Mobility

Coming Soon? GSM Handsets for Sprint/Nextel Customers

Deutsche Telekom Considering Sprint/Nextel Takeover

Even though the Microsoft/Yahoo courtship and apparent breakup does have implications for the mobile industry, the whole situation just didn’t peak my interest as much as this news item regarding the possible takeover of Sprint/Nextel by Deutsche Telekom.

The first thing to note is that DT is the parent company of T-Mobile in the US. If this potential merger actually happened it would create the largest wireless provider in the US. The new company would be bigger than AT&T or Verizon.

Now that would be a game changer. The Microsoft/Yahoo thing is interesting, but given Microsoft’s past track record doing big purchases, it is hard to see how a Microsoft/Yahoo merger would immediately impact what is happening in the mobile world. It might be a long while, if ever, before we saw something significant come out of their merger.

Now the DT/Sprint combination is different. First off, T-Mobile is based on GSM, Sprint is based on CDMA, and Nextel is IDEN. These are different and incompatible technologies. If this merger were to happen, then you would think there would be a lot of talk about consolidating customers under one technology, but which one? DT’s roots are in Europe which is all based on GSM. It would be a really big project that would take a lot of time if a decision was made to make GSM the foreground technology while CDMA moved into the shadows.

Maybe T-Mobile would ask (“force”) Sprint/Nextel customers to upgrade to a GSM handset when their contracts expired. Then again, there is a lot of cool stuff running on CDMA/EVDO that isn’t common or available on GSM. And then-then again, GSM would let Sprint customers easily roam when in Europe. The possibilities seem pretty endless on what could be done.

Overall such a deal seems like it would make sense for both parties. The deal would strongly improve DT’s position in the US, and would pull Sprint out of the suppressed state that it is in right now.

The other dynamic in play is the current price war going on between the US operators. “All you can eat” fixed price plans are now the standard. This could potentially create a “death spiral” where constant cutting of the fixed “buffet” price leads to a situation where no one makes any money. By taking out Sprint, T-Mobile could benefit from some long term price protections.

The cheap-dollar also becomes a big factor in this type of deal. T-Mobile in the US isn’t flush with cash, so the DT parent company would have to step in. DT has lots of cash, and a favorable currency market, so the purchase of Sprint could turn out to be a real bargain for them. I’m not a financial guru, but some of these factors seem obvious.

And lastly, with WiMax on the horizon, Sprint’s leading position in this technology area is another little enticing carrot for any potential suitor. On the down side, there will probably be a lot of anti-trust issues with a foreign company owning such a big piece of the US telecom infrastructure.

Understanding the iPhone Phenomena

A historical footnote: If you were in the market for a mobile smart phone prior to July 4^th weekend 2007 what were your options? Well, if memory serves me correctly, here’s what the offerings looked like in the U.S. for a phone that had: 1) a decent keyboard for fast typing (yes, for less nimble adults); 2) ability to play music and take decent pictures; and 3) easy synch up with email, preferably work email:

•  On Spint you had the Palm Treo and Blackberry

•  On Verizon you had the Palm Treo, Blackberry, LG enV and Moto Q

•  On AT&T you had the Palm Treo, Blackberry and private label HTC

•  On Helio (who? they are an MVNO) you had Ocean

        Blackberry owned the corporate market and RIM was just starting to make in-roads into the consumer space with sleeker phones and better marketing. They have certainly come a long way.

        The beloved Treo had a loyal following and the Palm OS was (and you could argue is still in some ways) the most well-tested and most consumer oriented mobile OS on the market. But Palm started to experience a crisis of vision and execution which first led to a burst into retail and advertising and then a precipitous retreat.

        The rest of the smart phones such as enV and Ocean were niche products with no great following and synching with work email was not a selling feature. It wasn’t for lack of trying, LG and Samsung certainly tried as did Moto to market their vast lineup of phones. But if you’ve ever tried to shop for one of these phones at a U.S. carrier’s Website you know how difficult it is to rise above the fray. (Like shopping for a “nice red” at a wine store that features hundreds of brands from around the world – which one to pick?).

        BTW if you are interested in finding out why the experience is so bad and who is doing it right, check out this article on Keynote’s online magazine: http://www.keynote.com/benchmark/mobile_wireless/article_americas_ears_thumbs.shtml

        In other words there was a hole waiting to be filled to introduce smart phones to the American consumer. Apple without a doubt filled that hole. Using something truly new and different and pushing it with marketing know-how, the team in Cupertino woke up the entire industry. Now instead of having to scroll through 100 phones on a carrier’s Web site, you could simply learn about and choose 1. 

         At the end of the day it really isn’t about giving consumers choice. That’s just business-world gobbledygook. It’s about helping consumer’s make a decision that makes them feel good. If they don’t feel good – no one does after scrolling through 100 phones – then they do nothing or just go for price.

        The iPhone is referred to as exogenous or coming from outside the industry and it heralded a step-function increase in consumer adoption for mobile technology because the message was simplified and the decision made easy. But it is by no means close to nearing mass adoption. The tipping point, if you will, is still far away.  For the iPhone to continue its ride, synching work email will be an important feature and Apple has already announced plans to do so.

        To get a preview for what the coming months will look like at the Canadian email king's headquarters, see this NYT article “BlackBerry’s Quest: Fend Off the iPhone” (http://www.nytimes.com/2008/04/27/technology/27rim.html?_r=1&oref=slogin ).

        So the match-up between Apple and RIM is clear.       

        How will other manufacturers respond? Well, if the lack of innovation in MP3 players is any indication, Apple doesn’t have much to worry about. I was recently told that even the much vaunted Walkman franchise has failed to deliver a good music listening experience on Sony Ericsson mobile phones. In the land of Sony Ericsson the Swedish mobile carrier has opted to pre-load Sony Ericsson phones with a music player from an Italian company.

        Why can’t Sony Ericsson, Nokia, Samsung, and LG get it right in the U.S. despite the head start? Maybe because they are still solving the wrong problem. With both the iPod and iPhone Apple has shown that it has learned not to confuse the tech-savvy early adopter market with the mass consumer market (and it skipped the wireless industry big-booth love-fest in Vegas last month to punctuate the point). Maybe this is just a U.S. dichotomy. We’ll soon find out as Apple gives Europe a second try with a 3G version of the iPhone.

Teens Prefer Texting to the Telephone

Texting is about to replace talking on the telephone as the favorite new teenage pastime.

 According to the Yankee Group, a U.S.-based research and consulting company, young adults 18 to 24 years old spend about 32 minutes a day texting. It’s OK if you said (or texted) OMG!

 And Madison Avenue has taken note.

 The Wall Street Journal recently reported on an upcoming campaign:

 “In ads that begin in two weeks for a new line of Degree deodorant for teen girls, Unilever is highlighting ‘OMG! Moments’. Print ads running in magazines such as Seventeen and CosmoGIRL show ‘High School Musical’ star Ashley Tisdale at a glitzy affair discovering that she has toilet paper stuck to one of her shoes.”

So texting is creating a whole new lexicon just as email did, oh just a generation ago (sorry if that makes you feel old . . . I’m still getting over it).

 
And it’s happened practically overnight. Americans sent a whopping 363 billion text messages in 2007, up from 81 billion in 2005, according to CTIA, the Wireless Association industry trade group.

 
But in addition to lexicon and advertising, those text messages flying around mean big business.

 
Last week at CTIA in Las Vegas, Evan Schwartz, cofounder and chief marketing officer of Thumbplay Inc. told MobileMarketer.com that they are announcing several new deals and initiatives to go after discovery of mobile content. “We announced the beta of a new program called the “Get” program. It’s basically a vertical mobile entertainment search . . . So all [that] consumers need to do is text “GET” plus any artist, game or content they want to the 48000 short code.”

 
Also last week RCA Music Group announced that Alicia Keys’ single “No One” has topped the half-million mark for ringback sales in the United States, making it the first-ever ringback to go gold. (Ringbacks are short codes.)

 
Coinciding with this was the interview we did announcing a new way to ensure all those texts and common short codes are getting through. Read it here.

 

Where's the text I sent you?

Your text, SMS, or short code could be seconds away, or minutes. There's a reason why it's not called "instant messaging". 

Is this a problem?  Well, it depends on 2 things: the application and user expectations. For applications such as voting, it won't do if the short code campaign doesn't register viewer votes (think: TV show)  until after the show has ended. Or, for authentication (think: online banking) if you're sitting at your PC for several minutes waiting for the short code to arrive so that you can continue with your transaction (sign-on, payment, transfer) there's likely to be, ah, no transaction.

Keynote regularly takes measurements for various mobile transactions to get a sense of how the mobile Web is doing (by the way, you can use Keynote's services to do this yourself).  Below are 2 charts that highlights the performance of 4 aggregators over a US mobile carrier.  The first chart shows total time of delivery (seconds) while the second chart shows availability (percentage).

Aggregator A had the fastest response time and best overall performance relative to other aggregators. 

If you were about to spend hundreds of thousands of dollars on a short code campaign, you'd probably not go with Aggregator D.  So before you sign-up, do some testing and find out who is best (or at least not worst). 
  

Apple Broke The Internet

My original goal was simple. I work in the Mobile group at Keynote, so I wanted to hear what Steve Jobs had to say about the iPhone during his kick-off address at Macworld.

I thought I would be able to jump on to any number of sites and either watch a live stream of the presentation, or at least get real time commentary of what was being said. It turned out that neither was possible.

You see, Apple broke the Internet.

There was so much real-time demand to hear what Steve had to say that many of the streaming and real-time information services where simply broken or offline during the initial part of his address. Video streaming sites like Mogulus, and Ustream - broken. Real time messaging systems like Twitter - broken. Cutting edge services like Qik that stream video from handsets - broken. Everywhere I tried, I was turned away.

It doesn't look like the internet is ready to stream video from one location on a massive scale.This was made clear at this one event. The day after, streaming providers like Mogulus reported that they were initially maxed out and in real time had to do some tuning of their infrastructure in order to handle the demand. The result is that they did not broadcast the first segment of the presentation. It was a great "load test" for them.

On mobile devices, there is a new service called Qik (qik.com). If you have a S60 capable handset you can stream live video right from your handset to their web site. Everyone else on the internet can then see where your handset is pointed. In this model, everyone becomes their own TV broadcast station. Anyone can capture a live "event" and potentially have world wide distribution.

Unfortunately, the day "Apple Broke The Internet" proved that we are still a long way off from broadcasting on a scale done every day by our local TV networks. Video streaming in all forms still has a scaling problem when trying to address a mass audience, and until that is solved our reliance on TV for "real time" live video will remain.

There is one great thing about services like Qik. Maybe everyone can't watch these spectacles in real time, but as part of the streaming from your handset, the video is captured into a clip that can be replayed. So "mass" consumption of the content is possible by those connected to the internet, it just won't happen in real time.

Mobile streaming services like Qik do offer a look into the future. If almost "everyone" will some day have a handset capable of streaming live video which is saved onto a server, that really creates a whole new level of transparency in how our news is reported. Everyone will become a small scale broadcast channel which would provide more raw, un-edited versions of significant events. This is a good thing.

Anyway here is a collage of my attempts to access different information paths during the Jobs presentation. Nothing was working for me.

 

"I want to talk about 4 things..."

Steve Jobs is famous for saying "I want to talk about 4 things....", sometimes it is 3, but today there were 4 things I want to talk about from the Macworld 2008 Keynote address.

1) Apple + Google

He mentioned Google specifically several times. "We love working with those guys...." was the quote. He talked and demoed the iPhone "GPS Lite" feature obtained from Google. Steve also did a demo where he placed the Google homepage onto the home screen on the iPhone.

Apple + Google working together, I wonder what the rest of the mobile industry thinks about this.

2) iPod Touch upgrade $20

For a few dollars you can add a handful of new applications into the Touch. Is it worth it? Who knows, but the important point is that Apple is now "testing the waters" to see how much push back they will get for charging for handheld OS upgrades in the future. It was a red-herring in that this new concept of charging for upgrades is being tested on the Touch, and not on the flag-ship iPhone. If the world cries foul, then I'm sure they will find a way to drop it in a way similar to how they handled the iPhone pricing snafu.

If there is only a minor uprising, then Apple has set a new precedent that they can play with in the future. If Apple has sold 4 million iPhones since launch, and in the future they want to charge a $20 fee for a major OS upgrade, 4 million times anything is a lot of money.

3) No new iPhone announced

I was expecting a 3G/GPS iPhone to be announced, but it didn't come. What does it mean? Maybe there are technical reasons holding it up, but most likely the real reason is that they don't feel the pressure to bring another iPhone to market. iPhone 1.0 is still "fresh" in the market, and so far no other handset has even approached the iPhone "coolness" factor, so there is no competitive pressure to release a new model. They are still selling the 1.0 model like crazy, so why bring out a new one.

4) iTunes Movie Rentals

Groans from Blockbuster, Hollywood Video, and Netflix. The time period you have to watch the movie seems limited, but like all things, Apple is famous for throwing something out there and then not being afraid to adjust as needed. Apple TV was initially a flop, a new face-lift for Apple TV was announced, over time the integration between iTunes and Apple TV will get more compelling. You have to wonder what the Satellite, Cable, and Broadcast folks are thinking. Apple Computer, iPod, iPhone, and Apple TV are all viewing platforms in the content viewing strategy.

iPhone versus N95

Updated: 1/15 after the Macworld Keynote Address.

When I wrote this original post, Macworld had not happened yet, now it has, and we can close off the original post on which is "better", the N95 or the iPhone.

During the Macworld Keynote, a new version of software for the iPhone was announced. "GPS Lite", and some new UI features. No MMS, no Video, no hint of a 3G iPhone on the horizon.

Because the iPhone did not make a giant leap forward, I would say the N95 is now the clear leader in the "Feature Wars". The iPhone still wins "cool", but for the raw number of features packed in the smallest package, the N95 for now is Top Handset.
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<Original Post>

With Macworld coming up this week, it will be interesting to see what changes are announced for the iPhone. There are three possible paths. 1) New features are announced for the existing iPhone. 2) A new iPhone is announced. 3) A combination of the two.

The reason I bring up new features is because it seems like the iPhone is getting compared to the Nokia N95 in just about every review forum possible. There definitely is some "N95 envy" out there from iPhone users. Without creating a product review, here is a breakdown of the "major" features of each handset

iPhone:
great UI and applications that are "fun" to use
update-able OS, awesome video quality

N95:
3G (N95-3), GPS, hi-res camera, video recording, memory stick, MMS

Like I said, no review, but on the surface the N95 has a lot of point-features that are missing on the iPhone. The iPhone wins hands-down in the coolness factor, but once you get past that, the individual features of the handset is what ultimately delivers "value" to the user. Just about all of the big features I listed for the N95 are ones that iPhone users would like to have.

So this gets me back to Macworld. There is one unique feature of the iPhone that could possibly keep it at the top of the heap. That is the easy way in which the OS of the handset can be updated, just plug it into iTunes and you are instantly made aware of any updates. Hit one button and the update starts.

I have not updated a N95 so I don't know the specifics of the process. But there is one big issue that I see. It looks like the software updater only has a Windows version. It doesn't look like there is a native updater for the Mac. Oh well, so much for having a strategy that allows you to chip away at your biggest mind share competitor.

Because of the simple iTunes integration, the iPhone architecture seems to create a platform that can extend the longevity of the original iPhone hardware. If it is true that an OS update can enable more of the features currently offered by the N95, then the iPhone can still maintain its position as the ultimate high-end handset. If this doesn't happen, then the title of "Top Handset" will be some version of the N95.

It all comes down to Macworld this week. Depending upon what is announced the iPhone either remains at the top, or it will occupy the second-rung of the ladder. If a new model of the iPhone is announced, but with no major update to the current iPhone, then the N95 temporarily becomes the new leader until the new iPhone is available. Then we start the review process all over again.

Top Performing Mobile Web Sites

For week of December 17th Keynote's industry analysis group, Keynote Competitive Research, reported the following top performers in the usual 3 categories:

US Mobile Sites

• Best Response Time (secs.): Facebook (runner-up: Google)
• Best Success Rate (%): Mapquest (runner-up: ESPN)
• Fastest Download Speed (bytes/secs.): CNN (runner-up: ESPN)

European Mobile Sites

• Best Response Time (secs.): Facebook (runner-up: Google)
• Best Success Rate (%): The Weather Channel (runner-up: Facebook)
• Fastest Download Speed (bytes/secs.): Euronews (runner-up: Time)

By at least some measures ESPN in the US and Facebook in Europe seem to be consistently running high performance sites.  But when you look at the other categories in which either company is not top 1 or 2 (response time for ESPN and download speed for Facebook), the picture is not so cut and dry.

The Mobile Experience - By the Numbers

In reviewing Keynote's new performance indices for mobile Web sites, RCR Wireless concluded that the age old principle of KISS was one that needed to be practiced by more portals. 

"There’s a golden rule for mobile Web design, and I think it’s that less is more,” according to Rachel Pasqua, director of mobile marketing at iCrossing Inc.  “Keep your file size small, ideally under 20k. ... You have to have copy and keep it simple."

I wonder how designers who have spent the past 5 years bulking-up on "Web 2.0" are going to react to this.

Do you find yourself spending more time on lighter pages?  Or are you feeling confident browsing with abandon on your 3G equipped smart phone?  With all this talk of a PC-like experience on mobile browsers, I wonder if the jaded masses will accept anything less but to be delighted from their mobile experience.

How much is my Facebook profile worth?

With all the recent announcements by Facebook on its new advertising model. I was thinking about how to establish a monetary value for a Facebook profile. Right now there are several calculations based on the number of FB users and the valuation based on the recent MS equity purchase. This all equates to a fixed cost-per-user, but I was thinking about something different.

I was thinking that the value should be variable based on the influence that a user has. The FB "influence factor" would be based on the number of friends I have, the number of apps I subscribe to, my groups, number of interactions, etc. My "influence factor" is a ranking of how involved I am in FB and hence a reflection of how FB "sticky" I am. The more sticky the better because the more time I spend in FB means that there are more opportunities to show me ads. Also a large number of friends means that my profile home page is prime real estate for product placement messages that my friends will view when they check up on me.

I guess I'm not that valuable. There is a FB application at http://apps.facebook.com/valuation that will calculate how valuable your profile is worth. Mine only comes out to $16 dollars.

It is an interesting concept because over time the high value FB user would also be considered an "influencer". These people would be more valuable to advertisers because of the social net they would cast over other Facebook users that they are connected with.

Taking this a step further you can almost imagine a "ranking" system that would calculate the pecking order of all FB users. Those at the top would be like Frequent Flyers with a lot of miles. They will probably get all kinds of perks and other inducements that we can't even imagine yet.

This whole line of thinking leads me to the concept of certain Facebook users eventually getting "paid" for being on FB. If your profile has a high FB-valuation, then it seems like people will start knocking on your door. "Hey if you just promote this product on your profile we will give you this...."

Who knows what "this" will be? Eventually it will come out what "this" is, and it is sure to happen. Your FB profile will be like the price of a stock. You will have a FB P/E ratio, and your valuation will fluctuate on a daily basis based on your marketing performance to-date.

And with profile "fame" a new industry will be born. You will be able to hire a Facebook PR agent that will work on your behalf to score the best deal with the various marketers that will want your profile endorsement and access to your friends list.

It is deja-vu-all-over-again. First we had web pages, then came web pages with advertising, then we had blogs, now we have blogs with advertising. Recently we had profiles, and now we have profiles with advertising.

One thing seems to be left out of the Facebook system for targeting ads. That is: "What is my ability to actually buy something?" Do I have a high FB value because I have a lot of free time on my hands to build my profile, and because of this not a lot of personal funding? Maybe I can get a high FB-valuation just because I have a lot of friends. I wonder if someone will eventually become a millionaire based on marketing dollars leveraged from their FB friends list?

It seems like even the ability to judge your financial resources is within the reach of FB based on the data in your profile. Right now you type in your name, your area of residence, and your birth date. With that information it seems like it would be possible to do some quick background research on "you" and figure out exactly who you are financially. From there it is only a hop-skip-and-a-jump to figure out what type of ads match up with your discretionary budget.

If FB actually knew the "real me", I'm sure my profile value would double. From $16 to at least $32.