Repositioning femto-cells to overcome lackluster market performance

By Phil Marshall

By Phil Marshall, PhD, Chief Research Officer, Tolaga Research

After five years in the limelight, femtocells have yet to gain a meaningful presence in the marketplace. Currently there are only thirteen commercial femtocell implementations worldwide, with several of these being limited trial offering.

In essence, femtocells introduce a disruptive architecture to mobile operators who have yet to accept that traditional network designs are incapable of economically delivering mobile broadband services. In the face of burgeoning mobile broadband, operators have an urgent need to reduce radio network, site and transmission costs. Femtocells have a unique design philosophy that leverages customer’s broadband connections to improve coverage and provide new economics and reliability for voice and mobile broadband services. To integrate femtocells into existing network expansion strategies, mobile operators must embrace several changes in design philosophies:

• A shift to hierarchical architectures to integrate, macro, micro and femtocells. These introduce distinct implementation and operational approaches for each layer of the hierarchy. For femtocells, service providers must introduce highly automated approaches to provisioning, inventory and interference management.

• A need to intelligently integrate other local area technologies like WiFi. This should see femtocell technology integrated with WiFi and other radio technologies like Wireless HD. Operators could then introduce intelligent network management techniques to manage service continuity across network boundaries to provide optimum delivery.

• In Anticipation of an extended role for femtocells in optimizing service distribution and personalization. As mobile broadband takes hold, an increased proportion of traffic will be delivered over wireless local area networks. Femtocells will play a key role in managing the distribution of services in local area environments, irrespective of the radio technology that is used.

Currently mobile operators maintain a high degree of control over the distribution of femtocells and position them as connectivity centric devices within the consumer market. This approach leads to inadequate market scale and differentiation relative to unlicensed wireless technologies such as WiFi. We believe that operators must relinquish control over the distribution of femtocells and the industry as a whole must leverage independent consumer electronics channels and offer integrated WiFi/femtocell based solutions. In addition, the femtocell technology must evolve from its traditional connectivity centric roots to embrace advanced media management, caching and service distribution capabilities.

Given the potential disruption that femtocells pose for traditional mobile operators, it is conceivable that other players such as Cable companies may prove better positioned to capitalize on the femtocell opportunity. This is particularly the case if the industry focuses on product development, standardization and distribution strategies that release femtocells from the control of mobile operators.

Tolaga Research recently published a report entitled “Fixing the Follies of Femtocells“.  It is also conducting ongoing research to investigate the economic potential for femtocells in the mobile broadband marketplace.

Look at the edge not the core for the Anywhere enterprise.

By Chris Marsh

By Chris Marsh,  Senior Analyst, Yankee Group

Ushering in a paradigm shift in enterprise mobility and freeing the information worker…for a one-year old company with only 18 employees this is an ambitious goal, but then leapfactor don’t seem short on ambition.

Leapfactor is a cloud-based micro-apps company that is seeking to accelerate the trend of the consumerization of business processes through the proliferation of both ready-to-use and customizable micro-apps that can in theory run on any device and link to almost any back-end system (for starters think automated and customizable alerts & notifications, easy sharing of business indicators, and on-the-go work approval flows).

In an interesting call with their CEO, Lionel Carrasco yesterday, what struck me was not their ambition but how much of the emerging Anywhere could be seen in the micro-apps approach:

• The core proposition is a redefinition of where value resides in mobile communications, no longer HW, no longer even SW, but true to mobility it lies in customization to the business, and agility in deployment and execution.
• Value can be realized quickly, negating in this case the need for large upfront investments in software licenses. Cost becomes OPEX and crucially it becomes flexible depending on user demand.
• The model is intended to be highly scalable, both in terms of the number of users for whom it could be deployed within a business and by having B2E, B2C and B2B applicability.
• Everyone can be empowered by the potential of mobility, not just those core application software license holders in your organization.
• By offering a public SDK aimed not just at the professional developer community but company IT departments, and partners; it’s less about zero-sum winners and losers in mobility, and more about empowering the ecosystem.
• By making it easier to create, customize, and update applications, businesses are not slowed down by the extended product development cycles of for example SAP applications.

There are however the inevitable challenges and they are myriad - leapfactor’s CEO acknowledged that security around the cloud-based architecture is high on the list of their clients’ concerns. It goes further than security however, with recent Yankee Group data pointing not only to security but a host of other potential barriers that enterprises consider cloud computing to throw up.

Add to this the challenges of this business model for markets with a lot of legacy infrastructure. Not so much a problem for Brazil and Mexico, two of the focus markets for the initial deployment, but for Western Europe who is next in the line up, it will be a more complicated sell-in.

And let’s not forget the challenge of growing the whole ecosystem. This is difficult enough to do as a large enterprise, but as a start-up this will require a lot of clever partnerships with systems integrators, OEMs and others to make it work.

Nevertheless, the potential points to one of the most interesting dynamics of Anywhere - when innovations allow the Anywhere enterprise to focus less on the “how” and more on the “where” opportunities in the contact zone between businesses and their customers, and between employees and their business processes, the relationship becomes a reciprocal one, where each one has a mobilizing force on the other.

Wider software strategy key to offset Qualcomm’s margin pressures

By Caroline Gabriel

Qualcomm’s Brew developer event used to be a low profile affair, gathering the loyal CDMA base in San Diego but scarcely troubling those seeking to understand the chip giant’s broader strategies. All change this year - not only did the event have a new name, Uplinq, to reflect new momentum behind Brew Mobile Platform, but Qualcomm used it as the stage to outline a host of new directions. These may have been loosely connected by some basis in Brew technologies, but their real common thread was the quest to diversify Qualcomm’s model and boost its margins. Average selling prices of handsets, and therefore their chips, are falling, with even the smartphone going mass market; the highly profitable CDMA infrastructure chip business is dwindling; the IPR licensing landscape is changing as the world moves to LTE. Qualcomm is certainly better placed than most to cope with these changes, given its cutting edge silicon for high end segments, and its still significant patent holdings, but it has been broadening its revenue streams for years, and is now upping the pace to keep its profits healthy.

This means a stronger emphasis than ever on the software platforms that run on top of its silicon, and the managed services and apps that can drive use of  Qualcomm-based devices - rather than on chips as a standalone offering. For instance, Qualcomm is known for directly integrating its processors, including the high end Snapdragon, with the kernels of the major operating systems and creating optimization software so that those OSs work faster on Qualcomm silicon.

In the Qualcomm software world, Brew is important in itself, enjoying a new lease of life as an important driver of mobile web services for midrange devices. It provides developers with tools, and operators with UIs and hosted app stores, that are suited to lower end phones and networks. This has found it favor outside its original CDMA home, with AT&T in the US and many emerging market carriers, such as Telefonica.

AT&T did not announce specific devices at Uplinq, but reiterated its intention to base its growing family of what it calls QMDs (quick messaging devices, aka midrange handsets) on Brew. It is in the process of equipping all QMDs with Brew, and expects this to underpin 90% of phones in this category by the end of next year.  “This category is one of the fastest growing and a real sweet spot for developers, because these customers are hungry for applications,” AT&T said. Midrange devices remain vital to AT&T, with 65% of its base choosing them.

AT&T Mobility’s CMO David Christopher said the cellco has 10 new QMDs in the works, and will create its own developer program, to encourage new and, in some cases, exclusive apps rather than just relying on the existing Brew catalog. It is extending APIs for messaging, location and device identification to developers and has launched a virtual sandbox. In a major step for AT&T, it will also decentralize the distribution of Brew apps, allowing users to go outside its own App Center to get content and programs. It will not be fully open like Android Market, but AT&T will work with selected aggregators to provide off-portal apps (ironically, in Android AT&T is more prescriptive, preventing customers from obtaining apps except in the official Market).

AT&T also sees Brew as a way to enhance its efforts to cooperate with other carriers worldwide, pooling expertise, reducing cost of R&D, and creating a massive common developer base. All these activities will help operators fight against the bitpipe role, and are clearly seen in the Wholesale Applications Community (WAC). More tactically, many carriers are forming development alliances, notably DoCoMo with Telefonica, and Vodafone/Verizon with China Mobile. Now AT&T says it will coordinate its Brew development efforts with America Movil, the giant carrier that dominates the Latin American market.

Traditional supporters remain vital too, so Qualcomm will have been relieved that its most important customer, Verizon Wireless, has decided to stay faithful to Brew for its midrange web offerings. The cellco’s CMO John Stratton told the Uplinq audience that Verizon had accepted it needed to rework its platform, or kill it. It opted for the former option, and now plans a significantly upgraded version of its Get It Now applications store, which hosts the Brew content and apps. This has underperformed in the era of smartphones - and Verizon’s own strong move towards Android - admitted Verizon Wireless CMO John Stratton, in an Uplinq keynote. Stratton said featurephone app revenue had declined steadily since a peak in 2007, even though the subscriber base and mobile data demand had rise significantly during the same period.

Verizon Wireless had asked itself “is this business worth saving?” Stratton said. As reported by ConnectedPlanet, he added: “There are huge opportunities in the Verizon Wireless base we need to work harder to unleash, to tap into.”

As a result of this crisis of faith, Verizon now plans to update its store and certification process to provide a more compelling experience for its 56m non-smartphone subscribers. The main step has already been promised, but Stratton provided additional details of the Open Catalog, which will support a variety of developer models. It will allow  carrier and other forms of billing including micropayments, and include free, paid-for and ‘freemium’ apps (the latter offer free trials or basic free services with an upgrade to a paid-for, premium version). Adding free apps should boost traffic and Stratton said the upside for the cellco will be increased data fees.

The carrier also hopes to make it easier for Brew developers to get their wares into the Get It Now store. It will reduce its certification and testing fees dramatically from $550 to $99 and will drop a requirement for apps to target all devices in the portfolio, so participants can focus their resources on the most powerful or popular phones. Stratton also said the aim was to reduce certification time from one month to an average of 18 days or less.

The store will get a new user interface, after having been “frozen in time” for five years, and navigation will be improved, using Qualcomm’s Xiam recommendation technology to suggest apps to customers.  “We need to recognize that smartphones won’t get to 100%,” Stratton said. “The featurephone will be a declining part of our future sales, but they’ll still be a pretty big part.”

The big US carriers, over time, will not represent Brew’s greatest survival tactic. Instead, it will rely on emerging market operators, looking to deliver a smartphone-like experience at low cost. CEO Paul Jacobs, in his Uplinq keynote, said the latest Brew generation, Brew MP (Mobile Platform), was geared to creating a new category of “smartphones for the masses”, replacing the current “text and talk” handsets in this price range. To this end, Brew MP goes well beyond the application runtime environment of its predecessors and looks like a fully fledged OS and apps platform.

“In the 10 years since we launched Brew, there have been a lot of changes,” Jacobs said. “We think the platform represents the largest developer opportunity out there in terms of scale and consumer reach.”

Qualcomm has already announced two Indian Brew partnerships and just before Uplinq started, it revealed a deal with China’s infotainment portal SINA to create an app store for the country, based on the Brew white label store. An alliance with Latin American giant America Movil is also key, and supports another important Brew strategy - to enable a full carrier software platform, from end user experience to hosted delivery, app store and ad solutions.

This end-to-end promise was enhanced at Uplinq with various announcements, including a deal with agency AdMarvel.  They will cooperate to bring in-application advertising to Brew apps and widgets, initially for America Movil. AdMarvel will work on general availability of the solution for Brew and Brew MP worldwide. There are no sign-up fees and developers can download the relevant SDKs from the AdMarvel site with immediate effect.

This is all part of a move to enhance the appeal of Brew to carriers with new web oriented functionality, and also to extend Qualcomm’s developer and carrier offerings to the high end, particularly riding on optimization for Snapdragon, which currently leads the emerging market for gigahertz ’superphones’, and is eyeing new mobile internet device formats such as smartbooks and tablets.

The aim here is to enhance the value of the chips, increasing their differentiation from rivals like Samsung Hummingbird or Texas Instruments OMAP. Qualcomm also hopes good tools will spur the creation of the high end applications that, in turn, boost sales of advanced processors like Snapdragon. A clear example of this double-take was a heavy focus on augmented reality, which will be optimized by future chipsets, and will also feature in new developer frameworks. AR is much hyped, and features in some smartphones and browsers such as Samsung Galaxy S, but is still unproven as a consumer driver. It allows users to obtain information about an object or its surroundings by placing their phone camera against the object.

The integrated silicon/software AR offering consists of the Snapdragon MSM8655 cellphone chipset and various tools and optimization features. In future, AR will be boosted further by dual-core and 2GHz versions of Snapdragon, though a high end version targeted at smartbooks has been delayed until early 2011.

Digging a Hole to Anywhere

By John Keough

By John Keough, Research Associate, Yankee Group

Whenever someone needs to dig  in a developed area (toddlers in suburban sandboxes excluded), utilities are responsible for marking the locations of existing pipes and cables in the construction zone with paint. Utilities commonly outsource this task to third-party locators. Wielding paint sticks and electromagnetic hand-held devices, these locators determine where the underground facilities lie, paint the ground a pretty color and head to the next job. If the dig goes smoothly, all is well. If Ernie the Excavator whacks a gas main with his backhoe, however, a massive liability battle is likely to ensue (not to mention significant downtime in the construction process and potentially serious  injury to  Ernie).

With today’s technology, it’s often difficult to determine who is at fault for such an accident; the utility, the third-party locator or Ernie. As the only real evidence lies in the physical paint markings, insurance companies and investigation teams will sometimes find themselves in landfills feverishly sifting through mountains of construction rubble trying to piece together what happened. Jigsaw puzzles are significantly less fun when they come fully loaded with substantial legal ramifications.

Construction damage disputes are hardly rare; The Common Ground Alliance estimates there were over 200,000 “facility events” in 2008 alone. CertusView is currently developing an Electronic Marking Wand to help avoid these potentially messy situations. The wand is loaded with connectivity to create a digital record of exactly where and when ground was painted.As the operator manually sprays paint on the ground, an RFID tag identifies the color of paint being sprayed and GPS capability (with the help of other on-board technology) determines the precise coordinates of the markings. This information is then transferred via Wi-Fi to an application that digitally superimposes the paint markings onto an aerial image of the worksite. With this visual documentation on record before any excavating takes place, the specifics of the paint spraying will no longer be points of dispute.

Click here to view image of Electronic Marking Wand Prototype USPTO #7640105

CertusView’s wand is a great example of how an M2M solution can help solve an industry’s inefficiencies. By leveraging existing and emerging technologies in creative ways, embedded device developers have the power to transform current inadequacies and legal quagmires into business opportunities.

A Cautionary Tale on Operator Led Payment Consortiums

By Nick Holland

By Nick Holland, Senior Analyst, Yankee Group

I have the strangest sense of deja vu all over again.

Today, Verizon, AT&T and T-Mobile publicly announced a contactless payment consortium. It has no name, no CEO and no concrete details on cities of deployment, payment processor or, really much of anything. HOWEVER. It will use contactless (read NFC) technology to facilitate the payments and it may well bypass the traditional Visa and MasterCard duopoly. Intriguing.  So much so in fact that my colleague Andy Castonguay published a report on this very topic last month (available here).

Here are my $0.02.  Remember Simpay? No? Let me refresh your collective memories. In February 2003, Vodafone, T-Mobile and Orange formed a mobile payments association collectively called “Simpay”. The initiative had a simple remit - that subscribers could charge merchants and content resellers for goods and services to their mobile bill, bypassing traditional payment networks.

Fast forward to June 2005. Simpay press release:  “Following the decision of one of its founding Members not to launch Simpay for the foreseeable future, [...] not to pursue its activity on a pan-European scale as originally planned.”

(cue sound of air being released from a balloon)

Why did Simpay fail? A variety of reasons… the readiness of consumers to use alternative payment mechanisms (cards, checks and most of all, cash), the relatively nascent mobile payments landscape in Europe at the time, the lack of retailer buy-in and, not insignificantly, one of the three major participants pulling the plug.

So, have lessons been learnt? The U.S. consortium that is yet to have a name* has, IMHO, more potential than the not-long-deceased European predecessor. And why?…

• It is intended to be deployed in a single country. Admittedly a very large and diverse country, but at least the language is the same. Apparently.
• It may offer an alternative payment network to vocally disgruntled retailers that are looking to escape the shackles of Visa and MasterCard (but not too much)
• The technology is so very nearly there to offer contactless NFC payments at the point of sale in the US, AND there are a number of large retailers that already have the hardware in place from the last attempt to make contactless work, circa 2006.
• Operators may not be necessarily charging to a mobile bill, unlike Simpay, but to a third party. Hence, the potential for churn inducing sticker shock is  not expected to be a problem (banking / processing allegedly being dealt with by Discover and Barclays)
• The public at large is, theoretically at least,  prepared to experiment with new and exotic forms of payment. Tests of NFC have been done ad nauseum for years and in each of these rather self serving tests, the public has embraced the concept of tapping a phone / keyfob / card / dog with sticker on its nose against a payment instrument. People love this.

The one issue remains however. Consortium. Not to suggest that the triumvirate of AT&T, Verizon and T-Mobile can’t come to some equitable agreement on forming a mobile payments network, but it didn’t work before. And, all it took for Simpay to implode was one of the players to drop out.

Lesson learned?…

*May I be the first to suggest not a name, but a symbol like mid-90′s Prince, or an emoticon even? How about :-/

The Anywhere road trip

By Emily Green

By Emily Green, President and Chief Executive Officer, Yankee Group

A few years ago when we were first centering Yankee Group’s research on ubiquitous connectivity, or what we now call Anywhere, I said something that I now see was wrong. I claimed that the expansion of connectivity around the world would ultimately redefine good vacation experiences not as those that include free WiFi, but those that promise the absence of the opportunity to connect. Meaning we’d be so exhausted from our connected lives that the best vacation would be one in which we would be prevented from connecting - and happy about it.

Hah.

I have been on a family road trip for the past week. Writing today from Richmond, Virginia, I am here to tell you that the best way to vacation in 2010, at least in the U.S., requires the following:

1. A Sprint Overdrive: this slick little hockey puck turns either 3G or 4G cellular signals into WiFi, creating a hot spot for up to 5 laptops, WiFi enabled cellphones, etc. In the car, we toss it into the armrest where it silently creates a traveling WiFi cloud around us. In the hotel, it replaces the usually glacial in-room WiFi. With 4G service via Clear now available in over 40 cities in the U.S., we’ve been pleasantly surprised how often we see the ‘4G’ indicator pop up on the display. Once the cry goes out, the pile-on to take advantage of what my daughter calls ‘real broadband’ is unleashed.
2. An Apple iPad. Even as a longtime Apple fan (if you’re nice, sometime I’ll tell you about the Mac software company I started with friends 25 years ago) I was unsure about the role the iPad might play in my life - but had to give it a try. I’m an instant convert; that’s probably another post. I have the 3G-enabled model, but given the availability of 4G in many of the cities we’ve hit on this trip, we’ve been much better off using the Overdrive’s WiFi instead of AT&T’s 3G network.
3. An HTC EVO phone. Its speedy performance, its access to the rapidly expanding Android app universe, its huge screen and its unique support for 4G means that, in the three-way tussle among our traveling group for the use of the iPad, the EVO makes a damn good consolation prize. Leaving my trusted Blackberry behind to ensure I spend enough time away from office email, I find the EVO is also a great mobile phone, one I’d be happy to make my regular handset.

Once you have these three elements (and of course, sadly, the attendant chargers and cords; the EVO in particular requires a lot of attention to battery management), here’s what happens:

• You ditch all other means of navigation. I’ve been reminiscing on this drive about family road trips decades ago, with my mother unfolding the next map in our AAA Triptik package to guide my father into the next state. So dated… but now we’re already ignoring our car’s own GPS system, whose screen suddenly seems so much harder to read, doesn’t zoom as fast, isn’t as current, doesn’t let you type names… it’s only three years old, but already seems so flawed. We’re not using anything fancy in its place, just the iPad’s pre-installed Maps app; but that app is so good and so easy that I wouldn’t be surprised to see the dog offering to ride shotgun soon.
• You have a richer view of the changing world around you. I’ve traveled a lot in France and always enjoyed the brown signs on the autoroute that alert you to an upcoming castle, cathedral, or Roman ruin. But again, 4G with intuitive multimedia devices creates a intergalactic change. See something along the road of interest? Instantaneous answers via our mobile WiFi cocoon. At a strange ballpark and don’t know the players? The EVO enriches the game experience and guides you to better food nearby.
• You skip the hotel room Spectravision. In a shocking turn of events, the TV remote has sat untended on the bureau, because no one wants to watch TV. Besides four fave movies we pre-loaded on the iPad, we have e-books, newspapers, music, and more, all in one place. One key nuisance, though: Apple’s stubborn stupidity about Flash support.

I’m sure there are two or three more aspects to how different our road trip feels, but I’ve already spent too much time away from the vacation itself. The key is true mobile broadband with great access devices. Won’t travel again without either if I can avoid it!

Get a Grip on iPhone 4 Antenna Issues

By Carl Howe

By Carl Howe, Director, Yankee Group

20 db attenuation from a hand touching an antenna? Demand a recall! File a class action lawsuit!! Off with their heads!!!

Readers of tech news know that I’m talking about the Apple iPhone antenna firestorm, whose flames were fanned by Consumer Reports retracting its recommendation of the iPhone 4. The blog notes the following:

It’s official. Consumer Reports’ engineers have just completed testing the iPhone 4, and have confirmed that there is a problem with its reception. When your finger or hand touches a spot on the phone’s lower left side-an easy thing, especially for lefties-the signal can significantly degrade enough to cause you to lose your connection altogether if you’re in an area with a weak signal. Due to this problem, we can’t recommend the iPhone 4.

We reached this conclusion after testing all three of our iPhone 4s (purchased at three separate retailers in the New York area) in the controlled environment of CU’s radio frequency (RF) isolation chamber. In this room, which is impervious to outside radio signals, our test engineers connected the phones to our base-station emulator, a device that simulates carrier cell towers (see video: IPhone 4 Design Defect Confirmed). We also tested several other AT&T phones the same way, including the iPhone 3G S and the Palm Pre. None of those phones had the signal-loss problems of the iPhone 4.

Kudos to Consumer Reports for doing real testing and introducing facts into the discussion. However, their video describing their testing was unhelpful in actually determining which RF degradation they were measuring, what frequencies they were doing testing at, and what the RF degradation means to actual use. All we got was that there were some numbers on a meter displayed and they flashed red at one point. Compare that video with the in-depth analysis done at sites like Anandtech.com, and the Consumer Reports testing falls short of providing enough documentation to trace the root cause. RF industry engineer bloggers such as Bob Egan have noted some of these methodological shortcomings publicly as well.

I haven’t found anyone here at Yankee Group who has reproduced the death grip problem with our iPhone 4s. I just did a TV interview where I demonstrated the proper way to short out the antenna and did all the appropriate gripping. While I am sure I can cause a 20 db signal drop if I position my hands the right way, I can do that much more easily by stepping into the elevator. After more than two weeks of use, I’ll simply echo what others have said; the iPhone 4 seems actually better at making calls than prior iPhones in real world use, not worse.

But let’s step back from the technology for a minute and look at this from a business point of view. Consumer Reports is in the business of making recommendations of products for consumers. They withdrew their recommendation for iPhone 4, just as they have done for other consumer products such as 8 models of Toyota cars and for some brands of car seats. That’s just what they do, and they are doing it based on the best information they have available to them.

However, in my opinion, the iPhone 4 recommendation withdrawal is an overreaction. Why? Because:

• 20 db signal drops aren’t going to kill anyone. Unlike recommendation withdrawals for safety issues in cars, the worst case outcome of an iPhone 4 reception problem is a dropped call. It’s not a life or death scenario, nor should Consumer Reports be implying that this is.
• Problem workarounds are trivial. The so-called “death grip” required to induce the signal loss documented by Consumer Reports isn’t exactly a natural way to hold a mobile phone, requiring the user to hold the very bottom  of the iPhone between their thumb and finger and squeeze hard. The solution is amazingly simple: move your thumb, and it magically works better. For those who can’t be bothered, a case (or as Consumer Reports recommends, a piece of duct tape), eliminates the issue. Holding the phone naturally will largely avoid the problem entirely.
• Consumers already have the ultimate recourse: product refund. iPhone 4 is a consumer product, and Apple has already told consumers that if they are not satisfied, they can return their iPhones for a full refund. So far, there haven’t been many takers, but that’s a perfectly viable option for anyone who thinks their iPhone 4 really is inferior to other options.

This is not to say that Apple has no work to do here. Even if this antenna issue isn’t a big technical problem, it is a Apple brand problem. When black iPod nanos were being scratched because consumers were stuffing them into tight jean pockets, Apple bundled inexpensive cases with iPod nanos to convince consumers to protect them a bit better. Until Apple can add a clear, non-conductive coating for the external iPhone 4 antennas (which will should eliminate much of the sweaty palm death grip problem), it would be well-served to do the same for iPhone 4 customers. Yes, it would cost Apple about $150 million or so to provide free bumpers to each of the 5 million iPhone 4 owners so far (my estimate), but the brand value it would save would be far greater.

My bottom line: if you don’t like your iPhone 4, buy a case or take it back. Recalls and lawsuits may make lawyers happy, but if you want the best mobile phone made today, check out Consumer Report’s ratings. The top rated phone in their list is the iPhone 4, even if they can’t recommend it.

Who is making those 160,000 Android phones activated each day?

By Carl Howe

By Carl Howe, Director, Yankee Group

Google’s Andy Rubin was recently quoted as saying that Google is currently activating 160,000 Android phones each day. That’s a pretty amazing number - if Android adoption continues at that rate, it implies that Google is on track to activate more than 58 million phones this year, which is quite a staggering number.

But HTC’s latest quarterly report makes me wonder who is building those phones. HTC, one of the big Android ODMs and maker of the Verizon’s Droid Incredible and Sprint’s EVO, reported record revenues of $1.8 billion last quarter. At an average OEM price of $500, that accounts for at most 3.6 million Android phones in the quarter, assuming that HTC only sells Android phones. The reality, of course, is that HTC makes many different types of phones, including those for Windows Mobile, so that number is likely to be more like 2.5 or 3 million Android phones out of the mix. Motorola, LG, and Samsung all also sell Android phones, but they are both later to the party than HTC and haven’t built up as large volumes yet. But for the sake of fairness, let’s assume all four manufacturers are shipping a million Android phones a month. That still leaves us at 48 million phones for the year, 10 million short from the 58 million that Google is citing.

We predicted that Android would be the next breakout mobile app platform in the report, “The Mobile App Gold Rush Speeds Up” earlier this year, and we’re pleased to see Google confirm this fact. But Google’s activation count implies that Android phones are being activated by Google that aren’t being reported by the major manufacturers. The open question is, who is making more Android phones than HTC? And is there a mystery manufacturer that we can’t see? We don’t have answers, but we’d be happy to pass on any suggestions readers may have.

More likely is the fact that the 160,000 Android activations a day was not an average, but a peak activation rate. But we’ll know more as we head into the holiday buying season and get further numbers.

Messaging or tennis?

By Declan Lonergan

By Declan Lonergan, Vice President, Yankee Group Research

Last week I traveled to London in search of mobile messaging innovation. Ok I admit I was tempted to take a detour to check out some of the tennis that was just getting underway at Wimbledon. But, on a rare sunny day in this great city, I resisted that temptation and stuck to my task.

Recently I’ve been taking a fresh look at mobile messaging - trying to figure out if the market really is on the brink of total commoditization, or whether new innovations can rescue operators and vendors from the looming prospect of declining messaging revenues. I thought I might find some answers in London where I participated in a great workshop, hosted by Telsis, and attended by leading mobile operators from Kuwait, Turkey, Germany, Mexico, and Cyprus. I also spoke with several other operators and a few messaging vendors who were in town to attend the Global Messaging Congress later that week.

So, I went looking for innovation, and here’s what I found:

I discovered pragmatism. A representative from Portuguese operator TMN was happy to admit that the messaging guys within his organization struggle to get the attention of the board nowadays. Management wants to be reassured that messaging revenues will hold up well, but they don’t want to be bothered by requests for investment in new platforms. In general, the messaging product managers I spoke with are pragmatic about their roles within their organizations. They’re expected to quietly get on with the job of staving off service commoditization, and they’re not expected to ask for much help in the process.

I discovered fear. No surprise here. Operators are really worried about competition from new sources. As one T-Mobile representative explained, the most dangerous enemy is no longer Orange or Vodafone, it’s Google, Facebook, and Apple. To illustrate this he cited the fact that T-Mobile’s once-successful music download service is now effectively dead - killed by the iPhone and other non-operator music services. Operators’ fear extends to messaging, where the threat is coming primarily from social network-based messaging.

I discovered innovation. Yes really! My search for mobile messaging innovation was not in vain. Several exciting new things are happening, but not necessarily in the places you might expect. The most interesting area of innovation is in developing markets. In places like sub-Saharan Africa where mobile web - and sometimes even mobile voice - coverage and quality are patchy or non-existent, and where most consumers have very basic devices, SMS takes centre-stage. The technology is being used as a platform to deliver a wide range of application-to-person (A2P) and P2A services. Infinitely creative local entrepreneurs are emerging to take full advantage of the unique attributes of SMS - reach, ubiquity (are those two the same?), reliability, and ease-of-use.

Pragmatism, fear, and innovation. Maybe that’s not such a bad combination. Of course I could have discovered the first two of these quite easily by watching Andy Murray at Wimbledon instead.

PS - I recently wrote a Yankee Group report titled - Messaging is Dead. Long Live Messaging! Following my trip to London, I’m more convinced than ever that - as I argued in the report - mobile messaging is alive and well. If you’ve seen (or deployed) innovative new SMS- or MMS-based services in your local markets, I would love to hear about it.

Voice – The Killer App

By Nick Holland

By Nick Holland, Senior Analyst, Yankee Group

The spoken word is something that we very much take for granted. We typically start at about a year of age, and continue to do so for the next seventy years or so. The words themselves however only convey a part of the message - there are infinite nuances to voice communication based on situation, mood, audience and physiology. In fact, an individual’s voice is as unique as a fingerprint - no two are the same.

This attribute is often overlooked. The value of voice is rarely assessed and certainly, from a telephony perspective, voice is as commoditized as tapwater. However, the ability to use voice as a biometric signature may be coming of age, particularly as we are on the cusp of a whole host of mobile transaction services where authentication of the end user will be paramount.

There are four factors of authentication - something you have, something you know, something you are and something you do. If you go to a supermarket and pay with a credit or debit card, the transaction uses two obvious factors - something you have (the card), and something you know (your PIN) or do (your signature). However, there is a more subtle factor at play - your physical self. You have to present the card in person and interact with the clerk. At their discretion, they could decide to decline the transaction based on your behavior, your body language and yes, even your tone of voice.

In the Anywhere world, the physical component of being at the point of purchase is removed, meaning an increasing requirement for validating that you are who you say you are and that the merchant is also who they claim to be. Online card fraud is a case in point - often only one factor of authentication is present - the card details. The merchant is essentially flying blind, having to trust that you are who you claim to be. Consequently, card fraud is rife, with merchants subject not just to losses, but higher fees for taking “card not present” transactions. Reciprocally, cardholders have been victims of fake merchants sites in “phishing” attacks, where card details are harvested from unsuspecting consumers and then used to commit card fraud using their credentials.

Given the ubiquity of mobile devices, global connectivity and the naivety of end users, fraud over mobile is set to grow in parallel with the anticipated explosion of m-commerce and m-payments transactions unless robust authentication can be introduced. Retrofitting the 4+ billion mobile subscribers with biometric capture technologies such as fingerprint and retina scanners is clearly out of the question. Passwords and PINs could be used, but as has been proven so many times, these are far from robust and easily compromised. So, the obvious candidate for the job is voice biometric technology. It can work with any existing device, is highly robust and, moreover, uses something that we are intimately familiar with - there is no learning curve to speaking into a phone.

For mobile operators, this presents an opportunity to rejuvenate voice revenues, with value being added as an extra layer as voice becomes more than just speaking but a means of uniquely identifying an individual.  Even in the Anywhere world, voice could become what it has always been in face to face situations - proof that you are who you say you are.

Next Page »