- IN THIS ISSUE:
- * Game Industry Eyes the Mobile Opportunity
- * Nokia Content Strategy
I am gearing up to start a public newsletter and a website at my URL www.anttila.net. The official launch for this modest private hobby will be in August but I will start testing the service with limited mailing list within a few weeks. Watch this space!
Too bad this cost-cutting is affecting our ability to follow what is going on in the industry. I would really like to attend selected conferences, promote Ericsson, find ideas and partner candidates as well as report back business intelligence. Let’s try out a creative move here: I would like to attend Mobile Outlook in San Francisco in June. See: http://www.mobile2001.net/. It is a high-level startup event mapping the industry trends. I am offering to go cover that event and write a special issue of IOW as a report to all my 1,400 readers. I offer a sponsorship opportunity for anyone who wants to finance this production and include their internal message to my reader base. In other words, by paying USD 4,000 to my boss you can become a sponsor, convey your message and I will go and cover the event for us all. Remember: first come first served.
Best regards
Tapio Anttila
GAME INDUSTRY EYES THE MOBILE OPPORTUNITY
Where can you pose with a sexy police officer pointing a gun at your head? No, I did not pose but it was possible (uh!) at E3, the world’s largest trade show for games and electronic entertainment in general. This massive battleground of Sony (Playstation 2), Microsoft (XBox) and Nintendo (GameCube) showed some signs of paying attention to the emerging wireless market so I decided to make use of my frequent flyer miles and head out to Los Angeles. Here are some thoughts and experiences.
THQ, based in Los Angeles, is the world’s 5th largest game publisher, boasting revenues of $330 million and a stock price which has surged 400% since June 2000 (too bad I grew interested in games only lately…). The company owns exclusive rights to develop games on media properties such as WWF (World Wrestling Federation). WWF is known in marketing literature as the company which offered AOL the branding vehicle which made them popular among the American middle class (so we should take them seriously since our goals with mobile Internet are similar). I spoke with Doug Dyer, General Manager of THQ Mobile, a newly founded division of THQ. Doug joined THQ two months ago from Iceland where he had spent a year developing GPRS applications for a mobile operator. THQ has cut an exclusive deal with Siemens (exclusive in one way only, though, enabling THQ to work with other manufacturers as well!). Why Siemens? “Well, our Dusseldorf office happened to talk to them.” There seem to be lots of low-hanging fruit out there… “I understand that Siemens is the leader in prepaid and this offers us lots of opportunities to innovate for new business models.” THQ is actively discussing MVNO models (they have a huge game retail channel) so seeing WWF wrestling phones with ‘aaarrgh’ ring tones might be well conceivable in the future. We pause to play a round of wrestling on a Motorola Java phone. Oh, and they are developing co-branded games for BT Cellnet.
I listened to an excellent pervasive computing panel featuring speakers from leading game publishers Electronic Arts and Infograms. Sun had also sent there their Java game evangelist. Sun highlighted the importance of modular multi-platform development (in the name of Java). I also learnt that the golden opportunity for mobile game use is not the game playing itself but particularly ‘housekeeping’ activities such as ‘character inventory and maintenance’ which you might well do to kill time at airports. EA and Infograms evangelized for the importance of episodic game design whereby the game is built as ‘nuggets of fun’ which enables people to jump in independent of following strictly the storyline (compare a movie vs. a soap opera). Majestic is the market trial for this type of a game: the suspense thriller uses phones, faxes and other devices to keep you involved. There was also an interesting notion of the future of Arcade games: p2p, Bluetooth and hotspot networking will create a who new category of game arcades and a p2p gaming genre.
The wireless panel was well attended with some 250 people but the discussion was pretty dull. Motorola apparently has very little clue about application development beyond their excellent competence in Java phones. Nokia comes through as the only innovator, they claimed to have the ‘mission to kick-start the mobile content industry’. Don’t forget that according to an investment bank research report 28 % of Nokia’s profit will come from Club Nokia in 2005 (!). The discussion moved into the integration of consoles and mobile services but since Ericsson/Sony was not there there was little expertise… There was a question on gaming platform standardization but since Ericsson was not there nobody knew what to say…
Some insightful URLs: www.liveplanet.com www.jamdat.com
NOKIA CONTENT STRATEGY
Nokia was an exhibitor at E3 for a second year in a row. They mainly showed their line of game developers, primarily from Finland. Among them was Springtoys who had developed a snowboarding game for 9210 Communicator. This game carries the Nokia brand and it is sold by them - an example of Nokia taking on new roles.
Nokia 3330 phone is hooked up to the Nokia game portal for WAP game downloads and high score sending via WAP. According to Nokia, of all 3330 users worldwide, 70 % have played Space Impact at least once, over 50 % at least once a week and 16 % every day. These are figures Nokia stated publicly in a conference session. Pretty amazing.
The Linux-based Nokia Media Terminal is Nokia’s interactive TV set-top box with DSL and cable modem hook-ups as well as an 802.11 WLAN interface (no Bluetooth). I comes preloaded with games and it is featured in the Nokia games brochure. The brochure claims that Nokia offers a game session handover from a network game play on a TV onto a mobile phone. For the related developer program, see www.linuxtv.org. (Nokia also announced an open source development deal with the consultancy CollabNet in Silicon Valley.) Nokia Media Terminal will be shipping in Sweden in June ‘01, later elsewhere.
Now to the implications of all of this to the Nokia strategy. Let me quote here the report Evli Equity Research: Mobile Entertainment - Case Study Club Nokia (Dec 2000).
“… Nokia is in a very strong position to sell software (digital content) for its large handset user base after handset sales mature in the coming years. We believe that Nokia will have about 700 million handset users in 2005 who can access the ClubNokia portal by pressing one button on their handsets.
If these users will spend on average only EUR 1.3 (1 EUR = $ 0.86) per month for mobile entertainment ClubNokia will create a EUR 10 bn business in 2005. We also believe that ClubNokia will reach a 40-50 % operating profit margin because it will have a light cost base due to Nokia Group’s large global resources.
In total, the ClubNokia portal is estimated to generate 11 % of Nokia’s total net sales and 28 % of Nokia’s operating profit in 2005. Our cash flow model shows the value of the ClubNokia portal to be EUR 81 bn (EUR 17.3 per share).”
These are impressive numbers. The only thing I wonder is how Nokia will entice a developer community to develop for them? They are clearly being more greedy than DoCoMo or Qualcomm which only target a roughly 10 % revenue share. But shipping 128 million phones in 2000 gives you the powers of a 1,100 pound gorilla…
An article on Nokia content strategy: http://biz.yahoo.com/ts/010518/valley_010518.html
INTERNAL DISCOVERIES
Please see the new section ‘Selected Letters from Readers’ at the end of the newsletter.
Here is an update on the important Parlay Charging efforts driven by Eelco Nicodem at Ericsson EuroLab Netherlands:
“Parlay Charging is now positioned as an enabler in the service network and part of the SN1.0 project. (see Charging ASUS link on http://http://internetapplications.ericsson.se/Marketing/ServiceNetwork/links.asp ) PU-SCSA Parlay Parnership Program has taken our product presentation and will include it in external (parlay)
marketing material. More and more operators (internal MU’s) have shown a real interest in the solution (e.g., Telia Mobile, Optimus, Wind, FarEasTone, BTW, ..) M-commerce people (former EHPT) have asked us to do Parlay M-commerce standardisation for them. EIP is investigating whether Parlay Charging also fits in EIP’s multimedia portfolio. We are likely to participate in the E///-NOB joint venture that will prototype this portfolio.”
QUICK TAKES
Wirca, which provides mobile commerce transaction networks, said it has raised an undisclosed amount of funding from individual investors. The company anticipates launching its transaction system in the fourth quarter. http://www.wirca.com
Japan-based K Laboratory which is part of content aggregator Cybird, launched the “first” BREW-based instant messaging platform. This is significant in the sense that Cybird is very close to the origins of i-mode in terms of its management team. http://dailynews.yahoo.com/h/nf/20010510/tc/9644_1.html
I met in San Diego a startup called v-Enable which has broken off from Nokia and is developing a faster way to navigate on a mobile device. Their Hybrid Engine is scalable server-side software that handles content rendering and complex data and voice switching for today’s wireless phone, and might well be a killer enhancing rendering technology for 3G. http://www.v-enable.com
Another one is Kargo: I met with Harry Kargman yesterday at the Ericsson Technology Summit. They have a pretty mature technology for content delivery enhanced with their graphical user interface solution. He said he might sell the company and pocket $15 million to launch his next company. www.kargo.com
In the content delivery space there is also the French-flavored Silicon Valley startup Mobileway. They are setting up an application hosting and management capability worldwide and they cover both applications as well as service management and support functionalities. They have recently received additional funding and are busy ramping up the operation. Acquisition targets: Viafone, another French wireless ASP in Silicon Valley. www.mobileway.com
At E3, Cybiko launched their wireless multiplayer game device ($140) using 900 MHz RF frequences for 19.2 kbps realtime transmission rates. The device is started for the pre-teen market for local game playing within a 150-300 range from each other and mom. Seriously, these people have collected useful experience on p2p game playing. Perhaps Ericsson Sony Mobile Venture (ESMV) should buy these guys as they are certainly soon going out of business anyway? This could be a good start for building “My first Sony” from ESMV for the kid and preteen markets. Bluetooth and BLIP access points would be a killer enhancement for this! www.cybiko.com
Tahoe Networks is developing edge solution for converging IP and mobile networks. There is little information on the technology on their website but they just got funded $38 million and their management team comes from Cisco, Sonera and other highly respectable sources. www.tahoenetworks.com
Rumors tell that mobile entertainment startup Indiqu did not get their next round of financing was forced to sell the company. Does anyone have more info on this?
WordLogic Corporation launched a predictive and adaptive text input solution for wireless devices, entering into competition with AOL’s Tegic. The solution is based on touch screen keyboard and menus and it adapts to user’s vocabulary (particularly useful for youth jargons). http://www.wordlogic.net/
Auvo Technologies (who have been testing at MAI at Berkeley) launched their server-based browser solution which enables simultaneous voice and text messaging over GPRS networks. They will run a trial on the Airtel network in Spain starting in August. This is a competitor to iPulse. http://www.auvo.com/
Just spoke with Janne Kujanen from LPG Innovations in Finland. Their WAP Office (competitor to Moso?) and other service level enhancement products for operators are getting nice traction. Reference customers include Vodafone and their US distribution is handled by Oracle Mobile. One of the successful startups with 120 people and solid technology. http://www.lpginnovations.com/basic.cfm
- (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/
—–
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
SELECTED THOUGHTFUL BROWSING
Farmgate, the agricultural information portal, is working with Trivanti, the wireless service provider, to help farmers fight the outbreak of foot and mouth disease in the UK. The farming community, which Farmgate and Trivanti estimate to have a mobile penetration rate of around 90%, can register with the portal to receive SMS updates on the latest outbreaks of the disease, enabling them to take precautions and avoid the infected area.
(go to http://webacademy.ericsson.se for links to stories)
IOW EVENTS CALENDAR
http://webacademy.ericsson.se/resources/majorevents.htm
IOW LIBRARY - RECOMMENDED READING
SELECTED LETTERS FROM IOW READERS
Tapio,
Regarding Internet Opportunity Watch - #8, 2001, and your Quick take: “The VPN solution from Columbitech enables seamless secure roaming between wireless LANs, mobile networks and Bluetooth. Even data compression is being supported. http://www.columbitech.com/”,
Firstly, please be aware that Ericsson has exactly such a product named EVO, “Virtual Office from Ericsson”, presently being rolled out by BT Cellnet as a key offering in their GPRS launch to push GPRS usage in the corporate environment. Already they have some high profile companies as customers. A number of other operators, in Europe, Asia/Australia and Americas are in advanced trials.
Secondly, also be aware that the persons behind Columbitech all has been consultants for Ericsson, developing the EVO product during 5 years and then left to form Columbitech and develop their own competing product…..
As they are a head-on competitor to the EVO product, it might be suitable for you to at least mention EVO in a coming Opportunity Watch.
Some background info: EVO is ESOE certified and EVO Servers are deployed by GIS on a worldwide basis with hubs in Stockholm, Dallas, Kuala Lumpur, China and India. Supported clients are W98/W2000, Palm Pilot. PocketPC client is planned to be released by midsummer. If you want to become an EVO user, to walk the talk (and save some considerable money on your mobile phone bills), pls visit http://evo.ericsson.se. For further info regarding EVO, see www.ericsson.com/evo.
Best regards,
Göran Norlin
Director Product Provisioning
Mobile Office
GÖRAN,
THANK YOU FOR RECTIFYING THIS. I WAS NOT AT ALL AWARE OF THESE NEW DEVELOPMENTS IN THE ECO PRODUCT LINE. I WILL FIND SOME TIME TO TRY IT OUT AND ENCOURAGE OTHERS TO FOLLOW SUIT.
BEST REGARDS
TAPIO
***
Hi Tapio,
You prompted for ongoing Music projects with operators.
Sonera last week ordered their first batch of Bluetooth m-commerce equipment from LMF. They will be offering MP3 downloads in cooperation with three major record companies.
btw - who do we use for DRM ? Nokia has signed up with Intertrust, but Sonera would be interested to sign with Microsoft if we do so as well. Does Sony have any DRM systems which we can use ?
Best regards,
Peter Lindholm
THANKS, PETER
REGARDING DRM SOLUTIONS, YOU SHOULD CONTACT KENT BOGESTAM IN THE JALDA GROUP OR GARY SILBER AT INTERNET PARTNERING. I AM NOT AT LIBERTY TO REVEAL HERE WHAT WE WILL DO BUT OTHER MUSIC DRM COMPANIES OF INTEREST INCLUDE LOCKSTREAM AND LIQUID AUDIO. PLEASE TELL ME MORE ABOUT THE SONERA CASE!
BEST REGARDS
TAPIO
Hi Tapio,
Below some more bits for your info:
The basic idea is that you enter a shopping area, downloading the MP3 of your choice, and paying for it in a rightful manner. The availability and price level of memory sticks and cards are just becoming acceptable within the coming quarters.
The basic service was made for Sonera Plaza & ZED by Sonera Mspace & Sonera Technology Center, as demonstrated by Sonera at CeBit. They could, though, use multiple sales channels for the service. Already from the beginning, the service was designed to support Bluetooth for identification, payment and download, but due to lack of certified Bluetooth gear, the first concept version uses WLAN (IPAC + Lucent WLAN).
Now, as we provide them with the BSPK & PNP’s and the R520’s (the evolution model with WAP over Bluetooth), they start verifying the application for Bluetooth. The obvious reason being the expected multitude of Bluetooth-enabled terminals from 2002 on.
Our point-to-point equipment will be certified in June, allowing for limited field trials (The Helsinki railway station, established music shops such as Stockmann, and other typical youth hot spots), but the major roll-out of the service will take off as our point-to-multipoint equipment passes certification later this year. Since Sonera is cooperating with three major record companies, the DRM issue has got top priority.
Other related applications: Public Transport Ticketing (specially France & Japan) & Vending Machines. Tomorrow, we will meet with Sonera’s business unit to discuss the specific business model for the various use cases.
Other related Ericsson sales objects: Mobile e-pay, Safetrader/Jalda, etc, but Sonera Mobile Pay probably has got a good enough payment platform of their own. Please check out:
http://www.sonera.fi/english/solutions/mobilepay/
Any Business Development hints and advise are most appreciated. There is always a risk of us being too narrow-focused out here in the bush, thus missing valuable leveraging potential which you could bring to the table 
Regards,
Peter
* * *
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.
