Volker on Mobile

I know, I know, there’s a ton of conferences out there at the moment but this one has some real goodies to offer. The Social Media World Forum packs a lot of stuff into one by running no less than five different streams (next to mobile, this is the general one, enterprise social media, social TV, and cloud computing). There is a Facebook Developer Garage to go with it, too.

It’s running on 15/16 March in London (Olympia).

I’ll be speaking on mobile & social, making a case for the gaming side of things but there are some others, too… Companies sending top-level speakers include:

• Facebook
• Xing
• Mercedes Benz
• Mars
• Mattel
• Orange
• Vodafone
• LinkedIn
• Yahoo!
• Cisco
• IKEA
• DHL
• StudiVZ
• Netlog
• CBS
• BBC
• Fremantle
• Endemol
• Beck’s
• Lufthansa
• Shell
• ING
• Marks & Spencer
• Virgin Atlantic
• TalkTalk
• bebo
• Ecademy

I actually feel quite small now! Come along, it should be inspiring and entertaining. Tweet me @vhirsch to meet for a chat.

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!

After the news broke that Orange will add the iPhone to its roster from just before Christmas, today we read that Vodafone UK will do the same, only a little later, some time in Q1/2010. Vodafone said that not having the iPhone was basically the reason for losing 200k customers in the last quarter alone. Vodafone had previously been shipping the device in 12 other territories.

With Orange and T-Mobile merging their UK operations, the new set-up which sees basically all large operators offering the device should make for some juicy deals. Analysts reckoned the contract tariff for to come down by £4-5 per month. Orange did not say anything specific but “indicated” that it would be cheaper than O2’s deals.

According to the article, Virgin Mobile (an MVNO that sails on the Vodafone network) is also “understood” to be desperate to secure the right to sell the phone. Happy days…

After many rumours and ominous statements that it was “reviewing its activities” Namco Bandai confirmed today that EA Mobile will thenceforth act as its distributor for mobile games outside the US and outside any app store.

After Taito and Eidos, EA Mobile just gobbled up another major distribution deal and the exodus from J2ME games distributed via carriers continues. It also means that EA’s dominance over the operator decks has just increased a little more yet again. It had estimated (back in June) that its 2009 mobile revenues would reach $185m (although this arguably includes Apple’s and other people’s app stores as well as embeds).

What is worrying is that this cements the oligopoly of games distribution in all major markets. EA Mobile, Gameloft occupy the top 2 slots very comfortably with Glu an equally comfortable but distant third. I-Play, Digital Chocolate, Real and Connect 2 Media are fighting for place and Xendex, Handy Games and a few others seek (and sometimes find) niches to prosper. THQ Wireless, Vivendi Games Mobile have departed. Player X found a new home under the mighty wings of Zed. And then? If the above companies all manage to maintain a healthy business, this might be enough; there are silverback gorillas in every market segment. If not though, this might become a doomed sub-sector; the limelight would then be on the (failed) ecosystem operators tried to build: overly fragmented with everyone of them wanting it just so and just their way rather than agreeing on a largely unified structure and processes pressed margins from a system that has been tough from the outset (handset fragmentation and international spread mean fairly high cost per capita anyway).

The accumulation of external properties arguably also mean that EA will need to run a business that is almost a combination of a publisher and an aggregator (with its very own challenges). The issue of shelf position (will they give Tetris and the Sims undue preference over Space Invaders, Pac-Man and Cooking Mama?), the commercials of their own deals (they anecdotally paid Hasbro a handsome sum), and the generally dominant position will all come into play and it is inconceivable (well, is it really?) that their partners will continue to play ball.

It might of course only be a brief interregnum on the way to an app store world. Smartphones are very much on the rise and, in that world, such stores seem to rule. Apple has taken the lead, Android followed suit and new stores are springing up almost by the day, which also includes operator-led ones: Orange already has one, Verizon Wireless has announced one (mobile web-based) and so has Vodafone (which might actually be bigger than Apples) as well as many others. The OEM all do the same (even though some carriers want to disallow them): Nokia Ovi, Blackberry App World, Sony Ericsson, LG, Samsung, you name them, they have it. The question of course is if that might mean the same thing all over again: will they again want it all just so? Will they again have it just their way so that a user would have the unique flavour of operator X on handset Y in this unique way, meaning that – again – thousands of SKUs would be required to service them? Groundhog Day? I hope not!

Image credit: http://www.antitrustreview.com/files/2007/07/files51lsaydhrsl.-ss500-.jpg

There have been rumours galore about Apple’s exclusive deals for its iPhone all over the place (see e.g. here for Verizon). New reports have now surfaced that appear to confirm that Apple is looking at this option for both the US and the UK (and, if this works, presumably also for other territories):

In the UK, T-Mobile confirmed it was in talks with Apple over stocking the iPhone 3G (the 3GS remaining exclusive to O2, which also has its hands on the Palm Pre) and Orange is “believed”, to be as well.

In the US, the Verizon discussion has been around for a while. A new report now suggests that losing the exclusivity would spell doom for AT&T: the report estimates that as much as 30% of AT&T’s customer are with the carrier solely because of the iPhone exclusivity. This sounds a little high to me: after all, the iPhone penetration in the US is much lower than that (it held just under 11% market share globally in Q1/2009). Are they saying that all the other users (those with the less fancy handsets) just stay on AT&T to share into the iPhone limelight? No, I thought not…

Apple is in any event in a beautiful position at the moment: so far, most of its competitors’ “iPhone killers”(Palm Pre, Blackberry Storm and innumerable devices from Samsung, LG and Nokia) have failed to challenge its numbers and, quite literally, all of the app stores set up by competitors showed meagre results compared to the – now – 1.5 bn (!) downloads in a little over a year from the Apple App Store. The good folks from Cupertino are therefore now in a pretty good position: they proved (a couple of times now) that they shift 1m+ devices – on the opening weekend! They bring a lot of sex appeal in which the carriers, not generally known for coolness, can bask. They cracked the content dilemma and produced a thriving developer community, which made people actually use their phones for all these things that have been promised for so long (iPhones are connected, most others can connect). In short: in carriers eyes, they are – aside from the horrible fact that Apple takes a healthy cut – a really good thing for networks that see themselves locked into cut-throat pricing wars over voice and SMS (bringing in, anecdotally, up to 50% of European carrier profits over the past 5 years) and craving for a way to increase user ARPU (app revenue on the iPhone is, apparently, $27 per device). Happy days…

It was only a question of time before the first carriers would release themselves from the iPhone-imposed stare and come out all action, and the biggest of them all (by sales), Vodafone, has now raised the curtains on its very own app store. It is the biggest app store to date: Vodafone has more than 289m customers who will – eventually – all be able to access the store (which makes it a cool 8x or so larger than Apple’s). Unlike on Apple’s App Store, you also do not need a credit card (which, however, you are likely to have anyway when you can afford an iPhone) whereas Vodafone, being a carrier, will bill to their customer’s phone bills directly. Very, very cool, huh?

Blyk, the ad-funded MVNO for 16-24 year-olds has been in the news lately a lot. The trigger was a piece by NMA according to which Blyk had announced it would scrap its consumer offering and concentrate on selling its technology/concept/both to other operators. This was quickly refuted by Blyk. The “final” position appears to being a little unclear.

Orange UK, one of the large carriers in the country with 15.8m mobile subscribers, has released its “Fifth Digital Media Index”, containing a set of interesting numbers on the data uptake on their network, and it makes for intriguing reading!

The title of this post is not meant in any way derogatory but with all the hype about the iPhone it is sometimes easy to forget that we are talking about a niche product that will probably remain a niche product (albeit a powerful and cool one!). In the rest of the world (feature phones aside), a few consortia are fighting for the open-source market, which is – let’s face it – a considerably larger piece than the small premium segment served by Apple.

English newspaper The Guardian published the results of a couple of recent surveys on mobile content, including the quarterly “Orange Digital Media Index” and a study carried out by TNS and, alas, no real surprises here:

• Ringtone and wallpaper downloads are slowing and are on the decline and, frankly, who in their right mind with a phone that plays MP3s, has a good camera as well as multiple connections to a computer, would spend money on such little gimmicks anymore? Ringtones were down more than 10%, whilst wallpapers still grew but at a meager 3%.
• Full-track downloads of songs though were on the rise — 292,000 in January on Orange UK compared to only 100,000 ringtones.
• SMS are going strong (up 21% or 1.3bn for the month in the UK) according to Orange, a number to which I, through my 12-year-old son’s phone bill, contribute no small share…
• TNS believes mobile IM is on the rise but this is not really the big thing. What IS the big thing is that, according to TNS, more than 1 in every 3 messages a user sends from either his/her mobile OR computer are SMS (38%), and that shows how ubiquitous the whole thing has become. Again, judging by my son’s communication patterns, I believe that: his choice of messaging is – in order of relevance: 1) SMS, 2) IM, 3) (and I mean a very, very distant 3) e-mail.

So pretty much all as expected. Unfortunately, no news on mobile video, games or applications in this one although this is there might actually have been interesting things to report. I am actually wondering now why I even bothered recording this at all… Apologies…