Source: Dilbert.com
Tag: 4g
The most excellent German blog Mobile Zeitgeist alerted me (in German) to a little battle that illustrates the pitfalls of creating the seamless user experience: Nokia appears to being in a tussle with (at least) the German arms of Vodafone and T-Mobile over the pre-installation of Skype clients on some of its forthcoming handset models (including the long-awaited iPhone competitor, N97).
Vodafone and T-Mobile Germany (who have a combined subscriber base of close to 80m) have now publicly stated that they will not include any Nokia models into their catalogues, which will have Skype installed. Now, there’s a market gone dead then… For other models, look to 3 in the UK (and my post on the Skypephone there…).
T-Mobile said that they “would not let their business be destroyed” by this. Their terms and conditions prohibited VoIP clients already but the carriers did anecdotally turn a blind eye towards this in the past. Nokia’s push however now is apparently too much for the carriers who fear network issues. Interestingly, this surfaces on the same day where, in anther part of the world, some queried the sustainability of free data plans for the iPhone (namely the Wall Street Journal on AT&T’s policies in respect of the iPhone). Predictably, Skype lambasted the move as “unfair practice”.
The name of the game is – of course – the pipe (not new: see e.g. here and here): the WSJ quotes from an Alcatel-Lucent analysis of North American networks during the midday hour of one day, which apparently shows that web browsing consumed 32% of data-related airtime but 69% of bandwidth whereas e-mail used 30% of data airtime but only 4% of bandwidth. The reasoning goes that increased data traffic impacts the networks’ capex whilst remaining – at best – ARPU-neutral (AT&T ponders to drop its data plan for the iPhone by $10), cutting down margins and hurting the carrier more than is healthy. Voice and SMS services are – on a bit for bit basis – very, very profitable as they use very little bandwidth.
To conclude though – as the WSJ does – that unlimited data plans should be abandoned “in the short term”, pours the baby out with the bathwater: smartphones are paving the way into the wireless future (20% of US households are completely wirefree already!) and it is a space where the carriers have great gains to make; maybe not on the sumptuous margins they were used to but healthy and viable nonetheless. To do as the WSJ asks would be as if one would have asked ISPs to please stop flat-rate plans for Internet access; and look what has become of the Internet!
Accordingly, other voices argue that a) slowing voice ARPU is at least being part set-off by increasing data ARPU (which grew a healthy 32% year-on-year in Q1 and saw more than $10bn in wireless data plans being sold in the US for the first time), and b) that the carriers actually know this for a while now and, accordingly, upgrade their networks to better cope with higher bandwidth demands in order to make the move to data pipes; the fight is arguably now “only” about whether these would be dumb or smart: with app stores, VAS and business-to-business (and machine-to-machine) solutions opening up vast new segments that have been completely unexploited to date, one should think that there is room for the smart pipe operator. So fear not!
The latest Carnival of the Mobilists is on now at Chetan Sharma’s Always On Real-Time Access blog. You can check it out here. Besides gratefully including my last post on 4G mobile gaming, he lined up some of the heavyweights and their contributions, including Tomi Ahonen on how to monetize mobile social networking (or not), Ajit Joakar on 4G and telcos, Russ Buckley’s musings over 1984 and more.
Next to app stores (or markets or marketplaces or app worlds or, well, Ovi), the dominating theme of CTIA Wireless was 4G/LTE. Now, as sexy and de jour as app stores might be, the latter has a hugely larger commercial impact (the Verizon Wireless contract for their LTE network will be a multi-billion deal alone!). But what is a network without applications?
So it was just as well that, one day before CTIA Wireless, I had the great pleasure of contributing to the “Connecting the Consumer” panel at Alcatel-Lucent’s 4G Symposium (with Disney, Samsung, Buzznet and Atlantic Records all contributing, providing for the various facets of content [games, video/film, music, web]). The ground had been laid by the keynote of the formidable Mitch Singer, Sony Pictures CTO and a long-standing thought-leader in changing sectors (he’s one of the people who brought the original Napster down and – in his own words – “look was the music industry has become”). Mitch had reminded us of “The Innovator’s Dilemma” (Read it! It’s worth it!), which deals with how businesses should tackle change…
And this brings me to the nucleus of this post, which is how the content industry will (should?) approach the next big thing that is LTE.
By way of background: LTE (Long-Term Evolution; don’t ask why but this is apparently what it stands for) is largely seen as the successor to current third-generation (3G) networks (UMTS, WCDMA, HSDPA, HSUPA, CDMA2000, EVDO, call me if you want more acronyms…). LTE appears to have won the “fight” against Wi-Max (as some early commentators predicted) with carriers (Verizon Wireless, Vodafone and China Mobile amongst them) and vendors (Alcatel-Lucent, Ericsson, etc) strongly supporting it. The standard is capable of delivering speeds well in excess of 10MB/s over wireless networks. So, world, be prepared!
One of the obvious beneficiaries should be the games sector home of the tech-savvy early adopters: ultra-high broadband, super-speeds, fantastic opportunities. Or so they say…
The games market can probably – to this extent at least – be simplistically divided into a) hard-core and b) casual games. The former would comprise massively multi-player online games (MMO) as well as fast-paced, high-end racing and action games. The latter is, well, everything from Solitaire to Scrabble and Tetris. And, yes, the latter is the one genre played by far more people, including the online gaming industry’s “golden customer”, the proverbial 42-year-old housewife from Ohio (absolutely no offense meant, implied or indeed merited!). Whilst it is easy to see how a high-end action game would benefit from high bandwidth, the case may be slightly less obvious for the casual games space (on PCs alone, this is a $2.5bn+ market already today!).
Given the casual games’ higher adoption across a much broader demographic, it is however conceivable that carriers (the ultimate gate keepers for mobile content at least in the world as we currently know it) would want to reach that broader demographic: higher spending power than geeky kids, faithful, not necessarily wanting to change things every 5 minutes, predictable spending habits – this is a much safer and more promising target demographic than my 13-year-old son who will happily switch allegiance to a provider the moment another one has something cooler, cheaper, slightly funkier, whatever, … to offer.
So what can 4G do for the (mobile) casual games space? It brings, quite simply, wireless (or wire-free; remember that sweet tagline from Orange days long gone?) digital media to par with the wireline one (and will, in very large parts of the world, effectively be digital media (or do you think Brazil, China et al will dig up their vast countries to lay down copper or fibre cables to connect their non-urban consumers?).
So what, you say? Well, this allows consumers to actually play as they did before the arrival of the first crude iterations of the Internet, and that is socially: what was a game before computers and gaming consoles took over? An intrinsically social activity (cards, board games, petanque, golf, you name it). We have seen a huge uptake of social games on the Internet with tens of millions of consumers enjoying fairly simple games on Facebook and other platforms. And the next generation wireless will enable that again wherever you are (see here for a presentation I recently gave at Casual Connect in Hamburg on the topic).
So, high connectedness it is then! Games that will allow to interact with peers, friends, total strangers that happen to have the same passion for the same type of game around the world. Games become a social activity again. It is a less fancy, less futuristic vision than all-immersive high-end niche products such as World of Warcraft (which will also see its fair share of fame once the wireless networks can support it) but it is one that will finally make any wireless device as ubiquitous as many in the industrialized world (East or West) have learned wireline connected devices to be. And it actually takes some of the sting out of concerns that (digital) games will make video zombies out of our children.
This development (with LTE as the backbone) opens a market to be counted in billions rather than millions, and most of them will be wireless (the number of mobile phones outnumbers the number of Internet-connected PCs by a ratio of 2.5:1 already today!). And this is where the true market opportunity lies!
On Monday, I shall be boarding a plane to visit Las Vegas for the All-American wireless love fest that is CTIA Wireless.
I will have the great pleasure of discussing the next generation of mobile entertainment services under a 4G LTE environment with executives from Samsung, Walt Disney, Atlantic Records, Buzznet and others. Alcatel-Lucent, who recently won a tender providing the infrastructure to Verizon Wireless for roll-out in early 2010, are hosting the respective 4G Symposium.
And otherwise? These are exciting times across a wide range of industry segments: network infrastructure and ultra-high bandwidth, the coming of age of smartphones and their widespread take-up as well as the respective changes for the content industries which can now offer services people could only be dreaming of a few years ago. Stay tuned!
Get in touch if you want to meet up during the show. Best to drop me an e-mail at volker (dot) hirsch (at) gmail (dot) com.