Why are there no cool local applications for dual-mode WiFi phones?

I am becoming slowly more disillusioned with the notion of WiFi on mobile phones.

For the last 4 years, I have been expecting the addition of WiFi to drive innovation in handsets, and lead to a variety of interesting applications and business models. But to date, I've only really seen 3 use cases:

• Connection to operator telephony+SMS via WiFi, using UMA, or sometimes SIP.
• Connection to non-operator telephony based on VoIP (Skype, Truphone, enterprise PBX etc)
• Connection to the Internet to share a broadband connection for web & email

I suppose 'indoor coverage' is a fourth, and maybe (from the operator point of view) macrocellular offload onto the customer's own broadband connection. But I'd argue that those are justifications rather than actual applications, and in any case overlap strongly with enabling the other three.

I've seen almost nothing about using the WiFi to connect to local computing or electronics resources. Nobody uses a WiFi phone instead of a microphone at conferences. Nobody shares music or video between phone and PC hard drive via WLAN. Most people still sync email & PIM via USB or Bluetooth. Nobody uses their handset as an Xbox or PlayStation controller. Nobody interacts with a street kiosk with a dualmode phone. Nobody orders their own food in a restaurant.

The exception here is in the enterprise, where phones will now hook into the PBX for a variety of purposes beyond voice - and WiFi (albeit usually on single-mode devices) is also used for a variety of specific corporate data applications like stock control or point-of-sale connectivity. But I don't see Nokia N95's or 'handsets' as such, being used in warehouses -although maybe the Symbol MC series count as dualmode phones.

But in the consumer market, WiFi phones are just about telephony and Internet. Apple has helped a bit with the iPhone, so maybe we'll get some innovation there. And in theory, the use of universal plug-n-play (UPnP) on some Nokia devices should facilitate better interworking with consumer electronics.

I suspect there are a few problems that have inhibited the use of cool, local, WiFi-enabled apps on smartphones:

• Relatively low numbers of WiFi handsets - and often consumers don't know, don't care or can't even switch it on when they do have it. I'm thinking here about people who got an N95 subsidised down to zero, solely choosing it on the basis of a 5MP camera.
• Relatively low numbers of WiFi homes (and offices) until recently. Plus lots of general horribleness around configuration, security settings etc etc. As an aside, this has also inhibited the use of WiFi in other non-PC devices like cameras.
• Passive or active discouragement of WiFi by operators, especially in operator-centric, non-Nokia strongholds like the US, Japan & Korea.
• Lack of willingness by handset makers to rewrite all their embedded applications to exploit WiFi. "Oh no, do we really have to rewrite the music player app to look for a PC hard drive when the phone's in WiFi range?"
• Usual problem of fragmentation of operating systems & customisations, that makes creating any sort of 3rd-party software a pain. Add this to the fragmentation of home WiFi setups and you multiply the complexity.
• Generally poor support for developers to write bearer-aware applications - ie apps that behave differently (or are only accessible) when the phone is in WiFi mode. This is slowly changing, with Symbian's new Freeway architecture, for example. Long way to go, though.
• Potential for 'fights' between operator use of the WiFi, and local applications. What's more important & gets priority - an operator phone call, or a file transfer to the company's Oracle database over the WLAN? It's very difficult to balance the rights and privileges of 'private' WiFi use against 'operator' WiFi, especially if there are multiple SSIDs set up (eg on some home gateways, UMA services have their own WiFi SSID).
• Generally low awareness of, and low comfort with, WiFi in peer-to-peer mode.

Obviously telephony (operators' or someone else's) and fast web/email access are hugely important. Offloading that phone/Internet traffic from the operator's network is economically attractive for some operators. But I think for WiFi to really get beyond perhaps 10% of handsets, there has to be more than that. With the advent of HSPA/EVDO with flatrate data, various improvements to indoor coverage (eg femtos), there's nothing compelling or unique that you need WiFi for in a phone, except in the enterprise. You can do VoIP over the 3G network. You can browse over it. You could even run UMA over 3G if you really wanted.

For dualmode WiFi phones for consumers to become massmarket, there need to be local applications, connecting to home PCs or consumer electronics, or maybe stuff besides Internet connection at hotspots. And these will mostly need to be non-billable, non-operator applications too.

Put simply - stop calling it WiFi, and start calling it by its techier name, Wireless LAN. Then forget the 'W' too. We need some LAN (local area network) applications for dualmode phones, not just wireless ones.

Over to you, Apple, Nokia, Microsoft & co.

Amazon Kindle - wireless eBook reader. Hmmm. Unconvinced.

There's apparently a lot of fawning and drooling today over Amazon's new gadget - an eBook reader connected via CDMA EVDO, which lets you download digital books (and magazine subscriptions) wirelessly. It costs $399 to buy, and then $8 or $10 for a book, and some other number for a magazine sub. Oh, and $1 for a blog/RSS feed.

And apparently there's a charge for converting PDFs to the inhouse proprietary protocol if you use the email service. Amusing, as I've joked before that in an all IMS world, we'd never have got free PDF clients, but instead be stuck with some lousy billable document viewing service. (I'm really going to have to stop writing up what I think are really stupid ideas as that's the second time in a month someone's actually gone & tried them out).

I like idea of a wireless tablet-type device in general (it fits in with my belief in multiple devices, and divergence). And the fact that there's no ongoing wireless service subscription fits in with my comments that we'll see more devices that subsidise the service, rather than the other way around.

But I'm totally unconvinced that this particular one will succeed. "This isn't a device, it's a service" says Amazon CEO Jeff Bezos. Funny, but actually I like to own stuff that I read. I don't want a personal document & library service. I want it tangible, sitting on my shelf or on my coffee table.

Some thoughts:

• In the eye of this particular beholder, it's hideous. The name's a bit naff too.
  
• It's black & white. OK for text in novels & newspapers, but not ideal for magazines.
  
• It's quite expensive for what's essentially just a screen & some memory.
• There's limited content. Checking the Amazon Kindle website for my favourite author, it only lists 3 of Iain Banks' novels. Same deal for Haruki Murakami. And there are none of the Lonely Planet travel guides listed (which would be pretty good to have in electronic form).
  
• "The captain has switched on the seatbelt signs. Please secure your tray-table and turn off your ebooks."
• "Long battery life. Leave wireless on and recharge approximately every other day". Am I missing something, or is that not really 'long' for a mobile device with the radio off?
  
• I'm not really interested in locking my reading matter to a proprietary device for all eternity. At least with iTunes I can play music back through my PC as well.
• It's not as obviously 'personalisable' as an iPod. And it doesn't come in pink.
  
• What's the point of reading most blogs if you can't follow the links? (or, presumably, add comments). OK yes there are some news-type blogs which I just scan, but I'm unconvinced I'd pay for this.
• I've seen some fairly spurious "save the trees!" environmental commentary. That's not convincing as most paper is made from farmed forecasts. And I'm sure that the plastics & silicon of the gadget itself have a fairly large energy input in their manufacture. Books and magazines are rather more easily recycled too.
  
• Magazines are delivered 'overnight' - which suggests Amazon cut a great MVNO deal with Sprint to get low-cost data transmission. I know that there is a part of the magazine market (subscriptions) for which timeliness is less important - but quite often I want instant gratification with reading material. [my gut feel is that the subs part of the magazine market is quite a small % vs. newsagent in-store purchases, but maybe that's different in the US]
  
• Not everywhere in the US has Sprint EVDO coverage. Let's hope people test it out before giving it as an Xmas present.
• I've got a pile of old magazines in bathroom. Maybe there should be a Kindle-holder accessory next to the loo roll holder.
  

And at least in London, there's actually huge competition from paper-based alternatives to mobile devices - there are now 3 free newspapers handed out on street corners every workday, one in the morning and two at night. Plus a couple of localised ones in the City and elsewhere. Sure they're not the pinnacle of journalism, but they're perfect for a 20 minute tube ride.

I think I'll be adding this to the 'What's not' column on my website's Opinions page.

And the killer mobile application is......

.... the colour pink.

This is an SMS I received from a friend this weekend:

"Is Orange worse than Vodafone? They have a pretty pink phone & I'm tempted"

Reality check, eh? OK, this isn't a particularly high-end user (prepay, mostly uses SMS, no interest in mobile Internet or downloading apps). But it's emblematic of the problems involved in differentiating based on software or applications.

I overheard a similar conversation in a branch of Carphone Warehouse recently. "Hmm, that's cute" (pointing at a Samsung) "Oooh, but that one's got a 5MP camera".... pointing at an expensive, ultra-sophisticated Nokia N95.

Anyone who says that users are 'demanding content' or 'clamouring for advanced services' probably goes to too many conferences where everyone has smartphones and contract data plans. It's easy to assume that everyone views things the same about mobility as people 'in the industry'.

My advice in response to the first SMS, by the way, was "borrow someone else's Orange phone & check you have decent coverage in your flat".

Salvaging something from unused videotelephony capabilities

One of the background themes in 2007's mobile industry has been:

"What can we do exploit the unused videotelephony capabilities we put in for 3G?"

Pretty much all 3G UMTS handsets have a forward-facing secondary camera, intended for videotelephony. It typically comes with software for controlling a video call, and uses the H324M protocol.

But unsurprisingly, nobody uses it. 3G videotelephony was one of those applications (like MMS) which was designed by committee, rather than on the basis of how users actually behave. To use mobile videotelephony, you have to hold the phone right up level in front of your face, or else the camera gets a great view of either your nostrils or your earhole. This is uncomfortable, unnatural, and downright dangerous if you're walking or driving.

Then there's minor issues like unclear pricing (question: do YOU know how much a video call would cost you with your current tariff?), privacy and a total lack of consumer demand.

Put simply, it's useless, it's always been useless, and it will probably always be useless. (As will be proved yet again with the upcoming IMS variant called Multimedia Telephony).

(Although I did see a drunk woman waiting for a bus last night, pointing the camera at the bus stop, as evidence to loudly prove to her husband that she was actually on her way home. So maybe, just like MMS being used for embarrassing photos in the pub, the optimum usage case for video calling is best summed up as 'seven pints of beer and a couple of tequilas').

And despite the pointlessness of videocalling, even the cheapest 3G phone still ships with the capability anyway, wasting time & money in BoM, software and integration & testing. And annoyingly, it isn't even possible to delete the video call application, so it just sits in the phone wasting memory, with unused icons cluttering the home screen, lengthening menu lists and adding unnecessary clicks to the user experience.

But something interesting is happening now..... unconstrained by the bewildering user-ignorance of standards bodies, some genuine innovation is happening with mobile video.

Developers have started to realise that it might be possible to salvage something from the wreckage of videotelephony. After all, there's now a standards-based video client on 10's of millions of handsets, so perhaps it can be pressed into service for something a bit more intelligently-conceived than person-to-person video calls.

Some interesting examples of H324M use cases include:

• TV streaming
• Uploads to social networking sites
• Video mail
• Video blogs
• Security & surveillance
• Video voting & other contributions for TV shows

Now not all of these are perfect, and there obviously are limitations in using client software originally designed for something else, but the general concepts are going in the right direction. The nicest thing is that using the built-in video client means that developers don't have to design their own software and port it to 10 different OS's laboriously.

I've had assorted briefings, discussions & collateral with a lot of companies in this space. I know the guys at NMS Communications pretty well, and they & their partners have some cool applications. And then I had an interesting discussion & some demos over dinner with HP the other night around the mobile video theme as well. (Ewan at SMS Text News has a great write-up here). Radvision and a bunch of other companies play in this space too.

Now there are definitely still some challenges here - the video quality isn't always good enough for some applications, and there's usually no option to save the video stream to the phone's memory as well as send it over the air. This means that the mobile video-call approach is best suited to 'real time' applications like TV viewing - otherwise you might as well as just use the videocam function, save the file to a memory card and transfer it to a PC later on. Once it's on a PC you can email it, upload it to YouTube and so on - usually for free. There's also still the question about pricing, and whether it fits with prepay models.

But overall, I'm a bit more positive about niche applications for mobile video - now that it's being exploited by market-savvy application designers, rather than some just group of academic grey-beards decreeing that videotelephony is 'obviously' a good idea.....

Disruptive Analysis website hosting problems

Apologies to anyone trying to access the main Disruptive Analysis website.

My current (and soon to be ex-) hosting company, who I'll happily name & shame as Pipex WebFusion, has had severe problems over the last 24 hours which seem to have taken down a lot of its clients' websites, including mine. They also host my email, so that's been up & down as well.

Track the ongoing status of their attempts at salvaging their reputation here.

Amusingly, even their own main website is also down. At least they eat their own dogfood....

Drivers for cellular VoIP - why operators will catalyse VoIPo3G

As expected, my press release on my new VoIPo3G report has caused a bit of consternation. 250m is a pretty big number, and it's raised a few eyebrows, especially in North America, where VoIP has always been a particularly contentious issue.

It's worth giving a bit of background to the market drivers I'm seeing for mobile VoIP.

The easier one to tackle is that of the independent, 'over the top' VoIP players like fring, Truphone, Yeigo and Skype, as well as softphone suppliers like FirstHand. They're all piggybacking on the increasing trend towards faster 3G networks (HSPA, EVDO Rev A), flatrate data tariffs and open smartphones.

A linked trend is the growing use of laptops with 3G data cards - not just for mobile executives, but also 3G USB modems pitched at consumers as an alternative to low-end DSL or cable offerings. Most broadband PC users won't even check the terms & conditions - they'll just download Skype, or whatever cool voice-enhanced FaceBook add-on their friends have invited them to sign up for - and expect it to work. While some operators frown on this (or try & block it), quite a few don't care, as long as they get an extra broadband subscription.

The independent players (or enterprise VoIP platforms) all have their own business models. Some are looking at PSTN breakout, some on inbound interconnect, some on advertising, some are hoping to be acquired and so forth. Basically, pretty much any rationale used for over-the-top VoWLAN also applies to VoIPo3G but with wider coverage. (Yes, it's actually a bit more complicated so ask me for any more details)

But it seems to be my assertion that operators will lead the charge to mobile VoIP that has caused the most consternation.

• First off, if the carriers want to move to future networks (call them 3.9G or 4G) like LTE, UMB or WiMAX for reasons of bandwidth, data capacity or better spectrum use, there's no choice. They're all-IP, so you have to use VoIP, or maintain parallel GSM/UMTS technology for circuit voice. The GSMA has just endorsed LTE as its preferred future technology. Another operator group, the NGMN (next gen mobile network alliance) specifically lists VoIP capabilities in its requirements document and is also closely aligned with LTE and is also watching UMB & WiMAX.


• Secondly, from HSPA+ or EV-DO Rev A onwards, you can get more calls/Hz/cell with VoIP than circuit switched. LTE should be able to get 100-200% efficiency gains. Given that voice pricing is coming down, capping the spectrum being used for voice makes sense. I believe that operators will become increasingly spectrum-constrained, and any ways to extend the carrying capacity of their frequency allocations will have economic benefits in future. There's a lot more on the links between spectrum policy and Mobile VoIP in the report.


• Thirdly, you can do 'cool stuff' with VoIP that you can't with circuit-switched - eg embed it in a game with stereo location cues, encrypt it, run a full unified comms client for enterprise and so on. You can also do hi-def voice and so on.


• Fourthly, over time the operators will want to switch off their GSM and CDMA 1x networks and reuse the spectrum for UMTS or LTE or EVDO, and not have to run multiple networks in overlays


• Fifth, FMC carriers will want to move to a single voice switching & application infrastructure (maybe IMS or some other NGN). If they're going towards VoIP on the fixed side (and ultimately turning off the PSTN), they'll want a similar migration path on mobile. Look at BT's expected opex savings deriving from moving to 21CN

It's also worth thinking about how VoIPo3G enables non-telephony VoIP applications. Operators are already launching VoIP-based push-to-talk (eg DoCoMo PushTalk in Japan), and Sprint is launching its VoIP PTT in Q1 2008 and eventually wants to migrate its 20m or so iDEN PTT subscribers over to CDMA Rev A. It wouldn't surprise me if other North American operators also go down the VoIP PTT route in the near future.

Then there are leading-edge operators like FarEasTone in Taiwan, which already has its own mobile VoIP proposition.

As I wrote the other day, the biggest sensitivity in my forecasts is to the rollout schedule of LTE and UMB. In fact, I reckon that one of the reasons that UMB will actually happen. But I also believe that the complexities of rolling out new LTE networks mean that HSPA operators ought to get earlier experience of VoIPo3G. I had an interesting meeting with Actix last night, which helps operators optimise 3G radio networks - and they highlighted the likely trickiness of getting LTE working well.

I think 2008 will see a lot of operators putting a toe in the water with VoIPo3G - some through PTT, some through IMS-based approaches like FarEasTone, and some through partnering with the independent guys. At the same time, fring & friends will also continue to gain users, and at some point we'll see a big push from Skype (and perhaps Google or Microsoft or others). 2009 will be even more busy, as we get HSPA+ rollouts, and perhaps UMB.

If you want more details about the report "Mobile VoIP: VoIPo3G Business Models", please email information@disruptive-analysis.com

New Disruptive Analysis Report - 250m users of VoIPo3G by 2012

I've finally published the new Disruptive Analysis research study on VoIPo3G Business Models. The press release is given below and also here, and details of the report & contents are here.


250m users of VoIPo3G by 2012

VoIPo3G to be driven by both wireless carriers and independent challengers

LONDON, November 13^th 2007 - A new research study from Disruptive Analysis shows that evolution of mobile VoIP will rapidly eclipse voice over WiFi and become a mainstream form of communication. The analyst firm predicts that the number of VoIPo3G users could grow from virtually zero in 2007 to over 250m by the end of 2012. This is comfortably in excess of the expected number of FMC users with dual-mode VoWLAN/cellular phones.

The report demonstrates that it will be the operators themselves which will be mainly responsible for the push towards VoIP being carried over cellular networks. Carriers will become increasingly attracted to VoIPo3G because it will enable them to fit more phone calls into their scarce spectrum allocations, reduce operating expenses by combining fixed and mobile core networks, and launch new services like push-to-talk and voice-integrated “mashups”. VoIPo3G also fits well with the move towards femtocells. Future generations of wireless technology – 3GPP LTE (Long Term Evolution), 3GPP2 UMB (Ultra Mobile Broadband), WiMAX – are “all-IP”, so unless mobile operators continue to run separate voice networks in parallel, they will inevitably transition to VoIP at some point.

However, because these new radio technologies are three to five years away from mainstream deployment – what happens in the meantime will provide the major disruption to operator business models. Some independent VoIP players are already exploiting the fact that today’s 3G networks can already support VoIP, putting dedicated software on smartphones, exploiting open operating systems, flat-rate data plans and features like “naked SIP” and built-in VoIP capability. These are linked to competitive ‘over the top’ phone or IM services via a mobile Internet connection.

At the same time, there is an increasing trend of carriers marketing 3G modems for PCs – not just for mobile computing, but also to compete with home DSL/cable broadband offerings. Laptop users expect to be able to use their normal broadband applications over 3G, including voice-based ones like Skype. Some operators are even offering their own VoIP software for PCs with wireless broadband.

The end-result of the push towards VoIPo3G is that by 2012, most VoIPo3G users will be using mobile carriers’ own standards-based VoIP capabilities, over the new, advanced 3G+ networks. However, a significant minority of about 60m will be using independent or Internet-based solutions – many actually operated in partnership with carriers or retailers.

Dean Bubley, author of the report and founder of Disruptive Analysis, comments: “3G networks are increasingly capable of supporting VoIP, for both traditional mobile operators and independent Internet-based VoIP challengers. But while CDMA operators will benefit from VoIP being ‘designed-in’ to their newest networks, 3GPP / HSPA operators will have to wait for several years – a window of opportunity which will be exploited by the ‘over the top’ players. Rather than competing head-on, partnership models have the potential to create win-win propositions”

The report, “VoIPo3G Business Models”, is available from Disruptive Analysis from today. It is based on a huge research effort spanning hundreds of interviews and meetings, and contains extensive market forecasts, industry commentary & analysis and company profiles.

Ends.



Commentary

Yes, 250m is a surprisingly big number. Especially when viewed against the VoWLAN users at the same time (below 100m). I did the sums and then had to triple-check my own model. But underlying it is one absolutely fundamental point:

If mobile operators roll out LTE or UMB, then VoIP is mandatory; they're all-IP networks, just as WiMAX is.

Now I've had to take a call on the realistic rollout schedules of those technologies, and if there are substantial delays, the VoIP forecasts move to the right as well. There's also an expectation that some operators will want to deploy VoIP earlier, on EVDO Rev A/B or HSPA/HSPA+ networks. This morning's announcement about FarEasTone's VoIP service is a very timely example.

I've also built in analysis of spectrum-related issues, device availability, IMS and a hundred other factors. The full set of inputs and sensitivities are in the report's methodology section.

The key thing to think about is that for many users, VoIP will be invisible. For them, it will be an underlying enabling technology, not a service in its own right. Its prime function will be to enable operators to squeeze more calls into a given slice of spectrum. Yes, its other functions are more interesting - helping independent 'over the top' VoIP providers get a foothold in the mobile market, and facilitating a new generation of 'Non-telephony VoIP' services. But they will be comparatively small compared with its main manifestation as 'necessary plumbing'.

(Non-telephony VoIP means where voice is not used for a simple Person A calls Person B phone call, but is somehow a feature of another application - inside a game, linked to FaceBook or some other type of mashup or corporate web service)

The other angle to recognise is that almost all of these VoIPo3G users will also still be using circuit switching for some of their voice traffic. There will be very few all-IP users - most will fall back to GSM or UMTS or CDMA 1x or another network, either when out of 3.5G coverage or for other reasons.

If you're interested in more details & pricing for the full report, please email:
information AT disruptive-analysis.com
A table of contents of the report is available here
I'll also be speaking at the upcoming IIR conference on VoIP & wVoIP in Madrid on the 26-28th Nov, and the Mobility World Congress in Hong Kong on Dec 2-5th

Operator VoIPo3G in Taiwan

My VoIPo3G Business Models report is launched today - I'll be making a separate post about it later.

But with impeccable timing, there's also another announcement (OK, yes I'm quoted in it) from Finnish IMS software vendor Movial, relating to a contract with Taiwanese operator FarEasTone for enabling its new VoIP service on both handsets and laptops. This includes the use of voice on its HSPA macro network, plus its in-home HSPA router with WiFi.

I reckon that this is the first 'official' operator-branded VoIPo3G service, except for some 3G-based IMS-PoC push-to-talk services like DoCoMo's, plus non-IMS partnerships like Skype/E-Plus.

Some interesting things to note

• firstly, FarEasTone pushes pretty hard on a whole host of technologies. It announced its IMS/HSPA deployment contract with Ericsson in September 2006.
• secondly, Skype has huge penetration in Taiwan, which is definitely a catalyst for operators' own VoIP launches, as people are looking for ways to mobilise it as well as using it on fixed broadband. This also seems to indicate that there's a substantial % of voice traffic for which 'best efforts' is perfectly acceptable.
• thirdly, FET is also a WiMAX licence-holder (it recently signed a deal with Alcatel-Lucent) for southern Taiwan and so is likely to benefit services that can ultimately bridge HSPA, WiMAX and WiFi.
• fourthly, Taiwan and FET have relatively low levels of prepay use compared with contract subscribers, which makes it easier to subsidise high-end devices, or for mobile operators to enter fixed-broadband markets.

All this means that FET has seemingly been able to launch VoIPo3G, before HSPA is fully voice-optimised. I suspect that some of the options in the network and handsets like RoHC (robust header control) and voice-friendly scheduling haven't been implemented yet - my understanding is that they're due to be included in most vendors' infrastructure components in 2008/9. I'm also curious about what's happening at the application level in the network, given that there's no specific 3GPP or OMA standard for 'ordinary mobile VoIP' yet.

This all suggests that VoIP on FET's HSPA network might not be as spectrally-efficient as circuit yet, although in this instance the unique characteristics of the Taiwanese market appear to mean that competitive gains offset this consideration.

Because of these fairly unique factors, I'm not expecting too many other HSPA operators to follow suit, at least in this specific way, before 2009. Apart from anything else, there aren't too many phones which have HSUPA as well as HSDPA, although that should change by H2 2008, with massmarket devices available in 2009.

What I see more likely is for an increasing number of operator VoIPo3G partnerships with the Skypes/Truphones/Frings of this world in the near term. Plus some more laptop-based VoIP services. But more on that later....

Voda data 'pipe' revenues up... and has content revenue fallen?

I'm quite impressed by Vodafone's results today - and even more impressed by the company's turnaround over the last 12-18 months into one which is embracing 'the real Internet' rather than persisting on trying to push its own content & multimedia services in preference.

Around London I see Voda advertising hoardings exhorting people to use Google on the go, something that would have been unthinkable a couple of years ago.

I suspect much of its epiphany has sprung from the realisation that it's 'pipe' revenue that is making its data revenue figures look good. It has shown organic growth of 45% in non-messaging data revenue. Non-messaging revenue is now up to a level of half that of messaging (SMS+MMS, which is itself still growing quite well) in Europe.

I've posted before about how much of Voda's data revenue must be attributable to laptop data cards & BlackBerries. This time around the company is pretty upfront about it: "The organic growth in data revenue of 45.1% was particularly strong and can be attributed in part to increasing penetration of Vodafone Mobile Connect 3G/GPRS data cards and handheld
business devices." [I suspect that 'in part' is a polite way of saying 'mostly']

This is particularly interesting given that "Handheld business devices increased by 112.6% since September last year and Vodafone Mobile Connect 3G/GPRS data cards grew by 78.9%."

This means around 1.8m data cards in Sep 07, and probably about 1.4m handhelds (there doesn't appear to be a hard number for last year's published so I'm extrapolating from Mar 06). So basically an average during the 6-month period of 1.4m 3G cards and about 1.1m handhelds [mostly BlackBerries]. Looking at my estimates last year this means that the time-averaged subscriber base has grown 65% and 100% respectively. Both are certainly above 50%, whichever way you slice it.

Now given those figure, that puts the 45% revenue growth in a slightly different light. It seems to imply that non-datacard/BlackBerry data revenues (content, Live!, consumer Internet, M2M etc) have actually fallen. It also probably means that the average costs for business data users have fallen, which makes sense as recent BlackBerries have moved outside the boardroom.

Let's use a very conservative back-of-an-envelope estimate of £35 a month for 3G cards, and £25 for BlackBerries. Multiplying through for 6 months gives £294m for datacards and £165m for devices. That's £459m out of a European total of £843m non-messaging data.

In other words, I'm estimating that 'data pipe' revenues have increased from 46% to 54% of Vodafone's European data revenues over the last year.

(I'm also not sure where Voda classifies data roaming interconnect fees, so that might account account for another chunk as well)

Once again, this illustrates my belief that mobile content is really pretty unimportant, compared with communications or context. Sure, Voda is very business-focused (28% of revenues are corporate), but it's still an indicator for the rest of the industry.

My data roaming moratorium

I've been travelling quite a bit over the past month, including a couple of trips to both the US and Madrid for events like VON and the NMS Communications Connect events, where I've been moderating panel sessions.

I've tried an experiment - a complete ban on myself using data roaming on my normal email & web device (an HTC handheld courtesy of T-Mobile Web'n'Walk). While I like the T-Mo flatrate for use in the UK, the £7.50 per MB roaming charges are a joke. It's been costing me quite a bit of money over the past year - and it's even encouraged me to switch off images in my browser (back to 1996, eh? try advertising at me now....).

When I get a free day I'll churn to another more roaming-friendly network as the contract's now finished, but in the meantime I'm still using it. Or I may get the device unlocked & get hold of one of these Voda Germany pre-pay data SIMs I've heard about.

Instead, I've been relying on laptop+WiFi for my email everywhere - not too tricky as I've been mostly staying at hotels and at conferences which have had free or inexpensive WiFi.

Of course, this means I've been unable to do the traditional email-check in airport baggage halls while waiting for my bags, or in the cab on the way to the hotel.

And you know what? The extra 20 minutes I have to wait makes absolutely no difference whatsoever to my productivity, my responsiveness to clients or my life in general. If I'm in a different timezone, and I'm taking 8-hour flights, my email often has a long latency anyway. An extra few minutes is irrelevant - except for my personal sense of instant gratification ("Must have email NOW"). I'm not even wasting the 20 minutes - there's plenty of other stuff I have to read on paper anyway.

Now clearly this won't work for everyone. There are some people for whom email & data connectivity always needs to be as realtime as possible. But it does highlight how much money is wasted on an illusion: that full mobility is always necessary.

It isn't. For me, data roaming is a nice-to-have rather than a must-have.

With one exception. I cheated once - to Google the address of the hotel, because a cab driver was clueless. That's got a clear ROI - 100kb of data (the first page of results showed the address without even clicking on a link) vs. an extra few pounds for the cab driving in circles. Although now I think about it, it probably would have been cheaper to just phone someone I knew was in front of a PC....

Nokia Ovi..... how long before it includes voice-based services?

Interesting announcement from Nokia & Vodafone today - easier access to both Voda Live! and Ovi services from Voda-ised Nokia devices.

"Customers will get faster and easier access to all of Vodafone's Internet and entertainment services as well as all of Ovi from Nokia services on a wide range of handsets"

"Accessible from a computer or compatible Nokia device, Ovi includes the Nokia Music Store, Nokia Maps and N-Gage, with more services to follow"

This is clearly very significant, and goes a long way towards validating the Ovi strategy overall. But I'll let others comment on its impact on mobile gaming, music etc as these are not really areas I focus on that much.

Instead, I'll fly a slightly more disruptive kite about this model....

I wonder... will Nokia ever be really controversial with Ovi and start to include VoIP applications on the platform? Perhaps not 'plain vanilla' VoIP person-to-person telephony, but maybe what I'm calling non-telephony VoIP (eg voice mashups with social networking, in-game communications, remote dictaphone capabilities, conferencing etc...).

I'd say it makes more sense for Nokia to do this sort of voice-based application than the operators themselves, at least in the medium term until HSPA+ or LTE is rolled out (which should have properly integrated & optimised VoIP)

This would also fit extremely well with the sort of operator/3rd-party partnership model I'm envisaging for innovative VoIPo3G services - which I'm forecasting could reach 45m users by 2012 in my new report on VoIPo3G Business Models.

Google's phone platform... how large is its addressable market?

I posted a few early comments on the Open Handset Alliance yesterday.


One thing that isn't immediately obvious is whether how much of the total handset market is serviced by the strategy of new OS + Google Apps + advertising + openness + maybe a direct subsidy from Google.

In particular.... will the model work for the majority of the planet's mobile users who have prepay phones, often bought from non-operator channels? And who are often anonymous, and don't have data plans?

There seems to be lots of very US-centric rhetoric from the company & innumerable observers about how this will 'break the strangehold of the carriers'.... which conveniently ignores the fact that that's certainly not true for the overall handset market anyway. Globally, it's about 50/50 sold through operator vs. non-0perator channels.

It's very easy to be seduced by big numbers in mobile - 3bn users, 1bn phones shipped and so on. But generally most of the smartphone propositions I see actually have a theoretical addressable market that is, at most, 30% of that figure.

Now, 30% of 1bn is still a big number... but when you take out about 100m Symbian devices per year, plus a bunch of other platforms used by the licencees, I'll take a wild punt that G-phone shipments will struggle to top 20m by 2010.

Open Handset Alliance - Initial thoughts

I've been absolutely buried in work, so I haven't yet had a chance to think through the full significance of Google's Android handset software, and the instigation of the Open Handset Alliance today.

Various people have been talking up the 'gPhone' and similar stories over the past week, so it's hardly a total surprise. What is interesting is just how many members the initiative has from the start.

I've written before that I didn't believe that the handset OS marketplace would conveniently consolidate to two or three platforms anytime soon, and with this launch, plus Apple and the recent resurgence of UIQ, I stand by that assertion.

Remember when the IT industry used to sporadically develop partnerships that under scrutiny were really "anyone but Microsoft" associations? Well, this one seems to be "anyone but Nokia or Microsoft"....

Biggest surprise for me is the Asia-centric nature - especially having both DoCoMo & KDDI onboard.

Semiconductor partners are probably the group with the fewest obvious gaps - although STMicro seems to have decided against pinning its flag on the Alliance on the same day it concluded its 3G chipset deal with Nokia.

Esmertec & Aplix add some Java flavour - and make me wonder whether SonyEricsson may be next on the Alliance's list of potential suitors.

LG, Samsung and Motorola are all notoriously promiscuous when it comes to handset software platforms, so it's no surprise to see any of them adding another OS notch on their corporate bedposts. HTC is a bit of an eye-opener, though.

It's noticeable that Google's tried to keep its distance a little bit - including itself alphabetically among the software members, although the liberal sprinkling of YouTube videos through the site is a bit of a giveaway. The fact that it's not openphones.google.com seems to suggest that this might actually be a commercial venture for the big G rather than another 'in Beta' testlab thing....

Last quick thought - there's no obvious enterprise-centric players (IBM, Oracle, Cisco, other usual suspects) in the list, so I guess that MS and RIM can sleep easily for now.

DPI #2 - Pudding Media in-call voice recognition... and I thought I was joking

"You heard it here first".

There's quite a lot of hoo-ha about the concept that a firm called Pudding Media has come up with. Basically it does realtime voice recognition on your phone calls, and tries to serve you adverts relevant to your topic of conversation.

Now where have I heard that before?

Afterthought - you could have some real fun with this type of thing hooked up to a voice synthesiser. I wonder if you could set up some sort of computer-based game of Chinese Whispers where the computer makes a phone call, says a sentence, receives some adverts, then uses character recognition or image processing on the advert images & feeds the description back to the synthesiser.....

I wonder if Comcast will try something similar, and terminate your call if it hears the word 'Sandvine' or 'Traffic shaping' being mentioned.....

Deep packet inspection getting another kicking

The Comcast / Sandvine saga seems to have been the catalyst for consumer awareness of the potential for packet inspection misuse.

To recap:

- DPI used to protect fundamental network integrity (eg stopping DDoS attacks, stopping P2P crashing individual mobile cells, managing unanticipated bandwidth spikes etc) = GOOD
- DPI use to block / degrade traffic you just don't like very much in the hope of negotiating/extorting (pick your point of view) money from an Internet company = BAD
- DPI policies not made transparent to your customers = ACTIVE CUSTOMER DISLOYALTY (ie being so annoyed about a service provdier that you tell everyone very loudly)
- Lying to your customers about DPI = DESERVING BANKRUPTCY OR LEGAL ACTION

There are now rumours that Comcast is playing funnies with traffic going to Google.com as well. It's also been reported that its customer service staff are denying the existence of SandVine DPI gear in the network - although Comcast is known as a customer (see page 21 of SandVine's AIM admission document) and by coincidence, a very high % of SandVine's revenue comes from (a) North America, (b) Cable companies and (c) A single customer (see slides 4,6 & 7 here). Obviously, Customer A is anonymous......

Amusingly, the term 'sandvining' has been coined as a generic term for inept and intrusive misuse of DPI.

I've been saying for a while that heavy-handed use of DPI would backfire competitively on the culprits. I didn't expect it to to get escalated to the US Senate quite so quickly though. I can't imagine Viviane Reding at the European Commission, or assorted other regulatory & competition folk to be particularly impressed if the same thing happened here, either.

Of course, this is all in the fixed domain. Limitations on spectrum (especially at a per-cell and backhaul level) mean that some forms of traffic management are going to be mandatory in mobile. I don't want my 999 emergency call (or any call for that matter) blocked by some local kids using BitTorrent on their smartphones.

But if I pay for a mobile Internet pipe (and I'm quite happy to pay a fair price), I want it to work with the service I want to use. If my operator thinks differently, it needs to be very explicit about this upfront. And incidentally, this applies just as much to any monkeying around with the handset's IP stack or OS, as well DPI as in the network.

A lot of enterprise FMC vendors still don't get it

The final panel session I attended at VON yesterday was on enterprise FMC.


There's plenty of good stuff I heard from an interesting range of participants, but fundamentally I still don't think that many of the players understand all of:


- Enterprise preferences
- Carrier requirements
- Handset design complexity
- User interface & behaviour


I still see plenty of 2002-vintage "one device, one number" rhetoric. Sorry, but while that may have conceptual elegance it's totally unrealistic. Many business users will have a business laptop as well as a phone. Many (most?) will have a separate personal handset & number - and although it is possible to have this as a 'profile' on a work phone, most employers won't want to be giving employees a new cool phone every 6 months, or start providing them in pink.


The numbering thing is similarly unrealistic, especially outside North America, where there are issues around fixed-to-cellular termination costs and SMS, that make it desirable to have both fixed and mobile numbers, even if they are bridged in the PBX or operator network. (Note: Vodafone's FMC team have 2 numbers on their business cards, as do many of Ericsson's employees. They've thought this through.)


Linked to this, there is also lots of rhetoric about the enterprise 'owning the number'. This might work for organisations that can be really 'proscriptive' and force employees to use their business device for all voice calls under pain of dismissal, irrespective of how clunky the extra software client might be. But real-world companies have to recognise that most user will have access to multiple devices, and that as calling rates come down, the issue of reimbursement becomes less of an issue than user experience. If I have 2 mobile devices (1 work, 1 personal), both with essentially unlimited minutes, I'll tend to use the one with the best UI (fewer clicks, intuitive menus, neat little features in the call register etc) and which looks the coolest when I want to impress my clients. And I'll use the clunkier one for things like messaging if it's got a QWERTY.

Also lots of talk about enterprise VCC. I'm not convinced it's that important from the enterprise's point of view. Certainly, there's no point worrying about the cellular-WLAN handoff at the front door of the building, if all the (many more) WLAN-WLAN handoffs inside don't work first. After we get good coverage & internal handover of voice-optimised WLANs throughout the typical corporate site, we can worry about the 2% of calls that occasionally transit the entrance lobby. Otherwise it's just putting lipstick on a pig.


There's also (so far) no real rallying call for enterprises to buy unlocked, 'vanilla' (or custom-build) smartphones. Yes, there's a lot of offhand comment that this is generally a good thing, but I'd like to see the enterprise FMC community put something collective in place to raise awareness in the same way that Nokia is pitching US consumers with unlocked handsets as an alternative to the iPhone.


Then there's something that I'm risking sounding like a broken record on. SMS. There's still lousy support for good SMS experience within most vendors' enterprise FMC implementations. No, it's not easy, but from a user behaviour point of view it is table stakes. If it doesn't work within the enterprise FMC app on the phone, the user will use the native SMS client - which will then naturally reveal the 'underlying' mobile number rather than the so-called enterprise 'single number'. Or they'll send the SMS from their personal phone in their other pocket. And guess which number the salesman's client will enter into his phonebook when he gets an SMS saying "in the taxi, be there in 10 mins". And no, IM or email are not alternatives from the perspective of a typical mobile user's entrenched behaviour patterns and expectations. For instance, you never know if someone outside your company is capable of recieving IM, or has a BlackBerry switched on. You can be pretty certain they can get texts wherever/whenever, though.

To be fair, there was some comeback to my question to the panel about SMS. In particular, Comdasys, a German FMC firm, mentioned integrating SMS gateways, which are probably the best way to solve the problem, at least on the server side. It's less clear-cut on the client side - I've heard some solutions that essentially put in a 2nd SMS client inside the handset's corporate PBX-facing application.

And lastly, coming back to my theme of the month, there's not much awareness yet of the possibilities of VoIPo3G, extending the full power of VoIP/unified comms over the wide area, as well as while the user is in the office WiFi coverage.

Overall, I'd say the enterprise FMC industry has come a long way in 2007 - but there's still a gap between what's deliverable today, and the sort of solution that will please both CIO and fit with the typical user behaviour of a person with a mobile phone (or two...)

3 + SkypeIn or SkypeOut

Quick thought....

The 3/Skype phone doesn't support SkypeIn & SkypeOut - presumably a function of both integration complexity, and the fact that 3 doesn't want to lose the outbound traffic minutes, or more importantly the inbound interconnect fees.

How long before someone comes up with a Skype proxy server that enables this, either running in the network, or even on your own PC at home?

You have "My PC" as a Skype buddy on your mobile, make a Skype-Skype call for free.... but your PC has a 2nd Skype client running on it with a different login (plus SkypeIn/Out) and bridges them together.....

Or if Skype doesn't let two instantiations run on the same PC, you use GoogleTalk or something else instead.

UMB - not dead yet

Lots of people seem to be taking glee in hammering CDMA Rev C / UMB at the moment, prophesying that LTE and/or WiMAX are inevitable winners, and that the CDMA roadmap is looking a bit questionable.

My view is that reports of UMB's demise are over-exaggerated. I think that these things are cyclical, and that over time the weight of opinion will swing the other way again.

Absolutely, there are doubters at the moment. Lots of people seemed to have jumped on Verizon's professed intention to converge with Vodafone's preferred architecture over time. Sprint is deploying WiMAX, which some interpret as kick in the teeth for its parallel CDMA network. Qualcomm obviously hasn't had the easiest year.

....and yet....

LTE is still a long way off from commercial deployment. We might see massmarket services launched in 2011, optimistically. And while the RF bit of the radio part of the standard is progressing, the sister part of the radio access network, SAE, is still mired in politics. Conversely, UMB is pretty well nailed-down and should be deployable in 2009-10.

Secondly, UMB is VoIP-ready, with a roadmap for early mobile VoIP within Rev A/B. If Verizon doesn't get any 700MHz spectrum, it's going to want to husband its existing frequencies more effectively in the medium term. UMB offers the ability to squeeze more voice and/or data into existing spectrum allocations. LTE will do this too, but is further away as already mentioned. Add to this the difficulty of running 2 networks in the interim period, and I see a strong likelihood that Verizon will stop bluffing, go for UMB initially, and hope to finally converge on a single, 4G-based, UMB2/LTE2 hybrid around 2012/2013 instead.

Thirdly, I can't see Sprint being able to push WiMAX down to small, handset-type devices in the near future. Possibly it'll decide that Rev A or B are good enough for phones running on its parallel network. Or possibly it'll decide to upgrade too, especially for reasons like improved voice capacity.

Then there's KDDI, and a bunch of other possibles, including future networks in places like India.

Overall - I'd say UMB doesn't look like the famous Norwegian Blue parrot just yet.

Notes from VON Boston

I'll be adding more posts to this over the next few days, but just to kick off with a couple of observations:

- PCs are the new mobile phones, at least from a VoIP, IMS & unified comms perspective. Huge amount of interest in porting softphones & other clients to laptops, for both FMC operators and various previously-mobile-only Internet players. This fits in with my own belief that early VoIPo3G rollouts are being catalysed by PCs with flatrate data plans.

- Everyone and his dog has some sort of social-networking application / plug-in / enhancement to their products. Think FaceBook-to-mobile apps, uploads of pictures or speech or video from handsets and assorted other permutations.

- IMS handsets (or even standardised IMS clients) are still very thin on the ground. Quite a few people are talking about "IMS proxies" in the network, which ordinary handsets can communicate with. That means not terminating the IMS session on the device itself, but on a server and then essentially using a 'thin client' or browser on the phone to display the results.

- Quite impressed with some of the work that Ericsson's doing to encourage developers to create apps on IMS platforms. Definitely some of the right thinking - I heard the phrase "two men & a dog in a garage" which is a bit of a paradigm shift coming from the telecoms establishment. I do have a slight worry that any startup wanting to get exposure to the global audience via carriers ends up being 2 men + dog + 30-person legal team. Although that said there are supposedly some options for easier routes to market via catalogues and quick 'vetting' of new services without detailed contracts.

Hutchison 3 - SkypePhone: doesn't look like VoIPo3G

I'm in Boston today so couldn't make it to the totally non-secret 3/Skype launch announcement today.

As far as I can see, this is technically very similar to the earlier deal with Skype on the X-series products about 10 months ago. In other words, a software client on the phone acts as a 'dialler' for Skype, but doesn't actually use VoIP over the radio network. It uses a circuit call into a Skype gateway in 3's network. The earlier X-series one used iSkoot on the Symbian platform - whereas this one has an application built-in to Qualcomm's BREW framework.

I'm expecting quite a lot of this type of hybrid 'dial through' option before we move towards 'proper' mobile VoIP over the next 2-3 years. It's a lot easier to guarantee decent QoS using this approach in the short term - especially as this deal is on a cheap phone which I expect uses a basic WCDMA 3G chipset. 'Ordinary' 3G doesn't support VoIP very well - there's too much latency and things like header compression are absent.

I'm expecting operator-led VoIPo3G (probably with partners like Skype) to start to become more important from the point at which full HSPA-capable (HSDPA+HSUPA) devices become common. This is already realistic for laptop modems, and will start filtering into more high-end phones in 2008

EDIT

Yes, I was right about my guesses on this - just got conformation from the 3 PR folk. It's a low-cost WCDMA-only phone based on a relatively low-end Qualcomm 6245 'value platform' chipset.

Pre-publication alert: New report on VoIPo3G business models

I'm just putting the finishing touches to a new Disruptive Analysis report on VoIPo3G Business Models, due to be published in the next couple of weeks.

Regular readers will recognise this as a theme I've touched upon numerous times in the past year or so. This year has seen the emergence of disruptive companies like Fring and Yeigo enabling wide-area VoIP on smartphones, and the increasing use of Skype and other softphones on 3G-connected laptops. At the same time, operators and their suppliers have been talking up the future generations of all-IP technologies like UMB and LTE, which make true mobile VoIP inevitable in the longer term for the established carriers.

I'm not going to give away any conclusions yet - but suffice to say that any company with a VoWLAN strategy had better start looking very seriously at VoIPo3G as a complement to it, if they haven't already done so. The comparative forecasts are eye-catching.

I believe that this will be the first, dedicated, comprehensive report on VoIPo3G, covering:

- Both operators' and competing independent VoIP players' business models for VoIPo3G
- CDMA/UMB and HSPA/LTE suitability for VoIP, and the likely timelines for adoption
- Different flavours and usage cases for VoIPo3G - from PTT to Multimedia Telephony to Enterprise communications
- Scrutiny of the opportunity for 'non telephony' VoIP and Voice 2,0 services
- Prerequisites and enablers, such as suitable open handsets and data tariffs
- Inclusion of phone- and laptop-based VoIP
- Analysis of likely competitive tactics of incumbents responding to VoIP rivals' efforts
- VoIP partnership options for UMTS carriers while they're waiting for LTE
- Full quantitative forecasts, with extremely detailed treatment of assumptions & variables

More details will be available shortly. But if you'd like a sneak preview, I'm moderating a panel on VoIPo3G at VON in Boston next week.

And if you'd like to register your details, and express interest in obtaining the report as soon as it is published, please email information AT disruptive-analysis.com .

Many thanks for reading this unashamedly commercial post.

Dean

Comcast & DPI - Caveat Inspector

I've argued for some time that many of the principles of ISPs' traffic engineering and packet inspection were flawed. That heavy-handed application of DPI would either result in what the medical industry calls 'false positives' (ie erroneous detection of something benign as malicious) or would lead to an escalating arms race by applications developers.

Although they still seem to be denying it, the web is a-splutter with accusations against US broadband provider Comcast. It's apparently doing something to block uploaded files - a process intended to counter things like filesharing, especially via BitTorrent.

Well, there's a great lesson to be learnt here about false positives. Apparently, the allegedly-non-existent traffic-shaping minions at Comcast forgot to think through what else might be affected. Like IBM Lotus Notes for example. Not to mention anyone using BitTorrent for legal purposes. Or assorted internally-developed corporate applications that might stop working.

Apparently there's now some sort of fix for this, I'd guess done behind the scenes between IBM and Comcast. While IBM will have the clout (and contacts) to do this, I'll bet that corporate developers won't.

I can also envisage some fun conversations....

"Hello, is that Mr Comcast Corporate Account Manager?..... yes, this is Mr Smith from XYZ Investment Bank. Well, we've got this application we developed... it uses a modified version of BitTorrent.... it distributes equity derivative pricing formulae to our traders.... it seems to have stopped working..... we've isolated the problem to your network. You started blocking it with no warning..... Yes, it's causing us some trouble...... Yes, quite a bit. About $300m so far...... well, if you could just hang on for a minute, maybe you'd like to speak to Mr SueEm-to-Bits our chief counsel? And Messrs Sarbanes & Oxley would like a word with you afterwards".

Meanwhile, I've noticed a distinct upswing in people talking recently about putting broadband and mobile traffic inside VPNs, or encrypting it.

My view is that a lot of the more onerous terms-of-service for broadband (fixed or wireless), or heavy-handed traffic shaping, are going to evaporate under commercial & PR pressure over the next year or so. And I'm expecting quite a lot of Comcast-type attempts to be outed by people monitoring traffic flows and reverse-engineering what's causing problems.

As I've said before - I can't get especially exercised about Net Neutrality. Because anyone stupid enough to block benign traffic (even if they don't like it for commercial reasons) is going to heavily burnt. I think the market will understand providers wanting to stop network integrity being threatened - but it will show zero tolerance for vindictive or accidental 'collateral damage'.


Edit

Just remembered a little snippet I heard last week. Apparently, P2P traffic has actually been dropping as a % of the total on the Internet over the last year or so. Can't remember the exact numbers, but it was something like 50% a year ago, but only 35% now. Not because it's being throttled...

....but because something else has grown faster: social networking. Blame MySpace, FaceBook, YouTube et al.

And while certain elements are easily trackable in DPI (facebook.com's IP address etc), the proliferating 1000's of plug-in are not. Are you going to traffic shape bits of Little Johnny in Iowa's MySpace page, but not others? Who are you going to bill when you decide that the Vibrating Hamster widget on my FaceBook page is consuming too much bandwidth?

SMS marketing.... ugh

OK, I'm biased. I detest SMS spam - which I define as ANY unsolicited SMS, even from my operator telling me about new services. I go out of my way to ensure I never receive any - putting my fixed-line number on web forms unless they have a clear & unambiguous marketing opt-out. British Airways for example is very clear that it will only send SMS about things like flight time changes, never for marketing, and that's OK.

Personally I'd never opt in for SMS advertising, and I'd certainly never buy an product or service marketed in that way. I've even chased down culprits and informed them of my punitive fees for deleting future unwanted messages. I prefer any marketing, news updates etc to come through via email, where it's much easier to scan, filter & prioritise messages - and read them as & when I have time.

Posting to ForumOxford recently, I thought about what it would take to persuade me to change my mind on this. The answer was an upfront payment (in cash or credit to my mobile account) of £3-£5 per received message.

The other option would be to develop SMS clients that are similar to today's email clients, so that rather than getting a "You have mail!" alert each time a message come in, you can just look at your inbox. However the problem with this is that it would mix up texts I want to receive immediately and would allow to interrupt me (friends, work contacts), and ones which have no realtime importance (advertising). And I don't think I can be bothered to set up a filter for who I'm happy to be interrupted by, plus occasionally I get urgent texts from unknown numbers ("Running late, in a taxi, there in 15 mins").

The other thing is that SMS marketing is roughly now where email marketing was in 1996 - "you have mail!"... cool!! But once you get to 'You have 94 unread SMS' you need to be a bit harsher in your attitudes.

Hopefully handsets will soon ship with preloaded SMS antispam software, and your SMS client will have Inbox / Sent / Spam folders in the same fashion as today's webmail & desktop clients. Then you could just sift through the rubbish once a week to look for anything that's fallen through the gaps - and you could mark the updates from your bank / hairdresser / favourite bar as 'not spam' to whitelist them if you really wanted.

WiMAX misquotes.....

http://www.theage.com.au/news/Technology/WiMax-set-for-rollout-as-UN-telecoms-agency-approves-its-inclusion-in-3G-standard/2007/10/19/1192301034416.html

"Once certain interference problems have been resolved, WiMax could become as ubiquitous as mobile phones and conventional broadband, Bubley said. "The real kick comes between two and five years from now," he said, when consumers will start seeing the first mobile phone-style devices using WiMax come on the market"

Well no, that's not what I actually said, but I guess being quoted incorrectly is better than not being quoted at all.

For the record, what I actually meant about two-to-five years was that is when I expect to see large-scale WiMAX networks operational in a decent number of countries - ie after 2.5GHz spectrum auctions, network build-out and increasing device maturity.

I see WiMAX as important, yes, but I'm certainly not expecting it to scale to levels comparable with 3bn cellular subscribers or 500m DSL/cable homes.

I can't see WiMAX devices becoming as small/power-optimised as cellphones for a considerable time. I see WiMAX' main role in the next 5 years being for non-phone devices like laptops, media players, in-car systems, PDA-type products etc.

WiMAX is 3G

Apparently WiMAX passed the final hurdle last night, and is now a member of the ITU's IMT-2000 family of technologies. In others words... it is a type of 3G.

Can't say I'm overly surprised by this, especially given the recent ramp-up in announcements & perceived credibility that the technology has garnered. Cisco's reported sniffing around Navini was also a bit of a signal that it thinks WiMAX is about to get its mainstream credentials bolstered.

It'll be interesting to see if this means there will be some back-pedalling on the other parallel regulatory approach to getting WiMAX accepted - technology neutrality. Now that WiMAX is a member of the 3G club, perhaps it'll decide that exclusivity isn't so bad after all.....

DIfferent device, same service.... different price

So, get a WiFi-powered Nokia and pay $8 a month for worldwide Boingo WiFi access.

Get a PC with WiFi and pay $39 a month for the same thing.

Presumably they're assuming that PC users either (a) have more money or (b) use more data

Seems like a great way to ensure lots more people start using their phone as a modem, to connect their PCs....

Either way, it makes a bit of a mockery of Nokia's claim that an N-series 'multimedia computer' is a replacement for a full PC. Although to be fair, nobody believed that anyway.

If WiFi's going to be in so many phones... why not in Japan or Korea

I keep hearing people telling me how WiFi will inevitably make its way into an ever-greater proportion of the mobile marketplace, and how its attach-rate curve will start to mirror that of Bluetooth.

I'm unconvinced. E- and N-series Nokia and HTC excepted, plus a handful of UMA featurephones, it's really not a big deal at the moment. Even where it is being shipped in dualmode, it's not used that much - nobody buys (or is given) an N95 for the WiFi, it's all about the 5MP camera. The Thing in your pocket might by Many Things, but it's not really a WiFi Thing from a customer perspective. The iPhone might turn out to be a bit of standard bearer for WiFi but that's still not going to change the overall statistics that much.

More importantly, dualmode doesn't really seem to be happening in the two countries that are usually 'leading indicators' for any new mobile tech uptake - Japan & Korea. Sure, there's a handful of dual-mode phones in Japan like the NEC 902iL and Motorola M1000 and one or two from KDDI. Yes, Korea has a boatload of WiFi hotspots, but there doesn't seem to be much impetus to include the capability in the average handset - KTF has its NESPOT Swing dual-mode service, but it's very PDA-oriented.

So while I'm expecting to see a continued growth of Nokia & assorted Windows devices with WiFi, plus the iPhone, the odd UMA device and perhaps VCC feature phone (and yes, probably a handful of Motos & S-Es), I really don't see massmarket devices adopting WiFi - especially when aimed at the global marketplace where not that many people have broadband+WiFi at home.

I reckon a reasonable target for 'attach rate' of WiFi into the global mobile phone market is 10-15% by 2011 in terms of shipments, so probably <10% into the installed base for at least 5-6 years. And I'd punt at an active-usage rate of probably around 3-4% in the same timeframes.

At the Symbian show today

I was taking the pulse of the smartphone industry yesterday, at the Symbian Expo down in London's inconveniently-located ExCel centre.


Some observations


- I'm feeling smug about my longstanding predictions that mobile applications will become 'bearer aware' not 'bearer agnostic'. Symbian's new Freeway architecture is essentially a bearer-awareness layer in the IP networking part of the device

- I'm also feeling quite smug about my ongoing belief in motion (and other) sensors being integrated into handsets. Nokia's keynote presentation highlighted this, with some cool usage cases like sending a busy tone & diverting a call to voicemail by just flipping over the phone while it's lying on a table.

- Apparently there will be upcoming Symbian WiMAX devices - my bet is for Nokia to look at ones for Sprint as it's still hoping to make headway in the US. On the other hand, SonyEricsson may be looking at Japanese deployments. One to watch.

- The spec sheet for Symbian v9.5 mentions that it 'supports UMA', although I still haven't seen a UMA Symbian phone in the wild.

- Symbian still doesn't seem to identify prepay subscribers as a specific end-customer segment. Most of these users don't get subsidised phones, and don't have data plans suitable for regular low-cost (ie daily) usage of data services.

- S60 is still essentially a Nokia-only game, although Samsung now has a range of 4 new devices. Not much sign of LG, or any of the ODMs and other tier-2's.

- Less FMC and wVoIP than I'd been expecting, although there were a couple of interesting things hidden away, like an encrypted voice app from Atelier and Phil Zimmerman of PGP fame

- Apple was hanging over the event like a cloud, the word 'iPhone' unspoken but essentially meaning that everyone's scrabbling to divert game/multimedia graphics efforts over to the UI instead

My thought is that the smartphone community is slowly coming to uncomfortable realisations. Firstly, normal people don't download applications to handsets. No, it's not about 'educating ' them, they just don't/won't. Get used to it, and use the browser instead, or get vendors/operators/retailers to preload them if you're really, really good. And secondly, the ultimate addressable market for smartphones as a percentage of overall handsets is more limited than they'd hoped.

Separately - I met two people brandishing iPhones who've been using them (with European eyes) for a month or more. They both said that, against their initial expectations, the SMS user experience is surprisingly good - something I'd thought might be an impediment to its uptake. Apparently it's not.

Moto buying a stake in UIQ

This should put the cat among the pigeons at tomorrow's Symbian Expo in London. Motorola has trickled out a few UIQ-powered phones over the years, as has S-E. Neither has exactly shown much enthusiasm for pushing Symbian+UIQ much further down the range then the top couple of devices, though. Now both have decided to join forces to (presumably) combat the creeping Nokia S60-isation of the higher end of the consumer phone market.

Motorola's polyamorous relationship with most members of the mobile software ecosystem is pretty confusing. It's got its recently-renamed Motomagx Linux/Java platform with a new partnership with Trolltech, it's got the former TTPCom's Ajar featurephone platform, it's got various Windows Mobile devices (especially in its Q range and its enterprise-device division Symbol), plus various legacy proprietary RTOS platforms. It's got of Flash Lite here and there, and it's Linux platform is supposed to be pretty Web 2.0-friendly.....

This is one of the reasons I'm skeptical that mobile operators outside Japan will ever be able to restrict themselves to just a couple of supported OS's in a few years' time, despite their hopes. S60, UIQ, Windows Mobile, UIQ, Motomagx, Ajar, Nokia S40, BlackBerry OS, midrange S-E & LG & Samsung OS's, Apple OS and a bunch of lower-end platforms or proprietary/closed implementations of Linux.

I wonder what OS Motorola will put in its future WiMAX devices? Fortran, probably. Or a hamster on a wheel. Or it'll partner with Google for yet another handset software platform....

T-Mobile pay-per-day pitch sounds good

I haven't seen the full details yet, but in theory T-Mo's idea of £4 for a day of 3G (and I assume HSDPA) access from a laptop with a USB modem sounds pretty impressive.

That's finally crossed the threshold of usability / value versus a typical London Internet cafe's £2 per hour, and could therefore appeal to ad-hoc users who've got access to a laptop but are loathe to sign up for a monthly contract. It also makes a lot of the current pay-per-use WiFi services look very expensive - for example T-Mobile's own £5 / hour at UK branches of Starbucks.

The interesting question is whether this will be available to travelling business users as well, enabling them to just buy a suitable SIM card when they land at Heathrow, enabling a massive saving against 3G roaming fees.

As a side note, I'm definitely seeing HSDPA becoming a viable alternative to both WiFi in the UK at the moment - although this largely reflects stupidity among WiFi hotspot operators on reaching sensible pricing levels. They've squandered a 4-year lead on the cellular industry.

HSDPA is also making inroads into home broadband in some niches in the UK - I've had a couple of friends recently mention they're looking at it rather than ADSL or cable. It's especially attractive to young urban professionals, immigrant workers or students who have a high chance of moving home more than once a year, and who therefore don't want a 12-month broadband contract. In some cases they'd also have to pay £££ to have a BT line reactivated & reconnected at a new place, which definitely makes the process more drawn-out and expensive.

Google and Jaiku... no good for prepay subscribers?

Everyone seems to be all a-twitter with discussions about the Google/Jaiku acquisition. I have to say it's not an area I've watched too closely - I'm not convinced that the average person is really prepared to do status updates many times a day, which is why most Yahoo/Skype chat sessions start with "Hey, are you online?"

But anyway, I just had a look at the Jaiku FAQ.

20MB a month is quite a lot, especially for people who don't have flatrate data. Which, outside the US, Japan and Finland, is most people - particularly teenagers on prepay tariffs. Yes, you can sign up for the capped £1 / €1 per day deals, but I can't see the average student wearing a £30 a month extra bill for this. Not to mention the fact that Nokia S60 phones' penetration into the (largely unsubsidised) prepay market is fairly low. Last time I asked Symbian, they didn't even have a strategy for targeting prepay users, or identify it as a specific target segment with unique needs.

On the other hand, maybe Google just wants the core software engines and mobile-savviness of the founders to plug into its own future social networking and/or mobile platforms. We shall see....

Could you multiplex 2G connections over 3G with UMA?

Musing.....

...so UMA can work over any generic broadband IP connection..... DSL, cable, apparently WiMAX....

...so could you run multiple UMA connections over a good-enough mobile broadband connection? Especially HSUPA which has sufficient upstream bandwidth.

There must be some usage cases for, say, 4x GSM connections being multiplexed over a single (portable) HSPA pipe. Answers on a postcard, please.

LG Telecom's Home Zone service... how does it work?

I just stumbled upon Korea operator LG Telecom's HomeZone service, which is an FMS pitch offering cheap in-home calls.

"Home Zone Service: a mobile phone in home phone’s disguise Subscribe to Home Zone Service and you would not need traditional fixed-line phone service ever again. Home Zone Service offers the convineince of mobile phones at a rate comparable to fixed-line service, at home or in your office.
Home Zone Service combines the benefits of the convenience of mobile phones with the thriftiness of fixed-line service in a single mobile handset. Home Zone Service is as easy as installing Access Point, the Home Zone Service device, in a place of choice. Whenever Home Zone Service subscriber makes a call within 30m from the Access Point, the call automatically registers at a rate comparable to fixed-line service. Up to seven mobile handsets can be operated via a single Access Point."

What's not clear to me is exactly how this works. I haven't been able to find much via Google, and unfortunately I don't speak Korean, so I have no way to interpret the FAQ on the more-detailed domestic part of LG's website.

There's a mysterious access-point widget with a 30m range that plugs into a power socket.... but which doesn't seem to have any hookup to a fixed broadband line that you'd need for either WiFi or a femtocell. I'm guessing that it's either some sort of repeater that signals to the network to flip to a lower tariff when it's in use, or perhaps it's got a CDMA modem in plus a Bluetooth antenna with cordless telephony profile (CTP). It needs a dedicated phone (there's a range of 6 according to the website)

Anyone able to shed any light?

Social networks and business contacts.....

Interesting dilemma.

In the last few weeks, I've had several 'work' contacts add me as a friend on Facebook, either as individuals or in one case as a company. Some are people I've had a drink with after a conference, so they're not 100% 'professional' contacts I've met solely in a dry work context.

After thinking pretty hard about this, I've turned them down and directed them to LinkedIn.

Personally, I like to keep my social life & my work life pretty separate. I won't take business phone calls when I'm 'off duty', and often restrict my email access my business email/web device at home. I almost never talk mobile stuff with my friends (although my father is a huge Apple fan, so iPhone discussions are inevitable).

I'm trying to come up with a reasoned criterion for someone being 'Facebookable'. If you read this blog, you're probably on the wrong side of the line. Ditto if I met you when I was wearing a suit, or if you only have the email address on my business cards.

Once again, this comes back to my theme of multiplicity. I don't want to have one 'identity' or one message inbox. You might differ... but for me, divergence is much more important than convergence in maintaining my work-life balance.

EDIT I've realised that actually there is one place where I happily blend social & business contacts.... Skype, probably because you can keep everyone you know segregated. Maybe there's something in that for eBay to ponder....

Geeky phone + Cool name = Social acceptability

I was in the US last week, and one of the things that struck me was that there is much less social stigma attached to using awkward-looking 'geeky' devices like high-end HTC handhelds and Treos. I even saw people actually talking into the large-format BlackBerries. Qwerty thumb-pads seemed much more common, and of course there were plenty of people shamelessly using hip holsters for their mobile gadgets.

(For my US readers - that sort of fashion faux pas would probably get you turned away from a trendy bar in London or Milan.... it's the European style-mistake equivalent of what I'm told are called pocket protectors)

There are a few reasons I can think of for this. And despite the swarms of tourists in my part of London I'll refrain from commenting on any sweeping or offensive stereotypes.

• Firstly, the US embraced PDAs much more vigorously than Europe, so the idea of some sort of handheld computer is much more engrained and accepted.
• Secondly, the preference for email and IM, and the later/slower adoption of SMS has reduced the number of people mentally-tuned into writing with multitap vs. Qwerty
• Thirdly, the BlackBerry phenomenon has run much longer, and wider, than it has in Europe. I see many more non-corporate 'civilians' with them in the US.
• Fourthly, the US historically had quite a high adoption of pagers relative to Europe.

But perhaps most interestingly.... geeky devices in the US have cool names. Hiptop. Dash. Curve. Q. Mogul. Blackjack. iPhone.

....compare those with MDA Vario III, XDA Executive, HTC S620, iPaq hw6910, Nokia E61i, Samsung i320, M3000 and so on.

Can you imagine a stranger ever coming up to you in a bar and saying "Oh wow, is that really a v1605?".

Telefonica + Nokia services agreement

Fascinating announcement today from Nokia & Telefonica which is potentially game-changing, in that it recognises Nokia as a key partner for services as well as handsets:

"Nokia will customize the new Multimedia Menu to provide easy access to Telefónica services.. Similarly, Telefonica customers will be able to access all Nokia services through the Multimedia Menu"

I presume this opens the way for things like Ovi, and maybe Nokia-optimised versions of popular web apps like Flickr. Using Nokia as an intermediary could be a way around the current problem with the mobile/web collaboration model - web services companies really don't want to do 100 separate operator-specific optimisations, and 100 separate negotiations, to get their application deployed widely (and hopefully virally).

"Our customers can take advantage of Telefónica's high quality mobile broadband network to access both Telefónica and Nokia services, as well as other third-party applications"

What's not immediately obvious is whether this just applies to Nokia phones (and if so, whether it includes S40 featurephones), or if it relates to S60, in which case it could apply to Symbian-powered devices from Samsung, LG and others.

Also, looking out a couple of years & flying a kite here.... I wonder if we might eventually see a Nokia VoIP service as well, given how good Nokia is at integrating VoIP clients onto devices - especially if Nokia positioned it as a 'non-primary telephony' VoIP service (eg for voice-enhanced IM, conferencing, gaming etc etc) and enabled developers to access it via convenient APIs.

Redefining the mobility premium

I wonder what would happen if you conducted a survey of consumers, asking them to allot 100 points of 'value' between:

a) Having a mobile phone, with the convenience of an integral phonebook, camera etc
b) Having the ability to make & receive personal calls from wherever you are, send SMS and emails, browse the web etc
c) Having the ability to do (b) while you're actually moving - for example in a car or bus

I'll hazard a guess that the answer would reveal perhaps a 50/40/10 split of perceived value. Yes, there's probably better ways of phrasing the question, but you get my point. The actual 'moving about' part of mobility isn't that relevant unless you regularly make calls while driving - and ironically, the move towards data services exacerbates this.

This is all a bit of a problem, as mobile operators have traditionally priced calls on the basis of a premium which essentially blends all of the above. That customers value the handsets themselves as much as the service isn't news - it's at the core of the ongoing tug-of-war between phone manufacturers and operators, as to who 'owns' the customer relationship.

More relevant is the distinction between nomadicity and full mobility. The advent of VoWLAN in all its guises, cellular homezones and assorted other location-based mechanisms for differentiating call prices has been apparent for the last few years, in the guise of FMC.

But with moves like BT's tie-up with FON last week, as well as the nonsensical hype around metro-WiFi, it's clear that nomadicity (and cheap/free calls on mobile devices) is taking a step further to achieving 'B' above.

I wonder, though, if the push for geo-specific pricing is actually a special case of what should really be in place: velocity-specific pricing. Maybe we should be pricing mobile communications based on how mobile you are. A call when you're stationary is cheaper than a call when you're walking, which is cheaper than one made on the bus/in a car, and so on to trains & planes. If you're on a femtocell in your bedroom, or connected via WiFi/FON in your neighbours house, you shouldn't be subsidising the calls of the salesman in his Mercedes driving 80mph down the M4.

Now obviously there's a world of pain in communicating all this - especially as even though customers might only value high-speed mobility at 10%, they've grown up to expect it, on the odd occasions they need it. But with the onward march of GPS in handsets, motion sensors and so forth - even just working out a given customers' average number of cells-per-call - it ought to be possible to measure who's really deserving of paying the mobility premium, and who should be on the 'nomad' tariff.

What's the legal definition of browsing?

I see that O2 UK has just revamped its data 'bolt-on' tariffs, towards a pseudo-flatrate offer comparable with T-Mobile Web'n'Walk and others at £7.50 for 200MB per month. About time, although as it'll come as no surprise that they're retaining the usual 10000% over-pricing on roaming at £6/MB - or £15/MB on prepay. (Yes, OK, there is the rather laughable 'data abroad' bundle of 10MB/month roaming for a commitment of £10/month. Bargain.)

In common with most of these, it also has the usual backside-covering 'fair use' terms and conditions.

"Permitted Uses of theO2 Web Bolt On are uses of your SIM Card within a handheld mobile device for the purposes of Internet Browsing and email only. Any other use of the O2 Web Bolt On will not be a Permitted Use, including but not limited to:

Use with Data Cards or Modems;
Instant Messaging,
IP Telephony,
Point 2 Point file sharing and file transfer,
VoIP (e.g. Skype™),
Video and TV streaming,
Slingboxes; and
Use in conjunction with routers."

But tell me... what exactly is the legal definition of 'browsing'? If I visit a website that happens to have embedded Flash animation or video streaming - like http://blueroom.o2.co.uk/2007/the-o2/sugababes-gallery.jsp for example, am I falling foul of the T's and C's? What about the messaging functions on FaceBook? Are they 'instant' or does that mean where there's a separate pop-up IM window? Can I use an open chatroom but not a private message window? What happens if there are only 2 people in a private chatroom? What if it's embedded in JavaScript on some new Web 2.0 social networking website? What if Skype develops a plug-in app that appears on certain Facebook or eBay web pages?

And I fear that using the Internet without somehow being 'in conjunction with routers' may be a little tricky. Especially if O2 launches a femtocell / home gateway.

You get my point. 'Hard' definitions don't work very well with traditional Internet applications, and are even worse with AJAX, Widgets and Mashups. Yes, of course I know what the T's and C's mean in spirit, even if it is mean-spirited.

Put simply, I don't think any of this stacks up, apart from instilling 'fear, uncertainty and doubt'. I'm not picking on O2 specifically here, most of the other operators, with the notable exception of 3's X-series, do something pretty similar. Essentially they're writing themselves a 'get out of jail free' card.

"Fair" in 'fair use' seems to mean "uncompetitive with anything else we do already or might do in the future". "That is, if it is used by enough people that we decide to take some action." So "Unfair" = "Competing effectively".

The strange thing is that they haven't applied equivalent rules to ordinary voice calls. Surely, taking this to its logical conclusion, it's not 'fair use' of my O2 voice minutes if I use them to call Vodafone's sales department, or Orange's analyst relations team?

Personally, I don't think these onerous but vague and sometimes threatening data plan T's & C's will stand up for much longer - except in the case of really bandwidth-heavy or malicious apps which can threaten network integrity. I expect most operators to have quietly moved away from these positions by the end of 2008.

Nokia & Navteq... location services, or location products?

Let me try and join the dots.

.....Nokia N95 with GPS and 8GB of memory and a memory card slot..... Navteq's giant mapping databases.... Nokia developing its non-carrier channels to market.....

Look at TomTom or Garmin or maybe even Tracker: mobile location is mostly about standalone products. Services are mostly limited to incremental add-ons: updates, or critical realtime traffic info, plus a tiny and sexy but mostly non-revenue slice of geolocation-meets-social-networking mashups. Not only is downloading maps or directions OTA to a handset slow and expensive, it also consumes valuable power.

Bottom line: mapping on mobile doesn't need an operator or very much over-the-air location services. Maybe in the future as upsell, but not as a starting point. The pricing/performance curve on flash memory is much steeper than that for wireless broadband.

Interesting, this is totally different from things like Google Earth. For that, a Web 2.0-type model works fine. Mobility is less important, bandwidth is abundant always-on and essentially free, more granular data is becoming available continually and there are no power constraints.