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Verizon's group hug: now it also supports Android

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On 04/12/2007

Verizon‘s U-turn continues: the carrier now announced that they would support the Android OS promoted by the Google-led Open Handset Alliance. This comes only days after Verizon was met with a lot of raised eyebrows after it declared it would open up to handset manufacturers, service and application providers. Upon the launch of Android, Verizon was amongst a select few that were visibly reluctant to support the initiative, reportedly for fear of impinging on their customer base by not being able to control the user experience.

This move may well be an attempt to prevent Google from bidding in the 700 MHz spectrum, the auction for which goes ahead tonight: Google may not see the necessity to bid just as aggressively if it can basically fall back on an OS-agnostic carrier as it can then continue doing what it does best, namely sell ads. The proximity of the dates may indeed point into that direction.

Verizon Wireless had created the most profitable U.S. cellular business by tightly restricting the devices and applications allowed to run on its network. However, its management apparently now came to conclude that it was time for a radical shift: this will have been out of fear to be isolated in a niche when the rest of the market was overrun by new, more powerful devices as well as media empires old and new both of which would bring a richness of offerings mid-term that Verizon could not have supported within the constraints of its tightly-controlled environment.

It may also have thought that opening up would help them to keep growing while containing costs; probably a bit of everything. That last bit is of course one of the reasons that led many partners to throw their weight behind the various OS campaigns that recently appeared to have picked up pace: the LiMo Foundation, C-based Nokia-owned OS Symbian and the Sony Ericsson and Motorola-owned UIQ (in which Motorola had just acquired a 50% stake; see here) will also be driven by the OEM’s attempt to contain cost. Unified OS make mass production much cheaper (and the famously robust Linux kernel also will allow stability whilst being flexible enough to allow enough flavours to keep every marketing and UI expert happy, too).

Everyone coming to their senses? Oh, brave new world.

Verizon opens up

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On 02/12/2007

US #2 carrier Verizon, the famed high priests of the walled garden said they would open their network to 3rd party devices, applications and services. Skeptics say this might just be a move ahead of the spectrum auction for the 700MHz range, in which Google had declared an interest, too. Commentators say it might be an attempt to discourage Google from throwing its head into the ring but they maintain that VZW will not be seen to reducing itself to a bit pipe.

However, the commitment to open its network may also mean that Google, in the wake of its Android OS promoted with the Open Handset Alliance (see here), may no longer feel that they have to spend billions of dollars to acquire the bandwidth necessary to pave the way to customers: with an open network environment, Android-based devices may very well also be running on Verizon’s network so Google may no longer need to go to the expense to providing an alternative route.

Apart from the considerations mentioned above, Verizon is under pressure to encourage device makers also from the neighbouring areas such as tablet PCs, dedicated gaming devices, etc to build hardware that works on its on EV-DO network rather than only on the UMTS-powered networks of most of its competitors. With ongoing convergence of the various screens and their inherent agnostic approach to whichever technology is being used, it is important not to fall behind as Verizon’s network might otherwise become an isolated island with only sub-par devices and less choice than with competitors.

So whichever good or bad intentions Verizon may have, it is opening the walled gardens a little bit more, and that surely is a good thing!

The G-System: Google's mobile OS aka Android arrives

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On 05/11/2007

So, no GPhone — yet. Google, with quite a number of partners, today announced the already much-rumoured “Open Handset Alliance” under which a Linux-based OS, nicknamed Android has been launched (the SDK will allegedly be available in a week’s time). Here’s a video explaining the deep thoughts of the creators (be quick: YouTube has removed it already…).

The whole industry had been waiting for this, and Google seems to have come up with a black-white thing: it goes back to its roots in open source but overlays it with Java, which has caused the content community a lot of headaches (every mobile phone translates it slightly differently, so one needs a gazillion ports). However, Google has teamed up with no less than 34 partners for the launch alone, including such giants as China Mobile, KDDI, Sprint Nextel, TIM, T-Mobile, Motorola (who seem to be dancing on a lot of weddings recently: UIQ and Linux Mobile are also on their plates), Samsung, HTC, Intel and eBay.

So what does it all mean? According to the members of the alliance, it will be better, bigger, faster for everyone: open source means more applications, less bugs and less cost. According to Google CEO Eric Schmidt, it is “a fresh approach to fostering innovation in the mobile industry will help shape a new computing environment that will change the way people access and share information in the future.” Commentators note that there is apparently one caveat: you’ll have to use Google for navigation. Now: does that bother anyone? Give me Internet on my phone on broadband speed and I happily surf with whoever gives it to me, I’d say. To enact a platform, supported by a lot of sector muscle, that makes the developers’ life easier should be good for everyone indeed as it will undoubtedly bring more usage. Traditionally, carriers feared for the consistency of the user experience. Apparently, Verizon and AT&T have already voiced such concerns also here although the explanation sounds defensive at best: they fear too much advertising. Would it be safe to say they rather fear loss of control?

Quite a few companies have tried to take on mobile as the next frontier and quite a few fared rather miserably on the complexities of the environment presented by the sector (Disney’s MVNO attempts, Infospace and a few others spring to mind). With Google’s might this might be about to change though. A fresh breeze and a unified development platform would, in any event, be a good thing.

Interesting though that, as in recent releases on OS-driven initiatives, Nokia is again absent. This is not promising any good in terms of unifying the landscape, it seems. However, both Linux Mobile (on which Android is apparently based) and Symbian (in which Nokia holds a huge stake and which it intends to make its platform of choice) are C++-based. And that would be easing development pains after all: much easier to deal with than the Java layers, which until now were statutory but might only be optional going forth.

UPDATE 7 Nov 2007: Nokia has said its participation in Android is “not ruled out at all”. It would work with it if it would see sense. Now, a convincing statement sounds differently but it IS noteworthy that the Finnish giant felt the need to comment on it so quickly.

Motricity acquires Infospace mobile assets

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On 15/10/2007

In Deals

Now, this is a big deal: Motricity puts $135m in cash onto the table of the under-pressure Infospace people to acquire the remains of the Infospace mobile business, including search, storefronts, portals and messaging. The deal was financed by existing investors Carl Icahn and VC Advanced Equities (see reporting from MoCoNews here and here).

The acquisition marks the end of an odyssey into mobile by Inforspace, in which it first acquired and then effectively destroyed some of the brightest stars on the mobile content sky, including game developers Atlas (bought for $6m, sold for $1.5m), Elkware (bought for some $26m and then closed) and IOMO (bought for $15m, then closed in August 2007) as well as ringtone giants Moviso. They lost people, money and ultimately the businesses (e.g. IOMO’s founders have recently opened their new shop, Finblade). What a battlefield…

Motricity’s, so far predominantly a platform and storefront provider, entrant into the increasingly competitive content publishing space comes at a time where more and more players try to extend their reach on the value chain: one sees platform providers expanding into master content provider relationships, one sees publishers (e.g. Player X) seizing the same position, and all are in a quest to concentrate enough revenue and margin in order to be able to run a profitable business in an environment where still the majority of players are losing money.

The challenge for Motricity will be to grow its business outside the US, and this is arguably where the risks are hiddedn. In the US, the company claims to have now grown their distribution footprint to 11 of “top 13” North American carriers (which leave another 10 that are apparently not top), which however seems OK since they add two of the biggies which they couldn’t reach before, namely mighty Verizon and AT&T (I still prefer the name Cingular!). The gamble is arguably being mitigated by the presumed synergies through the search, portal and messaging business, and this is where I suspect the balance of risk lies in respect of the financial considerations: because it harnesses Motricity’s existing business, the venture into the publishing side of things appears somewhat less risky. All in all, a deal that might just make sense; if the money is adequate? Who could say? What proportion of growth will come through which part of the business? Hmmm. There have been deals that, on the face of it, looked more reckless in the past (remember the seemingly atrocious $145m Jamdat paid for Blue Lava [incl. $8m non-breakup fee to Tetris, LLC])? It paid off for them as then EA bought them for a rather sweet $680m. I would not suggest that the same will happen to Motricity although, looking at the monies invested into them to date, it will just about have to be the exit its investors are looking to.

Mobile Mesh Networks: now we're talking…

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On 12/09/2007

Swedish firm TerraNet is trialling a mobile mesh network, we read. In a mesh network, each handset works like a little base station, too. It is a peer-to-peer technology without the need for a base station and, hence without a network operator or carrier. TerraNet’s devices currently have 1km range, i.e. unless there is another device within a range of 1km, it will not work.

However, should this technology become robust and sufficiently scaled, the new Vodafones and Verizons would probably be Ericsson and Nokia Siemens Networks, i.e. the big network vendors. Incidentally, Ericsson is said to have invested $3m in TerraNet. At present, a maximum of 7 hops can be done, and this would be limiting the distance that can be covered. However, the company apparently also offers a network node via a USB dongle and this could then connect to a VoIP system to bridge long-distance and go into another mesh network closer to the recipient.

Would this technology be available on a larger scale (and perhaps ultimately without the constraints of so many hops), this would then result in lower cost for users because there would be one less mouth to be fed in the value chain, and it so happens that this is the hungriest mouth at present. Terranet is said to be recognizing that the telcos won’t be delighted about this (multi-media evangelists like Nokia’s Anssi Vanjoki will however be uber-excited as it will boost multimedia offerings and the opportunities over there). Oh, dreaming of the future…

At present, the offering is geared to scarcely populated areas (the company runs trials in Tanzania and Ecuador), and the above-described problems might not be an issue there. In the contrary, it could be that operators would embrace the technology to expand coverage. The company also targets urban areas where people make lots of local calls, which would then be virtually free.

In those more urban areas, there may be problems with having enough available frequencies, and the struggle with the regulators in the space might indeed slow the deployment down significantly. This would probably be made even harder due to the political concerns of many countries when it comes to weakening some of their economic powerhouses (because this is what carriers also are).

Other commentators are also concerned with battery life but also note that, if the phones are replacing landlines, they can be left plugged into a power source (which would be defeating the purpose of the notion of being mobile though, I guess). Surely this would be solvable though.

Very interesting indeed, I think!

Amp'd files for Chapter 11 – Revisiting MVNO's

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On 04/06/2007

One down… Amp’d files for Chapter 11, citing the need for more time to ramp up its systems for demand. I wonder: shouldn’t $360m in VC monies be enough to build systems that can cater for 200,000 customers? Given that Verizon provides the network and Motorola the handsets, that would mean that they took $1,800 per customer on all the rest; a bit stiff. Verizon is the biggest creditor with some $33m in receivables. So their wonderful ARPU wasn’t that great after all, huh?

It’s a bit of a bleak outlook, and whilst the offloading of debt might work this time, it puts some serious question marks behind the model of MVNO Amp’d tried to implement, namely one that tries to build a full infrastructure other than the actual base stations. Now, the question is old: is this really necessary? It has failed often: they are not the first to stop. ESPN did it. Has anyone ever heard of Extreme Mobile again? To remind you: they had announced a Vodafone-powered MVNO in the UK… and the site still says “coming soon”.

Might perhaps be the call for a network provider that possesses some smart backend infrastructure allowing printing of customised invoices, sending of customised messages and provision of customised content be the way out? It would arguably be dramatically cheaper to have a network that rides on the back of a) a brand, b) retail distribution through the likes of Carphone Warehouse, BestBuy, MediaMarkt, FNAC, El Corte Ingles (depending on where you live) and c) “soft” customisation (i.e. through packaging rather than retail channel, etc).

What would be in it for the Vodafones and Verizons of this world? Lower churn! It is hard to get to real numbers but lore has it that the cost of one Mannesmann D2 customer when Vodafone bought them was a whopping $7,800 and that with – allegedly – 30% or so churn p.a. Surely no customer can use their phones enough to make that money back, me thinks… If churn could be reduced by, say, half if customers would stick with the brand due to higher loyalty, then the supporting carriers would make a killing! Customers are way more loyal to the football club they support, their politicial party of choice, the National Trust, U2, their Almer Mater, their home town – you call it affinity marketing, a concept that has been a great success for years e.g. for credit cards. Wouldn’t a combination of this make a lot of sense? The thing that killed the market so far is greed: everyone wanted to own the customer front to end – when all the customer really wanted was good service, etc and this fuzzy warm feeling.

Get onto it. I believe it would work. Anyone here to try?

Prince-ly Guitar on Verizon

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On 01/06/2007

One I’ve been waiting for for a long time: an opportunity to post something on one of my all-time heroes (strictly music-wise!) , the man who plays at least 167 instruments, the only one who can walk on 19” stilettos, the artist with the infallible fashion sense, namely the incredible Prince. We read that Verizon and Prince entered into a collaboration which they claim is an industry-first “direct-to-mobile relationship”. Prince will release new single “Guitar” exclusively via Verizon. This leads a promotional campaign up to the new album “Planet Earth” which will be released in July.

Verizon will promote artist, song and – incidentally – its V Cast service via print, TV, radio and cinema. This strikes me as rather traditional really… However, Verizon and the artist have tied up a rather need package featuring nearly every sexy must-have service around these days: V Cast customers can hold their handset up to the TV set to identify and download the song – IF their phone as Song ID, that is. They can also simply go to Verizon’s website and download it there. Upon release, the video will also be available on “licensed sites” YouTube, MySpace, Revver and Veoh.

As Prince isn’t signed to a label, this will be the main piece of promotion for the album, and that is certainly a rather revolutionary affair, at least one never tried by people who weren’t signed because they couldn’t find a label (as had happened to the Arctic Monkeys a while ago who, having started off on MySpace, have since grown to become an established acts signed to Domino). This together with a hole bouquet of recent activity of the artist (everything ranging from new website, concerts in Minneapolis [7/7/7] and London [21 Nights, selling 140,000 tickets in 20 minutes] to a new perfume and cosmetics range [not sure if I’ll try that one]) suggests a serious assault on the classic set-up of the music industry and the labels’ stranglehold onto it. This had been weakened by the arrival of digital media but never broken.

If it pans out? I sincerely hope so – less for revolutionary zeal, more for one of the greatest artists of recent decades. But in any event is this one of the more exciting music promotions of recent times. Well done!

Although, I don’t want to hide the bad: the world there is again defined as being North of Mexico and between the Atlantic and Pacific Ocean only… Or are we non-Americans not worthy of some Prince-ly mobile musical delights?

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