Now that its teenage customer base it getting older, Virgin Mobile is angling to disrupt the market with more sophisticated cellphone services, reports Leslie Cauley in USA Today (8/16/08). As most everybody knows, Virgin made its mark by taking the "negative" of kids with cellphones (i.e., no credit history) and turning that into a "positive" (i.e., a contract-free, pay-as-you-go plan). Granted, it's a relatively small market -- only "about 5.1 million customers -- a fraction of the 140 million-plus controlled by AT&T and Verizon."

But it has worked out for Virgin, in no small part because, unlike others who have ventured into contract-free offerings, it bothered to take ownership of operations, as opposed to simply leasing and re-branding someone else's. "If you're trying to differentiate yourself by focusing on the customer, you don't want to be beholden," says Virgin Mobile ceo Dan Schulman. While Dan won't say exactly how he intends to maintain relevance as his youthful customers age, there's a big clue in Virgin Mobile's recent $39 million acquisition of Helio, a high-end wireless carrier.

Helio only has 170,000 subscribers, but they pay a premium -- "around $80 a month, about a third more than the $55 spent by the average user." So, yes, Helio is a departure from Virgin's "contract" heritage. At a minimum it involves a service called "Ocean," which enables users to interact "easily, in real time, with social networking sites." But the most important thing, says Dan, will continue to be "good value on basic stuff," and of course a dose of "Virgin's high-style, renegade attitude and customer-centric focus." As Dan says, "Virgin classically tries to challenge industry convention." ~ Tim Manners, editor