As now is good tradition, here are the slides to the talk I delivered at Games Convention Online last week in Leipzig. Have fun and remember that sharing is caring… 
This should have come a week earlier but, alas, I was on the road – quite literally – en route to San Diego and Qualcomm’s most excellent Uplinq conference.
Life of course did not stop, and amongst the things you should not miss was (and is!) the last iteration of the formidable Carnival of the Mobilists, hosted by our very own Peggy Anne Salz on her award-winning MSearchGroove blog. Amongst the gems not to be missed were:
- An interview of a company focused on Windows Phone 7 (yes, you read that right!);
- Tomi Ahonen with another go at the app economy (which he claims isn’t much of an economy; read my comments on this here);
- A look on web bookmarks as an alternative to apps (to which I still not agree; cf. here);
- A couple of posts on Android, and specifically Motorola’s Droid X (and the future, if any, of Motoblur);
- And many, many more…
Finally, my post on Vodafone’s pondered changes to its revenue share structures featured, too.
The carnival is here, and well worth a read! And, again, my apologies for the late posting of this. But the old Highway 101 along the Pacific just had me in its grips… 
Last week, I moderated a panel at Mobile 2.0 Europe in Barcelona on “How to Make Money as a Developer”. Interestingly, there was no developer on the panel… However, there were representatives from Orange’s Partner Programme and from Telefonica, and I asked them if they would move from the “classic” 50/50 carrier revenue share (no one confirmed or denied the accuracy of that classic share of course) and, whilst they were clearly not willing to confirm anything (they probably couldn’t, to be fair), they did indicate that a revision of legacy models was under way in view of the not so new anymore challenges of app stores with their – now prevailing – 70/30 split in a developer’s favour.
This week, Vodafone came out a little more openly: at MEM, their Content Services Director pondered to
give [...] it back to the developers to let them monetise it.
The big one then followed. She said – and this must be close to an industry-first – that carriers
don’t necessarily have to drive towards revenue for all of that content.
And that is the real point: I have long been arguing that the real value of (great) content to carriers may not lie in incremental revenues (be it 50% or 30%) but in softer albeit much, much more important values, namely marketing, positioning as well as customer retention.
An example: a couple of years ago, we shipped a whole suite of X-Men 3 content, game, wallpapers, tones, you name it. The launch was, of course, around the movie launch (which was tremendously successful) and we had carefully crafted marketing plans including many brand partners (20th Century Fox, Activision, Panini, etc). We managed to drive some exceptional campaigns to which carriers in a lot of countries contributed serious marketing dollars. Did they do this in order to obtain an SMS-margin-matching ROI? Not in the strict sense. To them, this was brand extension and affiliation. And, boy, did it work!
Carriers biggest trouble is ARPU and customer churn. I am not sure about the latest numbers but for years the annual churn was reaching towards a third. And that is real money. If you can reduce churn by only a few points if you provide your users with great content services, you will see your money back many times. It is (brand) marketing, not incremental revenues that make it.
Now, as long as the content guys have revenue targets, the (normally very mighty) CFO of a carrier will ask painful questions on ROI and margins; and they will always come up short. Classify it as a marketing task though, and you’re looking really good: effective marketing that should yield measurable results at no cost. Hang on: at negative cost. How cool is that? I know that many a content guy at a carrier agrees with me here. Would they ever admit as much in public? You must be kidding me.
It is therefore good to see that Vodafone starts thinking publicly about alternative approaches with a view to strengthening and/or supporting their core business. Now put it in motion, folks!
It’s been looming and was long expected but today Vodafone announced it would embed its Vodafone 360 app store on two Android devices next to Android Market. Vodafone says their store would give partners a richer retailing experience than Android Market – but then they would say that, wouldn’t they?
But cheap puns aside, the move does have some legs: Vodafone uses Qualcomm’s Xiam personalisation engine, which provides recommendations based on user behaviour. They claim – and you may have heard that before in any number of my talks – that recommendations are a much stronger driver than promotions, stronger by a level of 4x to be exact. This ties in with my preachings: nearly 3/4 of all purchasing decisions (not only mobile, all of them!) are made on the recommendation of friends. And, alas, this is where “user behaviour” as the applicable pattern comes short: do I care how many, say, Amazon buyers of Grisham novels are also buying other authors’ crime thrillers? No. Why not? Because I don’t know these people. Do I care what my friends may think I like? You bet! Why? Because they know me and my tastes. Doh!
Anyway, back to Vodafone. They have realised (and, credit to them, admit it!) that a vertical implementation where you only get the full scope of 360 services if you have one of two phones doesn’t work. And, well, that’s somewhat obvious, isn’t it? Or is it a reasonable assumption that all my friends will all of a sudden (and at the same time) exchange their various handsets for a Samsung M1? No, I thought not either.
Vodafone did divulge a little data sniplet that must encourage them though, and that is that 360 customers have a 3x higher ARPU than others. If you look at the above (recommendations, friends, etc), that is not completely surprising. So now the next hurdle is to roll it out across their whole range of handsets. And let’s face it: a simple store won’t cut that on its own. Going cross-platform also means that – depending which handset you fancy – you may find different app stores of differing attraction competing with Vodafone’s own for attention (e.g. does Nokia’s Ovi offering seem to have more traction than, say, Blackberry App World but the latter has – from a publisher’s perspective – vastly superior price levels). All in all pretty sub-optimal, I think.
On a sideline: I will be moderating a panel on “How to Make Money as a Developer” this week at Mobile 2.0 Europe in Barcelona and I will be having the immense pleasure of having two operators on the panel (Orange and Telefonica-O2) as well as Microsoft (representing the OS side). This Vodafone announcement highlights some of the challenges the industry is facing. Interesting times!
Taiwanese handset maker and Android maven HTC has bought French idle-screen specialists Abaxia for $13m (or so industry sources say). Abaxia says it increases ARPU
by putting services at a zero-click distance to the user and pushing services directly to the front screen.
Think push notifications to a J2ME feature phone. Abaxia works with carriers and OEM to optimize the interface across multiple devices from different suppliers, which seems an apparent benefit to carriers as it will allow them to make their on-device brand communication consistent throughout the handsets available through them. That an OEM should then buy the company could therefore surprise…
And as to the use of idle screens? Hm, I am not totally convinced: an idle screen is, well, idle. I may be tempted to jump to it if an app sends me something from a friend (because, hey, it’s a friend in need) but I am not sure if the same attention can be garnered from the latest and greatest service offer from your operator. This is however what Abaxia claims it excels in. According to its website, the company helps
to drive not only data revenue but [...] to recover failing voice ARPU and secure advertising ARPU.
And here, well, show me the money. I have yet to see a convincing solution for this, and I am not sure if an attempt to capture the idle screen is the way to go.
However, when it comes to interface improvements, it might just work. So all might not be lost. And, in any event, congratulations to the teams at Abaxia and HTC!
The UK arm of Orange, the France Telecom-owned operator that is merging with T-Mobile’s UK bit, today offered a lot of news on the mobile games side. They made an announcement on the introduction of not less than 3 different gaming services that they will be launching over the next couple of weeks:
- Playtomo is a social gaming service to be used within the users’ social networks (e.g. Facebook; no others were mentioned). Users can download the app (?) from Orange’s portal and then share scores etc on the social network of choice. It sounds a little like a “posh Facebook Connect” solution (and this is not meant derogatory at all!). Friends can be invited from any UK network operator.
- Games Zone is a subscription-service where “just” £5 per month buy you two games and a 20% discount on all others. It also offers “exclusive competitions”.
- The third offering is a little unclear to me: Orange will launch the aptly called “Orange iPhone Games” offering, which will feature games that are “designed specifically or published by Orange for iPhone customers”. They say it will include a variety of game genres as well as the aforementioned Playtomo. Now, this one, I am not sure about… Orange clearly looks to bolstering their brand (or, perhaps, use their brand as a lever to lift otherwise unbranded games into the limelight) but this seems like a tough proposition. It is an interesting one, too, though as it would seem the first time an operator steps into the ring as a publisher amongst many. Watch this space…
The really uplifting thing about this is that Orange clearly recognises the significance of games to their overall offering and playful interaction is – as I have often pointed out – likely to be a driver for interaction between people in the mid- and long-term.
Finally: do you think this gives any hint as to which brand will survive the merger of the Orange and T-Mobile UK operations?
This week’s Carnival of the Mobilists is live and, amongst other great posts, includes my take on the tremendous value to be unlocked by mobile “2.0″ over the coming years.
Now, since I hope you have read that one previously, here are (some) of the posts you shouldn’t miss either:
- Looking at the value of location-based mobile advertising;
- Affiliate programmes as an (additional) business model for app developers;
- App or not – again… this time though the question is raised by none other than the Chief Communication Officer of DDB Worldwide;
- Some posts looking at services of network operators (might that have let the chasing-Apple-craze impact other service offerings?);
- Judy Breck, keeper of the tents emeritus, looks at how mobile leverages learning…
It can all be found over at Indigo 102, namely here. And now go there, and enjoy yourself!
It was today, 30 years ago, that NTT (now NTT DoCoMo) launched the world’s first commercial mobile cellular telecoms network in Tokyo with 88 base stations and, boy, did we come a long way since. Take fees for a start: there was a $2,000 sign-up fee and then a monthly fee of $300. On top of that, you would be charged $1 per minute voice. A handset weighed in at a cool 10kg (more than some budget airlines allow you as hand luggage these days; but then you would probably only fly First if you had one of those…). Nokia was still into wellies at the time, I think…
In its first 10 years, mobile phone subscribers “amassed” a rather meagre 4m subscribers. The second decade was significantly better: it grew to 740m! Fixed-line telephony took 120 years to break 1bn users, mobile was dramatically faster.
If you want to learn more, head over to the unfathomable insights of Tomi Ahonen who dedicated a post to the date (and every milestone since) that will take you a good half hour to read. Well worth it!
And now, lean back, and have a glass on the arguably biggest media revolution since the printing press (because, my dear “1st World” readers, most people from “other” parts of the world, would not have any access to digital media without mobile phones at all).
And for every stickler amongst you: Dr Martin Cooper placed the first “proper” mobile phone call on 3 April 1973 but the first proper mobile network was NTT’s to claim (and someone needs to update Wikipedia as to that. Tomi?).
All of it of course went even further back than that. See:
Image credit: http://openlearn.open.ac.uk/file.php/3317/T307_1_010i.jpg
Quick facts: I am an iPhone user. I wanted one, I am based in the UK. What to do? Switch to O2, which had the exclusivity for this. This post is not about bandwidth, 3G availability or anything like that – I have not (much) to complain about this actually. It is not about the iPhone either.
This post is about the simple mistakes network operators (plural; O2 is not alone here) make by not living up to their own messages. Listening to customers and identifying (and answering!) user needs.
Back story: I have an iPhone 3G on a £45/month plan, which gives you countless voice minutes and lots of SMS and unlimited data – in the UK that is. In short, I do not normally have to pay anything for (UK) calls and texts, hence the tariff. Now, if you dare travel with your iPhone, you’re in for nasty surprises. The only thing O2 UK has to offer is slices of 10 or 50MB of data for some hefty sum.
One of the most insulting things about this is this: I used to have a Blackberry on O2 and, you see, you can purchase an international roaming plan that gives you blanket data coverage on your device when abroad for – if I remember correctly – £25/month extra. Would I take this? Any day. Does this exist for iPhone tariffs? No.
O2 UK would be able to easily deduce that I am traveling regularly. Great opportunity to hook me into an even dearer deal, you might think (ad slogans include “We’re better, Connected” and “O2 can do”). But wrong you are. Whenever I travel with O2 abroad (and this is on an O2 network), this is what I get:
They actually send me at least 3-4 SMS with various warnings and alerts about how expensive and truly nasty it is to use my (O2-purchased) phone to its full potential and capacity whenever I dare leaving British soil. Connected? Can do? Not at all! Very inspiring. NOT!
Does it offer ANY solution to my apparent need? No. Does it try? No. What does this say about how important I am to them as a customer? A lot. And nothing good either.
It reveals a very “last century” way of looking at life: users are basically being perceived as revenue-generating units rather than someone the brand even attempts to communicate with. This is a very short-term view of the world, and one that is bound to fail quickly. Why? Because I am very likely to switch carriers (I have already unlocked my iPhone, which you can – incidentally – do here).
Now, O2, listen up: will I switch because there are so many other so much better offers out there? No. Will I do it because I fear the charges? No. I might end up paying the same as before. But that’s OK. I will do it because you, my dear carrier, showed me that you do not give a toss about me as your customer and you failed to deliver on your promise (“connected”, “can do”). I beg this will change about 2 weeks before my contract with you runs out: you will promise me everything under the sun to keep me but this is cheap, and I will not have it (as, I suspect, will apply to countless others).
Here’s the solution: Try and build some trust in your brand and your actions (Zappos anyone?). The reference to Zappos is not only a fashionable one (and, yes, I know it turns up in every man and his dog’s presentation these days; I used it myself a couple of weeks ago… But Zappos business is, get this, O2, to deliver happiness. You think that this is over the top? Think again: Tony Hsieh just sold his company for a very real-worldly price of $800 million to Amazon. His company is America’s biggest shoe retailer. Did I say shoes? Happiness!
Do you have to go that far? I would wish you would. But, dear O2, a little respect and care would already do it. Any of this? None I can see or hear, and your hotline will know I have tried! In modern “Tweetish”: #fail.
Listen and deliver. Then the rest will come. Until then, it’ll be Vodafone for me (who at least abolished roaming charges) or Orange (if they manage to learn from the above in time before my contract runs out).
Good bye!
First, Samsung announced it would drop Symbian from its smartphones in 2010 in favour of its new, home-brew bada OS. Then Nokia said it would drop Symbian (albeit not immediately) from its flagship N-series devices replacing it with Maemo, the OS that premiered on a Nokia device on the recently released geek dream, the N900.
It is said that there are
no current plans for Maemo devices in the [...] X-Series range or the popular [?] E-Series enterprise range
but the word “current” suggests that this might well change soon, too.
This would leave Symbian without its two largest OEM supporters. Will there still be a future for it?
Symbian of course boasts a still very impressive number of legacy devices, and it will therefore be here for a while. However, what does the long-term outlook look like? Android, LiMo, etc all “boast” a nimbler, more agile set-up, allowing for faster development and, arguably, better user experience. This is not necessarily Symbian’s fault (it carries with it its legacy around) but it makes it that much harder for it to reinvent itself.
I am not sure if there is place (and – timewise – the runway) to reinvent itself without the backing of big OEMs. I would be surprised if carriers would use it; they – even more than OEM – require adaptability and customization, which the newer platforms seem better suited to serve. Vodafone’s choice of LiMo for their first two Vodafone 360 devices is testament to that.
The ever-bright Tomi Ahonen suggested a comparison with DOS/Windows and MacOS: he compares Symbian to DOS, Maemo to Windows and iPhone to MacOS: MacOS led in UI and leads to this day. DOS outsold MacOS in spite of its dramatic inferiority because of the legacy instal base. Windows then overlaid DOS and rolled out on all the legacy devices with MacOS, as a result, always playing second fiddle despite its superiority.
The market place in mobile looks different though: DOS was nigh dominant (outside the mainframe and large enterprise side of things) whereas Symbian “only” covers about 5% of the current market. It is big but probably not big enough to bridge the DOS/Windows migration gap. With Android, Blackberry, Windows Mobile, LiMo, JavaFX (if that ever takes of properly), etc all on the map, too, the situation is very different to the DOS/Windows/MacOS world. Would Nokia be quicker in execution, I might still look at it differently but, unfortunately, it doesn’t seem to be that way.
So is it good bye, Symbian, then?
We live in a world where sharing has become an It-word. Contribution, engagement have all fast become pinnacles of every marketing expert’s arsenal.
And now O2, not always famous for the radical and new, has taken this concept, embraced it, turbo-charged it and took it to a whole new level. Enter: giffgaff (fashionable with no upper case). giffgaff is the world’s first people-powered MVNO (or “mobile service” as it calls itself), owned by O2 but apparently independently run. Here’s how it works (or supposed to work):
The network is a good (?) old-fashioned solid one, namely from O2. But that’s where it ends. Sales, marketing, customer service, brand development and the general business decisions will apparently all be made (or at least proposed or advised on) by giffgaff’s own users. I already found an entry in its forum calling for users calling for two rotating board-seats for users (though that will probably remain to be seen). giffgaff does have a gaffer (CEO in old-fashioned corporate speak) with a back-room (management team) overseeing the whole thing (and that team, according to early commentators who have met them, seem to be for real). The service appears to run on a SIM-only model and aims for “simple” tariffs that include voice, text and data (mobile web without restrictions).
The prices for the service should be significantly lower because there are no armies of marketers, sales professionals, account managers, customer service representatives, customer service managers, etc, etc – or at least much less of them. At the same time, the “sharing is caring” credo has shown its power and quality in many ways on the web so far (and with giffgaff people will apparently earn rebates if they contribute). And in particular on customer service it should be easy to beat virtually any carrier hands down, shouldn’t it?
So will it work? I think it would be wonderful if it would. I am not sure though if this experiment will be a massive success (maybe a small success is good enough anyway). And the reason for this is power law distribution: only very, very few people contribute significantly (Clay Shirky gives a wealth of examples) and most people contribute hardly anything (the question would then be if the rebates are enough to break that mould). Whilst this works well with something like Wikipedia, I am not sure if a user of giffgaff would be all too happy to wait however long it takes for a member of the community to answer his/her particular query, at least not if it concerns some core functionality. Such a user would arguably be disappointed and thus relatively quickly discouraged. Which would be the end of him/her as a user of the service. Which would be not so good.
I would be more than thrilled if they would pull it off. And I will clap and shout for them. It would really be a whole new level of sharing. Go on, guys!!!
A couple of weeks ago, I pondered Spotify’s impact on music business models and suggested that mobile may have a role to play in the monetization end of it (which is, unless you’re Twitter, an inherent part of a business model indeed). It didn’t take them long:
Today, the UK arm of 3 – always one of the more creative carriers - announced a handset (and not a bad one either) to be bundled with Spotify Premium (i.e. on the go and no ads): users will pay £99 up front, and then £35 a month for 24 months for a tariff including a Spotify Premium subscription covering both PC and mobile, 750 minutes voice calls, unlimited texts, data and Skype-to-Skype calls. Listen up: all bandwidth included. For a streaming service. Now we’re talking!
3 said that the Spotify Premium service was
worth £240
which suggests that they might want to stick to the £9.99 price point (which would surprise me). But then it is hard to tell which bit of such announcements is marketing and which actual price-setting for the sake of royalties and such like…
3 also said
that the deal with Spotify would extend to other products in the coming months, including 3′s mobile broadband service.
Again, I am curious about the price point: the way it is, it would be a nice marketing deal for Spotify but it could be said that not much was going for taking exactly that offer vs just signing up as it is already. A little discounted however (with the difference paid for by 3′s marketing department) might change the ball game altogether…
It’s all good though: I for one am truly intrigued by the prospect of having more than 6 million tracks (equating to, what?, 6 terabyte or so of music) on my phone!
And one little thing on the side: it is – again – an app and not the mobile web that they choose – in spite of bandwidth apparently not being an issue at all. It is thus another argument for the superiority (for the time being) of apps over mobile web when it comes to UI and input constraints.
Here’s a nice deal: smartphone content specialist Handmark integrates Amazon’s new mobile payments service into its mobile content stores. This includes, most notably, also the famed (and sometimes damned) 1-Click functionality whereby users can (just like on iTunes; Apple licenses the 1-Click patent) buy content with just one click. The store will then use whichever credit card they have previously entered. To mobile users, bruised and tired of multiple clicks and onerous navigation to purchase a single piece of content, this is a true piece of added value (and one that was often hailed on Apple’s benchmark app store).
From what I can see, Apple still leads in the fewest number of clicks but Amazon’s offering comes relatively close. Amazon’s service seems to offer a wider range of functions though: a user can pay, reserve, settle, run refunds, cancel, etc, etc, and, last but not least, a fairly established and recognized dispute resolution system, all through the Amazon API. Rather neat indeed! The transaction fees then are a dream for every mobile content provider: in the ranges customary for mobile content ($0.99-9.99), the fees range from 1.5%+$0.01 for Amazon Payments balance transfers to 5%+$0.05 for credit card payments. This, dear carriers, equates to a revenue share to the provider of 90-95%!
We will arguably see a whole range of app store providers taking this model up, in particular amongst those without a prior billing relationship. Carriers might be tempted to license the model, too, in order to facilitate the order flow (although I doubt that they will adapt the revenue shares, too): I would be surprised if Amazon could not adapt the back-end to integrate with a carrier’s billing module (although those commercial discussions would surely be interesting…).
It is a compelling case of transferring an existing brand with proven ease of use to the mobile web (where it will thrive first) and app stores the world over.
