Windows of opportunity

By The Informer

Mickey Rourke, George Foreman, Robert Downey Jr, and Jesus: They’ve all made some pretty impressive comebacks—and now Microsoft wants to join their ranks. This week’s big news was the much-anticipated launch of the firm’s new smartphone OS, Windows Phone 7. Microsoft has been enduring struggles in the smartphone OS space, and deservedly so. This latest bid to re-establish itself, if unsuccessful, will probably be its last.

It came as no great surprise that WP7 sees Microsoft galloping towards the accepted wisdom that what you need is an interface that looks pretty much like the iPhone interface on a phone that looks pretty much like the iPhone. That’s what the folks behind Android did, after all, and it seems to be working out quite well for them. Gone, for example, are the Microsoft hallmarks of stylus and endless menu drill-downs.

The Informer had a good play with a few of the devices on show at the launch and one of the things he quite liked was the ‘Live Tiles’ feature that sees contextual information and updates pulled from apps and displayed on the tiles on the home screen (the tiles on WP7 are a bit larger than on the iPhone and Android devices).

Nobody knows how WP7 will perform commercially or practically of course, but its arrival reignited the OS holy wars. Blogs and comment streams up and down the web are now strewn with barbed remarks, verbal salvos and rallying defensive cries as the ‘for’ and ‘against’ mobs sling their mud. It never fails to astonish the Informer quite how intense some peoples’ feelings about operating systems are.

Less surprising is the involvement of Microsoft’s key hardware partner HTC, which will provide several of the WP7 launch devices, including the HTC Motzart. Samsung, LG and Dell will also be present when the first handsets become available in the UK, where the new OS will make its debut. When it launches in Microsoft’s native US in November, the firm said there will be nine handsets available in total.

It will be interesting to watch how much grunt HTC puts behind WP7. Back in February 2009, when the firm had just unveiled its second Android unit, the Magic, an HTC exec told the Informer that Android was seen as “an additional platform” to Windows Mobile, which he described as “our DNA, our core business”. This was around the same time that Steve Ballmer was initiating the play that has resulted in WP7.

A lot can happen in 20 months, and whether or not WP7 remains so core to HTC is something we will have to wait to find out. In Q2 this year there were 3.09 million Windows Mobile smartphones sold across all manufacturers, according to figures from Gartner. HTC shifted 5.9 million handsets in the same period, meaning that Android represents a much more serious chunk of its business now than it did in February last year. HTC is the leading Android vendor and it is Android that has enabled the firm’s gradual move out of the white label business and into the world of branded handsets.

While we’re on the subject of handset OS rebirth, let’s have a look at Palm, which is now part of HP, of course. You’ll remember from last week that Ari Jaaksi, Nokia’s MeeGo go-to man made himself the latest high profile executive to depart the Finnish firm. Well it looks as if he’s to resurface at Palm next month as the senior vice president of WebOS. And he’ll be joined there by Victoria Coleman, previously head of R&D for Samsung in the US. Coleman will be tasked with overseeing application development for the platform.

With former Apple heavyweight, Jon Rubinstein, who joined Palm as executive chairman in 2007 and assumed the role of CEO in June 2009, the smartphone underdog is now sporting a line up of senior executives that seems designed to be a rainbow nation of its OS competitors. HP, which picked up the struggling handset vendor for $1.2bn in cash in April, has already said it intends to invest heavily in the webOS platform, across smartphones, tablets and netbooks.

Sticking with the handset scene for a while, Sony Ericsson turned in its third straight profitable quarter, netting €49m for the three months to end September. The firm said that smartphones are the cornerstone of its turnaround, with its high end handsets now representing more than 50 per cent of total unit sales, and helping keep average selling prices up. Overall shipments were down for the same reason.

The firm shifted 10.4 million units in Q3, down from 14.1 million for the same quarter last year and from 11 million in Q2 this year. Gross margin was up at 30 per cent form 16 per cent for Q309 and 28 per cent for Q210. Operating margin was four per cent. ASP across the firm’s portfolio was €154, down two Euros sequentially but up by 40 year on year.

We’ll round out our handset coverage this week with the news that Australian carrier Telstra has bowed to pressure from the nation’s Competition and Consumer Commission, and agreed to offer warranties on all handsets that match the length of the contract. All handsets apart from the iPhone, that is, which is not covered. The ACCC secured a similar commitment from Vodafone Hutchison Australia last year and said this week that it is in discussions with third player Optus towards the same ends.

The ACCC said that Apple’s exclusion from the agreement was a “cause for concern” and chairman Graham Samuel suggested, perhaps more out of hope than anything else, that Apple’s refusal to play ball might damage sales down under. ”The retailers are saying well we can’t negotiate a 24-month warranty with Apple because it’s too expensive,” he said in an interview with the Sydney Morning Herald.

“The truth of it is they can but it’s going to cost them, and of course that cost would then be passed on to the consumer in the purchase price of the phone. Consumers will then make up their mind whether it’s a better deal to buy an Apple iPhone or a Samsung or HTC.”

Over in the infrastructure market, it’s been a decent week for Nokia Siemens Networks. The firm won a deal with Chinese carrier Anhui Unicom that will see it maintain Unicom’s network in four cities.

And Vodafone’s Indian outpost Vodafone Essar has selected NSN to supply, implement and manage its 3G network in six of the nine circles—Tamil Nadu, Gujarat, Maharashtra, Uttar Pradesh (East), rest of West Bengal and Haryana—where it secured 3G spectrum. NSN is also the carrier’s major 2G vendor. The Finnish-German JV will operate the 3G network for three years under a managed services contract to enable simplified operations, improved network efficiency and consistent service delivery, the firm said. In India’s largest cities, however, Mumbai, Delhi and Kolkata, it will be Sweden’s Ericsson supplying the kit.

NSN has been busy in Turkey as well, where this week it announced the acquisition of network services specialist Iris Telecom. The acquisition will combine Iris Telecom’s multi-vendor Network Planning and Optimisation business with NSN’s managed services capabilities to create a regional player in telecom services with existing customers including Turkcell, Avea and Ucell, the firm said.

In the UK, Telefonica’s O2 operation claims to have become the first carrier in the country to offer large scale location based marketing services, which it hopes to sell to a range of brands. The opt-in service allows brands to define areas around which they want to build “geo-fences” using the mobile network. Any users that have indicated they are amenable to advertising relevant to the brand will then receive messages when they enter the fenced areas.

The first two brands, which will be trialling the service with O2 for six months, are ubiquitous coffee house Starbucks and hair product peddler L’Oreal. The technology is provided by US outfit Placecast, which has provided direct to brand services to customers including the North Face, Sonic Drive-Ins and American Eagle Outfitters. CEO Alistair Goodman told the Informer this week that the fenced areas could be as big or small as the brand requires. For the North Face Placecast fenced an entire ski resort, while for other customers it has circled supermarkets or sports stadia. The firm said that 65 per cent of end users involved in its “initial programmes” in the US made a purchase as a result of an SMS or MMS marketing push.

O2 is keen on the whole mobile marketing sector. Last month the firm said that it has seen good traction for its O2 More marketing service, signing up more than one million customers in its first year of launch. Over 1,000 campaigns have been deployed since launch, the firm said, and it claimed a 26 per cent response rate to some of its campaigns. Shaun Gregory, formerly of Blyk, said that the growth in location based services is set to create “a golden age for proximity marketing.”

On the cusp of a golden age we may well be, but that’s of no use to the 1,100 O2 workers getting das elbow at the German operation. O2 Germany is cutting heads as it consolidates its business with broadband player Hansenet, which it acquired earlier this year for €900m.

O2UK is also unhappy about the results of its appeal over the use of its 900MHz spectrum. The carrier had requested that it be allowed to use some of its 900MHz spectrum, which was its original GSM allocation, to run 3G services. Vodafone had asked for the same allowance, but both were refused the automatic right by UK regulator Ofcom. The UK’s Competition Appeal Tribunal upheld Ofcom’s decision.

Ofcom itself is about to feel the kiss of the coalition government’s scythe, as the bungling politicians carry on with their programme of cuts. Ofcom will be reformed as part of the new UK government’s cost cutting plan, in which 192 quangos will be axed altogether. Under the initiative Ofcom will merge with Postcomm, the postal services regulator, and several of its duties will be removed or modified.

In a development the Informer assumes is unrelated to this move, Ofcom’s director of technology resources, William Webb, has found the time to write a new book, called Being Mobile. The book, which takes a look at key technologies and applications likely to shape our mobile future, is being serialised exclusively on Telecoms.com, and you can see the introductory feature here. The first instalment will be published Monday.

Back to spectrum and US WiMAX pioneer Clearwire is understood to be preparing to auction off a portion of its spectrum in a bid to raise money to fund further expansion of its network, which is a bit like eating your own mouth because you’re starving. Word is the carrier is hoping to raise somewhere between $2.5bn and $5bn from the sale, with interested parties thought to include AT&T, Verizon, T-Mobile USA, Time Warner Cable and Sprint Nextel.

Finally this week we’re introducing a new section called “Living The Dream Press Invite of the Week”. It may never appear again. Here’s an email the Informer received this morning, which rather tickled his fancy.

“Dear Mr the Informer,

Just wondering if you could make it along to the Telepresence event

next Tuesday? Happy to arrange taxis if necessary.

Best wishes,

Tata Communications”

Take care

The Informer