- IN THIS ISSUE:
- * Brew: The ‘up-and-away’ scenario is here
- * Finally Here: Bringing Nordic Wireless Innovations to the US
- * The Demise of Flat-Rate Pricing
I am starting to understand what this cost-cutting means in our daily lives. I am finalizing this issue of the newsletter in San Jose in a motel located next to a trailer-home park. The motel advertises ‘We Have Color TVs’ as a service differentiator…
I have found something where I believe we should invest in, even (and in particular) in tough times. I have been using the Ericsson Timestep VPN solution for some two months now. I can assure you that it is the best thing since sliced bread: I can access our intranet, send and receive email at 200-300 kbps from any hotel that has high-speed Internet access. (My latest recommendation is Wyndham San Diego, $129 per night plus $9.95 per day for the Internet service.) I urge you all in the market units to put pressure on your IT organization to get this solution deployed - this is the best productivity investment possible! And the Ericsson travel service should create a global list of inexpensive hotels with high-speed Internet service!
Best regards
Tapio Anttila
BREW: THE ‘UP-AND-AWAY’ SCENARIO IS HERE
We just finished discussing Qualcomm’s BREW technology with QC and EWU people in San Diego. As reported in IOW #2/01, this middleware platform facilitates application development on Qualcomm 3000- and 5000- series phone chipsets. Qualcomm Internet Services launched this platform in February with a soft launch in Korea and made a huge splash out of it at CTIA. The whole concept is far bigger than just a middleware platform and a good example of Qualcomm’s ability to challenge Coke and Starbucks in marketing.
The less-known aspects of BREW are the business model and the distribution infrastructure. Qualcomm has built extranets for 1) developers, 2) carriers and 3) handset manufacturers for controlled delivery of BREW-based applications. Third-party certification companies have been engaged for application verification. And what’s more, Qualcomm has built a transaction engine that acts as a core for an electronic application marketplace where BREW-based third party applications can be offered to operators with a variety of pricing plans. Typically Qualcomm would take a 10 percent cut of the revenues with the rest being suggested to be divided between a carrier and a developer on a 10/80 basis (imitating the i-mode model). All of this should be ready to go in Korea by the end of the year with Japan and the US following soon thereafter. The SDKs will be freely downloadable from the web and the first developers’ conference is being planned for early May.
This revenue-generating ecosystem initiative has so far ignored standards bodies such as 3GPP(2) and Parlay. According to Qualcomm they are starting to look into them. They also plan to support other chipsets (yeah, but when?).
An interesting part of the BREW vision is their sudden interest in facilitating OEM handset bundling with BREW-based applications (increases handset replacement rate!). This vision is combined with their recent strong interest in the MVNO business model. Industry sources confirmed that Qualcomm has hired (three weeks ago) Randy Granovetter, the ‘dynamo’ behind Microsoft’s mobile Internet program, to drive their MVNO initiative.
Other initiatives being evaluated include automated application quality assurance, server-based application re-downloads (with your personal profiles backed up on a server), enterprise fleet management for devices and hosted application deployment infrastructures (initial discussions underway with M7 Networks).
Needless to say, BREW is poison for Openwave. And it lifts Qualcomm up to par with Nokia in competition on the hegemony in the application space.
Implications to Ericsson? Since we are (as well) the leading infrastructure company with relationships with a number of device manufacturers, this type of strategy is something we perhaps should have developed as well. If we distribute a non-Ericsson handset to an operator, it would be beneficial to us if our channel could add extra value to that handset (the ‘powered by Ericsson’ model).
Sadly, I don’t think this division of Qualcomm is up for sale.
FINALLY HERE: BRINGING NORDIC WIRELESS INNOVATIONS TO THE US
As some of you remember, I spoke at the iWirelessWorld conference in Beverly Hills, California. The event was remarkable in the sense that its theme was to present Swedish and Finnish mobile Internet startups to US investors and media. The event was organized by media consultants who had excellent connections to press as well as the capability to train oftentimes timid Scandinavians to do the necessary American pitch with the necessary bragging. The results were excellent.
Even if the economy is challenging us, we should make sure that we build the mobile Internet ecosystem leadership and thereby secure and accelerate the adoption of 3G services. In my opinion, our partnering activity should communicate the following ‘geographic’ messages:
1) 3G is happening globally and Ericsson Mobility World is harnessing innovations in over 40 countries. This demonstrates our ‘leadership by market share’ capability (this term was recently used by Openwave).
2) Sweden is the leader in mobility innovations. There should be a sub-program in the Ericsson Mobility World concept which communicates this goal. In the US, all innovations are by default American and one has to prove the contrary with hard facts and concrete marketing dollars. The importance of Sweden is that IT VALIDATES THE (ERICSSON) 3G BUSINESS MODEL.
3) Ericsson in the US is the leader in chosen areas of mobile Internet market development. The starting point has to be that Ericsson is a MARKET SHAPER. That means that Ericsson has chosen what markets it wants to shape, not the other way around. My opinion has been that we should focus on mobile enterprise in the US and help those partnerships reach global relevance. We should also choose where we want to do this shaping: New York, Chicago, San Diego or Tulsa/Oklahoma? There my opinion has been that we should ‘keep our friends close and enemies even closer’ and focus more on San Diego and Silicon Valley. Qualcomm and Openwave are defining the mobile ecosystems there now. As much as Swedes love sun, Ericsson has been hesitant to face those West Coast marketing machines with anything more than a puff of air.
(By the way, rumors from non-Ericsson sources tell me that Investor AB has decided to invest 20 percent of their assets to support the growth of the mobile Internet ecosystem. That would be a few billion dollars. I sincerely hope it is true.)
THE DEMISE OF FLAT-RATE PRICING
Mobile Internet services in the US will be based on either flat-rate pricing of a ‘cable-tv model’ whereby premium service buckets will have a tiered but flat pricing structure. In my opinion relying on this pricing model alone is doomed to a failure for two reasons: Firstly, it fails to on one hand capture the upside revenue potential of viralism (I receive a joke and send it with one click to ten friends) and on the other hand to control the network load of such growth patterns (viral growth can kill your network). Secondly, flat rate pricing entices you as a service provider to support passive customers (the ones who don’t use your service are the ones who bring you the margins). This is unnatural: pricing mechanisms should support the creation of value and build-up of loyalty. As a summary, I can see only two winning models: 1) transaction-based pricing and 2) b2b mobile services where end-user sees a flat price bundled together with other loyalty benefits (MVNO model).
INTERNAL DISCOVERIES
I am pretty excited about the possibilities our new product Mobile@Home offers in bringing 3G services to the home environment. I just wanted to make sure you are aware of the intranet site: http://www.dxd.ericsson.se/mah/
QUICK TAKES
‘Cohort marketing’ from Viralon is a viral marketing scheme that nicely demonstrates how network traffic could be increased as a side-effect of mobile commerce. This could be built into an MVNO offering as well. http://www.viralon.com/cohort.html
Antenna Software is an interesting new company in the wireless customer support area. They just closed a $17 million round. http://www.antennasoftware.com/
Curl technology is a new technology concept that offers a more powerful development environment for code and data integration in media-rich web applications. This means you can do cooler stuff with limited Internet connections. Founded by top MIT researchers. Investor AB is among investors. http://www.curl.com/html/
helloNetwork unveiled a streaming media delivery platform for wireless networks, allowing users to create, distribute and playback video and audio files on any Java-enabled device or handset. http://www.hellonetwork.com/
Compaq long has been rumored to be developing a secret add-on to the Compaq iPAQ under the Project Mercury moniker, but it now looks as if the project is a connectivity packet for the PDA. Sources say the system will run a version of embedded Linux being co-developed with engineers at MIT as part of a five-year project called Oxygen. The Mercury BackPAQ unit will connect to a H3600-series iPAQ, and it will contain two PCMCIA slots and a digital camera plus connectivity for IEEE 802.11b, Bluetooth, GSM and CDMA communication. The device also will feature an accelerometer that can detect when a user changes the orientation of the device (remember James Bond remote-controlling the BMW with an Ericsson handset?).
Microsoft may be making a move towards supplying users with wireless devices similar to the Research in Motion BlackBerry. Microsoft announced it is conducting a series of usability tests on professionals who own BlackBerry pagers. The Microsoft Usability Group will study the ways in which users interact with their tools; it then will incorporate the responses into current products or other devices under development.
U.K. Internet service provider Freeserve is developing a wireless micropayment technology with Vodafone. The two companies are delivering a trial service of their technology during the world heavyweight title fight this month in South Africa. Where’s Jalda?
- (go to http://webacademy.ericsson.se for links to stories)
- The 3G Portal - http://www.the3gportal.com/
SNS Newsletter by Mark Anderson - http://moneycentral.msn.com/articles/invest/trends/6112.asp - FierceWireless Weekly Newsletter - http://www.fiercewireless.com/
- Mobile Media Japan - http://www.mobilemediajapan.com/ (*NEW)
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NAM 3G Homepage - http://www.exu.ericsson.se/EUS/R/NAM3G/home/html/index.shtml
DIA Homepage (in memoriam) - http://dia.ericsson.se/
EIP Homepage - http://internetapplications.ericsson.se/ - MAI - http://www.mobileapplicationsinitiative.com
- Internal MVNO homepage - http://mvno.ericsson.se
- MI Competitor Intelligence in Outlook Public Folders: \Company Information\EIP\CB/M - Marketing (*NEW)
SELECTED THOUGHTFUL BROWSING
The $40-a-month price tag for most high-speed Internet connections could be a price many consumers are unwilling to pay, USA Today reported. Jupiter Research found that just 7% of all consumers were willing to pay more than $36 for broadband while 73% say they’d sign up if it were less than $25. As a result, while broadband use will grow, it won’t be a mass-market hit anytime soon. Jupiter expects about 28.8 million homes to have it in 2005, a big jump from today’s 5.1 million, but fewer than many expected.
So, when will Vatican do an MVNO? Please visit www.catholic.org and let your imagination flow. Perhaps TEI together with our Latin American MUs should look into this business opportunity.
Nineteen-year-old college freshman Brett Banfe made a vow just over six months ago not to talk for a year. Instead of speaking, Banfe relies on his Motorola Talkabout t900 two-way pager and email and Web access. Banfe made the self-imposed vow after his Kung Fu instructor told him that he did not listen very well. I wonder how many Finns have done this long before him…
Check out the new DoCoMo 3G site. http://foma.nttdocomo.co.jp/english/englishtop.html
(go to http://webacademy.ericsson.se for links to stories)
IOW EVENTS CALENDAR
http://webacademy.ericsson.se/resources/majorevents.htm
IOW LIBRARY - RECOMMENDED READING
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This is a newsletter describing the non-confidential part of my work during the past week and how I see market evolution affecting Ericsson (as interpreted my me in my role working for the Next Generation Mobility unit of EUS, based in New York City). The report will be published twice a month. For subscriptions go to http://webacademy.ericsson.se/elists.
Disclaimer: Opinions presented herein are those of the undersigned and do not represent the position or message of Ericsson. This newsletter is produced on writer’s own initiative, outside work hours and independent of any organizational supervision.
