- IN THIS ISSUE:
- * The Year 2003 on the US Mobile Market
- * Finland: Do It with a Mobile Phone or Else…
- * Picks from the Mobile Hollywood Scene
- * Picks from the World Mobile Scene
At the beginning of a year people tend to look at their crystal ball and do some wishful thinking. Having gone through the dotcom bubble and even some earlier hype waves I know that the only value of reading forecasts is that you can use them to convince others. The minute you start believing in them yourself you are on a weak ice… I tend to read a lot of forecasts for the simple reason that I need to convince others – reading ten kilograms of Ovum reports helps also create an analysis framework and a reference language upon which further learning can be based.
Here are again a few provocations for your consideration. Prosperous 2003 to everyone! If we work hard I am sure one day we will be flying on www.ecstasky.com… ;-0
Best regards,
- Tapio Anttila
- tapio@anttila.net
THE YEAR 2003 ON THE US MOBILE MARKET
Let’s do a little operator tour for our international as well as domestic readers to demonstrate the confusing jungle of terms, prices, bundles and brands the American customer has to deal with.
Verizon Wireless. The biggest, the best coverage and the most expensive. I am using the Motorola 720 phone with the mobile office connectivity kit (not a great phone but hey, I have yet to see a great phone from Motorola…). The 1XRTT network enables me to use my PC at a blazing 50-60 kbps speed but only at night time, during peak hours I would be consuming my voice minutes… and we would be up at $100+ per month plans. On the phone itself, 1XRTT data service has not been activated yet, hence downloads are rather slow. BREW services are working beautifully and the best part is the ring tone service provided by Faith, it earns the 2002 MEOW Mobile Entertainment Award – it works like a dream, the customer support is satisfactory and most importantly the tunes sound cool, something I want to pay for. The WAP services are already infested by the Microsoft Passport and .NET (Hey, you need a hotmail account, MSN Messenger, …! Yack! It’s the Microsoft Walled Garden.). December 2003: Still King of the Hill but Vodafone will have dumped its 49% – too bad Microsoft has no need to pick it up…
Sprint PCS. Yesterday’s success story, today the black sheep of the family. Executing well but thinks it can ‘do the Nextel’ and become proprietary on all counts. Has the best-performing data network in the country – I measured average stationary download speeds of 115 kbps (at night). Data plans offer unlimited phone multimedia services at $10 per month. Cannot separate PC use for technical reasons and has therefore been compelled to stop selling PC data cables (still available at www.futuredial.com) to avoid people using a 100 kbps unlimited Internet service for $10 per month… Has threatened to take down users who abuse the service… a somewhat cowboyish policy but hey, they’re from Kansas City! Does not support SMS interoperability (will come back to haunt them very soon), picture messaging is only possible to other Sprint PCS phones – ever. Some early wins and great innovations: photo community by Lightsurf is performing like a dream, content rights vault concept for digital downloads is a great benefit for the end-user. Has some great phones – my Sanyo 5300 camera phone was a big success in the Las Vegas nightlife. December 2003: Growth will stagnate again, ailing from proprietary features which put off branding and content partners. Guys, please give your consumer strategy into the hands of your MVNO partner Virgin Mobile…
Nextel. The cherry-picker of the industry – picks all the most profitable enterprise customers and slows down the profitable growth of their competition. An extremely experienced and competent player on the enterprise market. Has the proprietary direct connect voice functionality which is certainly of great value to construction workers and taxi drivers but which is substantially over-rated in its importance on the consumer market. The consumer strategy of Nextel was somewhat successful before the new generation of phones were introduced by the competition: there is no way their sole supplier Motorola will be allowed to invest enough in a small proprietary product line to keep their devices fresh and cool in the increasing competition coming from Asia as well as from Nokia’s new aggressive push on the US market. December 2003: Verizon, please pick these guys up before they become too expensive!
AT&T Wireless Services. The ‘sleeping beauty’ of the industry – mMode has grown into a massive catalog of entertainment services but its usability is questionable at the moment due to the poor coverage of the network. New phones are in the pipeline but until very recently the coolest device was – a Motorola 720. AT&T is closest to what is known as ‘the bitpipe strategy’ and it will also be the US operator most favorable towards including adult services in its portfolio. AT&T gets a lot of credit for trying to lay out the healthy GSM business ecosystem with common platforms and interoperability (SMS) as well as bravely indicating that the old infrastructure will be taken down (CDPD). Despite fancy mMode brochures retail experience at an AT&T store is like dating a senior person with too much make-up. I have to admit I have not signed up yet and I will need something beyond Motorola 720 to do so (perhaps Nokia 3650). December 2003: We will see a whole new AT&T Wireless with cool phones and much better network coverage. The Japanese watchful eye is overseeing their development towards W-CDMA and putting them back on a fast-track if need be.
T-Mobile USA: Currently my favorite operator in the US. The coverage may be poor in California but I have not been suffering from it. The device portfolio is fresh and new, the Danger Sidekick is a marvel at $200 (although 20,000 units sold is not that impressive). T-Mobile will be the first out of the gate with MMS services with a good device portfolio already in stores. The retail experience and the website are both fresh and serving their purpose (producing value for end-users). What a difference to AT&T and Cingular! Customer service get so far some minus points for repeated ‘customer is wrong and has to obey’ -attitude. December 2003: Cingular was supposed to acquire them but could it be instead Vodafone who acquires both?
Cingular: This is the child with learning disabilities. Devastated by its years of branding-focused leadership and focusing on a separate (Mobitex) data network, the company is trying to slowly get onboard with basic services, such as a functioning GPRS network. Despite its early entry into selling ring tones I cannot see much more here than an increasingly troubled follower. Moreover, persistent merger rumors seem to paralyze Cingular more than they do T-Mobile. There is a place for a ‘bottom-feeder’ on the market as well but Cingular does not seem to know how to play that role well. December 2003: Hopefully some industry restructuring takes place and Cingular gets to play the adjusting and learning party in it.
Virgin Mobile: Although not in the top tier of US mobile operators, this Sprint PCS MVNO seems to be doing fine. It has acquired 350,000 subscribers and analysts agree it should reach one million by the end of the year. One of the reasons is Virgin’s simple and easy to understand service offering and the fact that there is a great demand for prepaid services on the market. Virgin also won an exclusive agreement to sell the mobile services of MTV Networks – something MTV must be regretting by now…
FINLAND: DO IT WITH A MOBILE PHONE OR ELSE…
What does the consumer mobile market look like in the home country of Nokia? Here are a few loose notes. The market over there is impressive but somehow the Nordic Countries lost most of their leadership position they once had…
1) MMS is starting to work in a meaningful way – all three major operators are interoperating by now. Handset interoperability is a minor issue in Finland – according to my sources, Nokia has an over 90 percent market share.
2) There are no MMS phones in significant quantities – yet. The Ericsson T68 does not count as an MMS phone, the screen resolution does not cut it. We need to wait two quarters more to have the Nokia 3650 and the low-end Nokias to make an impact (which they certainly will).
3) I really like the operator DNA’s flat fee $17 per month GPRS service – it is the only way to go with current billing platforms where bundling of content and transport is not possible. It makes me love the company and I use their other services as well. Is there a lesson here?
4) Nokia is the only survivor of the dotcom era in Finland. The Telia-Sonera merger excites Finns as much as a spoonful of cod liver oil – it is viewed as three steps back into the history. Leading application companies stumbled in their inability to expand internationally. The latest buffet for the vultures include Codetoys and Akumiitti. A new undergrowth of startups is emerging from the ashes. However, only brave fools leave Nokia in an economy like this. The Finnish VC money would be wise to go to Sweden where the streets are full of homeless wunderkinds from Ericsson.
5) The Nokia-funded content aggregator Starcut is getting traction internationally. On top of providing Nokia with movie and TV content from the US, the company claims to have secured ‘all global tier one operators except T-Mobile’ as customers. Well, they come from the part of Finland where modesty is not a virtue… Getting Vodafone, mmo2 and Orange lined up a is a big coup for a Finnish company, that’s for sure.
6) Finnish media companies have created great innovations on premium SMS and they are on the way to pioneer finding real value in MMS. However, it is far fetched to expect this expertise to be easy to export from a country where people speak one of world’s most unrecognizable languages and where 90 percent of people adore the national pop-icon Leningrad Cowboys and where you can get physically compromised by admitting that you don’t actually enjoy the sauna that much…
7) Can Nokia be considered a software company? Well, the Club Nokia photo community did not work at the launch of the 7650 camera phone in June and uploading photos did not work in December, either. And so great is Nokia’s fear and hatred towards ‘Micro-Soviet’ that the Nokia 7650 desktop software does not support Windows XP… Don’t get me wrong: Nokia Series 60 will rock the party starting this year, it will be a huge success beyond all expectations.
To sum up the comparison, Jupiter predicts that Western Europe will see wireless content revenues of $2.5 billion in 2003 – US is expected to reach $0.1 billion. On the wired side the numbers are reversed: $0.5 billion for Western Europe, $1.8 billion for the US. Cingular, AT&T and T-Mobile: Are you sure there is nothing to learn from the European GSM industry?
PICKS FROM THE MOBILE ‘HOLLYWOOD SCENE’
Music Phone is a great little company based in San Francisco and focusing on music dedication services. It has license the catalogue of Universal Music and BMI and the service has been launched on AT&T’s mMode. It is still in elementary stages and slightly awkward to use (anyone likes WAP?) in my view but it is the first example of ‘music messaging’ as a new category of mobile music services after ring tones. A good sign is that AT&T is featuring it as a ‘top’ mMode application on their portal. http://www.musicphone.com/index.jsp
20th Century Fox is licensing its mobile media properties and they are looking for publishers for worldwide distribution. The focus is on European and Asian markets as they are currently more mature than the US market. The portfolio expands over the entire product line of the company and Fox believes that TV entertainment is a better place to start than movies due to its longer span over time to build a user community and sustainable revenues. The company’s flagship property is The Simpsons which will – without going into details – soon appear on your mobile device. Please contact me if you have good ideas to offer to Fox or any other studio.
Urban hip-hop is making fairly quick moves into wireless. It was all started by Russell Simmons who is creating a wireless strategy for his Island Def Jam label. Then his Phat Farm clothing brand got a signature Motorola i90c phone with Phat Farm retail distribution. Rumors tell that P.Diddy will soon launch his signature phone with Boost Mobile, a US (Nextel) extreme sports lifestyle mobile brand. Vibe Magazine has outsourced their entire online operations to Yahoo! Launch which is developing a mobile offering with Moviso. According to industry sources, hip-hop ring tones are on the top of the charts and the mobility and communication-intensiveness of the urban community offers a high-potential market for mobile services, according to a Nokia executive I recently spoke with. Moreover, the genre has clear potential for exporting local hip-hop ‘scenes’ into international markets. Please let me know about the mobile hip-hop initiatives in your local market!
The adult industry is slowly sneaking into a foreplay with the mobile industry. My recent visit to the AVN show in Las Vegas (coinciding with the Consumer Electronics Show) proved that the major studios and publishers, with the exception of Private Media and Playboy, are still fairly passive. It is much more plausible to see startup ASPs and portals to develop offerings for shy mobile operators. In the US the GSM operators will take on adult services faster due to both their need to strengthen their competitive position aggressively as well as the fact that some European markets (Netherlands, Germany) are well-developed in terms of adult content. Pocketjoy.com launched in September 02 and is currently cash-flow positive with over one million unique visitors per month. An excellent result, given the rather unimpressive WAP service. Their export activity is starting into Latin America and Asia. The US operators are publicly fiercely opposing mobile adult services but a look under the hood reveals a totally different world. The American double-morale makes things complicated, though: no matter what the company policy is, many individuals refuse to work with adult services for ethical or moral reasons and doing so is prone to destroy an individual’s career.
PICKS FROM THE WORLD MOBILE SCENE
Takaharu Mita, a Japanese journalist, has been an avid user of FOMA mobile phones for videoconferencing for some time now. He has recently launched his own site for other people to call him and talk to him. I find his views highly insightful. http://vt.sakura.ne.jp/~mita/foma/foma-e/fomadiary.htm
You should all get to know Wireless Watch Japan. It is a great video newscast on the web and the latest issue included a very interesting interview of the CEO of KPN Mobile from Holland who presented his experiences nine months after the launch of i-mode in the Netherlands. It is all about getting the right handsets and getting the business model right. http://www.wirelesswatchjapan.com/vp/48.shtml
Tipic’s new Jabber-based open source J2ME IM client marks the beginning of cross-standard IM in mass-market mobile phones. The client does AIM, Yahoo and MSN messaging alike. Try it out in your Nokia Series 60 phone! It also works on SonyEricsson P800 and Blackberry. http://www.tipic.com/node.php?id=1394
NewBay Software from Ireland has launched FoneBlog, a mobile blogging solutions for mobile operators. It enables end-users to create their own participative mobile stories and communities. The future of mobile storytelling is here! http://www.newbay.com/
Helsinki City Transport has just sold its one millionth SMS-ticket for public transportation. That’s a significant number if you consider that the population of the city is only 800,000. What strikes me here is the simplicity of the service: you just send an SMS-message ‘A641′ to the number 16353 and you receive a confirmation usually in less than 30 seconds. This technology has implications for other areas of small-value ticketing and couponing. http://www.plusdial.net/eng/business.html
INDUSTRY ANALYSIS
According to Seamus McAteer of ZelosGroup, the monthly volume of SMS traffic was 300 million in June 2002, not 1 billion as stated by CTIA (he actually presented to me some argumentation to support this). “CTIA must have counted in voice mail alerts in which case the number might be even bigger”, says Seamus. He believes 1 billion SMS messages per month will be reached by the end of first half of 2003. Unfortunately I think there are a lot of ‘numbers’ out there one cannot trust. www.zelosgroup.com
Hey, here’s a great official site to check out monthly mobile statistics from Japan! http://www.tca.or.jp/eng/daisu/.
Sticking to Japan and Korea for a moment, the Danish mobile consultant-entertainer John Strand has now for a while been making a case whereby Korea is way ahead of Japan in making a commercial success out of mobile data services for consumers. Some data I found seems to support this: Out of online web users, 41.1% of the Japanese and 73.7% of the Koreans pay for online content. To pay for this content, 0% of the Japanese and 33.4% of the Koreans use mobile phones…! 47.6% of the Korean users pay for mobile content, whereas only 23.4% of the Japanese do. http://www.japancorp.net/
Wow! Research firm Forrester predicts that 56 percent of European firms will be using text messages as a marketing tool by the end of 2003.
HOLLYWOOD MOBILE ENTERTAINMENT CAREERS
Rio Caraeff at Sony Pictures is still looking for more resources, both in LA and in the UK. This time around the focus is on consumer marketing for mobile games in LA as well as product management and business development roles in London.
I have opened up a a whole job market on my website – see www.anttila.net!
QUOTE OF THE MONTH
“Dropping the Jacobs into the wireless business was like dropping polecats into a kindergarten.“ – Andrew Orlowski, The Register – http://www.theregister.co.uk/content/59/29115.html
This is not the author’s opinion in any way, just one of the funniest lines I have seen from this brilliant writer.
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Disclaimer: Opinions presented herein are those of the undersigned and do not represent the position or message of any company I might be affiliated with.
