The God delusion

By The Informer

So the new iPhone is here—the iPhone 4. It’s a thing of beauty, no doubt about it—and it has behind it a short but very impressive line of forbears. The iPhone lineage has changed the way that people perceive, define and use mobile phones. It has had more positive impact than any other device on consumer enthusiasm for mobile data. And it has been the interface for one of the most important and influential developments the industry has seen in recent times; the App Store.

You could argue that there is no overstating the importance of the iPhone, and in years to come the device’s achievements will no doubt grow in stature even further, fed by the fond sunlight of reminiscence.

Surely, though, Apple has bitten off more than it can chew with the promise that it has made on behalf of the iPhone 4. Like the adrenalin now fuelling predictions that England can progress beyond the quarter finals of the World Cup, clearly the excitement’s gone to somebody’s head over there in Cupertino. Because with the iPhone 4, Apple is claiming that it can succeed where all others have failed, and entice end users into regularly making video calls.

It beggars belief, doesn’t it? If they’d said they were shipping the phone with an embedded app that proved once and for all the existence of a divine being, it would be more plausible. If they said the phone sported a new function that could cure terminal diseases when waved over the patient, then the Informer would be more likely to take their word for it. Even—and this is really pushing it—even if they said they could make the in-built weather app correctly predict the day’s meteorological conditions, the Informer would be prepared to give them the benefit of the doubt.

But video calling? Ha! Who are they trying to kid?

Video calling is the folly erected by the industry to house its prize white elephant. It came to symbolise with painful accuracy the colossal bungle that was the introduction of 3G. It was at the centre of the promise on which all of those auction billions were staked and the breathtaking anticlimax of its arrival seemed to represent a failure of the industry at large as thousands lost their jobs.

And now Apple has made video calling one of the central planks of its marketing for the iPhone 4. This being Apple it’s not called ‘video calling’, of course, it’s called ‘FaceTime’. And the firm has been cautious enough to work it so that the application only runs over the handset’s wifi connection. Clearly it still doesn’t trust the cellular networks—which have now truly delivered on the promises of a decade ago—to deliver this holy grail of services.

For all Apple’s innovative smarts, though, the scenario-led marketing was the same old guff. Travelling executive Dad in his hotel room gets to see wife and child at home and everyone feels warm and fuzzy. This is what we were being fed ten years back and, while the technology is now proven, the demand is not. Video calling of a decent standard has been available for some time over mobile networks, truth be told, but handset vendors and carriers stopped promoting it in the face of barely lukewarm enthusiasm from the consumer.

The Informer tried it once, some years ago, and succeeding in getting a video call up and running to a colleague who was visiting Japan, and in a bar. Momentarily it felt like living the dream—Japan, after all, was the kind of market where everybody video called one another. It was to prove the briefest of thrills, however. A waiter  appeared in shot and said something to the Informer’s colleague. “I’ve got to go,” slurred the colleague, “You’re not allowed to use mobile phones in here.”

If Apple succeeds it will be nothing to do with technology and everything to do with Apple making the service feel cool to its increasingly widespread fanbase.

Just as interesting as the newest phone are Apple’s plans for the device it replaces; the 3GS. The firm is discontinuing the 16GB and 32GB versions of this handset, and will produce only an 8GB version that it will  knock out for $99. The iPhone 3G will be axed altogether. With this new budget version of the 3GS, Apple is taking its first steps out of the very high end of the handset market, and looking to make some wins in the mid-tier where, until now, it has been content to let others mop up the business. It’s a move that should worry other vendors.

The carriers, meanwhile, are using the arrival of the iPhone next week to usher in new pricing strategies. Last week it was AT&T, this week it was O2 UK. And like its US counterpart, Telefonica’s British outpost was keen to point out that the vast majority of smartphone users will be unaffected and only the heavy consumers of data will be hit hardest.

Based on current usage patterns, 97 per cent of O2 customers would not need to buy additional data allowances, as the lowest bundle – at 500MB – provides at least 2.5 times the average O2 customer’s current use, said CEO Ronan Dunne. £35/month, for example, gets a user 600 minutes, 500MB of data and unlimited text messages. Up that to £60/month and you get 1GB of data and unlimited everything else.

O2 will not be getting the iPhone 4 on an exclusive basis as it has with previous iterations, and so it is no doubt wary of losing customers whose existing iPhone contracts are almost up to rival networks. It should be worried, too, because its network performance in London, where the concentration of devotees is at its highest, has been woeful of late. So the firm announced this week that it had tapped Nokia Siemens Networks to give it the network equivalent of one of those body building shakes in the UK capital.

In the distant future, word of the wondrous iPhone’s launch may well be passed down to new generations as a bedtime story. It would probably go something like this:

Once upon a time there was an urban princess who, like, so desperately wanted to get her hands and a shiny new iPhone 4, carved as it was out of purest Supremium, which could only be mined in the cloud Kingdom of Cupertino.

So the princess went down to her local operator’s retail outlet and asked for an upgrade. At the princess’s request the operator smiled wickedly and agreed to let the princess have an early upgrade to the iPhone 4 but only in exchange for £20 per month on top of her existing tariff for the remainder of her existing contract as well as the price of the new device itself. This might be around £199 for the 16GB model and £299 for the 32GB model, as the evil king of Cupertino, who controlled the operator by a magic link, hadn’t decided yet.

What’s more the princess would also have to sign a contract tying her into another 18 or 24 months servitude in the operator’s kitchens.

At this news the princess broke down in tears. “Who will help me now?” she cried. Just then a funny little man jumped in through the window and said to the princess:

“Why are you crying?”

“Because I want an iPhone 4G and it costs so much,” she replied.

“Hmm. How about I get you an iPhone 4G and you do something for me,” said the funny little man.

“Ok,” said the princess. “I’ll give you anything.”

“I want your firstborn baby,” said the man.

“Sure,” she replied. “That sounds like a much better deal.”

And they all lived happily ever after, except for the operator and his cohorts which were vanquished by the mighty European Court of Justice, which told them that roaming caps are to stay in place.

Four of Europe’s largest mobile operators – Vodafone, Telefónica O2, T-Mobile and Orange – have been whining to European authorities about the European Commission’s regulation forcing them to reduce roaming charges by up to 70 per cent. In 2009, the four carriers challenged the validity of the EC’s Roaming Regulation of 2007 before the High Court of England and Wales. This court then asked the Court of Justice whether the EC’s regulation was in fact legal.

As it turns out, not only is the regulation legal, “it is proportionate essentially to the objective of protecting consumers against high charges,” which in this case saw retail prices more than five times higher than the actual cost of providing the wholesale service. Take that, operators!

The African cross-border One Network from Zain was once seen as a blueprint for effective international roaming strategies but came instead to be viewed as one of the reasons why the firm’s African business was unsustainable. Having tied up the sale of that business to Bharti Airtel, Zain this week announced a reshuffle of its executive management team to take into account its renewed focus on the Middle East, where it has more than 31 million customers.

Whoever was in charge of overseeing the Kuwaiti network won’t have so much to do now that the firm has outsourced the operation and management of its 3G network to Motorola. Under the three year agreement, Motorola, in association with Zain Kuwait’s internal team, will handle the design, planning, support and optimisation of that network, while also looking to improve the firm’s 2G system.

On a similar theme Egyptian carrier Orascom, run by billionaire businessman Naguib Sawiris, said this week that it has called off discussions with regional powerhouse MTN. The pair had been in discussions for some months over the potential sale of “certain of Orascom’s operations” — thought to be the firm’s African portfolio — to MTN. But they have failed to reach an agreement, Orascom said on Thursday. This is after Orascom’s parent company, Weather Investments, had also failed in talks with MTN over the latter’s acquisition of the Egyptian carrier.

And now for something completely different: Russian carrier Vimpelcom has hooked up with M2M network specialist Jasper Wireless to launch what the firms claim is the first machine to machine platform in the Russian market. Vimpelcom said it will use the capability to connect and manage consumer electronics devices as well as to build enterprise solutions in a bid to seed the market for a new wave of connected devices, including e-readers, digital photo frames, cameras, PNDs, tablets and gaming devices. It also sees possibilities vertical sectors including transport, banking and e-health.

Vimpelcom CEO Boris Nemsic had nothing to say on the matter, on account of the fact that he has left the building. Nemsic, who joined Vimpelcom from Telekom Austria in April last year, resigned with immediate effect, Vimpelcom reported this week, in phrasing that made it sound very much as if Nemsic hadn’t anticipated his own resignation at all. Nemsic was joined in departure (and probably blinking surprise) by general director Alexander Torbakhov, as the firm reorganised itself into four new business units; Russia, Ukraine, CIS and International.

Both Nemsic and Torbakhov were on three year contracts which were only just over a year old when they were given the boot by the man they replaced, Alexander Isozimov, who recently returned to head the firm.

With nearly two years left on those contracts, the payoff should keep things ticking over while they decide what to do next.

Take care

The Informer