Elop’s Fables

By The Informer

The Informer apologises for starting the third AWIW in a row with tales of Nokia’s woes but by all accounts it’s been a pretty quiet week in the world of telecoms, no doubt drawing further attention to the embattled Finnish vendor.

Newly installed Nokia chief Stephen Elop had only been in the captain’s chair a few hours – a chair no doubt still warm from the posterior of his predecessor, OPK – when he had to deal with news of expected delays to the forthcoming N8 handset. Based on the Symbian ^3 platform, the N8 is set to be Nokia’s flagship model, spearheading the company’s renewed assault on the smartphone sector. But in response to news of delivery delays, which in turn sparked speculation about device’s state of readiness, Nokia clarified that it still expects to start shipments by the end of the third quarter. The company had initially targeted its online pre-order customers to receive their N8s by the end of September but is now advising that they should expect their devices in October. When in October is not clear.

So it’s a baptism of fire for Elop and looks set to be an uncomfortable six months at the top with exiting head of mobile solutions, Anssi Vanjoki, pulling no punches on his reasons for leaving. The straight talking Finn has been widely quoted in the press as saying the motivation for his departure was “Not being made CEO. It’s as simple as that.” Maybe he’ll be on gardening leave soon.

There’s plenty of commentary around at the moment and the Informer recommends Tomi Ahonen’s lengthy but detailed analysis, or that of Peter-Paul Koch, a noted mobile platform strategist and founder of QuirksMode.org who gets right to the point.

As the first non-Finn to run Nokia, Elop is in a great position to change Nokia’s perception as well as its strategy and it will be interesting to see what his legacy at Nokia will be. As for the headline of today’s instalment, will Elop’s Fable be a tale of diligence and hard work – the Ant and the Grasshopper? Or “slow and steady wins the race” – the Tortoise and the Hare?

As a number of pundits have noted, while Nokia is king of the castle in the lower tiers, it’s becoming increasingly tough at the top end and the firm’s position in the smartphone space is looking shaky. Although Symbian currently leads the market, Android will become the most popular brand in the mobile OS market and is expected to attract more than half a billion users by 2015, according to forecasts from Informa Telecoms & Media.

Malik Kamal-Saadi, principal analyst at Informa, notes that Symbian was developed more than 20 years ago and as the market evolves, the architecture of this platform has increased in complexity through a number of upgrade cycles and additions of new layers. Consequently, it is now becoming very hard for Symbian to keep up with innovation and bring champion smartphones to the market in a timely fashion.

Meanwhile, the number of Android users is expected to grow very rapidly thanks to the strong support by almost all major players in the mobile industry value chain – with the exception of Nokia. According to Informa, the number of Android smartphone users is expected to grow 78 per cent CAGR between 2009 and 2015 to reach 540 million, representing 38 per cent market share of total smartphone subscribers. The number of Android users is expected to surpass that of both RIM’s BlackBerry and Apple’s iPhone by 2011, Saadi said. Meanwhile, the market share of Symbian smartphone users will drop significantly from 53 per cent in 2009 to 32 per cent in 2015. The platform will maintain its leading position until 2014 when it will be ousted by Android, which will become the new platform leader thereafter. In terms of sales, smartphones powered by Android are expected to surpass these of Symbian as early as 2012 with more than 142 million Android phones expected to sell that year versus 137 million for Symbian.

To this end the pressure will grow on Nokia and could push the company to consider the adoption of an alternative platform. It’s a contentious issue and there are valid opinions on both sides, but if Nokia joins the Android party, the support of this ecosystem by all key players could help the mobile smartphone industry potentially commoditise its terminal software business much like what Microsoft did in the PC world.

But that’s probably not going to happen and nor is this; on the subject of commoditisation, this week saw the formation of another committee dedicated to seeking out the Holy Grail of a single universal platform for the development of mobile internet applications.

Known as Webinos (Secure WebOS Application Environment) and spearheaded by the Fraunhofer Institute FOKUS group, the organisation intends to deliver a platform for web applications across mobile, PC, home media (TV) and in-car devices and all within three years. The project will start this month and is co-funded by the European Union, which has provided a grant of €10m.

But talk about fragmentation. The body, nay, committee, is founded by 22 players from across the mobile, consumer electronics and automotive industries as well as well as the W3C, the international internet standards body. Those involved intend to use open source technologies to build a standard platform allowing software designers from across the industry to create web applications and services that can be used and shared over a broad spectrum of converged and connected devices – regardless of their respective hardware specifications and operating systems. Good luck with that. Two quotes spring to mind that Webinos would do well to consider: “The wonderful thing about standards is that there’s so many of them to choose from,” and “A committee is an animal with four back legs”.

Over in the US, Verizon Wireless is taking another approach to application development, opening up its network to new messaging and location-based services by making a total of 20 different APIs available to developers. Verizon made the announcement at its Developer Community (VDC) Conference, taking place this week in Las Vegas. Messaging APIs will allow developers to create applications and services that send, receive and request receipt of text and multimedia messages, including features such as “link-to-buy” a product; while location APIs will allow developers to request and incorporate location information in applications and services on most smartphones at a granular level, or via ‘coarse location’, which has an average range of one to two miles and works with all Verizon Wireless phones.

Smaller rival Metro PCS stole the limelight however, by commercially launching LTE in Las Vegas, marking the launch of the first LTE network in the US and an industry milestone in the shape of the world’s first LTE handset. The Samsung Craft will be available for $299, with Metro PCS offering two different LTE plans. A $55 plan including unlimited voice, texts and data access and a $60 plan with access to premium video-on-demand content and MetroStudio multimedia content.

“Metro PCS has put its name in the mobile history books by becoming the first mobile operator in the world to launch an LTE handset. But it’s a risky move because handsets using new mobile technologies take years to develop and this one is very early,” said Mike Roberts, principal analyst at Informa.

Verizon Wireless will launch LTE later this year in the US with a much larger network with a population coverage up to 100 million, but it will probably only launch with USB modems since they are much easier to develop than handsets. Verizon unveiled plans to focus on the 30 metro areas with National Football League teams, which potentially means that Green Bay, Wisconsin, will have LTE coverage before Los Angeles does. Informa forecasts that the US will be the largest LTE market in the world through 2015, growing rapidly to reach 1.5 million subscribers at the end of 2011 and more than 70 million at the end of 2015.

Over to Europe now, where the EC has proposed a five-year plan for the award and harmonisation of radio spectrum within the EU to boost the deployment and take up of fast and ultra-fast broadband. Expanding on the Digital Agenda for Europe, EU commissioner Neelie Kroes made a commitment to ensure that every European citizen can access basic broadband by 2013, and fast and ultra-fast broadband by 2020.

The proposals include steps to promote efficient spectrum management, and in particular, to ensure that sufficient spectrum is made available for wireless broadband. The Commission proposes that EU countries should by 2012 complete the process of giving licenses to operators to use spectrum bands which have already been technically harmonised at EU level for the use of wireless broadband, (the 900/1800MHz bands, the 2.5GHz band and the 3.4 – 3.8GHz band). In addition, EU countries have been asked to open up the 800MHz band to wireless broadband by January 2013.

This is all good news and will likely help data roaming within the EU. More number from Informa this week forecast that the global roaming market will grow 86 per cent over the next five years, delivering revenues of $67bn by 2015, or 6.3 per cent of total mobile service revenues worldwide.

A slowdown is predicted until at least 2012 as a result of the economic downturn and customer cost saving initiatives, but a marked upturn is expected from this point onwards as markets recover and as mobile data roaming becomes increasingly prevalent.

“Data roaming, new pricing models and technologies, as well as regulation are just some of the forces that will transform the roaming market over the next five years,” said Paul Merry, senior analyst at Informa. “Bill shock remains a major issue for mobile roaming users in those markets where pricing regulation has not been implemented. Moreover, the legacy of bill shock is such that even in regulated markets there is a perception that mobile data roaming is expensive. Overcoming this sensitivity will take time but is critical.”

EU regulations presently limit roaming spend to €50 per trip and Informa believes such measures are a step in the right direction, but also states that €50 remains a very high amount for the majority of users, especially leisure users. However, mobile data roaming is expected to show substantial growth due to the popularity of app stores and the ongoing success of smartphones, delivering a 28 per cent CAGR or a 246 per cent increase over the five year period.

Informa found that Western Europe will remain the largest roaming market delivering approximately 41 per cent of roaming revenues by 2015, followed by Asia Pacific with approximately 18 per cent and North America with approximately 10 per cent.

Take care and see you next week,

The Informer