversification activities do not succumb to the same fate, ensuring it leverages its strength in connectivity and customer billing when diversifying.

 

 

Organization
Orange
Research by Market
Mobile & Telecom
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