The Death Of Helio

[hank424]

Helio, the once high-flying, uber-hip wireless reseller, has crash-landed and was scooped up by rival Virgin Mobile USA Friday in a stock transaction valued at $39 million.

Though other so-called mobile virtual network operators (MVNOs) still exist, such as kid-focused Kajeet, Helio's demise marks the end of an era. "Helio was the last of the big-profile MVNOs," says Eddie Hold, vice president of consumer services at Current Analysis. Despite its flashy brand and the star power of founder Sky Dayton, four key factors deflated Los Angeles-based Helio.

The company, a joint venture between Internet service provider Earthlink and Korean operator SK Telecom (nyse: SKM - news - people ), didn't understand the market. Dayton, who had also started Earthlink, was a media darling, but didn't have direct experience with the mobile industry. "I never bought into the genius of Sky Dayton," Hold says. "What did Earthlink ever get right in the wireless market?"

Helio's "best of both worlds" strategy of offering the coolest phones with advanced data services sounded good on paper, though. And Helio won kudos for introducing some innovative services, such as early partnerships with MySpace, YouTube and Flickr. But the premium offering carried a premium price with plans that ranged from $65 to $99 a month.

Even Helio's phones, which were supposed to be its key selling point, had flaws. Its most eye-catching model, the Ocean, won early raves for its sliding QWERTY keyboard, fast 3G data access and global positioning system. But over time it suffered from comparisons to T-Mobile's Sidekick. "People either love or hate the Sidekick," Hold says. "Either way, they probably wouldn't buy an Ocean, so that market was already taken."

Finally, the recent string of MVNO failures, from Amp'd Mobile to Disney Mobile to Mobile ESPN, may have scared off consumers. "When someone buys into a two-year plan, they want to feel sure that you'll be there two years from now," Hold says.

Now, Helio seems to have met its odd-couple match in Virgin Mobile. Warren, N.J.-based Virgin, which has five million customers, is partly owned by Richard Branson's Virgin Group and Sprint Nextel (nyse: S - news - people ). At its 2002 launch, Virgin Mobile cultivated a brash, youth-oriented image, supported by content deals with MTV. But when it failed to keep pace with larger carriers by launching 3G services such as mobile TV or video, it became "just another low-cost, prepaid phone service," Hold says.

Analysts say Helio should inject a little cool into Virgin Mobile. Virgin gets Helio's 170,000 subscribers and plans to leverage the company's snazzy technology to introduce advanced services and high-end phones in 2009, Virgin Mobile Chief Executive Dan Schulman said in an analyst call Friday. This could slow down the thousands of subscribers who leave Virgin Mobile each month in search of more sophisticated phones and services, Schulman noted.

The acquisition also calls for job cuts at Helio and store shutterings to reduce costs, and the companies have already leveraged their combined heft to negotiate better rates with Sprint, from which they lease airwaves. Schulman said Virgin Mobile anticipates at least an 8% discount in network costs in 2009. Sprint will also give the company a $10 million break up-front.

Analysts warn that the wireless market has morphed into an unfriendly place for MVNOs. As the U.S. wireless market fills up, with more than 80% of Americans already owning a cellphone, carriers are targeting young consumers directly and also being more cautious about who they allow onto their networks.

In the end, the death of Helio may not ensure the survival of Virgin Mobile. In the analyst call, Schulman noted that his company had little choice but to acquire a rival. "Scale is the key to success in this business," he said. "If we didn't do something like this, we would fall further behind."
Source: The Death Of Helio - Forbes.com

[hank424]

The Helio stores are shutting down.


That's the word according to Fierce Wireless, which took this shot of a Helio store in Denver with a sign in the window that reads "The Helio Store is closed. Contact their customer support."

[Mobile Mike]

Wow, another MVNO bites the dust...

Of course, this particular one didn't come as too much of a surprise considering there have been news reports circulating for weeks on an Virgin-Helio marriage.

[SmArTeStChIlD421]

this seems to me a lot like the Cingular Wireless AT&T Wireless merger...........because alone they were ehhh...soso......but together they are a mammoth.......i think Virgin will do really well......what does it mean for Helio coverage because Helio customers had FULL access to Sprint's network.....roaming and all.........Virgin just had access to the main network.......what will this mean for the new companies coverage???

[Mobile Mike]

Originally Posted by SmArTeStChIlD421

this seems to me a lot like the Cingular Wireless AT&T Wireless merger...........because alone they were ehhh...soso......but together they are a mammoth.......i think Virgin will do really well......what does it mean for Helio coverage because Helio customers had FULL access to Sprint's network.....roaming and all.........Virgin just had access to the main network.......what will this mean for the new companies coverage???

I guess we'll find out soon. Apparently Virgin will integrate Helio's handsets with theirs, along with post-paid plans and the like, so it's entirely possible Virgin will inherit Helio's deal with Sprint (as far as full access is concerned).

[Eric47]

yea the helio here shut down too. i asked the manager and he sounded glad...evidentally helio has been a sinking ship for about 6 months.


when everyone showed up with unlimited plans that really killed Helio because that was there main staple.

[SmArTeStChIlD421]

Originally Posted by Mobile Mike

I guess we'll find out soon. Apparently Virgin will integrate Helio's handsets with theirs, along with post-paid plans and the like, so it's entirely possible Virgin will inherit Helio's deal with Sprint (as far as full access is concerned).

you would think they would make the offer because prepaid customers make up a lot of Sprint's network traffic right?? i mean Virgin and Helio are two of the biggest MVNOs........this merger could mean bg bucks for Sprint because one of the only other sizable MVNOs is Kajeet

[Eric47]

tracfone is probably the most popular in the Southeast.

Helio was not a conventional MVNO's as they did contracts more than Prepaid

[tmobileman]

this amuses me, I had a customer call on Wednesday and say I am leaving tmobile for Helio, they are giving me a free ocean...I said to that customer that's because their going out of business, they said you're just saying that to get me to stay, I said no I am just saying that because it is true, they left...now I wonder if they are thinking about what I told them

[WumpusVA]

Wirelessly posted (Mozilla/4.0 (compatible; MSIE 6.0; Windows 98; PalmSource/Palm-D062; Blazer/4.5) 16;320x320)

Originally Posted by tmobileman

this amuses me, I had a customer call on Wednesday and say I am leaving tmobile for Helio, they are giving me a free ocean...I said to that customer that's because their going out of business, they said you're just saying that to get me to stay, I said no I am just saying that because it is true, they left...now I wonder if they are thinking about what I told them

hahahahha! that's too funny!!!! i'll bet that customer feels like an idiot right now.

[SmArTeStChIlD421]

free ocean......wow......those things arent cheap.......i wonder if they made him sign a contract for that too