Why Is T-Mobile Joining the Web Services Industry?

The German telecommunication company, Deutsche Telekom has recently announced that its mobile phone division in the U.S., T-Mobile, will soon expand its service offerings to include web hosting services. CEO of Deutsche Telekom, Rene Obermann, said that he believes that the web hosting industry will drive the company’s future business.

Does that mean that T-Mobile will depart the league of cell phone carriers? Not likely. Though T-Mobile has lost cell carrier market share in the U.S., it is still strong in Europe. Even though AT&T has an exclusive agreement to provide iPhone service in America, Deutsche Telekom has purchased rights to market the iPhone in Europe. The popularity of the iPhone will continue to keep the mobile division strong.

However, it seems that in America T-Mobile USA is seeing the writing on the wall. T-Mobile is already lagging behind Sprint, Verizon, and AT&T in the mobile carrier service industry. Without rights to deliver iPhone service, it would have to jump by leaps and bounds to overtake any more significant market share.

With communications still at the forefront of T-Mobile’s mission, it will enter the web hosting services as a way to diversify their offerings. Web hosting is becoming big business, especially with the serious reduction in the price of monthly web hosting service contracts. Advanced technology has allowed web hosts to offer shared web hosting with unlimited disk space and bandwidth for very little money. More and more small to medium sized businesses, as well as personal websites are popping up all over. T-Mobile plans to capture part of this already established industry.

T-Mobile doesn’t plan to stop there. T-Mobile is also in discussions to form a joint venture with Clearwire for improved internet connectivity. So with all the talk about entering new markets, what is up the company’s sleeve?

It seems that Deutsche Telekom is in the process of restructuring their entire business paradigm. Whereby telecommunications has been its main focus, Mr. Obermann says that the industry is changing and in order to remain competitive and continue increasing its long-term growth, Deutsche Telekom must “Fix, transform, and innovate.”

“The industry is changing and through an emphasis on innovation we are evolving Deutsche Telekom,” says Obermann. “Our goal is to expand our important core business of providing fast network access by adding a broad portfolio of IT and Internet services.”

What does all this mean for the future of T-Mobile? It likely means that they are struggling to remain competitive in the North American market, and by diversifying they hope to remain a name-player and competitive. But without an already established background in internet solutions, T-Mobile has a long way to go to prove to customers that they can deliver quality service in addition to their cell carrier service.

With so many new web hosting companies springing up every month, it will be interesting to see if T-Mobile can indeed penetrate this industry which is quickly becoming saturated. We will see if by the end of 2011 whether their internet efforts pay off.