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[Has the industry been expecting too much from data ARPU? Research Director Andreas Constantinou revisits Channel ARPU as a new way of capturing not just the user’s wallet, but also his attention and heart] It seems everyone wants to own the user these days. Or to be precise, everyone wants to own the last mile to the user, the ability to grab the user’s attention, heart and wallet. Mobile operators have been concentrating on the wallet relationship and winning an increasing share of the user’s wallet – which has led to building tens of billions’ worth of network infrastructure and a drive to increase data ARPU. Handset manufacturers have been concentrating on winning the user’s heart with the latest features, the sexiest designs and the simplest user interface. Retailers have tried to grab the user’s attention and guide the purchase decision through the physical shopping experience. Media brands have exploited the user’s brand affinity to establish further inroads into the user’s wallet. Advertisers, the newcomers to the mobile industry have focused on reaching out and attracting the user’s attention through SMS, MMS, in-game, in-video and idle screen ads. The flaws in data APRU Traditionally, the industry has been measuring these efforts in terms of data ARPU and voice ARPU; in other words the average user spend on calls, text messages and more sophisticated data services. Particularly, data ARPU has most often dominated discussions about network operator performance. As voice ARPU has been declining in both mature and emerging markets, data ARPU is seen to this date as the main revenue source for network operators. Yet it seems that the focus on data ARPU is overrated for several reasons. Firstly, data ARPU does not account for how users have multiple relationships with multiple brands besides the operator. These relationships are global, given the worldwide reach of internet brands versus the local reach of the operator. In other words data ARPU accounts for degree of wallet ownership but not wallet share, which is how user-brand relationships manifest. Secondly, the data ARPU mentality puts the emphasis on technology (e.g. advanced messaging, mobile TV and faster pipes), but not use cases (e.g. communicating to your closest friends, or living the brand experience of your favourite pop star on your phone). Data ARPU is a superficial measure that looks at the result but not the root cause of operator’s revenue and hence likely profitability. Thirdly, data ARPU describes how good the operator is at grabbing the user’s wallet, but not his attention or his heart. Yet the latter two elements are particularly important in a world of information overload, multiplicity of choices and impulse buying. Win the user’s attention, then his heart and his wallet will follow. Perhaps most importantly, data ARPU does not address monetisation through the last mile to the user. In other words, the data ARPU notion focuses on revenues derived directly from the user but sidelines a whole range of revenue sources; sources which stem from exploiting access to the user’s attention, heart and wallet. Introducing Channel ARPU Both voice and data revenues are derived by billing the end user for anything from calls and texts to mobile TV subscriptions and m-payments. Increasingly however, revenues may be derived from third parties as a fee towards the party facilitating the delivery of mobile services through the last mile to the end user. Channel revenues are not a new concept; Rental, revenue share or other fees for channelling services, products and promotions to the end user are commonplace in fast-moving consumer goods (FMCG) are well as mainstream media industries. Increasingly, mobile services can be modelled after the business models prevalent in the FMCG industries, as the margins in manufacturing decrease and the value moves towards defining the customer proposition and controlling the delivery of services through the last mile to the end user. We ‘ve coined the term Channel ARPU to refer to this new source of revenue, i.e. third parties wishing to channel services to the user. This is for a number of reasons; – firstly, Channel ARPU is derived from a new part of the pie, i.e. service providers wanting to tap into a share of the consumer’s attention, heart and wallet. Such service providers are really a new source of revenue. – secondly channel revenues are derived from attracting consumer eyeballs, gaining brand affinity and understanding consumer behaviour, activities which all take place in the last mile to the consumer (or last few inches if you consider the phone screen). – thirdly, because revenues from service providers are most interesting if seen from a per-user context, particularly as per-user metrics relate best to existing network operator performance metrics. The many forms of Channel ARPU Channel ARPU can arise from a number of sources; we have categorised these into a number of distinct types, based on the medium through which the user is reached. UI inventory leasing: the ability to channel promotions and services throughout the handset user interface (aka real-estate), across the user journey. This is about promoting content, infomercials and ads not only in-SMS, in-video, in-game and on-idle-screen, but throughout every application on the handset, from the start-up screen through to dialler, the inbox and the main menu. As an example consider Android – a means for Google to massively increase its ad inventory and derive Channel ARPU from advertisers and service providers utilising Google services on top of the operating system. The Blyk MVNO is another good example here, where Channel ARPU is used to subsidise free minute and text bundles and offset customer acquisition costs. In Blyk’s case, the MVNO leases UI inventory in the form of in-MMS ad messages. Retail sub-leasing: leasing of shelf space to OEMs and service providers through the physical retail shelf space. Today this is often seen as a handset promotion on a stand; however this model hasn’t really been exploited as much as it has been in other FMCG businesses such as supermarket shelf leasing. Yet there are plenty of opportunities for leasing shelf space for promoting services using product-like visual clues (i.e. physical boxes with the branding and conditions of use of the service) – much like what you have in a video club. Service delivery leasing. Network operators have traditionally made a cut from premium SMS service providers and handset application developers – as much as 70% in many mature markets. These revenues can be accounted for as Channel ARPU, i.e. per-user revenues derived from provided service providers with access to the last mile to the user. More recently, operators have revenue share deals with handset OEMs, by allowing OEMs to deliver services to the end-user through their network. The example here is the deals that Vodafone, TIM and Telefonica have established with Nokia’s Ovi. These deals involve bundling of Ovi services on a Nokia handset in return for a share of Ovi revenues with the operator. Channel ARPU here is the revenues operators derive from Ovi. User analytics leasing. Increasingly, efforts like Nokia’s 360 and vendors CarrierIQ, Agilent, m:metrics, mFormation and Nielsen Mobile use a handset software agent to derive a broad range of information on device usage, service usage, user profile, network usage, user social graphs and more. This is an underhyped area of mobile solutions which deliver unprecedented insight into mobile consumer behaviour; an opportunity which may ultimately result in creating a metrics aggregator that is to the mobile industry what Nielsen is to TV. As in every industry, metrics on sales, performance and analytics on consumer behaviour can be a very lucrative business. Channel ARPU therefore includes revenues which operators can source by leasing metrics and analytics to third parties. Customer access leasing. Apple’s iPhone can command a revenue share for providing network operators with access to high-spending customers. For the operator, this can be accounted for as a negative Channel ARPU, as it flows outbound towards the OEM. In a sense, this is a similar business model to the revenue sharing agreements that retailers practice with mobile operators, for each subscriber that a retailer signs up on behalf of the operator. Adopting the Channel ARPU mentality The notion of Channel ARPU focuses on growing wallet share based on collaboration with third parties. This is contrary to the traditional view of voice and data ARPU which is about growing wallet size based on customer ownership and exclusive provision of services to the customer in the all-too-famous one-stop-shop model. Channel ARPU becomes more relevant as the mobile handset business shifts to resemble the fast moving consumer goods (FMCG) business, where manufacturing costs are low and value comes from using multiple partnerships and channels to access the right consumer at the right moment. Moreover, Channel ARPU better accounts for monetising access not only to the user’s wallet, but also to the user’s attention and brand affinities through the last mile. Channel ARPU is a refreshing and meaningful approach to viewing per-user revenues derived by leasing access to the consumer through that last mile. However, much like data ARPU, network operators have to formalise and standardise the metrics by which Channel ARPU is calculated, if this new form of measuring ARPU is to be adopted. Perhaps a task for standards bodies such as the OMTP ? – Andreas

[UI development flow and actors: Graphical Designer, Interaction Designer, Software Engineer, classical technologies: GTK, Qt, next generation: Flex, Silverlight, WPF, TAT, XUL, SVG… guest blogger Thomas Menguy describes what are the main concepts behind all the UI technologies, what the new generation ones have in common, what those modern approaches are bringing to the product development flow…and what is missing for the mobile space]. A good UI is nothing without talented graphical designers and interaction designers: How the plethora of new UI technologies are helping unleashing their creativity? What are the main concepts behind those technologies?Let’s try to find out! UI is trendy… thank you MacOS X, Vista and iPhone! UIQ S60 iPhone Put the designers in the application development driver seat! Here is a little slide about the actors involved in UI design UI flow actors and their expertize What does it mean? Different actors, different knowledge …. So different technologies and different tools! Those three roles can be clearly separated only if the UI technology allows it. This is clearly not the case in today mainstream UI technologies where the software engineer is in charge of implementing the UI and the service part, most of the time in C/C++ , based on specifications (word document, Photoshop images, sometime adobe flash prototypes), that are subject to interpretation. The technologies used by the designers have nothing in common with the one used to do the actual UI. The technologies that allow UI implementation…require an heavy engineering knowledge. Big consequence: the software engineer decides at the end! The picture is different for web technologies where it has been crucial and mandatory to keep strongly uncorrelated the service backend from its representation : Web browsers have different API and behavior, backend have to be accessed by many other way than web representation…and above all data is remote and presentation is “half local/half remote”. Separating representation, interaction and data has been the holly grail of applications and services development for years. It has been formalized through a well known pattern (or even paradigm in that case) : MVC (Model View Controller) MVC pattern / source: wikipediaFrom wikipedia: http://en.wikipedia.org/wiki/Model-view-controllerModel The domain-specific representation of the information on which the application operates. Domain logic adds meaning to raw data (e.g., calculating if today is the user’s birthday, or the totals, taxes, and shipping charges for shopping cart items).Many applications use a persistent storage mechanism (such as a database) to store data. MVC does not specifically mention the data access layer because it is understood to be underneath or encapsulated by the Model.View Renders the model into a form suitable for interaction, typically a user interface element. Multiple views can exist for a single model for different purposes.ControllerProcesses and responds to events, typically user actions, and may invoke changes on the model. All the UI technologies are offering a way to handle those 3 aspects and, as a consequence, are providing a programming model defining how information and events flow is handled through the MVC. See below a simple schema I’ve made describing a GTK application: when you look at an application screen, it is made of graphical elements like buttons, lists, images, text labels, called widgets (or controls) . Rmk: the term “widget” is used with its literal meaning : “window-gadget”, this term is now used a lot in web 2.0 marketing terminology and by Yahoo/Google/MS to represent a “mini application” that can be put on a web page or run through an engine on a desktop PC or a mobile phone, to avoid confusion I prefer the term of “control” over widget for the UI technologies, but will continue using “widget” in the rest of the GTK example as it is the term used by GTK itself. Widgets are organized hierarchically in a tree, meaning that a widget can contain other widgets, for example a list can contain images or text labels. In the example below the “root” widget is called a “Window”, it contains a kind of canvas which itself contains a status bar, a title bar, a list and a softbutton bar. Then the list contains items, the title bar has a Label, the softbutton bar contains some buttons and so on. A widget is responsible for Its own drawing using a low level rendering engine, called GDK in the GTK case (GDK offers API like draw_image, draw_text, etc). Computing its size according to its own nature (like the size of the text that will be displayed for example) and the size of its sons. Reacting to some events and emiting some specific ones: the button will emit a “press event” when it is pressed with the touchscreen or when its associated keypad key is pressed. The widget tree will propagate system events (keypad/touchscreen, etc) and internal events (redraw, size change, etc) through the widgets. The developer will register callbacks (in fact functions, piece of code implementing a functionality) that will be called when widgets will fire events (like the “press event”) . GTK Widget tree structure: a phone screen example The major GTK/gLib formalism is how those events/callback are handled: through what is called a “gloop” where all events are posted in the loop queue, dequeued one by one and “executed” in this loop, meaning their associated user callbacks will be called. This loop is running in one thread. This is what we call a programming model. In nearly all the UI technologies such a loop exists with various formalisms for the queue handling, event representation, etc. To finish with the above schema the user callback will then access to the middleware services, the various databases and so on. There is no clear MVC formalism in that case, the controller is mixed with the view …and even the model that is mixed … with the widgets! (so with the view) Qt Model is really identical to the this one. One last point very relevant for application development and design: the notion of states. Each application is in fact a state machine displaying screens linked by transitions, like in the example below where in the state 1 the user decides to write an SMS, it will open an SMS editor screen and clicking send will go to a selection of phone numbers. Application State Machine: write sms example Here is an attempt to formalize a modern UI framework with Data binding (for Model abstraction). UI engines formalizationControl:equivalent to a widget but where the MVC model is fully split. A Data Model as to be associated alongside with a Renderer to make it usable.Control Tree:equivalent to the widget tree: aggregation of Controls, association of the controls with a Renderer and a Data Model. Possibly specification of Event Handlers.Data Model:Object defining (and containing when instantiated) a set of strongly defined and typed data that can be associated with a Control instance.Data Binding:Service used to populate a Data Model.Control Renderer:Object that is able to graphically represent a Control associated with a Data Model, using services from a Rendering Library.Rendering Library:Set of graphical primitives, animations, etc.Event Handling (and Event Handler):code (any language) reacting to events and modifying the current state machine, the Control Tree, etc.Standardized Services:Interfaces defined to access middleware directly from the event handling code.Server Abstraction:Possibility to transparently use Data Binding or any service call locally or remotely. Ok if you are still there, and your brain is still functional, here is what’s happening today in this area…. In traditional UI frameworks like GTK, Qt, win32, etc the control tree description is done with a C/C++ description … a little niche technology have paved another way: it is called HTML: after all an HTML web page description is defining a tree of controls, W3C use a pedantic term for it : the DOM tree. JavaScript callbacks are then attached to those widget to allow user interaction. It is why all the new UI technologies are based on an XML description for this tree, it is muuuuuch more easier to use, and allow a quicker description of the controls, and above all it allows nice design tools to manipulate the UI….Apart from this XML representation the majority of the UI technologies are coming with: An animation model, allowing smooth transitions, popularized by the iphone UI, but it was already there in MXML (Adobe Flex Format), XAML (MS format), SVG, TAT offer…. Modern rendering engines (Flash for Flex, MS has one, TAT Kastor). Nice UI tools for quick implementation: Adobe Flex Builder, MS Expression line, TAT Cascades, Digital Airways Kide, Ikivo SVG… In many case : a runtime, to be able to run a scripting language. Here are some quick tables, really not complete, of some of the most relevant UI technologies in the PC and mobile phone space. Just to explain the columns: RIA : Rich Internet Application, delivered through a browser plugin RDA : Rich Desktop Application: delivered through a desktop runtime Runtime: ok, galvoded name here, just a name to represent the piece of technology that allows the UI to run UI: Technology to describe the control tree (you know what it means now!) Event Handling: the dynamic UI part, and how to code it (which languages) Tools: UI tools RIA&RDA Chart Embedded rich UI technologies So its time to answer the main point of this post: How those technologies are helping unleashing designers creativity? By defining a new development flow, allowing each actors to have a different role. Here is an Adobe Flex “standard development flow: Adobe Flex&Air tools flow In the next schema I try to depict a more complete Adobe Flex flow, adapted to the mobile world, where, for me, a central piece is missing today: it is not possible now to expand “natively” the adobe air engine, this is mandatory for mobile platform with very specific hardware, middleware, form factors. So I take the adobe flow more as an example to demonstrate how it should work, than as the paradigm of the best UI flow because this is not the case today (same remarks for MS flow, less true for TAT for example) An Adobe UI design flow for embedded This shows clearly that the “creativity” phases are clearly uncorrelated: different tools are used between the designers, they can do a lot of iterations together, without any need of the software engineer. This one can focus on implementing the services needed by the UI, optimizing its platform, adding middleware features. Interaction Designer defines the application high level views and rough flow Graphical Designer “draws those first screens” Interaction Designer import it through Thermo Graphical Designer designs all the Application graphical Assets Interaction Designer rationalizes and formalize what kind of data, events and high level services the application needs Interaction Designer & Software Engineer are working together on the above aspects HINT: A FORMALIZM IS MISSING HERE once done: Software Engineer prepares all the event, data services, test it unitarily, in brief: prepare the native platform Interaction Designer continues working on the application flows and events, trying new stuffs, experimenting with the Graphic Designer based on the formalism agreed with the Software Engineer. Once done … application is delivered to the Software Engineer that will perform target integration, optimization…and perhaps (hum certainly) some round trip with the other actors 🙂 So this is it! this flows really focus on giving power to the designers…taking it from the engineer hands. Some technologies are also missing to really offer a full Mobile Phone solution: All the PC technologies are about building ONE application and not a whole system with strong interaction between application. With today technologies, the designers are missing this part….leaving it to the engineer: How to cleanly do animation between applications? Strong theming and customization needed for: product variant management: operator variants, product variants (with different screen sizes and button layouts for example), language variant (in many phones 60 languages has to be supported, but in separated language packs). A not well known one: Factory line fast flashing of those variants. It is very long to flash the whole software of a mobile phone while on the factory line … so if you are able to have a big common part and a “customization” part as little as possible but with the full UI…you gain productivity…and big money 🙂 Adapted preset of widget or controls (try to do a phone with WPF or Flex…all the mandatory widgets are missing) Anyway an UI technology is only the way to interact with a user…to offer him a service. Most of the technologies presented above are about service delivery and not only UI…My next post will be about this notion of service delivery platforms. [Update] Replaced the term “ergonomics specialist” by “Interaction Designer”, thanks Barbara, see comments below. Thomas Menguy #mxml #svg #gtk #xaml #adobeflex #mobilephone #userinterface #tat #daw #ui #thermo #phone

[All consumer electronics, mobile and software companies have to in-source third party software – but the perils and complexities of managing that software are several, as the software moves through your organisation and out to the customer. Guest blogger Ã…se Stiller distills years of experience in software licensing in simple guidelines for managing 3rd party software] The particular challenge I would like to draw your attention to in this article is the risk for unauthorized distribution or reuse of the third software. It is easy to see the need to assess a potential supplier, but it is equally important to turn around and take good look at your own company’s ability to safely manage the responsibility, End-To-End Whether you are developing a 2D game or a complete application framework putting together software products is not always as “Lego-like” an activity as we like to draw in block diagrams to management. In many cases bringing in 3rd party source code is the only viable alternative, but you must be sure that everyone dealing with the code knows what they are doing.- and you can´t very well ask all engineers to study the contract. Pardon my French but it’s often hard to ask engineers to “RTFM” or to be precise “RTFC” (C for contract). It´s is hard enough to get the right code, at the right price, in the right shape delivered at the right time but you must also get it with the right terms to fit well into your own development process, not to have to burden developers with unnecessary restrictions and contract details. Sourcing of software is and must be a team activity. Only a true Hercules can deal with all the Hydra-heads single handed. Staying above the line of software commoditisation Developing an application, game, application framework or any piece of software for mobile phones means adding unique and sexy features to a whole lot of commodity, and checking that nobody else gets there first. What was cutting edge technology two years ago is now all taken for granted – users don’t want to pay for Bluetooth or FM radio these days and 5 mega pixel cameras is slowly becoming the norm. The value line of software is increasing up the stack with each month going by. For software companies, as new technology ceases to be a marketing differentiator and turns into standardized commodities, it becomes appropriate to share the costs for maintenance and further enhancements with competitors and partners in the same business. The easiest way to find this economy of scales is of course through sourcing software from Independent Software Vendors (ISVs) or by using software which comes under an open source license (e.g. Eclipse IDE and WebKit browser core). Another good reason to source software is of course to get access to specific technology that you cannot, or cannot afford, to develop in-house. Some things are simply best done by experts, like preparing Japanese puffer fish and developing e.g. telephony modules for mobile phones. In mobile phones as well as all other complex consumer electronics you will find a lot of common functionality developed and maintained by external ISVs. The type of components vary from highly visible functions like Web-browsers to completely anonymous drivers, and only very few suppliers will get their logo in a prominent place. A mobile phone would have to be the size of a car to allow for “NN-inside” stickers for all externally developed software components. There may be many links in the chain between the original developer of a software component and end-user. A lot of the sourced components themselves come with software developed by others than the supplier, like e.g. open source parsers and specific security solutions, and the further away from the original owner of the IP the harder to keep track. A good practice is to make sure that such components are declared well in advance before you sign an agreement to source software, specifically if there are inherited restrictions or obligations pushed on to you and your customers. Make sure that the sourced software doesn´t come with an undetected Hydra-head embedded in the license. If there is Open Source with obligations to disclose code to end-users this will affect you or your customer, or your customer’s customer. The perilous journey of software through an organisation Regardless of the reason for sourcing 3rd party software it is important to truly understand how the sourced component will be used in the internal development process, and how the component will be integrated with existing product. For example, there may be a need to distribute code to sub-contractors or pilot users, customers, additional development sites etc, during the development process . Your license must meet these needs and allow for that – or you must plan for an alternative way to work. Deviations from standard development process may add to the overall cost for the sourced component, and must be taken into the cost/benefit analysis. Naturally you must not panic but maintain a healthy balance between the added cost to eliminate a risk and the weighted cost for an actual breach. If the sourced component is self contained and easy to replace your worries are less, even with a un-permissive license. However with a less modular and more realistic dependency you need to be more cautious about handling the code. A good way to reach an understanding of all your needs for re-distribution of a sourced component is by identifying the End-To-End journey for the software through your company. You will then be able to anticipate what distribution rights must be catered for in the contract, and to prepare for a change in the process if you cannot win these rights in the license. Another benefit of such practice is that you will gain a better understanding of how the third party product is to be integrated with you product. You can describe the level of integration and understand how that will impact your negotiation, or choice of license for Open Source software. The natural place for an end-to-end flowchart and for the description of the integration is in a Risk Analysis for the sourced component. Such Risk analysis should also include the standard commercial risks, market risks, legal risks etc – but that is a different subject. Plan for the software’s journey There is no single solution to how to safely manage third party code through your development process; any solution must be case specific. Naturally it depends on the size of your organization and of how many will have access to the code, but it also depends on the level of integration with the rest of the product. Based on the End-To-End flowchart and the license for the software, you can provide a plan for the management of the third party code; you can identify an owner of the code in all stages of development, and if necessary specify a hand over process between development units, and eventually the hand over to your customers. You can define specific rules for the code and provide solutions before the issue becomes a problem. As an extra bonus you may also find and be able to eliminate conflicts between licenses – e.g. an Open Source license forcing disclosure of code and another license prohibiting such disclosure. Another Hydra-head down. Information is King A development process is only as waterproof for the in-sourced 3rd party software as the team members who are involved in this process. By identifying the different units that will be involved with the third party component, you will be able to locate who needs to be informed about the rights and obligations that come with the component. Knowledge about the restrictions for the component must be available for all those who actually access the code, all the time. A good way to achieve this is to keep a simple database where you register the third party IP included in the product, and specify rules for how the code may be spread and used. Access to the information in the database must be granted to all those who come in contact with the code and therefore you may not want to add the contract as such to the database. Do not confuse this with a contracts database; that serves a different purpose. Information in this database must be easy to find, easy to understand and interpret and it shall clearly explain what you must and must not do with the code. E.g. if you can only distribute to subcontractors or development sites that have been approved in the contract, these subcontractors and sites shall be listed in the database and if you can only distribute binaries to customers that must also be easy to detect for anyone who might need to release code to customers. It is, of course, crucial that the information in the database is always correct and updated. Therefore someone must be identified as the owner for the information. The owner of the contract is my first choice since that is the person with the most to gain on this; the one who will be hit by the Hydra if something goes wrong or have a smooth and easy day at the office when all the questions are answered by the database. Do’s and Don’t of software sourcing. When you accept the responsibility and liability that comes with signing a software license for source code – Open Source or closed Source, you must not let price and liability totally overshadow the rights to use and distribute. Do your homework and get a good understanding of the intended use of the code, before agreeing the license terms. Analyze the risk and avoid problems further down the road by planning the management of the software End-To-End and publish the restrictions for the code where it is easy to find and to update. – Get the team to help define the contractual needs for the sourced software. My experience is that insufficient or unclear license rights too often blocks engineers from doing their job. If you can get the engineering teams to help you prepare the sourcing better by providing relevant input to how your company will use the sourced component, you stand a far better chance getting the contract right from start, and it will save you from panic changes to both contracts and project plans. – Educate all on a need to know basis. My experience also tells me that engineers in general don’t love contracts, or rules restricting their creativity, but they do need to know the “Dos and Don´ts” with the third party code they handle. Just putting rules in a database is probably not sufficient; a verbal run-through of the rules is a good support for the information in the database, and an excellent way to test if the database works for its intended audience. You will probably also learn if the rules set up for the third party IP is too restrictive or too complicated. – Talk to all stakeholders. Sourcing of software is teamwork involving every department in your company – save possibly for janitors. It takes a team to find and fight all the heads of the Hydra. In other words; to provide all the input for the risk analysis leading you to a good license agreement and a safe passage for the software through your development process, you need help from all the stakeholders. Open Source is no different from any other third party software in this respect. – Ã…se Stiller [Ã…se has lived through the pains of licensing software both from the selling and the buying side of the cooperation as part of UIQ and Teleca, and has survived to tell the tale and educate the rest of the industry.]

[Is there a future for the SIM card in operator service delivery? Research Director Andreas Constantinou reviews the state of the SIM card industry, the commercial developments in the last 12 months and discusses why the role of the SIM may be indeed coming to a positive inflection point] Yet a paradox exists in the adoption of the SIM card for operator services. On one hand tier-2 and tier-3 operators have put the SIM card into innovative uses: the SIM has been used to deliver mobile banking in Czech Republic, mobile ads in Russia, ringtone downloads in Brazil, payphone use in Nigeria and automatic device detection in Austria. On the other hand tier-1 operators have used the SIM mostly for basic applications such as managing missed calls and roaming lists; At the same time handsets have developed far superior user interfaces to the SIM’s text-based UI and operators have invested in Java, Flash and on-device portals for advanced service delivery, as opposed to SIM based applications. It’s perhaps yet another reminder that innovation does not easily bubble up in large organisations like tier-1 operators, while cash-strapped tier-2 and tier-3 operators have been more resourceful and innovated using existing infrastructure. Still the issue of adoption of SIM cards for service delivery by tier-1 operators is indeed a fundamental one, given that tier-1 operators are the largest SIM customers. Furthermore with the commoditisation of SIM card functionality, SIM card manufacturers will need to continue delivering new value in order for the whole SIM ecosystem to survive – and a win-lose situation is not tenable. So is there a bright future for the evolution of the SIM card? The SIM industry backstage To understand the status quo, one needs to visit the backstages of the SIM card industry – an all-too-familiar site, for those observing the industry in the last few years. Operators (particularly tier-1s) have been clearly motivated to see SIM cards take a greater stake at service delivery, yet have been reluctant to invest in long-term initiatives without a business case for a 6-month RoI. As such, tier-1 operators have reverted to applications (e.g. on-device portals, active idle screens), platforms (Java, Flash Lite) or ‘container’ programs to further their service delivery aims. On the other hand, handset OEMs have until recently seen the SIM card evolution as a potential compromise to their own agenda and have been slow at adopting industry standards for SIM-enabled service delivery. And while SIM toolkit standards have been adopted in the vast majority of handsets (an estimated penetration of 95% of more), the potential of the SIM as a service enabler has been severely limited compared to the constantly increasing handset feature arsenal. Last but not least, SIM card manufacturers have since 2006 proposed significant technology advancements, in terms of ‘smarter’ SIM software, near-gigabyte capacity and creative new applications, from blogging and widgets to advertising and idle-screen promotions. Yet these advanced SIM cards have always demanded a significant per-unit price, while the average selling price of ordinary SIM cards has been dropping as much as 30% year-on-year during 2006. Yet the prospects for the SIM card evolution in early 2008 are not as dire as they may seem. A confluence of developments, both technology and commercial ones are marking an inflexion point for the advancement of the SIM card. Change of scenes Three major developments that took place in the last twelve months will likely impact the uptake of advanced SIM cards in 2008: 1. The price war on SIM cards has largely subsided; during 2006 competition from China and between the major SIM card manufacturers caused prices to drop by more than 30% year-on-year. Fortunately, the prices have now stabilised with Gemalto reporting a decline in average selling price ASP) of only 2% year-on-year for 4Q07 (compare this to declines of handset ASP of 5% or more for tier-1 OEMs in 2007). 2. The cost of NAND memory used in SIM cards (as well as PCs and removable storage media) has dropped dramatically in the last two years. The cost delta between a 256KB NOR memory and a 256MB NAND memory has dropped by an order of magnitude within the space of two years. This has helped make mega-SIM cards more affordable to mobile operators who are planning to source high capacity SIM cards. 3. The OMA standards body has been busy finalising the Smart Card Web Server (SCWS) specification, a technology for using the SIM card as an always-on web server that stores operator content, application settings and encrypted files for multiple applications. The SCWS specification is expected to be finalised soon, following three successful interoperability ‘testfests’ which took place between September 2007 and January 2008. The SCWS is a pragmatic specification that leverages the mature and widely used HTTP protocol to enable a range of solutions such as on-SIM portals, NFC, just-in-time customisation and DRM. The SCWS protocol requires a more advanced smart card OS, but no hardware upgrade and hence no increase in hardware BOM. This is in contract to high-capacity SIM cards, which impact not only the silicon BOM, but also add a requirement for two extra PINs to both the SIM cards and the reader terminal. We are not there yet.. Despite the recent developments, and the great potential to address the application distribution barrier, the role of the SIM card has not really advanced beyond that of an authentication mechanism, particularly for tier-1 operators who command scale and dominate OEM terminal requirements. A few tier-2 and tier-3 operators in Latin America and Europe have been using the SIM card in applications such as banking, automatic device detection, ringtone download and idle-screen promotions. Yet tier-1 operators still appear reticent and somewhat undecided as to whether to invest in advanced SIM cards with SCWS capability and/or high capacity. The primary reason has been pricing. SIM card OEMs have been bundling advanced OS capabilities in higher-end NOR cards of the 256KB and 512KB range, which operators don’t yet perceive the need for. The major handset OEMs have delayed plans to incorporate SCWS (and the necessary underlying BIP server support) due to the lack of an established base of SIM cards that support this functionality. Sagem and LG have committed to supporting SCWS within selected commercial handsets later in 2008, but there are no commitments as to the scale and the sustainability of OEM SCWS adoption. Overall, the industry has been caught up in a chicken and egg situation where no player has been willing to risk investment in advanced SIM cards. How to kickstart the system Pricing and addressable market are the fundamental criteria that have caused the Ferris wheel of the SIM card evolution to remain still. Yet, there are still ways to kickstart the wheel and push the industry inertia into motion. For that to happen, SIM card manufacturers need to redraw their pricing plans and figure out how to migrate the software BOM surcharge into service enablement post-sales revenues. Once SCWS capability is featured on standard SIM cards as a norm, the handset OEMs will be incentivised to support the many SCWS use cases and therefore produce compliant handsets via a software update. And once the industry Ferris wheel starts spinning into motion, the benefits for both handset OEMs and network operators will be compelling enough for the wheel to keep spinning for many years.. at least until the next S-curve arrives. – Andreas [Andreas is a moderator at the forthcoming SIMposium conference in Berlin, 22-23 April, the annual SIM mega-event for the mobile industry.]

[In part 2 of his predictions for MWC 2009, Research Director Andreas Constantinou talks about M&As amongst Linux vendors, OHA devices, enterprise UIs, the challenges for Modu, and the unstable future of UIQ] Check part 1 for learnings from MWC and predictions on a new Trolltech, the evolution of widget solutions, the relicensing of Qt, acquisitions of WebKit vendors and Danger devices. Prediction 6: M&As in the Linux vendor landscape Analysis: Mobile Linux has gone through two phases; the first phase (2000-2006) was the OEM in-house efforts from Motorola, NEC and Panasonic who developed their own middleware and applications on top of MontaVista (and Qt/E in the case of Motorola). The second phase (2004-now) has been the emergence of for-license Linux-based software stacks from MontaVista (the incumbent), WindRiver, OpenMoko, Mizi, Access ALP, Azingo, A la Mobile and Purple Labs. Many of these vendors also offer integration, customisation, productisation and certification services on top of their software stack, as shown in the next diagram. (note that Qt/Qtopia are missing from this chart because it is still not known whether they will be offered under commercial license terms following the Nokia acquisition). In practice the above taxonomy of mobile Linux vendors is rather simplified and the devil is in the details; OpenMoko is six months late and probably six more months before being mature enough for v1; Mizi has recently announced a re-developed version of a low cost stack and is looking for customers beyond Korea; Access ALP still has teething problems and its MWC demo was unimpressive; Azingo is well funded and has a quite stable & complete stack incl. WebKit, but has only started to build a services arm; A la Mobile is underfunded for its claim as the ‘Red Hat of Mobile’, while WindRiver appears to be taking on that role; and finaly Purple Labs is already on three European phones and has a single-core Linux stack ready for licensing. Naturally, ten mobile Linux vendors is far too many, while financial challenges will be setting in this year and OEMs will be making hard decisions about which stack/integration vendor to choose. MontaVista had a surprisingly small stand at MWC this year, while it has been losing many head-to-head bids to WindRiver. A la Mobile has publicly only been funded with $3million, a far cry from the $30million that Azingo (ex Celunite) has gotten to date. It is likely that MontaVista or A la Mobile would be looking for another financing round or for an exit. [update: A la Mobile secured a second round of 6.75 million from Venrock in February. That’s enough to power a startup for 2 years, but is it enough to build a services organisation?] On the other hand Purple Labs has been under the radar until recently when its ownership structure changed with the majority ownership moving from Vitelcom (Spanish ODM) to Sofinnova Ventures (altough details of the deal are sketchy). Interestingly, Purple Labs has a mature software stack already in three European Linux-based phones and claims to have the first single-core Linux stack already on a soon-to-be-commercial phone. Yet despite the strength of its technology (and the hardware design expertise of its team) PurpleLabs is lacking the professional services arm that will aid OEMs in integration and productisation projects (any takers out there?). [update: PurpleLabs has a proportionately-sized pre-sales team, but most importantly has a strong management team incl. the ex-head of Openwave prof. services]. Exits, IPR acquisitions and company acquisitions are therefore likely for mobile Linux vendors by MWC 2009. Prediction 7: OHA devices; cheap but ugly Analysis: The Open Handset Alliance and master-chef Google have been cooking the Android SDK for quite some time and the first development boards were shown running Android ‘officially’ at MWC. There are no counter-indications that Google will be able to hit its 2H08 promise for the first Android devices; several chipset vendors have been integrating the Android stack and HTC (followed by Samsung) has significant expertise in bringing up a ‘virgin’ OS into a mature phone software, as it did for Windows Mobile in 2002-4. The well-architected stack that is Android (incl. plug-and-play core apps and J2SE-like environment) will likely be targeting mass-market devices; having a US-based company as master-chef and HTC as the host, this probably means low-BOM devices with a PDA-like form factor. In other words, a low price and data-first design will be very much a priority compared to the looks and phone-first design (very much like Windows Mobile devices thus far). Prediction 8: Enterprise UIs emerging Analysis: The enteprise segment has traditionally been seen as completely contrary to consumer segment from a functional requirements perspective; consumer devices have to be fun and sexy, whereas enterprise devices have to be function-first and stripped down of most aesthetic features. But wait.. who said enterprise people are boring? I believe that some innovation on the user interface and the plastics of enterprise devices is in order. And while plastics innovation is too much of a gamble, UI innovation isn’t (you can change UIs easily with many of today’s UI frameworks). Therefore, I foresee that at least one vendor will be offering enterprise-targeted UI frameworks which provide both eye-candy and functionality such as word/Excel/PPT/PDF document viewing and rich email (Picsel comes to mind). This also means that the boundaries between enterprise-targeted mobile OSes and consumer-targeted OSes will be bluring, which is also the direction taken by Windows Mobile 7 featuring a customisable UI layer (a major functional delta from all previous Windows Mobile versions). Prediction 9: The challenges of Modu Analysis: Modu made big headlines at MWC, not only because of its huge marketing spend, but also the innovative nature of its connected device offering. Modu offers a mobile (cellular) building block which is at the center of a connected personal area network of mobile devices. Like many previous attempts at creating a distributed devices environment (most notably IXI), Modu is based on moving cellular connectivity into the centre of a connected devices framework and thereby making it much easier to design, develop and market mobile devices. In principle, the paradigm of a distributed devices environment is a win-win-win for operators, manufacturers and users (as I advocated on this 2002 IEEE paper on this very subject). However, the challenge is in bootstrapping the ecosystem of operators, device and services vendors to invest in this new paradigm of building connected devices. What Modu has done is quite clever; Modu did not develop just an OS for powering this connected device ecosystem (like IXI) or just the connected devices prototypes (see Motorola’s wearables distributed devices collection designed by Frog agency). Modu created the physical building block (a nano-phone, so to speak) that can form the nucleus of the distributed devices system, making it easier to bootstrap an ecosystem around it. However, Modu is still facing a major challenge; convincing OEMs to build devices around its building block. That means putting its money where its mouth is and funding (or at least part-funding) several handset projects, which is clearly a very expensive exercise. More importantly today’s handset OEMs are more keen to invest in services rather than over-innovative handset designs. To convince OEMs to build on top of its building blocks, Modu therefore has to create a framework for delivering services around it. There are a handful of service companies who are today creating service frameworks; Google, Yahoo and Nokia come to mind. Service frameworks are inherently a loss leader; there’s no money to be made by designing, developing and supporting the service connectivity framework (see Android, widgets/Go 3.0/OneConnect and Qt, respectively). However there is money to be made from enabling service delivery and access (see Google ads, Yahoo ads/services and Ovi, respectively). Therefore Modu’s challenge is in creating a loss-leader framework for delivering connected services around its cellular building block and convincing OEMs that this should form part of their service investment strategies. Prediction 10: The unstable future of UIQ Analysis: Motorola invested in a 50:50 ownership of UIQ alongside Motorola back in October, in what amounted to a diversion for the company’s Linux strategy. UIQ’s expansion (now 400+ people in Ronneby and Budapest – almost a tripling in numbers within a year) means that the venture has much higher costs than revenues. If you do the numbers, it turns out that UIQ must ship at least 6 million devices annually (at $3 per-unit royalty) in order to sustain its workforce OPEX. This is a far cry from the 1.2 million it shipped in 2006 but close to the 7.7 million estimated for 2008 (both figures from Nomura). UIQ must therefore ramp up volumes very fast in order to sustain its OPEX. The real challenge with UIQ however comes with sustaining the underlying Symbian OS strategy. With UIQ’s ownership transfered out of the Symbian, Sony Ericsson and Motorola are now arch-rivals for Nokia, who controls the majority of Symbian shares (and in practice most of the decisions taken by the Symbian board). It has for long been rumoured that Nokia has been working on a new-generation OS, but rumours aside, UIQ should have continual challenges in driving the features and strategic agenda for Symbian OS towards favouring UIQ. Moving UIQ to a different kernel support package (some Linux flavour) is a very expensive 2-year operation that UIQ would not easily venture into, given its financial state and the instability of its parent Motorola. Clearly a lot to look forward to until Mobile World Congress 2009.. – Andreas (while on the topic of predictions, make sure to check out our hugely successful Mobile Megatrends 2008 series. Full presentation below.) [slideshare id=209579&doc=mobile-megatrends-2008-vision-mobile-1198237688220186-3&w=425]

We ‘ve just launched our new website with a completely redesigned look & feel!. After a year in the making and working closely with two design agencies, the website is finally alive and kicking. Thanks to Paul at fifty50 and Savvas at Peel-Me for all their hard work. Feel free to browse through the site and let us know what you think! San Francisco next week? Continuing with our successful 360 degree workshop on Mobile Open Source, we ‘ll be delivering the workshop as part of Informa’s Open Source in Mobile conference in San Francisco conference on March 10. This one-day intensive workshop is a must for companies wanting to understand the economics, legal issues and complex landscape of Linux and open source software vendors in the mobile industry, and make informed decisions on their own positioning. Check here for more info on the Informa Open Source in Mobile conference, or drop us a line if you are in the San Francisco area and want to meet up. – Andreas

To celebrate another year of blogging at VisionMobile, we ‘ve just published a glossy brochure titled ‘VisionMobile Blog, Print Edition 2008’. This brochure contains eleven of the best articles that appeared on the blog in the last year. The Print Edition 2008 contains excerpts from the following eleven articles, organised along several themes: Theme: Mobile software strategy: – Rethinking application environments (March 07) – The significance of Google’s Android (November 07) – Prague or Berlin? Behind the scenes of the SIM industry (April 07) Theme: Mobile operator strategies: – Container projects: The next chapter in handset customisation (June 07) – Motorola’s UIQ: Diversion or U-Turn? (October 07) Theme: OEM strategies – The headaches of being a handset OEM (April 07) Theme: Service delivery technologies – On-device portals: Sardines in a can (February 07) – Activating the idle screen (June 07) Theme: open source in mobile – Sun’s open source Java policy will mean very little for the mobile industry (September 07) – Bye Bye Browser (April 07) – GPLv2 vs GPLv3: Licensing dynasty or end of the road? (September 07) You can download the PDF version of the brochure here. If you prefer the brochure in its glossy 200gsm paper glory, drop us a line with your postal address and we ‘ll send it through by snail mail (offer valid until March 7th).

Welcome to the 111th edition of the Carnival of the Mobilists! This week’s Carnival is hosted by VisionMobile. It’s been another busy week for mobile industry observers – a particularly mad week if like us you joined the Barcelona party of 50,000+ industry execs rushing across conference halls and meetings and where grand announcements of new products, partnerships and acquisitions were the norm. So what’s new this week ? An interview with the CEO of Mobile Monday, key learnings from MWC, an insight into trends around content recommendation and a comparison of mobile markets worldwide in terms of leaders and followers. Let’s start. Paul Ruppert at the Mobile Point View has done an excellent podcast interview with Jari Tammisto, CEO of Mobile Monday. For those unfamiliar with Mobile Mondays, this is a set of ad-hoc groups formed around local communities with a keen interest in mobile, and a very succesful one, too; over the last 3 years MoMo groups have formed in over 30 countries. From personal experience, the London MoMos are a highly informative, and the mailing list throws up a few gems once in a while. Paul’s interview features quite a few interesting historical facts recounted by Jari from his experience in building up the largest event organising circuit in the industry. On the subject of the MWC, I wrote a detailed post on Learnings from the Mobile World Congress and 10 predictions for MWC 2009. Recommended reading if you ‘re trying to figure out what are the main trends emerging from MWC, particularly if you ‘re interested in service delivery, Ovi vs Trolltech, open source or OHA/Google. Writer, journalist and mobile content expert Peggy Anne Salz over at mSearchGroove writes another thought-leading piece on how recommendation and viral marketing is catching on. Following an interview with JT Klepp, MoConDi President, Peggy writes about how MoConDi s one-click viral sharing gains traction lays out stats & strategy for the company and discusses the role of recommendation & reward in the scheme of things. A very worthy read for those who track where content recommendation is headed. Dennis at WAP review talks about how Yahoo has officially opened their mobile Widget platform to developers, following on the footsteps of Nokia WidSets among others. BTW, from discussion from several widget companies at 3GSM, it seems to me that there are three Widget ‘standards’ or points of API gravity forming across mobile and web; W3C Widgets specifications, Yahoo Widgets and WebKit-based Widgets (used in Apple Dashboard and Nokia Web Runtime). Megablogger, publisher and friend Ajit Jaokar talks about how Mobile Youth is a myth based on a presentation he gave at MWC. Ajit raises a very good point; that there are no ‘Mobile’ Youth – Just ‘Internet Youth’; the mobile data industry is arrogant enough in claiming a whole demographic. Ajit makes another enlightening observation, that Mobile is a just a medium and that the youth will adopt which ever medium will be the one which reflects their social graph. Judy Breck of Golden Swamp and kind maintainer of the Carnival writes about how putting knowledge on mobiles is key for new generations in Middle Eastern cultures. Always with a keen interest in education and the world around us, Judy argues that “educators [in the Middle East] can help the intellectual liberation of the commons by seeing to it that a kid in any culture who has a mobile can use that device to learn reading, writing, arithmetic and the subjects once limited to academic institutions.” C. Enrique Ortiz at the Mobility Weblog offers an accurate definition for social graphs and social networks, as a resolve to the confusing definitions in the Wikipedia entries for these terms (don’t miss the related links at the bottom of the article). Reknown consultant, strategist and author Tomi Ahonen at Communities Dominates Brands writes a long and thoughtful post where he analyses which countries are ahead and which are behind in mobile. Tomi argues that there are primarily four ways to measure leadership in mobile telecoms – the penetration rate (i.e. the number of cellphone subscriptions); the network generation(s); how advanced the handsets are; and how advanced the services are. This is a post that needs to be read from A to Z (ok, minus the sales pitch at the very end). It’s crammed with factoids based on Tomi’s extensive experience, his books and his telecoms background. A Must Read, both for novices and experts to the industry, which is why I ‘m nominating this as Post of the Week. Congrats Tomi and keep them keeping! Next week tune in to Taptology for the 112th installment of the best of the mobile blogging! – Andreas

[Trying to figure out what are the key takeways from this year’s MWC conference in Barcelona ? Research Director Andreas Constantinou reads between the lines of the MWC happenings and predicts the undercurrent of changes which will be surfacing at MWC 2009] Mobile World Congress (3GSM for the romantics) was another year of industry partying – not just the late evening parties, but more importantly the hubbub and cheering around new products, partnerships and acquisitions. Pretty much everyone’s chat-up line at Barcelona was ‘so what have you seen here?’ – I guess mostly because there was no big theme, no overarching hype, no glitz around the next killer app or megapipe technology. Oh, and fortunately, the industry is beginning to look at reality, not hype with the last two MWCs. So, in developing a response to this banal question, a few recurring themes started to emerge. Themes which were mostly not about things you could see or hear at Barcelona, but the undercurrent of changes that could only be seen by reading between the lines of both announcements and non-announcements. And so, I decided to risk a set of 10 predictions for MWC 2009, as the clearest affirmation of learnings and key-takeaways from this year’s Barcelona mega-fair. Here they are, in no particular order. Prediction 1: A new would-be Trolltech will surface as an on-device service delivery platform Analysis: Nokia acquired Trolltech for its Qt application execution platform, and specifically for two reasons (see our detailed analysis of the acquisition): a) to use Qt as a service substrate, an on-device platform which wraps each one of 10s of forthcoming Ovi services across the 10s or 100s of connected device models across PCs, home & embedded appliances and mobile devices. On-device software is these days as essential to service providers as Google Gears and Android are to Google. b) to tap into the respectable, established developer base for Qt (particularly swarmed around the KDE desktop flavour of Linux), and in this way get a helping hand for developing Ovi wrappers based on Qt. Given that every OEM (not just mobile, but also in the embedded space) is now looking at deploying connected services, a Trolltech wannabee would be a prime acquisition target for connected device manufacturers (Sony Ericsson, Sony, Panasonic, LG come to mind). Prediction 2: There will be 30+ companies offering widgets-in-an-app type of software solution Analysis: ECMAscript (the standardised flavour of Javascript) allows any small software vendor to develop a key application (read: calendar, contacts, email, idle screen, album viewer or music player) that includes widgets. Widgets are an on-device service delivery platform, albeit one that is restricted to a single app and a single device model (it doesn’t port as easily). ECMAscript implementations are becoming more ubiquitous thanks to both open source efforts (Adobe’s Tamarin and Apple’s JavaScriptCore in particular) and closed source, optimised implementations (e.g. the one developed by Bling Software). However, many vendors will discover that offering widgets in any app is not a cash-cow and comes with long and painful sales cycles. Plus the porting effort across device models is non trivial, and exactly why Trolltech gives an economy-of-scale advantage to Nokia when porting services across 10s or 100s of connected device models. Prediction 3: Qt will be relicensed under a more permissive license Analysis: Qt is offered under a dual-licensing model; GPLv3 version as a try-before-you-buy and a commercial royalty-bearing version. Nokia wants to license Qt to other device manufacturers as a service delivery vehicle for Ovi, and so will have to sweeten the pill, as the previous take-it-as-is S60 strategy has pretty much failed (only a handful of non-Nokia S60 models are launched every year, making up a tiny percentage volume-wise to Nokia S60 devices). My prediction (and indeed a bold one) is that Nokia will change the licensing model for Qt to a more permissive one, such as an MIT, BSD or Apache 2.0 license. Naturally, the Ovi-specific parts of Qt will remain closed as with S60 WebKit, but a permissive license will allow OEMs to see Qt not as a threat, but as an opportunity to build more value on top, for a reduced cost (rather than maintaining their own platforms). Prediction 4: Two companies offering WebKit derivative implementations will be acquired Analysis: Without a doubt, WebKit, the core browser engine for rendering HTML and scripting, is becoming exceedingly popular. Companies like Wake3, Pleyo, Torch Mobile and SkyFire have emerged in the last six months to offer WebKit derivative implementations for OEMs and MNOs, in addition to Nokia’s S60 WebKit, Nokia’s Web Runtime and Motorola’s WebUI who are already using WebKit (more OEMs are on the way!). WebKit is also a mature, time-tested and standardised plaform for operator service delivery beyond the browser. I believe that WebKit derivative implemenations will become mandated by mobile network operators (MNOs) in 12-18 months – at least in Europe initially. The host of OEM and MNO players who want to get in the on-device service delivery business will look to rapidly develop expertise and talent in this area by acquiring solution vendors offering WebKit customisation, porting or value adds. Prediction 5: A device model designed by Danger will be developed and launched by at least two ODMs. Analysis: Microsoft’s acquisition of Danger is due to a rather simple reasoning; The lack of consumer-driven sales of Windows Mobile devices is because there are no fun devices based on this platform. This is because of two reasons: a) ODMs don’t have industrial design skills, nor the cash flow to invest in risky form factors and un-brick-like materials. ODMs see Windows Mobile, as a surefire way to get into market and leverage on the marketing mussle of the Redmond giant, like debris at the tail of a comet. b) OEMs have used Windows Mobile as a means to sell into the enterprise market. Windows Mobile offers a plug-and-play approach for enterprise admins as its security, remote management and seamless Office integration features are no-brainer purchase criteria which drive enterprise sales of Windows Mobile. As a result, all Windows Mobile devices lack the ‘fun’ factor that Sony Ericsson, Nokia, Samsung, LG and Motorola devices sport. In a reactionary move, Microsoft bought Danger in order to imbue its ODM projects with not just a software reference and a hardware reference platform (which it already has thanks to TI), but also industrial design references. Note that Danger is a software/hardware/industrial design house, in a sense a fabless OEM – the same design house which is behind the recognisably cool Sidekick devices. In this light, the acquisition makes a lot of sense for Microsoft. The acquisition is also particularly well timed, as the company plans to launch Windows Mobile 7 which features a highly configurable UI customisation layer – the customisable UI marks an inflexion point from Microsoft’s previous strategy of enforcing the Windows signature UI across all licensees. In conclusion, following Microsoft’s past history of ODM launches we should see at least two ODM device models based on Danger designs launch in the next 12 months leading to 3GSM 2009. Coming next Next week: the remaining five predictions for 3GSM 2009, including enterprise UIs, the rise and fall of Modu, M&As amongst Linux vendors, OHA devices: cheap but ugly, the demise unstable future of UIQ and distributors as a route to market (see Synchronica, Bling) – ok, I ‘m cheating that makes for 11 trends, but stay tuned! [update: the remaining five predictions are here] – Andreas (while on the topic of predictions, make sure to check out our hugely successful Mobile Megatrends 2008 series. Full presentation below.) [slideshare id=209579&doc=mobile-megatrends-2008-vision-mobile-1198237688220186-3&w=425]

[Trying to figure out the rationale behind Nokia’s acquisition of Trolltech ? Research director Andreas Constantinou dissects the facts, figures and strategic thinking behind this seminal development in the mobile industry.] From a 10,000ft view, Nokia’s acquisition of Trolltech is about preparing the ground for Ovi; allowing Nokia to create a consistent service access platform (much like Google’s Android) that will make it fast/easier/more intuitive to access Ovi services from any connected device. Trolltech is a fundamental building block in Nokia’s transformation to an Internet services company. Read on for facts and figures. Deal Background – On January 28, Nokia announced it will acquire the majority of shares at Trolltech, a maker of cross-platform tools and software for application development. The major shareholders have agreed to the acquisition, and so Nokia is expected to eventually acquire 100% of the shares. – Nokia is paying 16NOK a share which is around 6NOK premium to the 10NOK where the share price has been hovering after Trolltech’s IPO peak. – At 16NOK/share the acquisition values Trolltech at over EUR 100 million. – Compare that with Trolltech’s FY2006 revenues of NOK 174M (roughly EUR 21.6M). This a 5:1 multiple over the company revenues, which is quite conservative for telecoms company valuations. – Trolltech revenues have been growing at 40% year-on-year, but the company has been loss-making in the last two years and only managed to bring EBITDA into positive in 3Q07. Moreover, Trolltech s share price had fallen to 10NOK for most of 2007, following an offering at 16NOK at the time of the IPO in July 2006. (see Trolltech 3Q07 results). Trolltech backgrounder Founded in 1994, Trolltech is a vendor of software platforms and development tools for Linux, Windows, OSX and mobile Linux. – The company has 250 employees and is headquartered in Oslo, Norway with offices in Beijing, Silicon Valley, Australia and Germany. – Historically, the company has been VC-funded by Index Ventures, Borland and NorthZone and raised a further $22 million through its July 2006 IPO on the Oslo Stock Exchange. – The company has more than 5,000 customers including Skype, Google, Cisco, Adobe and Industrial Light & Magic. – The main product, Qt (pronounced cute ) is an application execution environment and user interface framework for Windows, Mac and Linux desktop environments. – Trolltech Qtopia (previously Qt/Embedded) is a version of Qt downsized for mobile and embedded devices. Qtopia has shipped in more than 10 million devices to date and more than 40 models, primarily Motorola handsets for China and also handsets from Cellon, ZTE and Wistron. – Qt (incl Qt/E) has also shipped in more than 130 embedded device models, such as PVRs, automotive devices, medical devices and set top boxes. – Qt and Qtopia have been licensed under a dual licensing model; a GPL-licensed branch for non-commercial use and a proprietary licensed branch for commercial use. – Qt has been the main money-maker for Trolltech (primarily from ISVs), while being backed by a reported 100,000-strong application developer community. – On the contrary, Qtopia sales have not met expectations. Indeed, Trolltech s strategy with Qtopia hasn t been performing as had been hoped; the Greenphone was discontinued a year following its introduction and Qtopia had lost all of its community developers, as Trolltech had not been paying due attention to its GPL branch for over two years. Qtopia had also been sidelined by the industry, given that GTK (a graphics framework and competitor to Qtopia) had been selected by most industry Linux players (including forums LiPS, LiMo, GMAE, and OEMs NEC, Panasonic and Nokia). The rationale behind the Nokia acquisition – Nokia s strategy is to use Qt to establish a uniform service development, deployment and access platform across various embedded devices (set-top boxes, IPTVs, home appliances, tablets) using a single codebase with form factor specific UI on top (Qt has been ported on Desktop Linux, Windows, MacOS, embedded Linux (Qtopia Core) and Windows CE (under development). Qt supports C++ and recently Java (via Qt Jambi) – Combined with Ovi, Qt/Qtopia is essentially the foundation layer for developing, deploying and accessing Ovi services. – The acquisition further allows Nokia to strengthen its tools offerings. Trolltech offers a range of development tools, including RAD tools, QtDesigner, qMake a command line tool chain, a plugin for Visual Studio and internationalization utilities. Note that Nokia had also acquired the Symbian tools from Metrowerks tools in September 2004. – The acquisition also allows Nokia to tap into the very respectable 100,000 reported developer base of Qt most of which are KDE desktop developers). – It also gives Nokia a stronger access to a modern application execution environment for connected devices, where Nokia has to compete with Google s Android (with the Dalvik J2SE-like virtual). – Whereas there is a high-degree of functionality redundancy between S60 and Qtopia, there are interesting synergies between S40 and Qtopia (note that for each S60 device, there are roughly eight S40 devices shipping). – S40 has over the years managed to support modularity, most importantly operator and regional variants. Adding parts of Qtopia above S40 would create a much more customisable stack in terms of the UI and middleware components. (Qtopia Core is also known to be lighter than GTK in terms of footprint/performance). Industry impact – Motorola has committed to the Qtopia SDK as their development platform for external developers. Following the acquisition, Motorola will therefore have to move away from relying on Trolltech. – In practice Motorola will need at least 18 months to migrate away from Qtopia (assuming that handset business still bares the Motorola brand name by then!). Motorola will also have to eventually write off related investments, including the 300 developer seats it purchased for Qt/Embedded. – Trolltech joined the LiMo foundation in 7 January 2008, which is clearly synchronous to the acquisition announcement (the Nokia Trolltech discussions should have been intensified 3-6 months before the acquisition). As such it is likely that Nokia does care about a stake in the LiMo foundation and is initially using Trolltech as a vehicle to participate to the major forum competing with Google-led Open Handset Alliance. – The acquisition bares little direct impact to Symbian and Nokia s S60 strategy, but a turn away from potentially using Symbian for Nokia s S40 platform (something Symbian has been long-hoping for). – There is an indirect, negative impact to Symbian, since now Nokia is perceived by the industry to be less and less reliant on Symbian OS. Nokia itself reinforces that perception: This acquisition will also further increase the competitiveness of S60 and Series 40. , according to Kai Öistämö , Executive Vice President, Devices, Nokia – Qt is at the heart of one of the biggest pieces of open source software: the KDE Linux Desktop (parent project of the now famous Webkit browser engine). Nokia needs to learn from the successful Maemo project on how it should treat open source developers. Ari Jaaksi should now be a very prominent figure within Nokia. Qt/Qtopia as the foundation for Nokia’s Ovi Zooming out, it is clear that Nokia wants to use Qt/Qtopia as the foundation for Ovi, in three ways: – use Qt/Qtopia to support rich Ovi services across a large footprint of embedded/mobile devices. As Ovi is the evolution of S60, it also needs a foundation layer for developing rich Ovi clients (this rhymes with rich internet clients from Adobe and Google). – use Trolltech developer tools and environments to enable richer delivery and implementation of Ovi services and future Ovi-based services. – tap into the repored 100,000+ developers of Qt Quick background on mobile software trends: the war of the OSes (read Symbian vs Windows Mobile) has faded, while the war of the application exec environments is the flavour du jour (see Flash Lite vs Java; Java SE vs Java ME; web programming vs C++). Nokia, as a long-term thinker is preparing for the next war: that of the service access environments for connected devices. Much like Google’s Android, I expect that Nokia wants to turn Qt/Qtopia into a service access environment, to feature: – an environment for connected applications and often-on connectivity which treats each application as a Web 2.0 citizen. – which taps into the long tail of developers, not just the short head, like S60 does. – and which is backed by established developer communities In the meantime, Nokia should be seeing that S60 and S40 middleware is commoditising, following the fate of Symbian OS. Perhaps it could get the other OEM stakeholders at Symbian to fund an acquisition of the S60 stack, while Nokia concentrates on the UI and service access layer which is Qt/Qtopia. Thoughts ? – Andreas Further reading: For a historical (mid 2006) perspective on Trolltech s strategy, see the research paper we wrote on Mobile Operating Systems: The New Generation, which was sponsored by Trolltech. For a strategic perspective on manufacturer strategies and the rise of the service environments, see our mobile megatrends presentation (particularly trends 4 and 10).

Big news in our world! Check the press release. Price (the offer values the company to 100 Millions Euros) is not so high compared to Trolltech technical and community assets (but high …looking at the actual company revenues of 22 Millions Euros). This is not a dot com acquisition. Period. The next game would be to understand why. Trolltech is providing a native development environment called Qt, which is a set of “OS services” (memory management, Thread, etc…) and is famous widget library. This environment has been ported on Desktop Linux, Windows, MacOS and embedded Linux: “Qt/embedded”, now called Qtopia Core , on top of which a nearly complete phone application stack has been built, Qtopia. The framework allows C++ development but recently a java version surfaced: Qt Jambi Trolltech provides also (and sell) some development tools: a RAD, QtDesigner, qMake a command line tool chain, a plugin for Visual Studio and some internationalization utilities. While huge adoption in the mobile phone market remains to be seen, Qt is at the earth of one of the biggest OpenSource piece of sotfware: the KDE Linux Desktop (…father project of the now famous webkit browser engine). So crossing with Nokia current strategy and ths interesting quote from the Nokia PR: “Trolltech’s deep understanding of open source software and its strong technology assets will enable both Nokia and others to innovate on our device platforms while reducing time-to-market. This acquisition will also further increase the competitiveness of S60 and Series 40.” Kai Öistämö , Executive Vice President, Devices, Nokia Here are the different bets: It is widely known that the proprietary S40 is difficult to maintain and extend/modernize, porting Qt as a companion framework may allow Nokia to open it’s most widely used platform (S60 is negligeable compared to S40 market share) to third party developpers … and open source developpers. Nokia wants to have cross platform technologies to merge S60/S40 and desktop environment, so take advantage of the HUGE Qt developper pool. Nokia desperately needs a credible platform and a set of APIs to counter Android in the web services area…and the Java Qt makes sense here. Does Nokia has some ambitions for KDE to use it as its base OS for its forthcoming “Personal Computer”, touted as the next big thing and next strategy of Nokia? Be prepared for a S40, a S60 Qt port …. and perhaps an opening of the S40 platform, at least for selected third parties. Anyway I quite don’t get this … In Hildon regards, the Maemo Tablet OS running on the nokia Internet Tablet (n770, N800 and N810). This one is based on GTK, the Qt archrival on the Linux Desktop, uses a Mozilla based browser, so is in the opposite technical direction: will it be cancelled as it is to run a Qt based Tablet OS? For KDE Desktop: Dealing with a little company like Trolltech is something, having Nokia as the main backer of its framework is something else. How the OpenSource community will react? What do you think Nokia has in mind? Thomas

[guest blogger Thomas Menguy praises the virtues of web applications on the iPhone.. and realises how the mobile internet has already taken off] Ok I admit, I have an iPhone. I love it, blablabla you know the story already. It has its flaws, but as an old time mobile software engineer I’m really stroked by one BIG fact: The applications I use the most on it are fully web based!: My IM messenger (JiveTalk), my english/french dictionary (Ultralingua), my mail and rss reader (special version of gmail and google reader) … even my all time favorite mobile game Bejeweled is web based! What a shock.. I wasn’t prepared for that: when Steve Jobs told us that the only way to add application will be (at first) through the web browser I was the first to laugh, only raw C++ is meaningful for applications, a web browser is a mere toy compared to a real application framework. How wrong I was. And here is why. (and no it won’t be only about the iPhone) Unlimited and affordable data plan, and efficient bandwidth and coverage: I’m in Europe (France) and here network coverage and edge (2.5G) are very efficient. Webkit and Mozilla : Webkit engine tends to begin the defacto mobile web browser (check what pleyo is doing) embedded in S60, MacOS, Android…the only other credible contender is the Nokia Mozilla version (my Nokia N800 is simply unbeatable for web browsing). Raise of ad-hoc web services framework: the famous and numerous web widget frameworks (webwag being one to be noticed), and Yahoo GO for example. And the biggest one which is vastly under looked: modern websites, sorry webservices, are fully Model/View/Controller (ruby on rails, but above all struts2, etc.) what does it means in human readable language? : it is VERY easy to adapt the content/services of a web site to different browsers / way of presenting data. Look at the plethora of “iPhone” optimized sites (ebay, dailymotion, facebook, etc) that have popped up everywhere in few months. Those approaches have something in common Need of a reliable wireless data link Well architectured network backend to provide optimized business data and adapted rendering data (the last one is not mandatory, check RSS for example were the business data has no notion of representation in it). An “On Client” web service framework: a browser with standard and added proprietary APIs like the iPhone Safari, a limited and fully proprietary engine like Yahoo Go!, or a full OS with the complete stack like Android and … the iPhone OS (OK, don’t forget the “old” high level OSes like S60 and WinMobile). Everything seems to be in place, and from what we saw above a good web service client platform would have to: Be fun to use and compelling, tailored for each user Be VERY efficient for the phone common tasks (phone call, address book) Offer a nice and easy way to deploy data representation and flow control from existing web services backends…with good performance and relatively wide access to the underlying platform and datas For me the first two doesn’t have to be understated (just try a WinMobile phone for a few months to understand what I mean 🙂 ), as the device remains a phone, a communication machine and voice is still the undefeated champion for communication. This is where the iPhone is groundbreaking at a first sight…and also where I’m not sure of what Google Android will deliver (call me skeptical if you want…). The third point may bring a lot of optimism … as it implies that we don’t need a single platform anymore, but a bunch of deployment possibilities, tailored for each device/client or even each service. Android and the iPhone may be seen as such a platform with at least two of those deployment possibilities: the browser and application native development, here Android is much more friendly to Java/Web programmer that the iPhone. But we could perfectly imagine devices with more deployment options or other completely different but close enough to web development standards to allow fast adaptation of web backends….why not an iPhone with an Android sandbox? At the end the famous “cloud” (the network) is really shaping the “on device” clients, allowing more and more diversity and at there won’t be a “one fit all” solution… Thanks Steve Jobs for being the first to have put in place all the elements of the chain, dealing with carriers, content provider, services providers…and coming with a great consumer electronic design. Google wants to go further? not sure for now, but the US 700 MHz auction have to be followed very carefully cause if this spectrum becomes “free” of the carriers, we don’t know how fast it could go! – Thomas

Data and voice ARPU have always dominated discussions about network operator performance. As ARPU is declining in both mature and global markets, data ARPU is seen as the main revenue source for network operators. Indicatively, data revenues contributed to almost 18% of total wireless revenues in the US in 3Q07 and to 21% of total revenues in Western Europe for 2007, according to Chetan Sharma and Informa, respectively. Yet it seems that the focus in data ARPU may be overrated for two reasons; firstly, because the data ARPU mentality puts the emphasis on technology (e.g. advanced messaging, mobile TV and faster pipes), but not use cases (e.g. communicating to your closest friends, or living the brand experience of your favourite pop star on your phone). Secondly, because a new source of revenue is emerging that may eventually overshadow data ARPU in terms of industry focus. Introducing Channel ARPU Both voice and data revenues are being mostly derived by billing the end user for anything from calls and texts to ringtone downloads and mobile TV. Increasingly however, revenues may be derived from third parties as a fee towards the party facilitating the delivery of mobile services through the last mile to the end user. Channel revenues are not a new concept; Rental, revenue share or other fees for channeling services, products and promotions to the end user are commonplace in fast-moving consumer goods (FMCG) are well as mainstream media industries. And mobile services can be increasingly modelled after the business models prevalent in the FMCG industries, as the margins in manufacturing decrease and the value shifts in defining the customer proposition and controlling the delivery of services through the last mile to the end user. We ‘ve coined the term Channel ARPU to refer to this new source of revenue. This is for a number of reasons; firstly, channel ARPU is derived from a new part of the pie, i.e. service providers wanting to tap into the wallet share of the consumer – and as such it’s important to distinguish this new source of revenue. Secondly because channel revenues are derived from attracting consumer eyeballs, selling to consumers and understanding consumer behaviour, activities which all take place in the last mile to the consumer (or last few inches if you consider the phone screen). Thirdly, because these revenues are most interesting if seen in a per-user context. The many forms of channel ARPU Channel ARPU comes from a number of sources, most of which should be familiar to industry pundits: – UI inventory leasing: commonly referred to as mobile advertising, UI inventory leasing refers to the ability to channel promotions and services throughout the handset real-estate, across the user journey. This is about advertising not only in-SMS, in-video, in-game and on-idle-screen, but about channeling content through every application on the handset, from the start-up screen through to dialer, inbox and main menu. In this case Channel ARPU is the ARPU derived by auctioning handset UI inventory to advertisers and promoters in the form of bunding with the handset or time-based leasing. For example, Android is means for Google to massively increase its ad inventory and derive Channel ARPU using mobile networks as a simple transport medium. (see previous article on the significance of Google’s Android for more details). The Blyk MVNO is another category leader here, where Channel ARPU is used to offset customer (and handset) acquisition costs. – Retail sub leasing: leasing of shelf space to OEMs and service providers through the operator’s physical retail shelf space. Apart from special handset promotions this model hasn’t really been ‘productised’. However, the potential of selling services visually through the retail space is huge and hasn’t really been exploited (see earlier article on how to exploit the retail space as a point for visual service discovery). – Service delivery leasing. Operators may make a revenue cut from handset OEMs by allowing OEMs to deliver services to the end-user. The example here is the revenue share deals that Vodafone, TIM and Telefonica have established with Nokia’s Ovi. Although officially unconfirmed, operator deals with Ovi involve bundling of Nokia Ovi services on a Nokia handset in return for a revenue share of Ovi revenues with the operator in the case of Vodafone this is music services only. Channel ARPU here is the revenues operators derive from Ovi. – User analytics leasing. Increasingly, efforts like Nokia’s 360 and CarrierIQ use a handset agent to derive a diverse range of information on device usage, service usage, user profile, network usage, user social graph, etc. This is an underhyped area of mobile solutions which deliver unprecedented insight into mobile consumer behaviour; an opportunity which may ultimately result in creating a metrics aggregator that is to the mobile industry what Nielsen is to TV (and an area of interest here at VisionMobile, as we authoring a research report on this very topic). As in every industry, metrics on sales, performance and analytics on consumer behaviour can be a very lucrative business indeed. Channel ARPU therefore includes revenues which operators can source by leasing metrics and analytics to third parties (a direction where Verizon appears to be heading). Last but not least, Apple’s iPhone can command a revenue share for providing network operators with access to high-spending customers. I have not classed this as Channel ARPU here as this revenue goes to the OEM, not the operator. Technically though, this may be called recurring subscribing acquisition costs (SACs) or a negative Channel ARPU as it flows out from the operator. As an indication of numbers involved here, Piper Jaffray calculated that AT&T pays Apple $18 per iPhone user per month. In a sense, this is a similar business model to the revenue sharing agreements that retailers practice with mobile operators, when a retailer signs up a new subscriber (I have heard of figures in the order of 15% of ARPU going to the retailer, which is modest compared to the iPhone revenue share estimates). Adopting the Channel ARPU mentality It is also important to note that the Channel ARPU mentality is about growing wallet share based on collaboration with third parties. This is contrary to the traditional view of voice and data ARPU which is about growing wallet size based on customer ownership and exclusive provision of services to the customer in the all-too-famous one-stop-shop model. In conclusion, Channel ARPU is a refreshing and meaningful approach to viewing per-user revenues derived by leasing access to the consumer through that last mile. However, much like data ARPU, network operators have to formalise and standardise the metrics by which Channel ARPU is calculated, if this new form of measuring ARPU is to be adopted. Perhaps a task for the GSMA or the OMTP ? – Andreas [updated: mega-blogger and friend Ajit Jaokar argues that ARPU may be outdated providing some strategic arguments; ARPU does not translate to the web; or to multiple SIM ownership; advertising models relate to a service, not a user; the global web supercedes local operator strategies; and that customers have relationships with multiple service brands] (Channel ARPU is trend 15 in our Mobile Megatrends 2008 series. Full presentation below.) [slideshare id=209579&doc=mobile-megatrends-2008-vision-mobile-1198237688220186-3&w=425]

[ever thought how hard it is for mobile software companies to penetrate the mobile space? guest blogger Morten Grauballe introduces the ‘100 million unit club’ of successful mobile software firms and spins a tale of myth and reality for making it big in the mobile phone industry] 2007 became the year when mainstream Silicon Valley decided to attack the mobile phone market head-on. With over 1 billion mobile phones shipped every year and the market moving towards 3 billion mobile subscribers, you can understand why. Apple started the year by announcing the iPhone. Half way through they started shipping and quite successfully too. The incumbent players took notice believe me. Then to make 2007 a real year of change, Google announced Android a new platform meant to change the dynamics of the value chain. It is free (in a royalty sense) and with a strong focus on allowing internet applications and services (to make money). Apple has also announced that it will open up the iPhone for native applications in 2008. It is a complete onslaught on the mobile phone market. So, if you are a large software player in the PC or internet space, then 2008 seems like the perfect year to penetrate the market and get onto those 1 billion units. You can easily envision the following conversation taking place in well-establish software players from San Francisco down to San Jose: CHoM (Clever Head of Marketing): Over 1 Billion mobile phones every year that is too good to be true!….How do we penetrate this market? How do we get to the biggest installed base of users? RAG (Resident Architect Genius): Not sure CHoM: Java seems to be a good option there are millions of java-enabled phones in the market A little later . RAG: I had a look .Java ME does not give good access to a broad set of APIs. Also .there is significant Java fragmentation across handsets complete nightmare, if you ask me! CHoM: I got it! We will move to native programming – Smartphones are taking off! RAG: Hmm .Symbian OS, with the largest installed base, is on single digit percentage market share. CHoM: But if we add Brew we will get a few more percentage points! [in denial!] RAG: We are still nowhere near 1 billion units! CHoM: What about adding Windows Mobile? Or the new Android thing? [Now completely in denial!] A few hours later CHoM: So in summary, we need to port to 8-12 different operating systems to be successful! RAG: Yep and most of these operating systems do not have publicly available SDKs! [clearly enjoying himself] CHoM: What ? [Almost crying!] RAG: Finally….you should know that there is no distribution method for getting software onto phones! [Big grin!] CHoM: ..! [in tears] A few more hours . CHoM: So what you are saying is ..we need a relationship with the handset manufacturers to get the SDKs and to get our software embedded into their phones! [with a hardened sense of realism! RAG: Spot on, boss! In a world like that, it might be surprising to newcomers (like CHoM and RAG above) that there are successful software players in the mobile phone industry. There are in fact quite a few. When your software is on 100 million phones globally, then you have joined the 100 million unit club . Some of the leading members of this club are: – Adobe (formerly Macromedia) provides the Flash Lite execution environment – Access provides a successful mobile browser – Beatnik provides the polyphonic ringtone engine on most mobile phones – Packet Video provides the audio and video technology, i.e. for the Verizon V-Cast music service – Opera provides a successful mobile browser – Red Bend Software provides the majority of Firmware updating Over-The-Air (FOTA) software – T9 provides the predictive text engine found on a lot of phones – The Astonishing Tribe (TAT) provides the graphics engine that drives a lot of UIs in the wireless industry By studying the approach of these companies, newcomers can learn a lot about how you tackle the world of mobile. What do they do right? First of all, they all have excellent products that excite not only the mobile operators, but also bring true value and benefits to the consumers around the world. Without this, you should not even try to enter the mobile phone market. Secondly, these companies embrace complexity, rather than trying to ignore it or wait for it to disappear. Most, if not all, members of the 100 million units club have ported their software to the 8-12 leading operating systems in the industry. Where applicable they will have a Java version (like Opera Mini) and a native version (like Opera Mobile). They have also invested in the art of software optimization (something not always needed on a PC), which allows them to move into the mid-tier and low-tier segments of the market. They also understand the complexities of software distribution. When appropriate they will have relationship with the handset manufacturers. At other times, the will use the portals for the mobile operators or independent service providers to distribute their solution. Thirdly, these companies understand the market dynamics of the global mobile phone market. Some markets are operator-led, while other markets are more OEM-led. If, for instance, you have managed to get your software embedded on some of DoCoMo s MOAP-S based handsets in Japan, then your next port of call should probably be the S60 or UIQ licensees in Europe. If you manage to get on these handsets, then you have an opportunity to move to the proprietary operating systems of these licensees. Gradually you expand your market to more and more platforms across the various markets in the global mobile industry. Finally, all of the above companies have participated actively in standards work. To get acceptance for your solution, it important for all the players in the value chain (mobile operators as well as handset manufacturers) that your software or service is based on open APIs and protocols that other people can add value to and support. (In coining the term the 100 million unit club , I have ignored web programming. In our brave new world of web 2.0, that is admittedly a crime which I am sure web 2.0 fanatics will nail me for. The fragmentation and appropriateness of web programming for mobile phones is however a big topic in itself and is probably better left for a separate blog posting). Lessons in a changing market Basing recommendation on extrapolations from the past is always dangerous in a dynamic market. Let’s therefore also look at some of the changes taking place right now. These trends could determine who will and who will not be members of the 100 million unit club in the future. Open operating systems are definitely gaining market traction. Linux, Windows Mobile, Symbian, and a few others are now responsible for close to 10% of the market. There is still an ongoing debate in the market as to whether they will make up 20% or 50% of the market someday. Whatever your view point, it is not going to happen overnight, and in the short term, Apple’s OS X and Google s Android platform are two new operating systems that need to be taken into consideration. Platform de-fragmentation is clearly not a trend to bet on in the next 2-3 years. In the 5 year time horizon, it might be. The good news about the increased competition in the platform market is that SDKs, tools, and support from the large platform providers are improving rapidly. It is therefore becoming easier for the software players to embrace the complexity as described above. Software is becoming more portable. If we move from the world of software platforms to the world of software distribution, there is more help to be found. The Open Mobile Alliance ratified the specification of Device Management (DM) in early 2004. At the heart of the OMA DM standard, there is a well-designed protocol which enables the service provider to query any handset for its basic characteristics (like model number, firmware version, and settings). According to Ovum (Nov 2007), there is now an installed base of 235 million handsets with OMA DM support. This will grow to 50% of all handsets by the end of 2008. With both handset manufacturers and mobile operators actively using this protocol to provision settings and new software to handsets, it is becoming possible to distribute software post-launch. All of a sudden, you know which handsets are attached to the network and you can offer new features and services. For those software players who are already comfortable with the complexity of the platform market, this is an opportunity to accelerate time-to-market and up-sell new software or services once you are on the handset. The completion of SCoMO (Software Component Management Object) with in the OMA will further accelerate this trend. 2007 was a very exciting year for software providers in the mobile market. Players, who understand how to navigate the new world of mobiles have a lot to gain. Good luck and Happy New Year to all new candidate members of the 100 million unit club! – Morten [Morten Grauballe is EVP Marketing at Red Bend and ex VP Product Management at Symbian, and has been in the mobile industry long enough to boast both scars and medals]