Poll Position

By The Informer

Here’s a curious little story: Once upon a time (a few weeks ago, actually), after meeting a carrier CEO who predicted that the mobile infrastructure provider market would contract to three players within five years, the Informer decided to run a poll on the website he calls home, Telecoms.com. He wanted to know which vendors the site’s readers thought would be the three to survive, should the CEO’s prediction come true. So, up went the poll, giving readers the chance to choose three winners from Alcatel Lucent, Ericsson, Huawei, Motorola, Nokia Siemens Networks and ZTE.

After a week or so, industry opinion became fairly clear. Ericsson and Huawei traded the top spot, a whisker between them, while Nokia Siemens was a small distance off in third place. The rest languished way off the pace, with Motorola sat at the bottom.

Then, on Thursday this week, something remarkable happened. The industry, it appeared, suffered a huge change of heart. In the space of no more than an hour, Motorola went from last place to first, having received a massive, life-saving injection of votes. On noting this phenomenon, the Informer rushed to the US vendor’s website to see if this volte-face had been inspired by some huge news from the firm.

Indeed not; there had been nary a press release from Motorola for a fortnight. Perhaps the inspiration was tidings of some excellent M&A activity… But the wires revealed nothing. The Informer, not for the first time in his life, was stumped.

So, just out of interest, the Informer got out his toolbox and used his ‘whois lookup’ application, to see where all these votes were coming from. He was shocked. The overwhelming majority of the votes that had reversed Motorola’s fortunes had come from within Motorola itself! Tracing the IP addresses back, it looked as if an email had gone round to different country locations, as the votes came in big blocks. One slab from the UK, one slab from Singapore. A bunch from Kuwait.

None of the other vendors did this to boost their own rating on what is, let’s face it, a poll that is now of interest predominantly because Motorola staff have tried to nobble it. Interestingly, six Illinois-based Motorolans were bound by some wider moral code to play the game properly, at least in part, attempting to offset their blind corporate loyalty by voting for Ericsson and Huawei as well. Most, it appears, didn’t vote for another two players at all. Talk about climbing the slippery poll…

Anyway, Motorola should be thankful for the constancy of its employees. It’s a different story over at Nortel, where workers at a French factory have threatened to blow the plant up if they don’t get decent layoff terms from the malingering Canadian vendor. The workers clearly had one eye on historical precedent as this unusually dramatic threat was levelled at Nortel, amusingly, on Bastille Day. Vive La Révolution!

Workers placed gas cylinders around the factory, which is just outside Paris, where 480 jobs are about to be guillotined as part of Nortel’s dismantling. Certainly blowing a factory up is a novel way to distribute a firm’s assets. There were suggestions, though, that the workers were bluffing, and that the gas cylinders were empty.

One company certainly not firing on all cylinders at the moment it struggling handset JV Sony Ericsson. The firm reported its fourth consecutive quarterly loss this week, shedding €213m in Q2 this year. If your glass if half full, you’ll be interested to know that this represents a sequential improvement, given that the firm misplaced €293m in Q109.  If your glass if half empty, however, you’ll note that sales nose-dived to €1.68bn from €2.82bn for the same quarter last year. Unit shipments were down 43 per cent year on year to 13.8 million and the firm blamed market conditions, particularly in Latin America, for the slump. It estimated its own market share at five per cent.

Sony Ericsson’s in good company, though, as market leader Nokia had some woes of its own to share. Nokia’s bad news, though, tends to be more related to smaller profits, rather than smaller losses. Q2 net income dropped to €287m, a massive drop from last year’s €1bn. Shipments were down 15 per cent year on year to 103.2 million, although this was a sequential increase of 11 per cent. In more bad news, the firm’s average selling price dropped by another €3 to €62.

News like this makes the handset business sound like one that nobody in their right mind would really want to be in. But there are still firms out there which believe they can pull the sword from the stone. The latest of these is PC manufacturer Dell. This has been expected for a while; since 2007, in fact when Ron Garriques, head of Motorola’s handset unit was poached by Dell to lead its consumer division.

Garriques spoke at a Dell analyst event on Tuesday this week, managing to confirm the company’s entry in to the mobile space while remaining almost completely vague as to exactly what form this entry will take. Since he spoke of consumer desire for 16″ screens, however, it seems likely that some kind of smartbook/netbook approach is where the firm is headed.

“Operators want us to create a set of products that work together with a common user interface as well as operator services,” Garriques said. “Operators don’t care how we execute that strategy, they just want us to be the integrator, providing an end to end solution that supports LTE or WiMAX,” he waffled.

“We’re really onto the 3G to 4G transition now, and consumers are looking for up to 16″ displays on portable devices. Carriers want end to end solutions, bundled with software that makes everything work,” he said.

Garriques said Dell is targeting the top three or four operators worldwide to see what their needs are, because there are “massive needs that are not being met at present.” The company might also look to Chinese or Taiwanese manufacturers to build the device and just put their own branding on them, he hinted.

However, Garriques also revealed a somewhat simplistic, over-optimistic view of the handset market when he said: “The late entrants to the handset space have done very well. The door is open and they have just walked in.” Is that because the long term players, like Motorola, aren’t offering any serious competition? Why could that be?  Is it really that easy, though? Even for Apple? The Informer doesn’t think it’s all strawberries and cream.

One of the keys to Apple’s success, it turns out this week, has been hard-headed brutality towards its opponents. The Californian vendor struck a blow against comeback wannabe Palm and its flagship Pre device, by removing the Pre’s ability to function as an iPod.

Palm had made a big deal of the Pre’s ability to interface with iTunes, allowing consumers to transfer and manage their music using the popular program. The Palm website still claims customers can, “use the Palm media sync feature to transfer your DRM-free iTunes music, podcasts, photos, and more to your Pre.”

However an iTunes update released Wednesday, taking the application to version 8.2.1, addresses an “issue with the verification of Apple devices.” In a nutshell, this means its puts a stop to the Pre’s ability to mimic an iPod. Earlier versions of iTunes still work with the Pre as Palm advertises, and users can still transfer music by treating the device as a USB drive, but it’s unsurprisingly clear that Apple is keen to protect its own innovation and new-found market share in the mobile space.

This news drummed up some interest on telecoms.com earlier in the week, with one reader suggesting that Palm should call in the lawyers, and that such activities would be illegal in the US. You can read the comments, and add your own, right here.

It’s been a handset heavy week, for sure, and the Symbian Foundation has thrown its hat into the application store ring this week by taking a refreshingly novel approach, and not launching a store of its own.

Instead the Foundation intends to function as a middle man, with Sean Puckrin, the man at Symbian who is leading the new programme – dubbed Horizon – trying to give it some rock ‘n’ roll chic by describing it as the equivalent of a record label in the music business. Nice idea that, until you realise that the record labels are dying on their backsides.

Anyway the aim of Horizon is to help developers get Symbian friendly versions of their applications into various stores. At launch, the Foundation is working with Nokia’s Ovi store, the Samsung Application Store and US carrier AT&T’s Media Mall. Services on offer will include language translation, UI construction and porting from one platform to another, as well as marketing and certification. Developers working on the launch phase of the project include UK newspaper The Guardian, Dynatech, MobileIron, National Public Radio (NPR), Skout, Ustream, and Wine.com.

The presence of dating app Skout, which has had success on the iPhone, gives a hint as to Symbian’s Strategy, which seems in part to be seeking already successful apps and offering to take the pain out of launching them on Symbian in a bid to create a reliable stable of applications.

“[Developers] see the volume and opportunity on Symbian,” Puckrin told the Informer, “but there’s a little bit of last mile work required to help operators actually seize that opportunity. We’ve had positive feedback from developers; they see it as addressing a number of the issues they foresee on going to market on Symbian,” he said.

Puckrin conceded that not all developers would feel the need to exploit the new service, which is probably a good thing for the Foundation, given that it plans to work on an app by app, bespoke basis, which could prove extremely time consuming.

“It is a lot of work,” he said, “and it won’t be thousands of applications to start with. It will scale over time and we’re expecting it to really take off around October.”

The involvement of Symbian Foundation founder member AT&T is also interesting, as it points towards the Foundation’s desire to spread the geographical appeal of its OS to developers. “One aspect of the programme is to look at companies that don’t have Symbian on their doorstep, in the US, for example, and help them understand the great opportunity worldwide that exists for them if they port their applications to Symbian.”

All of which could be taken to mean that the Symbian Foundation is worried that, left to their own devices, developers will be unmotivated to develop for its platform.

Now, in closing, it’s been suggested before that carriers don’t actually need their own networks any more and that they could all just compete on a single central network, differentiating on service and pricing strategies. Here in the UK, things could be moving in that very direction with the news this week that Ericsson, the world leader in managed services, has struck a network management deal with O2. Ericsson already looks after Vodafone, and runs MBNL, the 3G network JV owned by 3UK and T-Mobile. How long before the firm goes to the operators with a cost saving plan predicated on cutting out all the duplication involved in the Swedish firm running three more or less identical networks? Only Orange, which had to be different by going with Nokia Siemens, wouldn’t be able to play. Until, that is, the scale benefits enjoyed by the others forced it to join the fold.

The Informer doesn’t know how well Motorola fares in the managed services business. Perhaps he should put a poll on telecoms.com to find out what the industry thinks…

Take care

The Informer