Over the last decade, Verizon Wireless has been a rapid growth engine. The iPhone and Android revolution gave them the chance to strengthen their competitive position and they saw success and growth. However, over the last several years as growth in this smartphone segment started to slow. Going forward, what path should Verizon take?
Watching the company over the last several years this question was real and growing. Verizon growth has not been as strong as it should have been. So, how could they continue to show growth? That’s what investors, workers and customers are looking for. They need to create the next growth wave to ride over the next decade.
It seems like Verizon has several irons in the fire, and now they just announced their new CEO, Hans Vestberg, who could light a new and different kind of growth fire if he plays his cards right. He must introduce a new way of thinking. Explore new opportunities. And improve the company’s relationship with the analyst and media community.
CNBC interview with Lowell McAdam CEO Verizon
I remember an interview with CEO Lowell McAdam on CNBC maybe two summers ago. It was when smartphone growth was slowing, and investors, customers and workers were all wondering the next, new direction Verizon would take. At the time, Verizon growth was no longer as strong as it had been.
McAdam warned that their rapid growth was slowing as the company positioned itself for the next big growth wave. However, he promised Verizon and Verizon Wireless would remain a leader in communications services as it expanded into new growth areas. However, there were no details. Nothing to sink your teeth into.
He was right. Over the next couple years, Verizon Wireless growth did slow. Investors, workers and customers have been patient waiting to see what the next version of the company would look like.
Over the last couple years, we have started to see a new direction. They made two major acquisitions, AOL and Yahoo! They are powering a new initiative at Verizon called Oath. While this is promising if successful, growth still seemed in the distant future.
In a more recent CNBC interview, McAdam’s comments focused on core areas like wireless, 5G, fiber along with Oath. These are great new areas for the company to focus. This is what the company should have been talking about and focusing on all along.
While this may be the right direction for the company, is this enough? Is there passion and rapid growth ahead for the company? Every company needs passion for growth. Something to capture the imagination of the marketplace.
This seemed to be the missing ingredient in recent years as competitors like T-Mobile continued to shake things up and AT&T Mobility started to offer DirecTV NOW and wireless TV or mobile TV. These companies show innovation, new thinking and excitement.
Oath, 5G and fiber are good direction for the next Verizon growth wave
Will Oath be a success? Yahoo and AOL were once Wall Street darlings and real growth engines. However, that was yesterday. Why would Verizon be interested in acquiring yesterday’s technology? Companies which used to be on the climbing side of the growth wave, but who in recent years have been on the falling side.
So, the longer-term Verizon strategy seems to be making itself clearer. They did not buy yesterday’s technology leaders for the old tech. Instead, they acquired AOL and Yahoo to get their hands on all the users. Believe it or not, these companies still have plenty of users. And if Verizon wants to jump to the next growth wave of advertising, marketing, sales and more, they need these kinds of users. They think this is an instant customer base.
They want to grow into a more diversified company using their wireless network to connect countless users in a giant marketplace where they can spend money on a variety of things like technology, products and services. So, Verizon is following ad advertising or marketing model, similar to Amazon.com, Alibaba, Google, LinkedIn, Facebook and others.
They see the success of their wireless business and the success of companies like Google for search, Amazon.com for shopping, Facebook and Google for advertising and more. They want to grow into the kind of company that expands into all these areas which are new to them.
What new directions will the new CEO Hans Vestberg take Verizon?
Last week, Verizon announced CEO Lowell McAdam is retiring and will be replaced by Hans Vestberg who comes from Ericsson. A new CEO always ushers in a new era for every company. So, what new path will Vestberg take Verizon?
First impressions are lasting, so I hope he creates the right kind of leadership position in the minds of the marketplace. He should show passion and generate excitement.
That’s a very important question for every investor, customer and worker of the company. Not only is Verizon and Verizon Wireless under pressure, but the entire industry is changing as well, with existing and new competitors.
We saw AT&T take a similar path a decade ago. Ed Whittacre was the CEO of AT&T when SBC acquired AT&T, Bellsouth and Cingular. He put the pieces together for an amazing growth story.
New AT&T CEO Randall Stephenson took the helm and transformed the company in the new world full of iPhone and Android smartphones. He acquired DirecTV and reinvented it. Today they offer DirecTV NOW, wireless TV and much more.
This is the same kind of opportunity I see in Verizon’s future, if they can pull it off.
McAdam sees the future of Verizon centering around wireless and 5G, around fiber and around Oath. While I think these are a good direction for the company, I don’t yet see enough innovation and passion.
Perhaps that’s where the new CEO will Hans Vestberg can come into play. Taking the Verizon strategy to the next level. This is a critical moment. It is not a moment to waste.
Changes to expect from Verizon Wireless
So, what changes can we expect from Verizon and Verizon Wireless going forward. Plenty. This is both exciting and unsettling to those that follow the company. However, change must happen if the company intends to continue to grow and be a leader going forward.
Vestberg may decide to stay on the Oath path laid out under McAdam. Or he may decide to change directions. Or he may stick with Oath and add new thinking and bring new ideas to the table. He has been with Verizon for the past year, learning about the opportunities, challenges and risks.
So, I expect Vestberg to hit the ground running. Especially as he introduces himself to the US marketplace with his ideas to transform Verizon into a rapidly growing company once again. So, pay attention, this could be a quick transformation.
AT&T CEO Randall Stephenson interview at CODE
When AT&T CEO Randall Stephenson was interviewed two weeks ago at the CODE conference, he said AT&T and Verizon are both in the early stages of a similar transformation. This helped many investors better understand the new direction these telecom and wireless giants are heading.
He said, the two models are not that different. Both are focused on content and using data from their distribution business to enhance value of that content. He also said there are differences. Verizon is more focused on digital content where AT&T is more focused on premium content.
These two different approaches do help the investor, customer and worker better understand the direction these two companies are heading in. However, the direction of the industry and of the players are still not entirely crystal clear. And the investor, customer and worker like things crystal clear. There is still quite a bit of educating that needs to occur.
So, Verizon and Verizon Wireless need to do a better job of educating the marketplace. Helping it better understand the new direction the company and the industry is heading in.
What new changes can we expect from Verizon Wireless under Hans Vestberg?
I fully expect Vestberg to create a new growth wave or two for Verizon to follow. Will it be successful is the next question? He was brought in to help Verizon and Verizon Wireless continue to show growth going forward.
However, it has been a long time and the average industry watcher is still not as clear as they want to be. It’s not as clear as they need to be. So, as successful as Verizon is today, that’s still one job they need to get better at, for their own good.
It will be interesting to watch Vestberg transform Verizon. His plans should be strong, clear and he should not be afraid to put them out there for the world to see. Verizon still has a strong brand name, but the company is at a crossroads. It will be interesting to follow them over the next year and going forward.
This article is published as part of the IDG Contributor Network. Want to Join?