The iPhone Thud! June 12, 2007
Posted by chetan in : US Wireless Market , add a commentKing Jobs announced developer support for iPhone yesterday. Developers will be able to run browser-based apps. Duh! He said - because of security issues, we couldn’t open it up. and, whose problem is that? Apple can’t be naive, it probably is just not ready.
He also announced Safari for windows. The early version wasn’t impressive - a worse memory hog than IE.
My interview with Padmasree Warrior, CTO Motorola
Posted by chetan in : US Wireless Market , add a commentPadmasree Warrior is perhaps the most recognizable name at Motorola after Ed Zander. She is EVP and CTO at Motorola and fellow IIT alum. I interviewed her for the upcoming issue of PiTech Magazine. It will be released next month at IIT Alumni 2007 Global Conference in Santa Clara.
Excerpt
If you were advising entrepreneurs, which problems would you advise them to tackle? Where is the most innovation needed? What are some of the problems that our industry hasn’t solved? What’s holding us back?
There are many problems to be solved, some are technological and others regulatory. I will answer this question more from a technological perspective. My advice to entrepreneurs is to focus on value added applications for the mobile platform that has many constraints such as battery life, screen size etc. Just forcing the internet designed for a PC onto the mobile device will not work. We need to think about innovation in areas of internet mobility, content mobility and broadband mobility. Areas of particular challenge are power management and battery life. Another exciting opportunity is to think about how this device may be used, when Wireless Broadband becomes a reality with WiMax. I don’t think anything is holding us back. I am an optimist – I believe the human mind can solve most problems. The scale of the mobile revolution is so massive that innovation will occur at many levels both in developed and emerging markets simultaneously.
My thanks to Sandeep Sinha who made the interview possible.
Whitepaper: Unified Mobile Data Platform - An Analytics based approach June 11, 2007
Posted by chetan in : 3G, AORTA, ARPU, BRIC, Carriers, Devices, European Wireless Market, Indian Wireless Market, Intellectual Property, International Trade, Japan Wireless Market, MVNO, Mergers and Acquisitions, Messaging, Microsoft Mobile, Middleware, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile TV, Mobile Usability, Strategy, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , add a comment
Whitepaper
Unified Mobile Data Platform An Analytics based approach
Sponsored by InfoSpace Mobile
Executive Summary
2006 was a banner year for mobile data. Revenues from mobile data increased for all major carriers across all major regions around the world with data contributing 10-30% to overall revenues. In Q1 2007, US carriers recorded over $5B in data revenues with mobile data contributing to over 16% of the more than $32B in carrier service revenues. In fact, the Average Revenue Per User (ARPU) from data jumped 43% from last year. It has been a long journey though. Driven initially by SMS messaging, the market embraced ringtones, graphics, music, and gaming, each creating multi-billion dollar markets. As we look into the next five years, not only are new content applications such as broadcast video, idle screen, user-generated-content, community, and mobile search being introduced, but the functionality available with these applications, such as the sharing and tagging of data, is also increasing the demand on the mobile entertainment platform to be adaptive to the growing needs of the market. To stay competitive in this rapidly evolving and challenging market place, service providers must move from silo’d point solutions to integrated unified platforms to maximize their returns from the declining services and better prepare for the technical and business challenges in front of them. The vast potential of mobile data services in general and mobile search and advertising specifically can’t be realized without a retooling of the fundamental approach to deploying services, engaging partners, and serving users with the best possible analytics-driven contextual user experience. This paper outlines the evolution of data services, discusses the need for unified mobile data services approach, and lays out the basics and the merits of a services-oriented analytics-driven framework.
Table of Contents
Executive Summary 2
Evolution of data services 3
Integrated solution offering 11
Mobile Search - providing impetus for integration 15
Rise of the brands - What’s your Audience Strategy? 17
Analytics driven unified framework 21
Mobile Advertising 26
Recommendations 29
Conclusions 30
Your comments are always welcome.
Chetan Sharma
Breakfast with Dr. Simonyi June 6, 2007
Posted by chetan in : US Wireless Market , 3 comments
It is not often that you get a chance to meet some incredibly gifted people. It is even more rare if that person is highly accomplished (as in being a billionaire). And it never happens that the same person also just got back from space.
Well, today was my lucky day.
Seattle is the mecca of the US wireless industry and is extraordinarily beautiful, so it makes it a fun place to live. It also has its good share of famous people in the field of science and technology.
Puget Sound Business Journal organized a breakfast meeting with Dr. Charles Simonyi - CEO of Intentional Software and participant in the Soyuz TMA-10 mission to the International Space Station in April 2007. I sat there listening to him in awe of someone who has accomplished so much but is so down-to-earth and very accessible. His recounting of his space experience was just out of this world (you can catch-up on it here in case you haven’t kept track). He talked about his dream as a child when he met the Russian legendary astronaut Popovich who signed a card for him which he kept and took to the space station and after 44 years (from the initial meeting) met with his guiding light back on earth.
He talked about Bill Gates and Microsoft. He referred to a Russian proverb which means “with patience and hard work, everything can be grounded” and that he believes is the mantra that Bill adheres to. The lesson he learned from Microsoft was that Profitability is not a natural state so one has to work hard at it.
He talked about his startup “Intentional Software” which is attempting to make things simple for the various industries. The first industry he is tackling is pensions in concert with Cap Gemini. I asked him about the prospect of applying his “problem language” methodologies to mobile. He said, of course, telco is complicated and UI is complicated and we can use this to solve and make things much simpler. They have built some demo for the same. The idea is to let SMEs be SMEs and programmers be programmers and not mix the two. Now, that will be very logical.
He talked at length about the experience of Space travel and he thinks that civilian space travel will be a common place in his lifetime. Charles is also very funny. To the question of him not being too involved with his foundation lately, he quipped, “I was out of town”.
RCR News and Nikkei Electronics June 5, 2007
Posted by chetan in : US Wireless Market , add a commentKelly Hill at RCR Wireless news did a story based on our quarterly numbers for the US market (registration required)
Also, talked to Phil Keys of Nikkei Electronics on the topic of mobile widgets and their role in the ecosystem.
NY Times Article - Fever Builds for iPhone (Anxiety Too) June 4, 2007
Posted by chetan in : ARPU, Carriers, Mobile Applications, Mobile Content, Mobile Entertainment, Mobile Gaming, Mobile Usability, Smart Phones, Speaking Engagements, US Wireless Market, Wireless Value Chain , add a commentJohn Markoff of NYT interviewed me for this iPhone article. It will appear in tomorrow’s paper.
(Source: NYT)
http://www.nytimes.com/2007/06/04/technology/04iphone.html
Fever Builds for iPhone (Anxiety Too)
By JOHN MARKOFF
SAN FRANCISCO, June 3 — During an onscreen demonstration of the iPhone in Apple’s sprawling retail store here recently, an employee, clad in a black T-shirt, of course, surprised a potential customer.
Nonplused, the customer stammered, “You mean it’s a cellphone, too?”
Such is the spell that Steven P. Jobs has cast on the American consumer.
It has been almost six months since Mr. Jobs, the world’s consummate salesman, introduced the iPhone as the Ronco Veg-O-Matic for the Internet era. Tongue only partly in cheek, Mr. Jobs promised that Apple’s entry into the cellular handset market would be a better phone, Web browser and music player.
Mr. Jobs succeeded in building expectations for what some have called “the God machine.” The bar-of-soap-size phone is being coveted as a talisman for a digital age, and iPhone hysteria is beginning to reach levels usually reserved for video-game machines at Christmas.
Although the phones are expected to cost as much as $600 when they go on sale at Apple and AT&T stores later this month, each company has received more than a million inquiries about the product’s availability. Apple disclosed in television commercials Sunday night that the phone would be released June 29.
Further evidence that expectations have been wound up to a fever pitch: the phones, or promises to deliver a phone, are already on sale on eBay for $830. A pundit as unlikely as Arianna Huffington sought out Mr. Jobs directly for advice on being the first to score a phone. (He told her to go to an AT&T store.)
Last week, during an appearance at a technology industry conference in Southern California, Mr. Jobs teased the audience by briefly pulling an iPhone out of his jeans pocket and immediately slipping it back out of sight.
The anticipation, which is intense even by Jobsian standards, has led to some quiet, behind-the-scenes anxiety at Apple. Some Apple executives worry privately that expectations for the one-button phones may be too high and that first-generation buyers will end up disappointed.
Certainly there are skeptics. The high price will limit the phones’ appeal to true believers. The cellular network that the iPhone operates on is slower than those of many of its rivals. Several of Apple’s handset competitors hope that its decision not to include a keyboard, relying instead on a touch-screen virtual keyboard, will limit the attractiveness of the iPhone in text-intensive business markets.
“It’s very media-centric,” said a director at a handset competitor who declined to be identified, saying that his company did not want to elicit comparisons with the iPhone. “It will hit one sweet spot, but not necessarily all of the sweet spots — we hope.”
As has often been the case during the last three decades, Mr. Jobs’s timing may be impeccable.
While entire industries have been struggling for more than half a decade to find the right combination of features to merge cellphones and computers, Apple appears to have stepped in at precisely the right moment.
“These devices have become ubiquitous, and there’s an enormous hunger out there,” said Peter Schwartz, the chairman of Global Business Network, a consulting firm based here.
Most analysts believe that Apple will easily exceed its initial goal of selling 10 million phones by the end of next year.
“It will be just 1 percent of the handset market,” said Jagdish Rebello, director of wireless communications research at iSuppli, a market research firm based in El Segundo, Calif. “But it is essentially shifting the balance of power into the hands of the mobile device manufacturers.”
News reports out of Asia in recent weeks indicate that Apple may have placed an order for an additional five million phones with Quanta Computer, a Taiwanese manufacturer that is a leading maker of laptop computers. Another Taiwanese manufacturer, Hon Hai Precision Industry, was earlier reported to have been awarded the original order. Apple declines to comment on its plans.
Although a tiny fraction of the global phone industry, a 1 percent market share would make Apple a head-to-head competitor with the high-end version of Microsoft’s Windows Mobile software, which is used on a number of smartphones.
During the first quarter of 2007 Microsoft’s software was used on about 3.2 million personal digital assistants, or about 60 percent of the market, according to Gartner, the market research firm. Microsoft has come to dominate the market against competitors like Palm, Research In Motion and Symbian, but Apple’s entry is likely to reset the most profitable high end of the handset market.
“It will change the whole category of what people think a phone is,” said Richard Doherty, president of the Envisioneering Group, an industry consulting firm.
To head off potential consumer disappointment, Apple said several months ago that it would have the ability to add features to the iPhones after they were purchased. The company’s executives say that the capability to upgrade the iPhone in the field will give it a significant advantage over other cellphones, which are usually replaced frequently.
“Other carriers are scrambling to figure out what their strategies should be,” said Chetan Sharma, an industry consultant who follows the wireless data market.
One potentially crucial factor in determining the iPhone’s success that has yet to be clarified by the company: How willing is Apple to permit independent software vendors to develop programs for the iPhone? When he introduced the phone in January, Mr. Jobs seemed unwilling to permit outside software development. He said that opening that door would tend to raise both security and stability issues that were unacceptable in the wireless handset market.
Last week, however, at the D: All Things Digital conference, he seemed to relent. He said Apple was looking for ways to make it possible for developers to create software for the iPhone.
A person briefed on Apple’s plans said that at its software developer conference this month, Apple intends to announce that it will make it possible for developers of small programs written for the Macintosh to easily convert them to run on the iPhone.
Software, Mr. Jobs said last week, is what would make the difference. Poor software, he said, is what undermined the Japanese consumer electronics industry. And by that same token, software is what will give the iPhone what he said would be a five-year lead on the rest of the handset industry.
“If you look at the iPhone, it’s software wrapped in wonderful hardware,” he said.
Carnival #76 is up at Twofones
Posted by chetan in : US Wireless Market , add a commentCheck it out. Greg does a great job highlighting the best posts of the week.
Amp’D files for Chapter 11 June 2, 2007
Posted by chetan in : US Wireless Market , 1 comment so farOn a quite saturday afternoon, Amp’D announces its march to death-bed.
Per WSJ, Start-up wireless carrier Amp’d Mobile filed for Chapter 11 bankruptcy protection late Friday night, according to a person familiar with the situation.
The move marks the latest of several failed wireless ventures that focused on bringing video, music and other content to cellphones.
Bill Stone, president of Amp’d Mobile, confirmed that the company filed for bankruptcy protection.
Mr. Stone said the company was forced to make the move because its business has been growing fast in the past 6 to 8 months and couldn’t keep up with the growth. “We are pretty confident we’ll come out stronger,” Mr. Stone said in an interview. This is one of the most bizarre things i have heard. The problem is very basic, their cost is much higher than their revenues. The $100 ARPU doesn’t make up for the cash they were bleeding in operations and marketing.
Is Helio next?
The growing OFF-Portal market
Posted by chetan in : Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, US Wireless Market , add a commentTelephia released its numbers on the off-portal US market - content purchased via premium SMS (PSMS) from off-portal storefronts as well as PSMS servics like voting/sweepstakes and chat. Premium SMS revenues totaled more than $273 million, making up 32 percent of mobile content revenue in Q1 2007. Download purchases paid for via premium SMS (at off-portal storefronts) totaled nearly $215 million, accounting for 79 percent of premium SMS revenue.
These off-portal storefront purchases include content such as ringtones and horoscopes. Voting/sweepstakes entries generated more than $35 million. While voting/sweepstakes entries generated only 13 percent of total revenues for premium SMS transactions, they represented 47 percent of premium SMS volume, equaling more than 34 million transactions.
Table 1: Premium SMS Transaction Volume and Revenue Share (U.S.)
Category Type Volume # of Revenue Total Q1
Share Transactions Share 2007 Revenue
(%) (000) (%)
—————————————————————-
Off-portal Storefront
Purchases 40% 29,544 79% $214.9M
Voting/Sweepstakes
Entries 47% 34,716 13% $35.4M
Other* 6% 4,208 6% $17.4M
Chat/Community 7% 5,497 2% $5.7M
Source: Telephia Premium SMS Report and Telephia Attitudes and Behavior Survey, Q1 2007
Eric Schmidt at the D conference June 1, 2007
Posted by chetan in : US Wireless Market , add a comment“Today’s mobile devices are increasingly phones, cameras and computers with GPS capability that provides location data. The sum of all of that is a very interesting ad platform,” Chief Executive Eric Schmidt said, speaking at The Wall Street Journal’s “D: All Things Digital” conference in Carlsbad, Calif., Thursday. (via easyBourse)
TiE-Seattle: Mobile Content Monetization - Challenges and Strategies
Posted by chetan in : 3G, AORTA, ARPU, Carriers, Devices, Japan Wireless Market, Messaging, Mobile Advertising, Mobile Applications, Mobile Content, Mobile Ecosystem, Mobile Entertainment, Mobile Gaming, Mobile Search, Mobile Usability, Mobile Wallet, Strategy, US Wireless Market, Unified Messaging, Wireless Value Chain, Worldwide Wireless Market , 7 commentsTiE Seattle Chapter hosted its annual mobile event earlier today. Given that Seattle is the mecca for wireless, it was no surprise that it was a sold out event with standing room only. I had the privilege of coordinating the event with my friend Sandeep Sinha - Director, Motorola. The keynote was given by Cole Brodman, Chief Development Officer, T-Mobile USA, a charismatic leader in the industry who rarely speaks at industry events, so it was great to have him participate.
The panel discussion was on “Mobile Content Monetization - Challenges and Strategies” - clearly a hot topic where lot of industry attention is these days. The panel was moderated by Len Jordan, General Partner, Frazier Technology Ventures. The panelists included:
Brendan Benzing, VP of Products and Marketing, Infospace
Jai Jaisimha, VP Product Development, Medio Systems
Satoshi Nakajima, CEO, UIEvolution
Hank Skorny, Executive VP, Business Dev & Partnering, OZ Communications
First let’s discuss the keynote and then I will get into the panel discussion. Cole walked us through the history of data growth in T-Mobile (he has been with the company for 11 years) and made some observations about the industry and the potential challenges and industry opportunities. Salient points included -
- Youth is driving growth at T-Mobile. 12% of the consumers are using the phone as landline replacement.
- Pricing in the industry has settled down and it is no longer a differentiator, so carriers are not trying to compete on price but on service differentiation.
- Presented T-Mobile in context of it being a global 109M subscriber player rather than a 26M US only player, so the numbers looked better than Verizon and the crew.
- An interesting stat was that 52% of all voice calls in the US are on mobile. Clearly a milestone.
- There are 150M email users but only 10% use it on mobile. Huge opportunity to monetize.
- Mobile web has lagged behind and has failed to meet consumer expectations. Things have also been complicated by discovery issues, complex business models and incentives. For e.g. per MB/KB pricing was ridiculous and T-Mobile realized the mistake soon after the launch and switched to a per app pricing model.
- Changed the branding from “Get More” which was about more minutes (people were telling - we have enough minutes, give us a different value prop) to “Stick Together” (or Connecting People), hence the My Favs which has done really well for T-Mobile.
- Landline has become a junk/spam filter for phone calls. People don’t give your their personal mobile number unless they really want to.
- The entertainment experience on the device hasn’t really been good for the consumer. T-Mobile is focused on User Generated Content, Shareability of Content, along with communication aspect of the device with UGC being the key component for T-Mobile’s strategy.
- Cole also felt that Location and Presence will add to a huge value prop for the apps and services and in turn the customer. Seamless integration is key.
Then the discussion moved to a panel discussion with distinguished experts pondering over issues and future of the industry. key discussion points were:
When there is a carrier on the panel, it will be dishonest for the moderator to not touch upon the “closed garden” issue, the elephant in the room that no one wants to talk about in front of the carrier but endlessly ponder behind the backs. Well, Len didn’t shy away and put it straight to the panel. Satoshi, a veteran in the industry was bold to address it head-on, telling it like it is — carrier model in the US is a closed model and that hurts the entrepreneurs and if you think you will be in the next company which gets sold to Google, forget it. Lead time are so long that you might not survive. Brendan said it takes patience and commitment to scalability and reliability before you can crack the nut.
Cole to his credit acknowledged the issue and said, yes, as carriers, we do make things hard for the entrepreneurs to work with us, we haven’t built enough tools to make things simpler. However, he said, carriers need to take few issues into consideration, the biggest one being customer support costs. If there is a minor issue, multiply that by 26M and it can quickly become a nightmare. Secondly, User experience needs to be solid. We as an industry haven’t done a good job, he thought, by pushing out some of the half-baked solutions. And, finally, the spectrum isn’t free like the Internet, even when broadband comes, it will be an issue. However, industry needs to set the bar for introduction of apps a bit lower to test out the market, so instead of releasing it to 26M, introduce it to a small subset, test and expand. T-Mobile is working on figuring this out.
When asked, what’s the driving factor for mobile content, everyone agreed (of course) the personal nature of the device, the asynchronous capability, and personalization capability is important. Satoshi mentioned his nirvana moment was when he saw the first version of a mobile fishing game in Japan, where users could set the location for fish and when the back-end server ‘caught’ the fish, an SMS alert was sent. It affirmed the “different nature of this medium”. Hank narrowed it down to communication, jewelry, and entertainment being the key elements for mobile. Jai said that presence and location are going to make a huge difference in mobile UX.
The challenge of discovery of content was mentioned. Brendan thought the opportunity for “mobile advertising” is huge but it will take good amount of time for the market to develop. The models for advertising based content monetization will start to happen. Jai also thought indirect monetization models will start to happen soon and also Long tail content monetization will be significant as it is an untapped territory right now.
Len asked, how things are different in Intl market? Brendan said, some of the differences are in how people consume media, and how mobile fulfills the need for media consumption demands and needs.
To the question of how we pay for all this, Satoshi pointed out two business models, one is people will pay for mobilizing their Internet experiences. He said, Myspace is free online but the mobile version is $3.99 but is the biggest selling app on AT&T (value is in immediacy) and second the standard comcast/cable model of flat fee for services like VCast irrespective of the apps and content you consume (with bundling of course).
Brendan thought that Personalization will always be a big market. Also, an untapped market is the commerce on the phone. Online, 30% of search revenue is based on checkout or from ecommerce players. Micropayments for commerce and content will be big.
Cole emphasized that things need to be made very simple like RIM did for email - intuitive and easy to use. He said, carriers should focus on horizontal things instead of focusing too much on vertical elements. To the question on alternate billing models, they are looking at Paypal and other means for billing.
Satoshi thought that offdeck market is another opportunity that hasn’t been fully exploited yet but the challenge is getting eyeballs.
Finally, there was a question around why US is so behind. Cole countered that there is a perception that US is behind but we are doing fairly well. I agree, if you look the numbers, 12-15% growth Q-over-Q over past 10+ quarters ain’t bad. That’s clearly a misconception in the market as highlighted in our Q107 update.
So, a variety of issues tackled, some fun discussion, good networking, and a very successful event. Thanks to all those who were able to make it. The Wireless SIG is doing another event in June, stay tuned.
Chetan Sharma Consulting was a proud sponsor of the event along with other great sponsors.
Photo Credits: Shashi Shashidhar
