Every cloud...?

By The Informer

AWIW_April10

Also blowing his top this week was Tarek Robbiati, the chief exec of Hong Kong operator CSL who was recently promoted to head of Telstra International. The Informer met up with him at CSL’s headquarters, and boy was he putting the boot in.

Robbiati is “shocked” by most other operators in the world, especially those in the UK, because of their lack of investment in wireless infrastructure. He offered the withering suggestion that the massive amounts spent on 3G licenses has meant that operators have skimped on infrastructure spending to support those 3G services, leading to the well documented problems some operators are facing with the explosive adoption of smartphones and dongles.

He attacked the sentimentality of operator technicians to their legacy equipment, advocating a more ruthless approach to infrastructure investment. Robbiati himself is anything but sentimental. During 2008 and 2009 CSL ripped out all of its 2G infrastructure implemented by long-term partner Nokia Siemens Networks and replaced it will an all IP deployment provided by local vendor ZTE. The move was to future proof CSL’s network for the leap to 4G and beyond and, while he was in Hong Kong, the Informer got to see CSL’s pilot LTE network in action. It’s fast. Blazingly fast.

Robbiati also gave a good shoeing to the likes of Google, saying that net neutrality is the biggest issue facing any telecoms operator today. “There’s no such thing as free,” he said, and that goes for consumers and their expectation of free services or handsets, as well as internet service providers like Google that hitch a ride on the operator infrastructure.

As if to respond to Robbiati’s criticisms of UK networks and dismissal of his legacy vendor partner, Nokia Siemens Networks this week announced a $620m contract with Mobile Broadband Network Ltd, the network management JV owned by T-Mobile and Hutchison’s 3UK, for the expansion of the firm’s 3G network. The deal covers the supply of more kit but also network planning, optimization and maintenance. No doubt NSN,a s well as Ericsson which has a managed services deal with MBNL, have their eyes on the integration of the Orange 3G network into MBNL’s footprint. This will get underway following the merger of T-Mobile and Orange’s UK operations.

T-Mobile UK also unveiled its own application store this week, Softwareload, bringing 15,000 apps to market. The German version of the site currently has 1.5 million users.

Staying on it’s home turf, T-Mobile is now bidding for LTE spectrum as the German 4G licence auction got underway this week. There are no newcomers to the process, with T-Mobile going up against Telefónica O2, KPN’s E-Plus and Vodafone D2 in the auction, which is expected to raise between €5 – 10bn. It’s a far cry from the madness of €50bn in the German 3G auctions, but it’s still a fair old whack.

And 4G spectrum wasn’t all that was being put up for sale this week, as handset vendor Palm threw itself on the mercy of anyone with money in their pockets. At least that’s what’s widely believed.  Word from an analyst source of the Informer’s is that Chinese vendor Huawei is the most likely buyer, as the company has been conducting investigations into the handset vendor. But HTC and Lenovo have also been put in the frame, along with HP and Dell.

Palm itself has declined to comment, as you would expect, offering only the news that it is continuing to launch product into new markets. The Pre Plus and Pixi Plus will be available in Germany on Vodafone shortly, the firm said this week.

But Malik Saadi, principal analyst at Informa Telecoms & Media, pointed out this week that it’s Palm’s operator and distribution strategy that has really let it down. Exclusivity deals like the ones it signed with Sprint in the US and O2 in the UK have stifled the potential, Saadi said, of an operating system – WebOS – which is “far superior to others on the market”. What Palm also needs, Saadi said, is a decent hardware partner to make the most of that operating system. “Palm has a very strong IPR portfolio,” he said, “which would enable whoever buys it to play side by side against the likes of Apple.”

No stranger to the fickle nature of the handset market, of course, is Sony Ericsson. But this week, this very morning, in fact, the firm announced that it has scraped back into profit, turning in a Q1 2010 net income of €21m. There’s the small matter of a €342m restructuring cost that wasn’t taken into account, but these things are mere piffle, of course. Accountants can do anything, can’t they?

The firm’s numbers tell the story of its recent strategic overhaul. A profit of €21m compares to a loss of €167m for the fourth quarter of 2009 and a loss of €293m from the first quarter of last year. Sales and shipments are down, however. Gross income for the first quarter this year was €1.4bn compared to €1.7bn for Q109 while unit shipments dropped year on year from 14.5 million to 10.5 million.

Sony Ericsson has realigned its portfolio to focus on higher end products that, naturally, shift in smaller volumes. Its Q110 numbers indicate that the strategy may be paying off, with gross margin up to 31 per cent from eight per cent in the same quarter last year and average selling price up to €134 from €120 a year ago. The vendor also made reference to benefits it derived from the resolution of “certain royalty matters” during the quarter.

The Informer was not sure what these royalty matters might be so he phoned the UK number at the bottom of the press release and was greeted by a honey-toned Sony Ericsson spokesman who sounded of North American birth. This chap said that all would be made clear during a 1pmGMT conference call, which is about as much use as a chocolate teapot to the Informer, whose deadline preceded the call.

“I’m afraid I can’t say anything else,” purred the spokesman, before adding “We’re in New York at the moment,” and ending the call. This piece of information seemed somewhat surplus to the Informer, until he glanced at his watch and saw that it was 10am. Which meant it was 5am in New York. Which meant he’d probably woken the spokesman up. That’s what happens if you put your number on a press release, you see. Unless you’re the English spokesperson whose number was also on the press release, in which case you’ve turned your phone off and are still stacking the zeds with the best of them.

Anyway, Sony Ericsson has also benefited from a cost cutting programme inspired by parent company Ericsson. The programme was initiated in 2008, with the aim of cutting annual opex by €880m. So far the firm has slashed 3,150 jobs and the restructuring charges currently sit at €342m.

“We are pleased to see the positive impact of both the launch of new products and the business transformation programme improving the company’s results,” said Sony Ericsson president Bert Nordberg, citing the Android-based Xperia X10 and the Symbian-based Vivaz, both of which began shipping towards the end of Q1. “Increases in both gross and operating margins show that we are on the right track to build the correct cost structure for our business organisation and strategy.”

Sony Ericsson had a couple of new phones out this week, in a further bid to squeeze some positive association out of the Walkman brand. The Zilo and Spiro are clearly aimed at The Kidz, given their focus on music and social networking. Not to be outdone, Nokia launched three new phones of its own, preferring alpha numeric naming to Sony Ericsson’s whacky brainstorm monikers. The C3, the C6 and the E5, which sound more like vitamins than mobile phones, all have Qwerty keyboards and major on messaging and social networking the Finn said.

And lest it be forgotten, Microsoft popped out the Kin. This, said Microsoft from its place on the overcrowded bandwagon, is designed to be the “ultimate social experience” which either says something about how great the phone is or something about how poor social experiences have become these days. Sharp put together the hardware and Verizon and Vodafone will be the exclusive operator partners when the phone goes to market next month. In this country, when people want to use the bad word in company they often drop the first syllable, creating the phrase: “’kin ‘ell.” And the Informer couldn’t help but imagine people who buy Microsoft’s new handset saying things like “Where did I put that Kin phone,” and sounding rather frustrated.

Legally, of course, anyone writing about mobile phones these days has to include something about Apple, so here we have the news that the iPad’s European launch has been delayed. And the news that Opera’s browser, finally allowed onto the App Store, was downloaded one million times in its first day of availability this week. The Informer was one of those one million and he’ll let you know how it goes.

With Apple’s recent announcement of its iAds platform, and Google’s ongoing acquisition of Admob (will it be allowed?) mobile operators are feeling that familiar lonely feeling when it comes to the world of mobile advertising. Well, never fear, Alcatel Lucent’s here! The Franco-US JV this week unveiled a new mobile advertising solution called Optism that’s designed to get the carrier back into the game.

Optism is focused on permission-based direct marketing, which is really the only mobile advertising segment that operators have the potential to monetise. AlcaLu stressed that the Optism solution would not be going up against mobile display advertising networks like Admob and that the firm does not have an in-application advertising module designed to compete with the likes of iAds from Apple. Search, the firm said, would be dominated by Google.

Alcatel Lucent has created a specialist media team which the firm says gives it a “a wealth of experienced advertising and mobile marketing professionals to build commercial relationships with global brands and agencies.” While the size of this team was not made clear, it does include a sales function which will sell carrier inventory to brands.

Much was made of the scalability of the solution and herein lies the key to its success or failure. Alcatel Lucent believes that, by aggregating the inventory from operators worldwide, it can sell global mobile campaigns to brands, or allow them to select precise geographic and demographic targets for their advertising. Optism launched with Orange Austria already onboard as a customer but that one operator will not be enough to persuade big brands to divert larger chunks of their advertising (or indeed digital advertising) budgets to mobile. More operator partner announcements were promised.

We weren’t told what volume of operators signed up as customers to Optism would create the critical mass needed for Optism to succeed, nor what portion of operator customers need to opt in to the service to give it legs. But given that Optism itself will make money only from an (undisclosed) share of advertising revenues, Alcatel Lucent will certainly be motivated to push for growth.

Finally this week some interesting news from satnav outfit TomTom. First, the firm has released a version of its service that uses the voice of Scottish comedian Billy Connolly and, second, it has delivered the most empty promise imaginable by saying that anyone in the UK who buys one of its products between now and the world cup will get their money back if England win. They won’t be spending that money on a nice meal out, of course, because they’ll be full up from eating their hats.

Take care

The Informer