Industry indigestion

By The Informer

Finally. It’s all over. Well, for another year at least. All we’re left with is the delayed flights, the aching legs, throbbing heads, indigestion (cheese and ham or ham and cheese?), and the vague sense of having been robbed (either physically, emotionally or cerebrally, depending on your luck).

It’s been a busy old show, and interesting in a number of ways which highlight the shifting trends in the industry. The sheer number of developers there – those pubescent, ponytailed chaps with the long leather trenchcoats and pentagram-stenciled backpacks; the massive presence of Google; the momentum of Android; the realization of Microsoft; and the acknowledgement of the data boom headache, all stood out as touchstones to the Informer in Barcelona.

So it’s perhaps telling that the show opened with a display of unity from the operator community in the form of its banding together to secure a slice of the mobile application pie.

Twenty four operators, accounting for over three billion subscribers, formed the Wholesale Applications Community, an alliance designed to build an open platform for delivering applications to all mobile phone users. América Móvil, AT&T, Bharti Airtel, China Mobile, China Unicom, Deutsche Telekom, KT, mobilkom austria group, MTN Group, NTT DoCoMo, Orange, Orascom Telecom, Softbank Mobile, Telecom Italia, Telefónica, Telenor Group, TeliaSonera, SingTel, SK Telecom, Sprint, Verizon Wireless, VimpelCom, Vodafone and Wind are committed to creating the ecosystem, supported by vendors LG Electronics, Samsung and Sony Ericsson.

Guillermo Escofet, senior analyst with Informa Telecoms & Media commented on the move: “One of the biggest challenges facing mobile operators in the app-store space is competing with handset and OS players in global reach. The Wholesale Applications Community attempts to address this challenge but operators will need to move rapidly to enable the “single point of entry” for developers sought by the initiative if they are to stand any chance of regaining some of the ground they have lost on the mobile-content front to the likes of Apple and Google. As well as struggling with global reach, operators struggle to compete in terms of agility and the brand “coolness” necessary to attract a wide pool of developer talent.”

There is also the issue of whether developers will lend their support to the initiative. They seem far more interested in developing apps for Apple and Android and have historically mistrusted operators because of the unfavourable revenues share deals that have been on the table. The wind of favour seems to be blowing against the operators here and it seems a large number of developers would rather operators keep out of the applications development community entirely. What do you think? Send your comments to [email protected].

Google, on the other hand, really knows how to shake things up. The Informer reckons it was nothing more than a crude marketing stunt, but he tips his hat to the firm for the sheer, brazen ingenuity of it anyway. Google caused a near riot at the conference when it became known that any attendees to the Android developer streams would be gifted a shiny Nexus One handset. When word got out there were suddenly more ‘developers’ than you could shake a stick at in attendance. One of the big draws was the range of things to be done with Flash on the Android platform, and the Informer got some footage of Flash player and Adobe Air running on the operating system which will be posted on telecoms.com next week. There’s also some comment from an Adobe developer who confirmed that Flash can run on the Apple iPhone and hopes the Californian company will stop being difficult about letting it on to the iPhone platform.

There was plenty of support for the Android platform to be seen. Huawei unveiled a line up of such devices, including an HSPA+ Android handset – the U8800. Sony Ericsson was also backing the platform with a mini and mini pro version of its Xperia X10 Android device, as well as setting tongues wagging with promises of closer integration with Sony and the PSP PlayStation brand (Sony CEO Howard Stringer was present). Even Alcatel, which has barely started punting out colour screen devices, announced a touchscreen Android-based handset, the OT-980, which will retail for less than €200.

With all this Android-mania in the air, it’s no surprise that Google CEO Eric Schmidt was on hand to put the fear up the operators with a special keynote, during which he said Google was putting “mobile first”.

Citing successful internet phenomena such as Spotify, Facebook, and of course, Google, Schmidt highlighted the importance of the cloud to the success of any player in the mobile space going forward.

Perhaps that sea change is already taking place. Verizon Wireless was certainly being brazen about playing nice with the internet services space, joining forces with onetime adversary Skype to create a global mobile calling community. From March, US consumers will be able to get Skype on a wide range of Verizon phones, including the BlackBerry Storm 9530, Storm2 9550, Curve 8330, Curve 8530, 8830 World Edition and Tour 9630 smartphones, as well as Droid by Motorola, Eris by HTC and the Motorola Devour. The service will allow users to make and receive unlimited free Skype-to-Skype voice calls and send and receive instant messages.

Commenting on the announcement, Dario Talmesio, senior analyst at Informa, said: “The Skype/Verizon announcement demonstrates that mobile operators are beginning to change their attitude towards VoIP providers, they have gone from blocking to managing what they consider to be an issue. However, the majority of mobile operators have yet to make a firm decision, but market forces are such that mobile operators can’t avoid Internet-based VoIP.

“Those operators wanting to be serious players in the mobile Internet need to embrace openness and they need to allow Internet services on their devices – this includes VoIP. Blocking VoIP is a short sighted strategy. Those operators fearing VoIP providers need to be able to provide a compelling service competing with VoIP. Blocking VoIP simply doesn’t work for customers.”

Speaking of embracing internet services, one of the big themes this year was the acknowledgement of the mobile data boom, and the resulting headaches caused by the proliferation of flat rate and all you can eat tariffing. The president and chairman of Japanese operator KDDI, Tadashi Onodera, which operates in one such market where flat rate data is commonplace, waxed lyrical about the complexities of multi-level data pricing and the bandwidth shortage, and how content and traffic might be bundled together like it is on Amazon’s Kindle e-reader.

Mblox chief Andrew Bud was well chuffed by all this talk and it gave him the opportunity to go around saying “I told you so,” to the operators, as well as tell them that the data boom headache can solved, “but only by the judicious application of lots of money. But to generate this money, you need a businesses model.” Fortunately Bud has been banging the drum on his sender pay data model for a long time now and it seems that the operators are beginning to see some promise in the approach. Another indicator of the challenges facing the operator community that the Informer picked up on is the fact that billing has become sexy again. Just go and ask LHS, Oracle or Redknee. Tiered charging will become all the rage again, just wait and see.

Meanwhile, tackling the data boom on the technical side was AT&T’s CTO, John Donovan, who was sharing details of the lessons learned in the wake of the stellar success of the iPhone. Donovan said that with devices like the iPhone driving ten times more network usage compared to other devices, AT&T has seen wireless data traffic grow 5,000 per cent over the last three years. He acknowledged that the AT&T network has been under strain and said that steps had been taken to address the issue, namely in the backhaul.

Perhaps adding to the data problem is Machine to Machine, which is getting a lot of traction at present, MWC proving a focus for a string of M2M announcements. The GSM Association (GSMA) announced updates to its Embedded Mobile initiative, a programme aimed at vertical markets such as consumer electronics, healthcare, automotive and utilities, publishing a set of industry guidelines to reduce design complexity in what continues to be a hugely fragmented market. It was interesting to see quite a few connected cars there this year. Vodafone also announced that it will work with Verizon and nPhase, a joint venture of Verizon Wireless and Qualcomm, in global M2M, with an emphasis on an international managed service across multiple countries. While Konica Minolta is using its M2M Corporate service, enabled by Jasper Wireless, to provide connectivity for CS Remote Care, a remote diagnostic system across 32 European countries and Deutsche Telekom is to set up a new M2M International Competence Centre in Bonn.

All this talk of backhaul and data gave the femtocell guys chance to bang their own drum, with the Femto Forum’s Simon Saunders positing that operators can solve their congestion problems by shifting all that data traffic generated in the home or workplace onto the fixed line network. Ubiquisys was on hand to claim that the magic $100 price point for a femtocell was just around the corner.

As a result of growing operator commitment to the technology, all tier one equipment vendors (how many is that exactly? The Informer knows of two vendors at least who would say there are only two players in the top tier…) have now committed to supporting open standards and are actively working on integrating femtocell gateways into their own offerings. Informa expects the femtocell market to experience significant growth over the next few years, reaching just under 49 million femtocell access points in the market by 2014 and 114 million mobile users accessing mobile networks through femtocells during the same year. Femtocell unit sales are forecast to reach 25 million in 2014 alone, Informa said.

Preparing to add to the problem however was Samsung, which showcased the Wave, its first smartphone based on its own in-house designed operating system, Bada, which is being pitched as yet another open alternative to Symbian and Android. The most stand out thing about the Wave that the Informer noted however was the crispy Super AMOLED display stuck on the device.

Microsoft also drew a crowd with the launch of its new flagship – the carefully, if clumsily, named Windows Phone 7 Series. The new moniker is a conscious move away from the old Windows Mobile branding, and Microsoft is keen to point out that the change is more than cosmetic, having adopted a rip and replace attitude to the development of the new platform.

Windows Phone 7 offers a more visually appealing layout than its predecessors, featuring dynamically updated live tiles, which show users real time content updates. A user could create a tile of a friend and gain a readable, up-to-date view of a friend’s latest pictures and posts from the Start screen.

The platform is also making much of the aggregation trend sweeping the industry at present. Windows Phone hubs bring together related content from the web, applications and services into a single view built on specific themes: People, which brings together relevant content based on the person, from services such as Facebook and Windows Live; Pictures, which allows users to share pictures and video to social networks; Games, which integrates with Microsoft’s Xbox Live platform; Music + Video, which integrates with Zune content; the Marketplace app store, and Office.

Every Windows Phone 7 Series phone will also come with a dedicated hardware button for Bing, Microsoft’s search service, providing one click access to search from anywhere on the phone, including the most relevant web or local results, depending on the type of query. The company said handset manufacturers have already started building phones using Windows Phone 7, with the first phones to be in stores by Christmas 2010. Dell, Garmin-Asus, HTC, HP, LG, Samsung, Sony Ericsson, Toshiba and Qualcomm are behind the initiative, as well as operators AT&T, Deutsche Telekom, Orange, SFR, Sprint, Telecom Italia, Telefónica, Telstra, T-Mobile USA, Verizon Wireless and Vodafone.

Finally, Orascom chief, Naguib Sawiris, was also talking about operator unity, but of the M&A kind, rather than the joining forces to fight a common threat kind. The head of the Egyptian operator said that the industry is on the verge of a major shakeup that will see many of the smaller provider swallowed up, with Sawiris expecting quite a different telecoms landscape by as early as 2011, dominated by a handful of larger players. Fortunately for him, Orascom is something of an established player in the M&A space.

That brings us back to where we started and seems a good place to wrap it up. The Informer is going to unscrew his feet and leave them to recuperate in a vat of cold cream.

Take care

The Informer