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A couple of years ago, many in the mobile industry foresaw that mobile operators would control most of the device specification, including the user experience. The manufacturers would turn into unknown hardware manufacturers, considered happy if their name was printed on the battery. There was plenty of evidence; NTT DoCoMo’s undisputed reign in Japan and Vodafone’s increasing specification work. Today, I say the tables have turned. The manufactures are still the big brands and most of the user experience is still controlled by them. The operators are still waiting for data revenues to rise and their specifications of look-and-feel are shrinking. Someone proved that a Vodafone UI increased the usage of Vodafone services, but not to the extent that it gave any meaningful return of investment. It was too arduous and expensive to fight about the user interface. Most operators (maybe not in the US – yet) have lowered their walled gardens, to increase data revenues from uncontrolled Internet usage. So what is it that hinders consumers from switching between operator or manufacturer brands? Brand, price, and service quality are the three motivations that come to mind for operators. And brand, overall quality, and industrial design for the manufacturers. These motivations are not walled gardens at all, but the primary values of these companies. But there is one more thing: the user interface. Intangible and tangible at the same time, both logical and emotional. Anyone who has tried to switch between different device brands knows that this is not easy. Contacts are deleted, downloaded content is lost, and the camera does not take pictures, just to name a few. Look at the PC industry. A lot of consumers are turning to Apple because of one thing: Brand, coherently manifested in industrial design and user interface. But try to change! You will agree that the Mac is beautiful and that all the nice swooshes in the UI makes you feel as if the machine loves you. But the paradigm is not the one you are used to. And in the beginning that will drive you crazy! Essentially the UI raises the comfort level once you are inside, which is also an exit barrier – a soft walled garden. So I don’t think we will have a homogenization of the user interface into a single mobile paradigm. Manufacturers will probably continue to manifest and develop their own unique UI:s because there is an opportunity to continuously ‘lock in’ the consumer. Because switching would mean learning – and boy, aren’t we consumers lazy! There is a great incentive for the big structured mobile manufacturers (Nokia, Motorola and Sony Ericsson) to keep up their good work. There is also a big incitement for the historically more hardware-focused manufacturers (Samsung and BenQ) to invest more in this field. Strong brands like B&O and Apple will also have to keep this in mind when they are moving into our world. Google, Yahoo!, and other of our newly-found friends will have to consider this. And Microsoft will stick to their desktop paradigm, for better or for worse.

The Customised Design Manufacturer (CDM) is a new business model in the mobile handset industry that fills a very important market gap: producing uniquely customised handsets on-demand for consumer brands and 3rd parties. CDMs are here to capture a portion of the emerging market for uniquely customised handsets (UCHs) i.e. handsets for niche customer segments. Operators (see Vodafone Simply and the upcoming NMT handset), MVNOs (see Helio and Jitterbug), handset manufacturers (see Alcatel’s ELLE phone and EmporiaLife) and consumer brands (see Versace, Dolce & Gabbana and Bang & Olufsen) want to deliver uniquely customised handsets to firstly differentiate and secondly capture the market for trully unique, branded handsets. The Customised Design Manufacturer is a fabless manufacturer who caters for this very need: producing uniquely customised handsets for niche customer segments, taylor-made and styled to consumer brands, MVNOs and manufacturers. A CDM is an integrated business that combines brand licensing with handset industrial design, outsourced manufacturing, quality control, distribution, reverse logistics retailing and can also include an after sale, on-device service proposition as part of the handset. In essence, a CDM is a specialised, yet vertically integrated service house that is able to act as a one-stop shop for brands wishing to enter the mobile phone business or MVNOs, MNOs and manufacturers wishing to outsource development of unique handset designs. I first wrote about Customised Design Manufacturers after an inspirational talk with i-mate at 3GSM 2005. i-mate is the earliest example of a CDM, for prosumer and corporate customers. i-mate has been buying bulk from HTC and reselling customised handsets to several operators and independent retailers, adding in preloaded applications, internationalisation, warranty, support and marketing. Since 3GSM 2006, i-mate is transforming itself into a system integrator for corporate customers offering uniquely customised handsets with a complete enterprise device management solution. Customised Design Manufacturers are Here In the last year, several CDMs have surfaced; Modelabs, Tedemis, TCL Alcatel (an OEM with an in-house CDM business unit), while Emblaze Mobile plans to follow the same path. Modelabs is the leading CDM today, having produced handsets for Airness and Elite Model Look brands and expected to launch MTV and Tag Heuer handsets. Tedemis was the matchmaker that lead TCL Alcatel to produce the Glamphone for the ELLE publisher brand. ARCchart‘s new report titled ‘The New Age of Handset Customisation: 2006-2011‘ (of which I was the lead author), has analysis and case studies of these customised design manufacturers. The report also profiles tens of uniquely customised handsets to date, including Vertu, Xelibri, ESCADA, Firefly, Vodafone Simply, Dmobo’s Disney-themed M900, i-kids, ELLE Glamphone, Bang & Olufsen Serene, Goldvish, Casio G-Zone, Voce, Jitterbug and Nordisk MobilTelefon handsets, which targeted at a wide range of segments, including kids, fashionable females, tweens, teenagers, sports enthusiasts, senior citizens and VIPs. The report examines the Customised Design Manufacturer business model and provides insightful detail: “Each of the three CDMs ARCchart has identified – modelabs, Tedemis and Emblaze Mobile – take a different approach to integrating all handset commercialisation stages under one roof. Modelabs has grown in-house teams for brand licensing, industrial design, supplier management, marketing, distribution and support. Tedemis grew from a brand manager into a value-adding matchmaker between brands and manufacturers, adding service integration functionality to the handsets. Finally, Emblaze Mobile is moving from a virtual ODM towards a full CDM business model with the acquisition of European Telecom. TCL Alcatel has shown how an OEM can adopt such a business model by forming an in-house CDM business unit. The Chinese-French OEM has created an internal business team under the name ‘Brand Design’, dedicated to designing, manufacturing and marketing branded, customised devices for niche segments. The multi-disciplinary team pulls together functions across the breadth of the handset commercialisation process, including industrial design, engineering and marketing, to form a virtual CDM operation. This structure essentially allows TCL Alcatel to bridge the previously existing communication gaps between handset teams, allowing it to develop uniquely customised handsets, while leveraging the know-how and manufacturing assets of an OEM and reducing time-to-market and cost.” Challenges faced by CDMs However, creating a CDM is not simply a matter of integrating several business units under one roof. The ARCchart report has some interesting analysis on the challenges faced by CDMs today: “Customised design manufacturers have arrived in a challenging market place. As of 2005, about 84% of the global handset market is controlled by the top six OEMs. This leaves limited market share for the remaining hundred or so OEMs, ODMs, ODEs and CDMs. Furthermore, generous operator subsidies have turned mobile phones into consumer electronics items which are perceived as low-value by the consumer. Brands who want to play in the handset space will have to place brand appeal above pricing considerations, in the eyes of the sophisticated consumer. One of the most challenging aspects of a CDM business is merging the distribution and industrial design businesses. These two disciplines, within the traditional context of mobile phones, have different working cultures, processes, business models and margins. Distribution is about a high-volume, low margin business with cold, operational efficiency and large staff count. At the other end, industrial design is about small, closely-knit teams with creativity and flair which develop a few products a year and look to high margins. This challenge is also one that modelabs claims to have overcome, which is one of the reasons for its market lead. Another challenge for customised design manufacturers is linking brand companies to manufacturers. The cultural and communication gap is substantial, but not insurmountable. CDMs therefore have to act as a bridge between brand clients with creative, lifestyle marketing cultures and handset manufacturers who are engineering-led organisations.” Coming into the limelight The report predicts that CDMs such as Modelabs, Tedemis and TCL Alcatel will far outgrow ODMs and ODEs in the production of uniquely customised handsets in 2007. This is due to the appeal of CDMs as a one-stop shop for consumer brands wishing to enter the handset market. The ELLE GlamPhone No 1 handset has sold more than 100,000 units in 1Q06, with the sales of GlamPhone range expected to reach 250,000 by 3Q06, according to the ARCchart report. Modelabs is expected to announce handsets for MTV and Tag Heuer, which will further make an PR impact in the industry and bring CDMs into the limelight. Modelabs’ strong growth in profitability (+59.6% in net income in 1H06) is another validation for the viability and promise of the CDM business model.

ARCchart‘s latest report is titled ‘The New Age of Handset Customisation: 2006-2011‘. The report analyses the new players, business models and market trends that are changing the economics and dynamics of delivering uniquely customised handsets. As the lead author of that report, I will spend some time highlighting key findings of the research in the next few posts. Twelve Stages So much time, money and energy is being devoted across the industry in producing handsets, yet there is scarse analyst coverage and analysis of the handset commercialisation process – understanding this process is key to all vendors wishing to play within the handset customisation business. The ARCchart report spends a chapter analysing this industry process – quite appropriately, the chapter is titled “The Silk Road of Customised Handsets”, and talks about the path of handset commercialisation, from brand licensing and industrial design to distribution and the retail experience” Exactly how complex is the process of designing, producing, marketing and supporting a mobile handset ? The diagram below, taken from the ARCchart report, shows the twelve stages in the process of handset commercialisation: This diagram is particularly interesting, given that it also portrays the stages where the major players in the value chain are active today, and will be active in the future. The report then goes on to analyse each of the twelve stages. Of particular interest is the analysis of ‘brand licensing’ and ‘last mile handset customisation’ stages: Brand licensing “Handset OEMs have also typically been the brand owners. Companies like Nokia, Sony Ericsson and Samsung have both strong manufacturer organisations and healthy brands. However, with the increasing segmentation of OEMs, operator handset customisation and the entry of consumer brands, branded handsets for niche segments are slowly becoming a mainstream activity. Since brand marketing and handset manufacturing are two very different disciplines, a brand licensing agreement or proxy can bridge the gap. Technically speaking, brand licensing involves a brand owner leasing the use of a brand to another company. It represents the exploitation of intellectual property in its purest form. Brand licensing typically involves contractual terms stipulating which products the brand will feature on, co-branding elements, positioning and rendering of the brand logo, product lifetime, distribution, pricing, promotion, retail placement and retail experience of the branded products. The revenue model for brand licensing is a per-device royalty fee, often with a minimum volume commitment. This revenue model presents a low-risk, minimal cost endeavour for the brand owner, albeit at a limited potential for revenue returns. Brand owners may extend this model through strategic revenue share agreements, opting to share both increased potential revenues, with the potential risks. Beyond 1-to-1 brand licensing between owner and licensee, there are a number of proxy companies specialising in multi-brand representation. These players secure long-term licensing deals with brands, which they then represent, sublicensing brands within their portfolio to product manufacturers. An example of a brand license aggregator is Global Wireless Entertainment, Inc. (GWE) which specializes in long-term brand acquisition and representation. GWE’s current brand portfolio includes Pele, Muhammad Ali, Warner Bros., DC Comics, Marvel, Lucas Film, NHL and NBA.” … Last mile Handset Customisation “The final stages of handset customisation aim to furnish the handset with the external branding, applications, settings and increasingly, user interface components, to satisfy the customer’s requirements (typically an operator or OEM). Essentially, this process customises the plastics, settings and software of a basic handset in line with client specifications. Traditionally, client-specific handset customisation includes adding external branding elements to the handset plastics (such as the operator logo), adding local language support in the software and programming network-specific settings onto the handset. In today’s age of operator-led handset customisation, this stage typically involves embedding specific applications to support operator services (e.g. an IM application), or the OEM value portfolio (e.g. a push-to-talk application). It also includes embedding clientspecific software modifications (e.g. for handling special SMS messages, GPRS optimisations, specific codecs and Java APIs). Increasingly, this stage of handset customisation includes modifications to the user interface. The user interface of a handset is essentially made up of the visual elements of the applications that sit on the device, including the homescreen and menu application. Therefore, to customise the handset user interface, the manufacturer needs to adapt these applications one by one for a consistent look & feel. In the last two years, UI customisation frameworks have emerged which enable manufacturers to deliver a completely customised user interface within much shorter development times. UI customisation frameworks and their vendors (e-SIM, Digital Airways, TAT and MSX) are analysed further in Section G.3.” The report also discusses the cost and time-to-market of the typical handset commercialisation process: “The complete handset commercialisation lifecycle typically takes 12-18 months: a considerably long time, given that it is similar to the typical amount of time over which handsets are replaced in saturated mobile markets. The sheer number of stages involved in commercialising a handset also indicates that the total handset development cost is substantially higher than the basic bill of materials (BOM). Over and above the BOM, the total cost includes costs for handset production operations, testing and quality assurance, retail training and customer support training. In total, a low-end handset is likely to cost between $3 – $10 million to develop, while a high-end handset may cost $10 – $50 million.”

Poor discovery and accessibility are two major obstables hindering the growth of data services. In simple English, the user often does not know that a service exists (it’s poorly communicated) or how to access it (it’s hidden under layers of menus). In the past vendors have suggested software methods for improving discoverability and accessibility: personalised WAP portals (see ChangingWorlds), on-device portals (see SurfKitchen, uiOne), on-SIM portals (see Celltick) and WAP toolbars (see Alatto), with results which are encouraging but not ground breaking. A new paradigm for service discovery An idea struck me while I was recently explaining the world of the mobile industry to a fellow passenger on the plane. Why not exploit the communication power of consumer brands and place them within the retail environment for service promotion ? Here’s the scenario. Imagine walking into a mobile operator retail store in London in 2007. You spend ten minutes choosing your new phone and another five minutes choosing the right tariff. Following that the shop assistant shows you to a set of shelves stacked with branded, colourful boxes that easily fit in the palm of your hand. It looks like a console games shop, only now the shelves are stacked with small shiny boxes, each carrying a high street brand like Disney, Robbie Williams, Nike, Kodak, BBC News, AtoZ, the AA, the Discovery Channel, and SKY Sports. Each box represents an information or entertainment service that you can get on your mobile phone. You ‘re already familiar with the 10s of brands already on the shelves, so you can pretty easily make out the stuff that of most interest. You pick the motorist news alert service from the AA and the London’s map & planner service from AtoZ. You pretty much know that the AA service is probably about traffic information, and you check the small print to find out that the service is about daily traffic alerts. Both services cost 2 pounds a month. You take the two boxes to the shop assistant who scans the barcode on each box. She tells you that you ‘ll be able to access the services by pressing the MyStuff hard key on the phone, and then you ‘ll see the icons of the services on your screen (Technical note: the hard key is a shortcut to the WAP portal and specifically to the user’s own page. For smartphones a more elegant, and visually appealing alternative is to use an on-device portal local software application). Behind the scenes: the point of discovery This scenario presents a new paradigm for service discovery and accessibility. The use of consumer brands as a tangible, visual communication medium for the service proposition exploits the brand recognition that these content providers enjoy. The operator exploits this brand recognition in the retail environment to effectively communicate the value proposition of the service and allow the user to quickly browse and select from 10s of content providers. The branded box contains service details, pricing, as well as terms and conditions. At the same time, the retail POS acts as an advertising medium: the operator can command a commission for the sale of a service and at the same time play the content provider/advertisers against each other for availability and pricing of shelf space. Naturally, independent retailers (see CarPhone Warehouse) can also implement this concept, aided by independent off-portal providers like Bango and RefreshMobile (minus the hard key shortcut). The setup of a point of service discovery is straightforward for today’s mobile operators with 100s of retail points of sale. What an operator needs is a framework agreement with existing content providers, a logistics operation for the promotional boxes, some shelf space, training for the shop assistants, a MyStuff page on the portal and a straightforward mechanism for provisioning the portal that is accessible from the point of sale. An important yet subtle element in this concept is the hard key: I fundamentally believe that operators should send hard key presses not to the portal front page but the user’s own page. Personalisation should take priority over Customisation. Reality check The beauty of this concept is that it’s easy to implement, and it can be easily demonstrated (ok, instinctive proof will have to do for now) to accelerate service adoption and hence data ARPU. The drawbacks of the approach I would consider to be minor: there is a cost to the shelf space occupied by the branded box shelves (and probably reduction of shelf space for selling phones). Then there is the concern of increased ‘product noise’ and ‘brand noise’ in the retail environment which may complicate the sale. Overall though, I do believe it is a promising solution to boost service accessibility and discoverability that with an optimised retail planning can do wonders to the traditional mechanisms of service promotion. Any operator listening ?

We all know that the radio spectrum is the electromagnetic spectrum which mobile operators use to offer wireless services. It’s interesting to look into the lesser-known economics of the radio spectrum, such as auctions, spectrum allocation and regulation. In most cases, governments assign the national radio spectrum licenses with one of the following methods: Beauty Contest: Companies interested in obtaining spectrum licenses submit proposals to regulators outlining what they would do if they got them. The regulators then determine which applicant would make best use of the available radio spectrum. Lottery: self-explanatory. Auction: Available radio spectrum is licensed to the company offering the most money. The philosophy behind the “beauty contest” was to ensure that spectrum would be passed on to the group that would best use it for the public interest. It’s still the system used in a number of countries, including France and Spain. Many governments rely on the “beauty contest” because they want to keep control on the spectrum usage while supporting the investment capabilities of the telecom industry. Lotteries have been abandoned because of large number of bidding companies and many times the wrong kind of winning companies (companies that do not utilise spectrum in the most appropriate way) Auctioning has gained popularity because of fairness, transparency, and high government revenues. Statistics from the ITU-R show that most governments favour the auctioning process when: the density of the country’s population in high enough, the government’s budget deficit is large, the number of licenses is high. Auction basics The auction method in assigning radio spectrum is considered economically efficient because it maximises the social welfare if it allocates items to bidders who value them the most. Types of Auction: Open or oral auctions – These often have several rounds while sealed-bid auctions have only a single round. Dutch or descending auctions are typically fast because the auctioneer alone drives the price down. First-price sealed-bid auction is when the bidders decide off-line their claim without revealing any information and the winner pays the highest bid. Second-price sealed-bid or Vickrey auction is when the bidders tend to bid their true valuations and the winner pays the second highest bid. Sequential is the auction when prices tend to decline in the later auctions due to fewer or poorer bidders (e.g. UMTS). Simultaneous ascending auction is the most common approach for auctioning a set of spectrum licenses (most European UMTS license auctions). Spectrum allocation – demand vs supply ITU-R create global recommendations on spectrum allocations but it is governments taking the decisions. Governments consider radio spectrum as a scarce resource requiring extremely strict regulation. High demand of mobile broadband wireless services together with the development of new wireless technologies like DVB-H, 4G and UWB maintain demand for new spectrum. The impact of new technologies New technologies can utilise the radio spectrum more efficiently. For example, radio spectrum can be shared efficiently using spread spectrum technologies like in WCDMA 3G. Digitalisation i.e. Digital TV (MPEG 2, 4) also saves spectrum. Smart antennas and MIMO techniques further increase the spectral efficiency (bits/second/Hertz) hence reducing the spectrum demand. However, we are in the era where everything tends to be wireless and spectrum availability for deploying new services is very limited. There are many technologies in devices sharing the same spectrum i.e. WiFi and Bluetooth share the 2.4GHz spectrum. Wireless technology coexistence in the same spectrum band will be very common in the future, and it will be interference dictating the performance of these systems. Interference, even though is not an inherent property of spectrum but a property of devices, limits the performance of most current radio systems. In this multi-radio world where a single device might have more than nine different radio technologies, it is heavily mandated to find techniques allocating spectrum in a smarter way. But how is that going to be achieved? The emergence of cognitive radio Future radio systems should be able to sense the radio spectrum and adapt their service to the spectrum which is least utilised. This requires the development of smart radios or radios that are defined by software. Spectrum sensing radios or “cognitive radios” that adapt their transmit/receive parameters and access spectrum dynamically will decrease interference and allow wireless coexistence. A step closer to the development of a commercial cognitive radio is Vanu which is pioneering in the area of software defined radios. Is there an expiry date for radio spectrum regulation? 4G radio systems that might be deployed in the 2015 – 2020 timeframe are probably going to use software cognitive radio technology in order to achieve wireless convergence and coexistence. But, if cognitive radios are going to be used in the future, is there a need for spectrum allocation and auctioning? Is there going to be a “peaceful” coexistence between the radio systems sharing the same spectrum or chaos will emerge in the radio world? Whatever the future holds, ITU should allow the usage of cognitive radios but apply rules on spectrum usage to avoid a chaotic wireless coexistence that might hinder the development and adoption of future ubiquitous wireless broadband services.

I ‘ve spent most of my time in the last three months researching and authoring a report on the future of handset customisation. I believe that in 2008, hundreds of consumer brands will be commercialising mobile handsets, in a trend started by Bang & Olufsen’s Serene, ELLE’s Glamphone, Elite Model Look’s EML1 and Dmobo’s Disney-themed handset. There are far too many boring grey- and black- coloured handsets out there with the same-old designs and form factors. At the same time, operator and manufacturer brands are too coarse and rarely communicate values which are relevant to the user. There is a clear demand for handsets branded and designed to appeal to different consumer groups, while at the same time manufacturers are desperately trying to produce handsets where the brand value can command a significant delta on the retail price. Overcoming challenges for unique handset designs In order for supply to meet the demand for branded or uniquely customised handsets, there are several economic challenges, most of which are being overcome. The cost and time-to-market of producing made-to-order handsets (with moderate modifications to software and plastics) is very reasonable thanks to customised design manufacturers like Modelabs. Hardware reference designs are shrinking in size (see NewGen’s square phones for example) which frees up the industrial designer’s imagination to go create. There is no shortage of creativity and concepts today from industrial design houses like Idem, Ocean Observations, Frog, Product Visionaires, No Picnic, Alloy and IDEO. Distributors are getting into the handset customisation game (see Dangaard’s business of customising Qtek-brand handsets), and customised design manufacturers are getting into the distribution game (see Modelabs’ and Emblaze Mobile‘s acquisitions of distributor businesses). However, there is still a significant barrier to the proliferation of handsets with unique industrial designs (that appeal to the heart and the wallet of the niche segments to whom they are targeted). The supply chain issue If we are going to see tens or hundreds of consumer brands like Nike, Gucci, MTV and Google release their own handsets to the market, someone will have to stock these handsets and have a brilliantly effective system for managing these stocks. In other words, we need to see the Zara equivalent of the mobile handset customiser and distributor – Zara’s success is in most part owning to their just-in-time clothes customisation business and lean supply chain management. In plain English, this means that the distributor should be able to take the unsold stock of 10,000 Barbie handsets, change the plastics/enclosure to a Gucci handset, repackage the contents and shift the boxes from Malaysia to the UK. Vertu’s circa $50 hardware BOM is a testament to the power of the plastics and enclosure and the commodity of the hardware. To accomplish this just-in-time customisation we need two things: One-size-fits-all hardware reference platforms. With the component size reducing and the form factor volume reducing to 3x3cm PCBs, I don’t see this as being an issue. Add a customisable software stacks from Purple Labs, a la Mobile, or the Digital Airways + SKY MobileMedia + Montavista partnership and you’re there. Add a firmware OTA platform from Red Bend, Innopath or Bitfone (or OMSI‘s firmware over-the-wire platform) and you can customise the software at any stage in the distribution channel. Industrial Design Platforms. This is the three-word answer to the problem of snapping off the Barbie enclosure and snapping on the Gucci enclosure (and it’s not as easy as it sounds). Calling for the Industrial Design Platform To date, ID houses have worked off assumptions of the volume metrics of the hardware reference design of the handsets (and in a several cases, the ID and the hardware reference design have been created through iterative revisions). I believe what we need is a new paradigm of the industrial design platform (IDP), i.e. a physical plastics arrangement that can act as the smallest-volume common denominator for a range of industrial designs, that wraps around given hardware reference platforms. IDPs should be designed for certain classes of form factors (for example a lipstick-type factor, a thin flip phone or a square single-body factor) and allow reliable and safe modding of the entire handset enclosure. On top of the IDP, enclosures can be as sophisticated from Voce’s leather RAZRs to a Replay-jeans-moulded handset (as e.g. made possible by Inclosia technology), to cheap plastic Barbie enclosures. UI Customisation platforms: the perfect partner UI customisation platforms such as TAT, MSX, Digital Airways, e-SIM (and in the future Flash) are the perfect partner for industrial design houses, as well as the IDP model. This is for three reasons: UI customisation platforms make money through handset royalties – the nicer a handset looks the more money they make (and ID houses sure know how to make a handset look nice) ID houses need flexible UIs to work with. Ocean Observations’ Sofia Svantesson calls this an elastic UI. UI customisation platforms can deliver this elasticity to mass-market handsets and across the entire breadth and depth of the user journey, from start-up to shut-down The ID needs to be coordinated with the UI of the handset. Bang & Olufsen’s Serene is the perfect example. An IDP should therefore be matched with a UI customisation platform; you snap on the enclosure, you update the software UI, and voila, you have a totally different handset in your hands. Wildseed’s Smartskin tried to execute this very concept in 2004, but they were too early to market. Lesson for industrial design houses: Invest in building IDPs. This offers a clear differentiation to your competitors, reduces time-to-market and cost for handset variants, and improves your attractiveness as a valued partner for your customers (both tier-1 and tier-2 OEMs, customised handsets manufacturers, and value-added distributors). Go forth and multiply.

I ‘ve written before about on-device portals (ODPs) – it’s essentially device software that delivers offline browsing, storefront and homescreen replacement functionality. Whereas before it was a space to watch, ODP is now an adopted industry term and a vibrant market that’s here to stay. Quick round up of the market The ODP market was first analysed in a January 2006 ARCchart research paper which also coined the term – as the lead author of that report, I have since been watching the space closely. There are now 25 or more vendors of ODP products: Abaxia, Action Engine, Airmedia, Cibenix, Communology, Comverse, Crisp Wireless, Everypoint, Geniem, Macromedia (FlashCast), Handmark (Pocket Express), InFusio (nMap), mPortal, MSX, Nellymoser, Nokia, OnSkreen, Opera Platform & Mini, Picsel, Qualcomm (uiOne), RefreshMobile, Silk, Streamezzo, SurfKitchen, U-Turn and Volantis. The term ODP has now been adopted by Nokia, SurfKitchen and Cibenix. It’s good to see a term that you ‘ve coined become adopted (although it can become abused for self-promotion, too). Nokia, Airmedia, mPortal, Everypoint, Volantis and Picsel are vendors that have popped onto the ODP radar in the recent months. Nokia Content Discoverer In June 2006, Nokia announced the Content Discoverer (NCD) on-device portal solution, as the evolution of, and successor to, Nokia’s Preminet. Content Discoverer is currently embedded in millions of Nokia devices based on S60 and Series 40, including the Nseries multimedia devices, Eseries devices for enterprise users, Nokia 3250 and 6131 devices, and to-be-embedded on six more handsets by end 2006. Nokia dropped the Preminet back-end and instead integrated NCD with several service delivery solution providers, incl. Handango, Jamster, End2End, Plus Four Six and Qpass. Nokia has also established content aggregation agreements with eight local content aggregators. It’s worth noting that NCD features a portal-based view of content catalogues, rather than search-based views, to avoid disintermediation of content retailer portals. Vendor update: Airmedia, mPortal, Everypoint, Volantis, Picsel, InFusio Airmedia channels content to BREW, Java and FlashLite-capable devices using on-device portal products. Troy Evans, Macromedia’s FlashLite guru stopped briefly at Airmedia before going to Nokia as a Sr Manager, Branded Content. mPortal is an MVNO-focused ODP vendor that is targeting the US market and counts Disney and ESPN among its customers – another unique positioning among ODP vendors. Interestingly, according to an investor report, mPortal is looking towards MVNEs, chipset manufacturers, and device manufacturers as potential acquirers. Everypoint is an ODP vendor that specialises in the delivery of real-time sports content onto mobile devices. Everypoint developed Yahoo’s Mobile Matchcast application, an ODP application with sports content for the World Cup in Germany. MatchCast is a MIDP2 application available as a free download in 12 countries and 7 languages. Check out the screenshots here. Everypoint claims several selling points such as a home-grown vector-graphics engine, incremental, fast data updates and rapid application development. The Boston-based company has so far received $14M in VC investment from Venrock Associates, Prism Venture Partners and TD Capital Ventures. Everypoint’s closest competitor is Streamezzo, with the difference being that Everypoint focuses on real-time data delivery, while Streamezzo focuses on real-time video delivery. Volantis is a vendor of mobile content delivery platforms that recently launched two ODP products (Content Storefront and Content Player). Picsel is a Glasgow-based company that is planning to spin off its office document viewer into an ODP product for magazine publishers. Essentially, this is another uniquely positioning ODP product, targetting magazine publishers and addressing ease of use for publishers. Picsel claims they ‘ll have the solution live by the end of summer 2006. Finally, InFusio’s nMap is a repackaged Geniem Superstore ODP product which will feature on the ELLE Glamphone uniquely customised handsets in 4Q06. Deals and partnerships Quick update on the deals that I have come across in the last few months in the ODP market: In February Vodafone K.K. announced that its Live! Cast product will launch in Japan (following its launch in Germany last year). The service will be pre-installed on NEC and Toshiba handsets and will feature three content magazines targeted at 25-35 old males. Adobe announced that more than two million mobile phone subscribers have signed up for DoCoMo’s i-channel news and information delivery service since it was launched in Japan last September (i-channel is powered by FlashCast). Refresh Mobile customer base has expanded to ITV, BBC, Conde Nast, Shiny Media, AFP (Mumbai) OnSkreen’s Fusion feature set now mobile search for movie times, stocks and sports scores and the web. UIEvolution developed the application environment and ODP application that powers Mobile ESPN’s MVP and ACE’s handsets Comverse announced that it will resell SurfKitchen products Cibenix announced a combined solution with Sybase mFolio July Systems announced it is partnering with SurfKitchen to extend its content retailing channels with on-device storefronts. Yahoo’s big bet: beyond the browser The market of on-device portals is certain to grow aggressively. This is not only forecasted by ARCchart and indicated by Nokia’s Content Discovery deployment plans, but also hinted by Yahoo at their presentation at their Analyst Day in May. One of Yahoo’s big bets for the next 5 years is titled ‘beyond the browser’ – they see their Yahoo! Go product providing a range of features including integrated mail, integrated contacts, calendar, messenger, photos, search, news and information. This is ODP on steroids. Some Yahoo! facts: Yahoo! has over 50 mobile partnerships worldwide Yahoo! Go Mobile will support over 50% of Java handsets launched in the next 18 months RIM partnership enables Y! distribution across 160 carriers worldwide Partnered with Nokia, the largest handset manufacturer in the world Partnership to bring Y! services to millions of Motorola Linux-based mobile devices Trends in the ODP market So where is the ODP market heading? There are several clear trends. Firstly,ODP products will morph into on-device search portals, as ordinary content portals are disintermediated by search engines. Secondl ODPs will extend into an Electronic Service Guide for all mobile media, incl. TV, irrespective of format. This is where Streamezzo is taking their client and O2 UK certainly seems to agree, based on their presentation at the World Handset Forum in May. I have little doubt that ODPs will be featuring on every high-end handset (and several mid-end handsets) by the end of 2007.

3.5G or HSDPA was developed as an evolution of initial UMTS network to enhance the data throughput and provide a better data usage experience to users. 3GPP is considering another evolution step after HSxPA so-called 3GPP long-term evolution ‘3G LTE’ or as more commonly called 3.9G or ‘Super 3G’. Super 3G is expected to be an evolved radio access technology that can provide equivalent or better service performance compared to current fixed line access technologies, and at much lower cost compared to current radio access technologies (e.g. HSDPA and HSUPA). Deployment timeframe The main focus of this evolution will be on enhancements for packet-based services over an all-IP core network. 3GPP aims to finalise the development of the standard in July 2007, with subsequent initial operator deployments in the 2009 – 2010 timeframe. Super 3G will be based on 3GPP Release 8 and will be built on already existing investment. Super 3G aims The main targets of Super 3G are: Higher data rates than HSxPA: 100 Mbps for downlink, and 50 Mbps for uplink Increased ‘cell edge’ bit rate whilst maintaining same site locations as deployed today Improved spectral efficiency – three times more compared to current systems Reduced network delay – below 10 ms Spectrum flexibility – enabling deployment in different spectrum allocations Reduced CAPEX and OPEX To meet this challenge, a change in 3G radio technology is envisaged that integrates OFDM (Orthogonal Frequency Division Multiplexing) and MIMO (Multiple Input Multiple Output) technology within the current 3G investment. This is called HSOPA or High Speed OFDM Packet Access and was proposed initially by Nortel. HSOPA is considered necessary in order to achieve higher download data rates than 50 Mbps. Impact on existing infrastructure Super 3G will provide a smooth technological upgrade, using the existing WCDMA / HSxPA infrastructure, such that operators will not need to build a new network from scratch. However, how is it going to impact the HSxPA network? Is Super 3G a Mobile WiMAX killer? The only thing that’s certain is that Super 3G will further increase the capacity and hence the throughput of current 3G networks. The transmission network will require serious upgrades to accommodate the increased capacity. Mobile WiMAX and Super 3G Mobile WIMAX (IEEE 802.16e) will compete head to head with Super 3G and the comparison between the two will be more fair since both of them share the same technologies e.g. OFDM, Hybrid ARQ, All-IP Architecture, Adaptive Modulation and coding. The wireless leader will be the one not having necessarily the best radio technology but the best capacity and range of user devices. NTT DoCoMo is so far keeping a distance from Mobile WiMAX. Is that a strategy to protect their FOMA investment? It probably is. DoCoMo is pushing hard Super 3G as the main 3GPP standard for mobile broadband before the advent of 4G systems. On the other hand, Intel is aggressively promoting Mobile WiMAX and is starting integrating their Rosedale 2 chipset in some OEM laptops. Time will show which technology will dominate at the end and how “Super” Super 3G is going to pan out.

Vodafone’s Simply handset range has been a pioneering approach at unique handset customisation from a mobile operator. Not only does Simply effectively target a niche segment which craves easy-to-use handsets, but it does so by redefining the entire user interface and hardware ergonomics. Since May 2005, three Simply handsets have been launched; the Sagem VS1, a silver, stylish handset, the Sagem VS2, a simple black candy bar design and the Sagem VS3, a silver flip-phone design. Here’s some not-so-simple facts about Vodafone Simply that I uncovered recently: 1. Coming soon: the fourth Simply handset For those that were wondering if the line of Simply handsets had been a long-term strategy for Vodafone, the wait is over. The GCF (Global Certification Forum) lists the ‘Vodafone Simply Sagem VS4’ handset as having been certified on 24 May 2006. [updated] According to this post, the VS4 will have a slim form factor. 2. It wasn’t just a Sagem job Some little known facts about Sagem’s Simply handsets: The UI and information architecture were designed by Vodafone’s in-house User Experience team, which collaborated with US-based market research firm UsableProducts for usability design and testing, while the hardware design was by IDEO, the US-based industrial design house also credited with designing Apple’s mouse in 1980. As for the software, it was designed by a Paris-based UI technogy company. 3. Simply is targeted at the 34-54 year-old segment If you were like me, you ‘d have thought that the Simply handsets were targeted at the elderly segment. A Vodafone presentation from June 2005 states otherwise. Apparently, the Vodafone Simply proposition, comprising of handsets, customer service and dedicated calling plan, has been designed for a consumer segment the operator calls ?adult personal users?. This segment is the largest in Vodafone?s market segmentation, made up of 35-54 year olds, married with children, mostly female, with a low comfort or interest in technology. Makes sense. 4. The simple handset paradigm is becoming popular Apart from DoCoMo’s Raku Raku and TuKa’s S phone, there have been attempts at creating simple handsets in US and Japan. US-based Jitterbug for example is planning to launch their Samsung-designed handsets with a three-button interface, while Austrian-based Emporia is soon to launch their EmporiaLife handsets with completely redesigned hardware and software, including a big red emergency button on the back. If handsets weren’t so much about fashion and personality, I bet most people would opt for a simple handset that does voice and text really well and does away with the 80% of the functionality that only 20% (or rather 2%) of people use. One thing is for sure. The market for uniquely customised handsets is rapidly emerging aided by Customised Design Manufacturers such as Modelabs and tier-2 OEMs such as Alcatel, of ELLE GlamPhone fame. The ‘simple’ handsets are but one segment that uniquely customised handsets will cater to. As Apple says, one has to think different! Andreas

I was listening to an audio interview with John Markus Lervik, the CEO of FAST, the mobile search company, by Peggy Anne Salz, the author of Informa’s report on mobile search and content discovery. The interview is thought provoking. For one, it made me realise that disintermediation is already happening to mobile content providers as search is bypassing the WAP and web portals that they have invested in. Eventually, mobile search will practically replace mobile portals. This is the story of Internet search and portals not only repeated, but exacerbated as handset screen real estate is limited. Trends in mobile search Major operators including Vodafone are already partnering with the likes of Google to provide rudimentary search functionality to their users. However, we are only at the nascent stages of mobile search. There are several trends emerging. Firstly, the Internet search giants are moving their game onto mobile. This is epitomised by Steve Ballmer’s prediction: The “leading edge battleground between us and Google in local search really will come on the phone”. This will clearly threaten mobile search start-ups who are positioning themselves on the side of the operator. In the interview, Lervik plays down the importance of Google et al by saying ‘we are confident that operators will see little benefit in partnering with Google beyond the immediate PR effect and that in the long term it will threaten their business’. Mobile manufacturers are also willing to partner with Internet search giants to upsell the value of their devices, as indicated by the announcements of Motorola + Google and Nokia + Yahoo earlier this year. Furthermore, mobile portals are moving to sit on top of the search engine, offering a dynamic content structure based on content relevance to the user and collaborative filtering. Most importantly, handset user interfaces will play the role of the gateway to mobile search. Here’s where On-Device Portal products like Opera Mini, SurfKitchen, Cibenix and Zi’s Qix will come under the limelight. According to Lervik, “Operators need to understand that the future of their business is in controlling the user interface of their users’ handsets” So where is mobile search functionality going ? Current mobile search business models are limited in that they only focus in monetizing content (ringtones, games, logos) and inject advertising. Mobile search functionality itself has a very promising road ahead: On-Device Portals will offer a front-end interface to mobile search, combining search with home-screen replacement, offline content caching, store-front functionality, one-click buy and predictive keyword matching (ala Qix). Search will merge with personalisation, recommendation forming what Peggy Anne calls the mobile content triple-play Search will be combined with location (esp. in countries like Japan and Australia where location services are more advanced) With the increase of user-generated content, collaborative filtering will improve pure algorithmic search to provide recommendations based on what similar users have seen or written. Mobile Search: Beyond WAP and ODPs In a previous post I was arguing that the next step in the evolution of WAP is On-Device Portals. It is now clear that the next step beyond portals, both online portals and ODPs is mobile search. Stay tuned.

Have you noticed how many brands engulf our everyday lives ? There is a brand for every walk of life, every aspiration, every type of physical good, every action and almost every notion. From Wagner to Madonna, from Habitat to Marks & Spensers, from El Greco to Picasso, from Casio to Tag Heuer, from Athlete’s Foot to Gucci, from Ryanair to Singapore Airlines, from Accessorize to Shiseido, from Skoda to Porsche, from EasyMobile to Vodafone, from BenQ to Vertu, from Manchester United to Tiger Woods, from the Simpsons to Sarah Jessica Parker, from Socrates to Harry Potter, from Cirrus to Visa, from JVC to Bang & Olufsen, from Seven Eleven to Waitrose, from the Sun to the Financial Times. Brands convey a personality, a style, a predisposition, a mood. Brand marketing and positioning has become so sophisticated that there is literally hardly anything that we wear, do, think or dream that we cannot associate with a brand. The reverse is also true. The brand vector Each one of us owns, loves, aspires or hates certain brands. One might conjecture that our possessions, actions, aspirations and counter-aspirations can be described sufficiently fully as a set of brands. For example I may like to fly Lufthansa, wear Boss, drive an Alpha Romeo, watch the Discovery Channel, shop from Sainsbury’s, read the Harvard Business Review, drink Tropicana and eat at TGI Fridays. Taking this notion to the extreme, the personality of each citizen of the industrialised, globalised, marketed-to-death western world can be described as a set of brands. And given that each type of activity or aspiration in our lives is catered for by a spectrum of brands (see list of brand ranges above as an example), then each personality can be described as a brand vector. This is a powerful notion both for marketers and for consumers. As a marketer, being able to accurately measure the brand vector of consumers is the ticket to the nirvana of 1-1 marketing. For consumers, it’s a scary notion. I ‘m not a number, and even if I subscribe to Archimede’s school of thought (where everyone and everything in the universe is associated a unique number), then I don’t want anyone to know this number. That would utterly devalue my very own sense of uniqueness and privacy. It is unfortunately an inescapable consequence of our over-marketed consumerist societies that brand vectors will be eventually used to measure, describe and sell to consumers. So what does this have to do with mobile ? The mobile handset: the new frontier of personalisation Mobile handsets are as personal, indispensable and inseparable to us as our clothes and our wallet. Yet have you noticed how handsets are the least personalised items that we carry on us day by day?. How many endless combinations of clothes and accessories can one choose from ? Probably in the seven, eight, nine, or even ten digit number range. Yet how many handset models are there in circulation ? Roughly 3000. And they all look the same (ok, almost the same if you exclude the Razr, the SonyEricsson Walkmans and a few other bright exceptions). There are accessories and faceplates, especially popular in ultra-developed markets like Japan, but still, the handset branding or personalisation is often superficial, i.e. it does not permeate into the handset materials or user interface. However this is changing. We are entering the new era of handset personalisation. The handset as the expression of brand Once upon a time there were the mobile operators who provided the voice and data network. And then there was rebranding, and Orange showed that the future’s bright. And then there were walled gardens. And then there were independent retailers and off-deck portals. And then there were brands who discovered that the mobile handset was the third screen. And then brands discovered that the operators could not attract consumers with their one-size-fits-all brand. And then brands conquered the mobile handset and the mobile services and reduced operators to voice and brand pipes. This is probably how history books will describe the first 25 years of mobile history. The important point here is that we are now at the point in time where the evolution of brand ambitions and marketing plans is intersecting with the evolution of mobile services and mobile handsets. From Crazy Frog ringtones, and Madonna video clips, to complete new experiences such as the Firefly handset for 6-12 year old kids and the ESPN handset for sports enthusiasts. Mobile is becoming the medium through which every brand can reach the consumer, here and now. Looking at the Vertu, Xelibri, Firefly and Vodafone Simply handsets, we are witnessing the emergence of the truly customised handset. Not just your ordinary, vanilla grey clamshell with a couple of downloaded ringtones, but a true and full expression of brand personality through tailored plastics, materials and user interface. Think of the sleek shiny metal, elongated surface of a would-be Jaguar handset or the furry, huggable rounded surface of a Furby handset. Companies like e-SIM, Digital Airways and MSX are making possible completely branded user experiences for mass-market handsets. Companies like SkinIT are also moving aggressively to brand your handset cover with every different brand out there, from University clubs to Pop Stars, even design-your-own-cover-and-have-it-delivered-at-your-doorstep-in-ten-days handset cover. In 10 years every handset will be totally personalised, from the splash screen to the materials and the battery. Back to the brand vector theory. As the mobile handset becomes the receptacle of multiple brand expressions, and is always within the possession of the consumer, so it becomes the perfect tool to measure the brand vector of its user. Again a scary thought from a consumer perspective, but the aggregator or service provider who will be able to channel or measure the consumption of these brand expressions across users, handsets and regions will hold enviable value and power. It’s all about the brand In summary, the brand is slowly becoming the A to Z of the mobile user experience. From handset covers, to specialised materials, to a complete branded user interface. In parallel, the handset will eventually become the vehicle for measuring brand vectors, for understanding consumer behaviour, marketing and cross-marketing of every and any good. History is being written.

A year ago I wrote an article reasoning that Symbian’s outlook is no longer promising. In the article I argued that Symbian’s strategic value is deteriorating, as Nokia (both an ally and competitor) stifles Symbian’s efforts towards developing an independent, self-sustaining and competitive operating system for mobile handsets. My thesis was that Symbian’s only strategic option was to seek political and financial support from a network operator forum, as it is only the operators whose interests are aligned with those of Symbian. Fast forward a year later and so much has changed in the handset OS chess game: Palm and DoCoMo are using Windows Mobile, open operating systems are heading towards mass-market and the OMTP operator-centric forum looks set to achieve very little. However, Symbian’s future is looking worryingly same, destined to be reduced to a software house serving the needs of Nokia. Other manufacturers are becoming increasingly disillusioned with Symbian and Nokia’s S60 licensing strategy appears a costly but doomed experiment. Why invest in an independent software house, with the most complex software development and integration process in the industry when Nokia could have developed its core OS in house, faster, better and cheaper ? I would argue that what Nokia needs to do is revise its strategy to form an ally of Symbian instead of a co-opetitor, to help the ailing OS to become an autonomous, turnkey but flexible operating system. But first, it’s worth reflecting on why Nokia’s strategy towards Symbian has failed so far. Behind Symbian’s glossy numbers Nokia has been the main force behind Symbian, and its over 100% year-on-year rise in sales for four consecutive years. At the same time it has been depriving Symbian of platform value, by supplying its own middleware components (PIM applications and their engines, security, browser, messaging components, sync engines, Java VM, DRM engine and UI customisation engine). This has broken Symbian platform story, which coupled with Symbian’s idiosynchratic C++ language and lack of a reliable IDE has made for the most complex, arduous development of applications on mobile handsets. Furthermore, as several essential software components have to be provided by parties outside Symbian and integrated closely with the hardware reference platforms the OS integration and testing process is the most complex and time-consuming in the handset industry. Essentially, the operating system has not been as easy to customised and integrate on different handsets as other manufacturers had wished. Siemens’, Samsung’s and Panasonic’s delayed (and often failed) attempts at producing Symbian-based handsets is a testament to this. At the same time, DoCoMo’s investment of several tens of millions to co-develop a UI and middleware layer that sits on top of Symbian is an indication of how inadequate the Symbian OS is on its own. The complexity of OS integration has impacted not only time-to-market, but also commercial viability (how many Symbian OS-based projects have been abandoned?) and scalability (how much longer can Symbian keep doubling its handset projects year on year ?). One may argue that Symbian has become the least desirable open operating system out there. OK, so there’s Windows Mobile which comes with the negative reputation Microsoft carries, but which has been garnering commercial support by the likes of Samsung, Siemens, Palm, Motorola and the endless array of Chinese ODMs. But it’s not just Symbian that’s suffering because of Nokia’s strategy. It’s Nokia itself. Why Nokia shot itself in the foot Manufacturers (perhaps with exception of SonyEricsson) have been disillusioned with Symbian’s value and potential as an operating system for their handsets and have been slowly pulling out in different directions. Even Palm’s Ed Colligan noted that ‘Nokia owns Symbian’, suggesting that Palm would not support the operating owned by a competitor in the smartphone space. Nokia has indeed developed the organisational structure, expertise and processes to keep up with its smartphone expansion strategy. However, Nokia’s S60 licensing operations haven’t fared well. Here’s why. One might reason that Nokia’s S60 licensing strategy has been based on two pillars: firstly, extending the S60 platform to handsets beyond Nokia’s own and secondly, influencing the roadmap of competing manufacturers. Therefore, as manufacturers lose faith in Symbian, the S60 strategy suffers. As a result, Nokia’s restrain on Symbian has restricted the potential for S60 beyond Nokia handsets. In addition, Nokia has had to pay dearly for the Symbian OS through shares and licensee fees (over $100M a year in license fees alone according to ARCchart). In this sense is Nokia’s investment in Symbian sound, when it could have spent less resources and time to develop an OS internally? No one wants to play with Symbian So where does Symbian look for a helping hand ? SonyEricsson seems to be a persistent supporter, most clearly displayed by its announcements for the next generation Walkman and M600 handsets. However, I expect Nokia to continue keeping SonyEricsson at a safe distance from having a greater say on Symbian strategy. How about Fujitsu and DoCoMo ? DoCoMo simply wants to have a healthy choice of OS suppliers (Symbian, Linux and recently Microsoft), rather than taking an influential stake at Symbian. In parallel, DoCoMo doesn’t want to upset Nokia, as it needs the Finnish giant to supply handsets for its ailing i-mode operations in Europe (where poor handset selection is a key reason for poor i-mode penetration). European operators such as France Telecom/Orange and Vodafone have joined forces in the OMTP, but which is bound to fail amidst the cacophony of self-centred and divergent opinions echoed by its members. And where does an innovative operator like Vodafone go when it decides to invest in a software platform? To Nokia for a S60-based UI customisation layer and next-generation Java APIs in the form of the MSA initiative. Who’s there to help Symbian? No one. Except Nokia. Nokia has taken some steps to restore the shine on Symbian’s platform story. It has revamped its Codewarrior code development suite (purchased in 2004 from Metrowerks) to provide a unified set of tools for developing across the whole range of Symbian variants, from S60 to UIQ and for entry level to professional programmers. But this doesn’t address the ailing integration process that harms Symbian’s time-to-market, its scalability, the commercial viability of its projects and has ultimately hurt Nokia’s S60 expansion strategy. Nokia should u-turn on its strategy Clearly Nokia has to rethink its strategy of depriving Symbian of platform value. For the benefit of its financial investment and S60 expansion strategies, it needs to support Symbian in becoming an autonomous, turnkey, flexible operating system. Here’s my thesis. In terms of technology, Nokia should allow Symbian to have ownership and control of key middleware components such as platform security, messaging apps, synchronisation engine, Java VM, DRM engine and UI customisation engine. Nokia can retain control of high-value components such as the browser and S60 UI, but ensure that they are clearly abstracted and componentised, so that they can be developed, validated and integrated with as much independence from the core OS as possible. Manufacturers should be able to drop the UI, core OS and customised components, and integrate with the easiness touted by Open Plug’s FlexibleWare architecture. If Open Plug can accomplish this for Linux that has only lately been optimised for mobile handsets, then why can’t Symbian develop a similar componentised architecture for itself ? Furthermore, in terms of process, Symbian needs to be able to take in direct requirements from operators (not wishlists that may or may not make it to the final handset) and take sole ownership of the integration process for hardware reference design vendors like TI and Intel. In other words, Nokia should realise that it’s only option is to help Symbian grow its own market and build on it, rather than grabbing as much share of the pie as it can. And what about Symbian’s shareholder equity ? As Michael Mace, formed Chief Competitive Officer for Palm, put it, “how long will Benq and Panasonic want to remain part owners in an OS they longer use and that damaged their phone businesses? That means 18.9% of Symbian is likely to be for sale in the near future (if it isn’t already)”. Buying this 18.9% would put Nokia above the psychological barrier of the 50% of ownership, but below 70% needed to approve major initiatives, under Symbian governance rules. But again, if Nokia wants to own Symbian, then it’s much cheaper building an in-house OS development team rather than maintaining investment in an independent entity like Symbian. And following the previous thesis, if Symbian is to become an autonomous, turnkey OS then it needs to have a balance of shareholder power across its board. I only hope Nokia is listening.

How far can the WAP technology heritage go in surpassing its criticisms, i.e. the click-n-wait performance, the long click-distance and sub-par graphics ? The next step beyond WAP is already here. Over 20 vendors have launched On-Device Portal products, using device software to deliver content to the device with reduced latency, immediate content discoverability and the wow-factor user experience. On-Device Portals (ODPs) deliver functionality such as offline portals for no-wait access to content, store-fronts with ringtones and home-screen replacement for no-fuss service promotion. Already a number of ODP operator deployments are happening worldwide: Orange Downloads, Vodafone Live Cast, DoCoMo i-Channel, Sprint Nextel On-Demand and O2’s planned deployment of Qualcomm uiOne, are just some examples. The future is just starting, too. ARCchart, the London-based analyst and consulting firm which coined the ODP term forecasts that the ODP market will reach a value of $1.4 billion by 2009. ARCchart’s exhaustive report, titled ‘On-Device Portals: Beyond WAP’ includes in-depth reviews of 25 vendors, operator case studies, and the top-10 market trends that will influence the ODP market [disclosure: Andreas Constantinou, Director at VisionMobile is the lead author of this report]. 3G Profits: What Profits ? Operators have spent billions of dollars on 3G networks and on sourcing content from media brands, but data profits have failed to materialised. Of great concern is the fact that messaging (predominantly SMS) accounts for the vast majority of data revenue: for a successful operator like Vodafone UK, the increase in pure data (non-messaging) revenue generated between 2004 and 2005 is estimated at just $88 million, based on Vodafone UK’s own data revenue breakdown. Clearly, a zero added to the end of this figure would be nice. One can conclude that the answer is not in bigger pipes or more content – content may be King, but the user experience is Queen. While operators have made substantial investments in their content strategies, the user experience has been neglected, leading to the ‘abandoned shopping cart’ syndrome that was prevalent in the early days of the web. On-Device Portals deliver where WAP failed: in driving data ARPU by delivering content to the device in an easily discoverable, instantly accessible manner and through a ‘wow’ graphics experience. For example, figures released from O2 clearly indicate considerable data usage increase through the use of its O2 Active ODP deployment. On-Device Portals: Bigger than you thought There are now more than 20 vendors in the ODP space, including Abaxia, Action Engine, Celltick, Cibenix, Communology, Crisp Wireless, Handmark (Pocket Express), Geniem, Macromedia (FlashCast), MSX, Nellymoser, Onskreen, Openwave, Opera Platform, Qualcomm (uiOne), RefreshMobile, Silk, Streamezzo, SurfKitchen, U-Turn and Volantis. All vendors are offering a mix of offline portal functionality, store-fronts with no-wait content previews and click-n-buy access, as well as home-screen replacement for instant service discovery and access. ARCchart estimates that the on-device portal market in 2005 stood at $30 million, but will grow aggressively over time to reach $1.4 billion by 2009, corresponding to 1.1 billion ODP licenses sold for that period. While Tier-1 and Tier-2 mobile operators will initially lead the way in ODP client deployments, by 2009, media companies will be responsible for the lion’s share of client deployments. A promising but maturing market However, operators acknowledge that the market is still immature. There are several reasons for this. Firstly, deployment of the client-side software and device penetration are key obstacles. Whereas all ODP vendors have Symbian OS and Windows Mobile versions of their product, only recently have some taken the plunge to mass-market handsets via Java or native code development. Secondly, the need for a server-side component to augment the handset client functionality is becoming apparent. For an on-device portal to prove a success with tier-1 operators, it has to integrate with the operator’s billing, messaging, content management and CRM infrastructure, plus it has to scale across millions of users. Few companies have the local operator relationships, the network integration know-how and the scale to deliver this. Content refresh and personalisation is another underestimated factor. It is easy to launch a visually polished on-device portal product, only to see usage die off due to lack of interesting, relevant, visible and frequently renewed content. Moving fast Regardless, the ODP market is now well past the hype period. To date, there has been more than 20 operator and 20 content provider deployments of on-device portals, across the US, Europe and APAC. There are now more than one RFP for ODP products being announced each month globally and there are efforts by device manufacturers to incorporate ODP features into their handsets, such as Motorola’s Screen3 and Nokia’s Active Idle and Preminet client. In 2006, a second wave of heavyweight vendors are expected to enter the market, while in 2007, there is likely to be wide acceptance of On-Device Services by the key industry players. Ultimately, however, the core technology of current ODP solutions will commoditise and ODP producers will have to innovate their way into new technology areas in order to continue delivering value. Clearly a space to watch.

This week I ‘ll be at 3GSM, like (almost) everyone else in the industry. Over 50,000 attendees, nearly 1000 exhibitors at Fira de Barcelona. This must be the busiest week of the year. My calendar is already jam packed, with 20+ meetings scheduled..