a week in wireless

Operator, know thyself

UK-based carrier Vodafone, Big Red as it’s affectionately known, is in a right old pickle. Pieter Knook, the ex-Microsoft man hired to spearhead the operator’s designs on the mobile internet space, has done the Frank (Translation: effected a speedy departure) with barely concealed glee.

Just prior to his exit on Tuesday, Knook had posted his parting shot (since removed) on twitter. “Freedom beckons,” he tweeted as he went skipping off into the sunset leaving the smoking wreckage that is Vodafone 360 behind him.

Knook was hired from Microsoft in early 2008 to take on Vodafone’s internet services division, with the ultimate goal of pumping out the Web 2.0 platform to be known as Vodafone 360. Quite what magic Vodafone was expecting Knook to work remains a puzzle. After all, the chap had spent the last five years as senior vice president of Microsoft’s Mobile business, responsible for strategy, product development, marketing and sales. The Informer doesn’t want to do the man a disservice, but it’s not like Microsoft’s mobile initiative has rocked the boat too much in the past few years. (Watch out Nokia!)

So, for one reason or another, Vodafone 360 turned out to be a bit of a disaster. As the Informer’s chum, Bengt Nordstrom, CEO of independent mobile consultancy Northstream, said: “Vodafone 360 is almost a case study of what most major operators are doing wrong. Rather than cooperating with their peers around the world to create a common platform for social media and other services, individual operators instead continue to follow a sub-scale, proprietary approach.” Operator, know thy place.

There is already intense competition in the sector from internet players like Google, Facebook and Skype, as well as device companies like Apple, HTC and Nokia, limiting the potential of operator-branded offerings like Vodafone 360. When Big Red first launched 360, it was available only on a few high-end smartphones that were not attractive enough to compel users to switch. This meant a lack of 360 users on the platform, which further impacted its attractiveness and limited the opportunity to interact with other 360 users. To its credit, Vodafone realised its mistake and in July of this year abandoned the 360 branded handsets idea in favour of pushing 360 as a suite of services and applications.

But few web services are born great. While a few do achieve greatness, there are some, like 360, which are thrust upon users in a desperate bid to achieve that stature. Vodafone compounded the problem with 360 even further by rolling out a software update to Android-handset users, which sneakily included a whole batch of irremovable Vodafone apps, including the 360 suite as well as slapping the big red comma on every available bit of screen real estate. The company was promptly forced to backtrack on its move and give users an option to remove all of the Vodafone-branded offerings they hadn’t asked for in the first place.

Vodafone’s not alone in trying this model – Microsoft shoved IE down users’ throats, Nokia made Ovi a central feature of its devices and even the mighty Apple, which can do no wrong in its users’ eyes, came a cropper with the launch of Ping – a social network that prides itself on exclusivity to the point of crippling loneliness.

The message is clear: you can’t tell people what they want, but you can nudge them gently in a certain direction. “The simple truth is that mobile operators have never been particularly strong when it comes to developing new devices, software and services. Luckily for them, however, their success is not dependent on being strong in these areas. What matters for them are issues like network quality and coverage, customer care and channel strategy,” Nordstrom said.

Being given a not-so-gentle nudge in a certain direction this week were 1,200 employees at the newly formed management company Everything Everywhere, which is cutting back on jobs to help the firm operate at “maximum efficiency.” The bulk of the cuts will be felt at head office, with back office and middle management being first for the chop.

The merged mobile operation of UK operators T-Mobile and Orange reported its first results this week, notching up 27.9 million subscriptions at end June, up 3.4 per cent year-on-year. EBITDA came in at 309m, down from £379m in 2Q09 as service revenues decreased over the same period, mainly due to termination rates. But Everything Everywhere confirmed that it will meet its synergy net present value target of at least £3.5bn.

There’s fresh blood coming in at device manufacturer HP however, which is another company (like Vodafone and Nokia) putting its faith in a software executive. Leo Apotheker, has been named as the firms new chief executive officer, bringing two decades of software expertise, most of which was earned at SAP.

Meanwhile, Nokia’s new software guy, Stephen Elop, another ex-Microsoftee, has caught a break since last week as the Finnish handset giant assured the world that its flagship Symbian^3 device, the N8, has started shipping. Customers who have placed a pre-order for the device will be the first to receive it but market availability “will vary by country and by operator, with broad availability in the coming weeks”.

Another mention for Microsoft now, which is believed to be teeing up a handful of Windows Phone 7-based mobile devices for exclusive launch with AT&T in the US. What we’ve seen of the new Microsoft mobile platform suggests that it has some good ideas around user interface, but whether it can turn around Microsoft’s fortunes in the sector remains to be seen.

Not wanting to be left out of the shiny new device action was Canadian vendor RIM, which has jumped on the tablet bandwagon with the BlackBerry PlayBook. Initially targeted at the large and small enterprise space (much like the original BlackBerry) the PlayBook panders to the increasingly popular tablet/slate form factor, at less than half an inch thick and weighing less than a pound, with a seven inch high resolution display running at 1024 x 600.

The device also marks the introduction of the BlackBerry Tablet OS, which is built on the QNX Neutrino microkernel architecture, described by RIM as “one of the most reliable, secure and robust operating system architectures in the world”. Neutrino has a good reputation as an embedded devices OS and QNX was acquired by RIM in April of this year. An SDK of the tablet OS is planned for release “in the coming weeks,” while the PlayBook itself is expected to be available in the US in early 2011 with rollouts in other international markets beginning in the second quarter of next year.

Moving along to the Australian market now, where local incumbent Telstra has upped its game in the machine to machine (M2M) space, introducing a web-based self-service platform, allowing organisations to manage M2M products themselves. To get the Telstra Wireless M2M Control Centre initiative started, the carrier has entered into an exclusive, multi-year agreement with M2M technology provider Jasper Wireless, with a platform that does not only cater to business devices such as electronic metering, asset tracking and remote operations but is also expected to accelerate market entry for a new generation of connected consumer devices such as e-readers, picture frames and portable navigation devices.

Over in the Middle East now, emerging markets giant Zain is looking to partner, with UAE operator Etisalat negotiating for a 46 per cent stake in the Kuwaiti operator, in a deal that could be worth $10.5bn. Zain, like many of its peers, had objectives of building itself into a major player in the Middle East and beyond. But while Zain was the most ambitious of its peers it was also the first to blink, with its grand expansion plans unravelling over the past year or so, leading to the sale of the Zain Africa operations to Bharti Airtel.

Informa analyst Matthew Reed, thinks the proposal from Etisalat makes a lot of sense in terms of advancing Etisalat’s own expansion plans, because several of the Zain units are very successful and attractive assets. In addition, Zain’s operations are now almost entirely in the Middle East, which suits Etisalat as it is also the latter’s home region, yet Zain’s footprint is largely complementary to that of Etisalat, with only one important overlap – Saudi Arabia.

If Etisalat’s offer is successful, the UAE operator will be able to add Zain’s operations in the high-growth markets of Iraq and Sudan – both of which are countries that Etisalat has been targeting for some time. Etisalat does already have a presence in Sudan through CDMA operator Canar, but it has been unsuccessful in its quest for a GSM licence in the country. In Iraq, Etisalat has in the past had unsuccessful takeover talks with third placed operator Korek Telecom.

That’s all for this week,

Take care

The Informer

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