Three reasons why HP is buying Palm
By Carl Howe
By Carl Howe, Director, Yankee Group
HP’s announcement that it is acquiring Palm for $1.4 billion ($1.2 billion after factoring in Palm’s cash and debt) isn’t the most obvious deal in the world. But it does offer something for, if not everyone, at least three major players:
- Palm gets an attractive exit. The version 1 Palm Pre and Pixi had the unfortunate luck of being launched against the iPhone 3GS and a plethora of second generation Google Android phones. Palm needs patient development money to reach the point where it is as mature as those platforms, and patience is not a virtue most venture capitalists boast. This deal lets Palm’s investors recoup most of their money, and Palm gets to refine its software.
- HP gets a smartphone backup plan. HP has committed to Windows Mobile for the last decade, and it has done nothing for the company’s smartphone business. Given the declining trend in Windows Mobile currently and the untested future of Windows Phone 7, the Palm acquisition gives HP a much-needed hedge for its smartphone business and avoids pinning all its hopes on Microsoft.
- Bradley gets some tablet options and his old developers back. HP EVP Todd Bradley was CEO of Palm in the early 2000s and ran PalmOne, so this acquisition will be just like old times. Palm gives him a suite of developers that he knows and frankly, a sexier platform to build Anywhere connected devices on. In fact, the Palm WebOS has many attributes in common with Google Chrome, but doesn’t require licensing software from the Mountain View search giant. In a market soon to be filled with Windows 7 and Chrome tablets made by companies ranging from Asus to ZTE, Palm gives Bradley the opportunity to load up software that is a lot more differentiated and a lot less “me too.”
Is this going to change the balance of power in the market? The simple answer is no. Apple, Android, and RIM are going to be occupying places 1, 2, and 3 in the smartphone market for the foreseeable future, leaving Palm to fight with Nokia and Windows Mobile (and later Windows Phone) for the #4 spot. However, it does keep HP in the smartphone game without betting the entire smartphone farm on an untested Windows Phone 7 strategy. Sometimes, it’s just nice to have a backup plan.
Apple may develop digital payments platform
By Caroline Gabriel
The critical debate in mobile internet business models is whether the bulk of usage will move to browser-based applications, held in the cloud, as argued by Google; or stay mainly with downloadable software, as now. The device makers need to position themselves for either, especially if they aim to increase the percentage of their revenue that comes from software. Clearly, downloads are simpler to control and charge for, via device-specific stores like iTunes, but as we have discussed in relation to Apple’s possible rejection of the Spotify cloud music streaming app for iPhone, even powerful vendors cannot assume their preferred model will win out.
So the decision for a company like Apple may not be browser versus download, but software versus hardware as the driver of revenue - optimizing gadgets for effective streaming so that they can be sold at a premium and become highly desirable for users of cloud media; rather than trying to jostle for position in the online content value chain. Apple should be in the best position to stick to the hardware model, given the popularity of its iPhone and iPod Touch for all kinds of web and content activity, and the high margins it commands for its hardware. If its model remains fairly stable, iTunes and App Store will continue to drive adoption of its devices, rather than contributing significantly to revenue and margin in their own right.
New calculations by Berstein Research and Deutsche Bank both point to Apple collecting a disproportionate slice of the handset sector’s profits, given its sub-2% market share. According to Bernstein’s Toni Sacconaghi, iPhone sales accounted for 8% of handset industry revenues in the first half of 2009, though the company had about 1.9% of unit share. These modest figures delivered a huge 32% of the operating profit in the segment though. “Even if we exclude the operating losses generated by Motorola and Sony Ericsson, Apple still accounted for 25% of industry profits,” he wrote in a research note. This is a familiar equation for Apple, whose Mac generates 6% of sales in the PC market, but 25% of the profits.
But Sacconaghi warns that it will be harder for the vendor to maintain this balance in phones than in PCs as first mover advantage and brand impact are more easily lost in this fickle sector, and Apple will have to keep reducing prices in order to remain competitive. In the ongoing debate over whether Apple will, or should, go after the mass voice/text oriented cellphone market, Sacconaghi is on the ‘yes’ side. “We believe Apple will ultimately need to lower price (and margins over time) to expand its addressable market opportunity, including offering a lower cost, non-data plan iPhone,” said the note.
And Apple may be preparing itself for even more extreme outcomes, and possibly a squeeze on its hardware profits and a forced shift to a greater software/services mix. According to Silicon Alley Insider, the firm is working on a digital payment platform for iTunes and App Store, something that most of the web majors are likely to pursue as they seek greater control of the content value chain, and the ability to set the rules. Facebook is a key player, planning its Pay with Facebook system for PCs and mobiles, and introducing increasingly rigid rules (reminiscent of Apple’s own) for advertisers.
The rumored Apple payments platform would enable iTunes, and potentially App Store, account holders to make purchases at participating retailers across the web, not just within iPhone applications - which is as far as the Apple money ecosystem stretches so far, though even this has expanded with the addition of in-app purchasing.
However, broader influence of the payments chain would not necessarily help margins. In the current iTunes system, developers pay 30% per transaction, but clearly the percentage Apple could take would be far lower in a less controlled environment, with many elements - including tough negotiators like Amazon - claiming their cut of any sale.
As for the currently dominant app store model, will there be significant pricing differences between the various shopfronts? RIM has gone for a ‘quality not quantity’ approach with more apps at high price points, reflecting its enterprise credentials, but between the two big names, there is no significant variation in strategy. Prices are currently similar in the Apple App Store and Google Android Market, according to research by Distimo. It finds the only area of real difference is in the ‘reference’ category, where Android is more expensive because its market carries a wide range of dictionary-type apps for $15 to $30. Otherwise, top selling premium downloads in categories including entertainment, navigation and tools are about the same average price across both the stores, though there is a different pricing structure in games. In this category, the most popular Android games typically cost between 99 cents and $5.95, with most selling for $2.99, while most App Store titles sell for 99 cents, with a few offered between $6.99 and $9.99. Games are the best selling group in App Store.
Ericsson bid for Nortel LTE and CDMA assets likely to encounter hurdles
By Andrew Mitchell
The acquisition of Nortel Network’s wireless assets by Ericsson could encounter some hurdles as the government of Canada takes a stand on the matter. The next step in the process involves Canadian and American bankruptcy courts providing their respective approvals.
Speaking to press on Monday of this week, Canada’s Industry Minister Tony Clement stated that “The issue will come up as to whether this is a bid that is acceptable to the government of Canada under the Investment Canada rules.” Clement also reiterated on Tuesday that the government would not intervene until such time as the courts issue their ruling. Critics of the deal have asserted that Nortel has long benefited from extensive assistance from the Canadian government and that Ericsson’s bid represents a raw deal for Canada. The deal is subject to scrutiny and approval of foreign investment legislation under the new Investment Canada Act.
What are on the block in the sale of Nortel’s wireless division are CDMA and LTE assets. Essentially this is the remains of Nortel’s profitable CDMA operations and a 400 employee group focused on LTE technology research and development. Some contend that the value of these assets, despite a shrinking CDMA market, far exceed the winning bidder’s offer.
Founded in 1895 as Northern Electric and Manufacturing, Nortel has a long, proud and lately checkered history of innovating, designing and manufacturing everything from wire to wireless gear for the telecommunications industry. Despite its tenure it took Nortel just a little less than 9 years to go from boom to bust. On May 1, 2000 Canadian telecom giant BCE Inc. divested its 35 percent interest in Nortel, much to the delight of both BCE and Nortel shareholders. Shortly after the divesture however, shareholders were becoming increasingly less delighted by a continuing saga of earnings restatements, unprecedented losses, accounting abnormalities and class action lawsuits that eventually brought Nortel to file bankruptcy on January 14, 2009.
Ericsson’s bid of US $1.13 billion trumped a bid of $730 million by New York based MatlinPatterson Global Advisers LLC, a private equity fund, and the $625 million stalking horse proposal put forward by Nortel’s earlier JV partner, Nokia Siemens Networks (NSN). It has been speculated by some that MatlinPatterson’s unsuccessful submission would include Research in Motion Limited (RIM). Surprising everyone involved, RIM withdrew from bidding early, apparently as a result of a disagreement with Nortel over a confidentiality clause.
While NSN has seemingly walked away quietly from the outcome, the same cannot be said of RIM. In a press release last week RIM co-CEO, Jim Balsillie said, “RIM is extremely disappointed that Nortel’s world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada.” RIM, also a Canadian company and wireless pioneer, stated that it was ready to offer $1.1 billion for CDMA, LTE and other Nortel assets but according to Balsillie, “found itself blocked at every turn.”
Another irritant to RIM is that Ericsson’s proposal calls for a loan of US $300 million from Export Development Canada, a government agency that provides finance, insurance and risk management support to Canadian exporters. Balsillie has wasted no time or effort lobbying both federal and provincial politicians. What has been achieved by Balsillie and others, at least in terms of verbal support from politicians thus far, suggests that some level of government intervention beyond a court ruling is likely, and that’s something that hasn’t been lost on Ericsson.
On a conference call with analysts and reporters, Ericsson’s CFO, Hans Vestberg said, “We feel confident that this will go through, but we have a lot of respect for the process that will come.”
Sprint mandates Wi-Fi but WLANs remain both friend and foe
By Caroline Gabriel
Only a few years ago US carriers were mounting lawsuits against WiFi metrozone operators. Now AT&T and T-Mobile have made such hotspots a key element of their proposition, and last week Sprint Nextel said it would insist on WiFi support in all the smartphones it offers from next year. WiFi, then - provided it is under cellco control - has shifted from being a threat (diverting users away from mobile networks onto unlicensed, often free services), to a friend (allowing the exploding levels of wireless data to be spread over multiple pipes, with WiFi the cheapest to the carrier). But any strategy involving unlicensed networks involves a double-edged sword, and this is especially seen in the rising use of mobile application stores.
The upsides of WiFi for carriers? If they can direct users onto WiFi hotspots and networks they control (and charge for, at least as part of a services bundle), they can mitigate the loss of revenue from 3G to WLANs; do something about the quality of service; increase user loyalty and reduce churn; and offload the kind of low value but data-intensive traffic that can compromise a 3G network. Increasingly, consumers do find themselves on a WiFi network controlled by their operator. T-Mobile USA was a pioneer in using dual-mode devices and UMA to support fixed/mobile convergence and value added services in the home, while offering users bundled deals that included access to its huge hotspot system - reducing their cellular spend while on the road, but keeping them within the T-Mobile world. AT&T has aggressively emulated this strategy on the hotspot and bundling front, especially since acquiring Wayport and poaching the important Starbucks coffee chain deal from its smaller rival - though it does not use UMA for FMC and homezone services, pursuing a femtocell strategy instead.
The downsides? They cannot ensure that users stay on their own WLANs, rather than roaming off to third party services, taking all their wireless data spend with them (and even voice, with the advent of usable mobile VoIP, Skype and Google Voice for Android). They can make their WiFi connections more attractive, but only by providing free access to subscribers and outlaying considerable sums on extending their hotspot network to ensure availability, and on improving quality. And though traffic offloading may be a short term bonus, given the creaking nature of current 3G coverage and capacity, the cellcos live with the dream of moving to 4G networks and supporting true broadband and massive data usage, with the improved ROI of a flat, IP system. But if the users are accustomed, by then, to carrying out most of their heavy duty applications work on WiFi, how easy will it be to get them back onto the cellcos’ network, except by making it just as cheap (which means free or at least aggressively flat rate), and enhancing the user experience (expensive, not the carriers’ forte, and with the significant chance that Google or other over-the-top giants will do a better job)? This will be especially tough when the LTE networks are not universal in coverage, and may well be less widely available than WiFi for some years.
So the bitpipe beckons, strengthened by the carriers’ own willingness to show users that there is a faster, cheaper alternative to 3G for doing YouTube on the phone. Operators’ attitudes to app stores, particularly the Apple blueprint, epitomize the dilemma. AT&T bars the mobile version of the SlingPlayer placeshifting TV app, available from the iPhone store, from its 3G network, forcing its most-loved customers, the Apple users, to run the app on the phone’s WiFi link only. It pleads overburdening of the 3G system, resulting in poor experience for other customers - probably true, but hardly persuading the subscribers that their high value iPhone 3G data plans are worth the money.
Across the world, one of the many sticking points in the negotiations to get the iPhone into China is precisely its WiFi component. The carrier that does take the handset, most likely Unicom, will almost certainly insist that WiFi is disabled. This is largely because of government policies on unfettered internet access, but the restriction is supported by the cellcos, because they are determined to keep iron control of their networks, revenue models, app stores and brands. Hence another sticking point - China Mobile’s refusal to entertain an iPhone store that was not using the operator brand and revenue split (see separate item).
The Chinese carriers have the ‘luxury’ of building out new networks from scratch, using the latest 3G (and soon, 4G) kit and with little chance of their new systems overloading any time soon (3G usage will be a tiny fraction of the total for years). But for their US counterparts, there is the need to cope with an explosion of mobile data, driven by netbooks, dongles and smartphones, on 3G networks that are inadequate to the task, necessitating rapid upgrades and 4G plans. In the meantime, WiFi offload looks almost inevitable, especially for the GSM/UMTS carriers, with their less efficient networks.
Even in CDMA land, Sprint is following the trend, its own hotspot efforts having fallen drastically behind those of the GSM majors. Sprint only announced plans for a widespread hotspot service in 2003, behind its rivals, but its promises of a 2,100-strong network did not materialize and it has often misstepped in the WiFi market - for instance, in 2004, at the height of hotspot fever, it introduced a flat rate WiFi plan priced at $49.95 a month, double the price of competitors. Now it is heavily focused on femtocells for in-home coverage and FMC, and has been a real pioneer there, but it still needs to add WiFi to its mix once its customers are out on the road.
It is, therefore, going to insist that every midrange and high end handset it offers in 2010 will have WiFi support, which may point to stepped-up hotspot activity too - cellcos are not the only operators enhancing their service bundles with hotspot and metrozone access; cablecos are keen on this route too, most dramatically Cablevision, with its WLAN build-out across its New York, New Jersey and Long Island territories.
One of the vendors that will have to adapt to Sprint’s new rules is RIM, which has been remarkably slow in adding WiFi even to some of its highest profile phones such as the Storm and the new Tour. It will reportedly put this right by year end, adding WiFi to ‘Storm 2′, expected at Vodafone and Verizon in time for the holiday season, and to an updated iteration of Tour, which could see the light of day before the end of 2009, or early in 2010.
Sprint did go ahead and launch Tour this month, as did Verizon, despite the lack of WLAN facilities, saying that it did not want to delay its roll-out. But “Sprint is embracing WiFi in all its major devices going forward,” said Jeff Clemow, director of business product marketing. “It is now a requirement for all our PDA equipment suppliers to include WiFi. Several quarters ago we made a conscious decision to require all of our PDA suppliers to support WiFi.” This will be gradually extended to all high end handsets and webphones, said Sprint sources.
Clemow added that Sprint will offer a version of the Tour, from early next year (”after the first of the year”), that will include WiFi - this could, however, slow sales of the current model if users are keen to wait for the new facility. Sprint, of course, also has a WiMAX option to offer its users via its stake in Clearwire and its MVNO deal with the operator. As that network expands, it will give Sprint additional devices and service plans to add to its bundles, and the most powerful mobile broadband connectivity in the US, at least in certain metrozones.
Mobile billing service provider, Bango, says that 20% of users purchasing content on their phones are now connecting via WiFi, and unless this is through an operator portal or controlled environment, this damages the mobile revenue model for cellcos and their content partners. It could also make vendor stores more attractive to consumers than operator branded alternatives - a WiFi iPhone user still pays the App Store developer for the product, but buying from a cellco store will be tied to a specific network.
“The use of WiFi on mobile handsets is becoming pervasive,” commented Frank Dickson, VP of research at In-Stat. “By 2010, In-Stat anticipates that 20% of the total WiFi chipsets will be used in mobile phones as manufacturers, currently led by Nokia, continue to ship an increasing number of WiFi enabled handsets.” The solution, says Bango, is for operators to extend their billing mechanisms beyond their own networks - carrier billing is a significant attraction, often offering well tried, trusted and streamlined processes, and allowing purchases to be put on the mobile bill. “Operator billing delivers the highest payment conversion rates for mobile content,” said Bango CEO Ray Anderson. “These statistics are both a warning and an opportunity for mobile businesses to ensure that their billing solutions can secure the same high conversion rates from the growing number of WiFi connected customers.”
So perhaps, even as the cellcos invest large sums in creating attractive user experiences and strengthening their brands, it may be the more mundane weapon in their armory, billing systems, that give them an edge even in the world of WiFi.
Nokia and RIM use social networking to lure US cellcos
By Caroline Gabriel
The shift of the social networking craze to cellphones shows no signs of abating, and is a key theme of the US cellcos’ autumn plans, even giving Nokia a boost in its bid to improve its north American performance.
Nokia and RIM, both battling to get visibility under the Apple and Palm spotlights stateside, are heavily focused on tapping the social networking trend. The Finnish giant is launching another handset with AT&T, part of its slow but steady progress in establishing a foothold in the once hostile carrier. The companies have launched the Surge, a “socially supercharged smartphone”.
The handset also represents broader strategies in Nokia - pushing its Symbian Series 60 smartphone platform into midrange, well priced webphones, to appeal to the mass market by making key applications easy to access and use. The Surge, then, majors on homescreen access to instant and multimedia messaging, text and email, plus AT&T Video Share and a new application called JuiceCaster, which allows users to post messages, images and video directly to social networks like Facebook. Other features include Flash support, 2-megapixel camera, AT&T Navigator and AT&T Mobile Music, and the price is $79.99 with two-year contract and after mail-in rebate, from July 19.
Of course, the real prize for Nokia would be to get major carrier support for one of its flagship, higher margin smartphones. Its best chance lies with AT&T, which has already launched the business focused E71x and promised to make Ovi Store available to its customers later this year. Some reports say that AT&T will also launch the N97 superphone in time for the holiday season, though currently this is only available without carrier contracts in the US. Nokia’s north American market share was 7.9% in the first quarter, up from 6.5% a year before.
Over at RIM, the BlackBerry Tour has gone on sale at Verizon Wireless and Sprint Nextel, as the smartphone maker also hopes to lure AT&T for its forthcoming ‘Storm 2′. The company is looking to strengthen its hand by upping its social networking credentials, with reported plans to launch a network specifically for BlackBerry App World. According to reports from TechCrunch, the social site will be called MyBlackBerry and will allow users to create a social profile where they can share mobile tips and tricks, plus recommendations of BlackBerry applications and accessories. The site will also be personalized to connect to owners of similar devices.
Another blog, BoyGeniusReport, indicates that AT&T could launch Storm 2, though the cellco would not confirm this. This would show RIM pursuing a non-exclusive launch strategy, since Verizon Wireless - which had an exclusive in the original Storm’s initial US sales period - has confirmed it will carry Storm 2 from October. The Storm range was co-developed with Verizon co-owner Vodafone and supports both HSPA and CDMA EV-DO. The upgrade is expected to plug a key hole in the first model, Wi-Fi support.
This will be essential for any future RIM launches at Sprint, with the cellco requiring all smartphones to support Wi-Fi from next year. “Sprint is embracing Wi-Fi in all its major devices going forward,” Jeff Clemow, director of business product marketing, told FierceWireless. This may be a nod to surveys that indicate rising demand for Wi-Fi in high end and even midrange devices, or a way to spread the load of data traffic across multiple networks. Sprint even hinted that there could be a Wi-Fi enabled Tour later in the year.
Both Sprint and Verizon are now offering the BlackBerry Tour 9630, effectively a 3G version of the Curve with physical qwerty keyboard, EV-DO Rev A plus quad band GSM and 2.1GHz HSPA for international roaming. Other features include 480 x 360 2.4-inch display, trackball and 3.2-megapixel camera with flash and auto-focus. The Tour 9630 is priced at $199.99 on both carriers, with two-year agreement. The candybar design is being positioned against sub-smartphones like Sprint’s HTC Snap and T-Mobile’s Dash 3G.
However, the Tour is a sign, at least according to analyst Jeff Kagan, that RIM is not being sufficiently innovative in design terms. “The BlackBerry has not been reinvented in years,” he told Wireless Week. “The new devices, like the Bold and the Storm, are better than previous versions with many features, and they have shown strong growth over the last six months; however, during the last month or two, that is slowing. We have not seen anything earth-shaking coming out of RIM in a while.” He thinks RIM risks being confined to its business heartland. “They have too many happy business customers. However, for growth, they have to stay hot and right now they are not.”
Vodafone opens APIs in bid to create giant mobile software store
By Caroline Gabriel
The mobile operators have been busily readying their own application stores and underlying processes, seeking to steal the limelight - and pole position in the mobile value chain - back from Apple, Google and Nokia. Some, like Orange and T-Mobile, have been focusing on cross-platform stores to span all their portfolio of devices, plus PCs and even TVs, but Vodafone has made the most aggressive move yet, opening up its billing platform to third party developers.
This will allow any developer to reach Vodafone’s 289m subscribers from a single point of access, and any of those users will be able to purchase the software via their usual Voda bill. It is not too much of a stretch to think that, in future, Vodafone could also extend the system to non-competitive partner operators, to make it even more attractive to developers - Verizon, China Mobile and Softbank, with which it is creating a common widgets platform, being obvious candidates. The UK-based cellco made a point of noting that its latest move was related to its involvement in this initiative, Joint Innovation Lab (JIL). This will also underpin China Mobile’s planned store, due later this year - which is reported to be branded Mobile Market. The Chinese cellco’s determination to control the branding and business model of its software was said to be a key reason for the breakdown of its talks to carry the iPhone, with its integrated App Store.
Vodafone will publish a set of network APIs to enable the programmers to build capabilities such as direct billing and location awareness into their products and will offer access via JIL. Developers creating widgets using the JIL interfaces will be able to deploy them across all four JIL operators’ networks and stores unchanged. This cuts down on the complexity of making apps suitable for a particular cellular network/store, making the apps instantly suitable for Vodafone’s storefronts, and those of Verizon, Softbank and China Mobile as they upgrade these to support JIL.
Vodafone hopes to gain a far wider choice of software for its stores, vying with Apple’s and Nokia’s grand totals, but also says it should benefit from an increase in revenue via the revenue sharing model with developers (though it refused to specify what this share would be). JIL will release its web site and software developers’ kit later in the summer.
Vodafone’s statement said: “Developers will only need to create internet applications once in order to reach millions of Vodafone customers on any device and will be able to charge for it directly through Vodafone’s billing system.” Users gain the benefits of a wider selection of apps, more payment and micropayment options, a simpler web experience, and consistent quality of service across the Vodafone footprint, it added.
This is more sophisticated than most operators’ attempts to take the reins of running app stores - because not only does Vodafone offer developers a direct channel to market and a billing structure, but a rapidly developing software platform that could potentially reach the one billion-plus customers shared between JIL’s four supporters. But Vodafone’s goals are shared by most of its counterparts in developed markets - to make its own brands and user experience dominant; to ensure that customers are attached to its services and see the carrier as their main point of contact in the mobile web; and to put itself in pole position in the mobile software value and revenue chain.
These goals are hard to pursue when cellcos also want to carry the most eye-catching handsets and applications, which forces them to work with big brands from the device and software fields. Vodafone, partly because of its scale, has been reasonably successful in segmenting its customer bases and its marketing, highlighting partner products like Nokia Musicstore and smartphones for certain categories of consumer, and majoring on its own Vodafone Music for others.
Other carriers have been less decisive, and appear to be trying out various approaches to see what works. For instance, Orange was the most hostile of the European majors when Nokia decided to enter the mobile web services market under its own brand, but its UK arm has now signed with the Finnish giant for a relaunch of Comes With Music (CWM). This unlimited download subscription offering has had a rocky start in its first market, the UK, and this has, in turn, probably taught Nokia a few lessons about the pitfalls of going direct-to-consumer, bypassing its major channel, the mobile operator.
While Nokia may dream of a world where it sells its devices and integrated web services directly to the consumer, in reality, especially in its developed markets, it needs the support of the mobile carriers to thrive. So it is a real breakthrough for Nokia to have signed an exclusive contract with Orange UK to offer the 5800 XpressMusic touchscreen musicphone with a two-year subscription to the CWM unlimited download service (the usual CWM deal from Nokia is just one year). Exclusives, as Apple knows well, have the downside of limiting market reach for a while, but they do bring the operator’s marketing reach and budget with them. Given that CWM saw limited uptake and was generally thought to be poorly communicated to the UK public, a relaunch with a strong new handset and Orange’s full blown support should help matters second time around.
CWM initially launched with Carphone Warehouse but no major cellco, and is reported to have attracted only 20,000 UK users, though subsequent launches in other countries like Singapore are looking more successful.
But while cellcos and handset makers definitely need one another, that does not stop them making every effort to be the dominant players in the app store battle. This battle continues to heat up, and some players will have to be more flexible about operator demands than others, notably Microsoft (see separate item). But despite carrier resentments at Apple’s iron control of its App Store and revenue share, that platform continues to shine with users, and will be the key target for Nokia’s Ovi Store when that opens for business soon.
The Finnish vendor is promising that Ovi Store will go live with about 20,000 items, making it the second largest after Apple’s, which has about twice that number. This would certainly enable Ovi to top Android Market’s launch with just 50, and RIM’s with a few hundred. Key differentiators, says Nokia, will be a heavy focus on entertainment and video; the ability for users to personalize the choices with which they are presented; and extensive use of the store to distribute new Nokia software updates as well as apps.
Nokia aims to unite all its web services under the Ovi store, which is leading to some casualties. The latest is Ovi Share, a media sharing site. The Finnish giant only launched it in February, but said it is now stopping further investment in the product as part of its total overhaul of Ovi’s line-up and branding. It will keep the site operational, but will make no further enhancements to it.
Analysts believe Ovi Share saw poor take-up because of strong competition from established names like Picasa, Flickr and Facebook. Nokia is now likely to work with such firms rather than against them, indicating that it needs to drop its ‘not invented here’ approach to mobile web services. It has already taken a major step in this direction by starting to create a network of partnerships under the Ovi umbrella, saying recently that it would rely more heavily on third parties to expand its offering, in order to reduce cost and time to market, and leverage popular apps in the market.
Nokia draws eyes to Ovi with Heroes tie-up and ‘green’ moves
By Caroline Gabriel
As RIM and Microsoft opened up their app stores, Nokia beefed up its own upcoming Ovi Store with new content and services, ahead of global launch next month, and continued to press home its key differentiator, personalization.
Nokia is using three events this week - Web 2.0 in San Francisco, CTIA Wireless in Las Vegas and MIPTV in Cannes, France - to launch multiple initiatives in media, green technology, and various technical initiatives, all of them stretching its lead in consumer services.
The most original move is perhaps a tie-up with Heroes creator Tim Kring, who will create some kind of global epic similar to Heroes that will work on multiple media. This could finally tie location awareness to gaming, and could feature a TV show and a web-based gaming environment on mobile and fixed devices, with location services supporting a global treasure hunt genre. Nokia says it has signed on as a strategic partner and technology enabler for the project with an “immersive” narrative and elements of individual action and group participation.
Nokia has also launched its Point and Find service, which is an infrastructure play to promote products and apps. It uses real time image processing and recognition technologies from a handset camera and checks the images against any company that has cut a deal with Nokia. The user points the camera at virtually anything and Nokia identifies it from its database, and if relevant, can locate it using GPS co-ordinates. Point and Find also recognizes barcodes and supports category specific text entry search. Once Nokia has identified the item the customer gets a set of links to associated content and services. There are two betas, in the US and UK.
Nokia says that, since Ovi Store was announced at Mobile World Congress, it has signed thousands of content providers with majority coming from the US, UK, China and India including new signings from The Associated Press, Netflix, Paramount Pictures and Shazam.
The Finnish giant also tipped its hat to the green revolution, not just in its phones, but adding a ‘green’ element to its local search with Green Explorer. This is a new service which helps people make more greener purchasing choices, especially when traveling - it includes tips on the most sustainable methods of transport, eco-friendly places to visit, and a way to offset CO2 emissions when flying.
Nokia draws eyes to Ovi with Heroes tie-up and ‘green’ moves
By Caroline Gabriel
As RIM and Microsoft opened up their app stores, Nokia beefed up its own upcoming Ovi Store with new content and services, ahead of global launch next month, and continued to press home its key differentiator, personalization.
Nokia is using three events this week - Web 2.0 in San Francisco, CTIA Wireless in Las Vegas and MIPTV in Cannes, France – to launch multiple initiatives in media, green technology, and various technical initiatives, all of them stretching its lead in consumer services.
The most original move is perhaps a tie-up with Heroes creator Tim Kring, who will create some kind of global epic similar to Heroes that will work on multiple media. This could finally tie location awareness to gaming, and could feature a TV show and a web-based gaming environment on mobile and fixed devices, with location services supporting a global treasure hunt genre. Nokia says it has signed on as a strategic partner and technology enabler for the project with an “immersive” narrative and elements of individual action and group participation.
Nokia has also launched its Point and Find service, which is an infrastructure play to promote products and apps. It uses real time image processing and recognition technologies from a handset camera and checks the images against any company that has cut a deal with Nokia. The user points the camera at virtually anything and Nokia identifies it from its database, and if relevant, can locate it using GPS co-ordinates. Point and Find also recognizes barcodes and supports category specific text entry search. Once Nokia has identified the item the customer gets a set of links to associated content and services. There are two betas, in the US and UK.
Nokia says that, since Ovi Store was announced at Mobile World Congress, it has signed thousands of content providers with majority coming from the US, UK, China and India including new signings from The Associated Press, Netflix, Paramount Pictures and Shazam.
The Finnish giant also tipped its hat to the green revolution, not just in its phones, but adding a ‘green’ element to its local search with Green Explorer. This is a new service which helps people make more greener purchasing choices, especially when travelling – it includes tips on the most sustainable methods of transport, eco-friendly places to visit, and a way to offset CO2 emissions when flying.
CTIA: Google wakes up to real world dilemmas of app store game
By Caroline Gabriel
This year’s CTIA Wireless is a very software driven show, and the two themes that are emerging above all are widget-based user interfaces ( see separate item ) and the latest developments in application storefronts. RIM and Microsoft opened their stores, Nokia and Samsung fleshed out details of content for theirs, and Android continued to attract operator support, even as Google found that, in the real world, it has to grapple with many of the same dilemmas for which it has criticized the grandfather of these virtual shops, Apple App Store.
As promised, RIM opened BlackBerry App World, initially offering 1,000 free and paid-for products for download to one of its smartphones. The higher priced structure of this store, compared to those of Google and Apple, suggests it will far best in RIM’s enterprise heartland, though the company says it will also include plenty of consumer items such as games. Features will include keyword searches throughout the store and reviews of apps from other users.
As part of the appeal to consumers, RIM also plans a full episode mobile TV service for the BlackBerry devices, as it looks to put real meat behind its pronouncements about delivering media to the ‘four screens’ (cellphone, PC, TV and landphone), with the BlackBerry at the hub. The company is not commenting on its plans, but NewTeeVee.com’s sources say these consist of a monthly premium subscription plan, with unlimited content included in the fee, and licensed from a range of broadcast and cable networks. Initially, the offering will be for the US only but RIM will seek partnerships in Europe too.
However, the show will be downloaded over Wi-Fi where this is available, to support faster performance and avoid clogging the 3G network - US cellcos like AT&T have suffered much reported glitches in supporting high end smartphones like the BlackBerry Bold on their 3G systems. This would preclude the Verizon Storm from using the TV download service, since it does not include Wi-Fi.
Video is also important to Samsung’s proposition - as we saw last week, the Korean leader is attacking iTunes head-on with a mobile video store boasting full length movies, and it is also announcing a storefront for rich media applications created for its TouchWiz widget interface ( see separate item ). But it seems that the mobile movie store business will remain a head-to-head between Apple and Samsung for some time. Nokia said last week that it would include films in its upcoming Ovi Store, but not a full blown ‘Comes With Video’ offering as was previously rumored. Meanwhile, as Motorola retrenches to its core businesses, it has quietly closed its own movie download platform.
When Nokia introduced its flat rate Comes With Music service last year, it hinted strongly at a movie and video version to follow in 2009, taking on the video side of Apple iTunes. However, it seems less interested in this type of content now, despite Samsung’s launch of an ambitious movie store for Europe, tied to high end handsets like the Tocca Ultra. Although the Finnish giant also has high end phones with OLED screens - though perhaps not quite as video-optimized as Samsung’s flagship - it is currently more interested in stealing Apple users on the basis of games, the most popular section of the iPhone App Store.
Nokia’s head of entertainment business, Tero Ojanpera, said: “Movies will be part of the offering but this kind of a full fledged video store is not in our roadmap.” He was keen to allay confusion over the N-Gage gaming brand, which appears from recent moves to have been sidelined. He said N-Gage will remain a platform for high end games, and its titles will be discoverable in the Ovi Store, but the store will aim to present everything under various personalized channels, but with a single umbrella brand.
Meanwhile, Motorola has closed its movie download service in the UK after just nine months. It was created in conjunction with film studio Paramount and platform provider Saffron Digital and allowed users to download content to a PC for £5.99 to £8.99, and then sideload it to a Motorola phone. However, the offering was hardly marketed and the executives responsible for it both left the firm in January.
Over at Microsoft, the company is determined to make a bigger splash at CTIA than at Mobile World Congress, where it was largely drowned out by the launch of Ovi Store and much Android chatter. It has already talked up its important agreement with LG, which will result in 50 new Windows Mobile products over the next three years, and the Las Vegas event will showcase its mobile web store and applications.
While the Redmond giant cannot launch the delayed Windows Mobile 7 yet, having to rely on the stopgap release 6.5, it can stuff its upcoming Mobile Application Marketplace with eye-catching features, which should include a new Facebook app, and themes created by fashion designer Isaac Mizrahi.
The Facebook app will be an important catch-up on the other smartphone platforms, most of which now boast an optimized client for the popular social networking system. The WinMo implementation will be released in April, and another client for rival MySpace in the summer.
Microsoft has also shipped its Windows Live suite for its mobile OS, consisting of cellphone versions of Hotmail, Messenger, Live Contacts, Spaces and Live Search, for releases 6.0 and higher. Older phones can access Hotmail via the browser, with a new version optimized for the mobile web, said Microsoft.
Other software houses that should be unveiling apps for Microsoft’s store include games makers EA Mobile, Gameloft and Hands-On Mobile, and other recognizable names include AP Mobile, Accuweather and Pandora. However, many reviewers are noting that Windows Mobile Application Marketplace seems to have a less stellar line-up of high profile software than its rivals, such as Ovi Store, are boasting for their imminent opening days.
For Marketplace users, Microsoft will support two methods of purchasing - credit card or via the cellphone bill, and unlike Nokia, there will be no difference in price or developer revenue share terms, with either mechanism. Unlike Apple, RIM and the others, Microsoft will also allow users to return unwanted apps within 24 hours, for a refund.
It has also backed off unpopular plans to charge WinMo developers $99 for submitting even small tweaks to their apps in the store. This was hardly likely to encourage software programmers to focus their efforts on Windows rather than other platforms whose stores provided free entry, or at least free updates. Now all updates, bug fixes or version upgrades for applications that are already in the Marketplace will be accepted free of charge. Developers will still pay $99 a year, plus $99 per app, to submit new products, though in year one, five apps can be submitted free for the initial annual fee. The Marketplace is expected to launch later this year with the release of Windows Mobile 6.5.
Microsoft knows personalization will be important to attract carrier and consumer support for stores, as Nokia has emphasized with its Ovi platform. It has teamed up with the Design Museum London and Council of Fashion Designers of America to offer exclusive color palettes and wallpapers, making the handset into a fashion accessory. A new Theme Generator will enable users to select pictures from their PC to set as background images, and personalize their navigation bar, scroll bar and highlighted text.
With Ovi Store (and Palm’s store for WebOS) yet to open its doors, carrier attention has mainly been caught by Android Market, though some cellcos are ambivalent about the system so far. T-Mobile USA, despite reservations about the lack of personalization in the Android Marketplace store, dropped clear hints last month that Android would be its primary strategic software platform in future; now Orange has joined the chorus. Orange France plans to launch Android handsets almost as fast as they launch this year, promising smartphones from HTC, Sony Ericsson, Motorola, LG and Samsung. Of course, only the HTC model has launched - Orange should follow T-Mobile in offering the Dream, which the German-owned cellco brands G1, in the coming month or two. Samsung should be next off the blocks, around midyear.
French reports say Orange has declared itself happy with the revenue sharing model of Android Marketplace, and plans to promote the store and the cellphones heavily, partly in a bid to compensate for the law-enforced loss of its iPhone exclusive earlier this year. Vodafone is also adding to Android’s snowball effect in Europe, launching the co-developed HTC Magic next month, and planning its biggest campaign for a smartphone since the pre-Christmas program for RIM Storm. And the Magic is also set to come to the US via T-Mobile, in its 1.7GHz AWS band.
Meanwhile, the Android world has been waiting for Flash to become available and this could happen sooner than expected thanks to a port by software house BSquare. Last fall, Google and Adobe executives talked about plans to work together on a version of the streaming technology, which is almost universal on web-enabled phones, though famously excluded from the iPhone. But BSquare is to move more quickly, porting Flash to Android for an
unspecified global tier one carrier.
According to BSquare, Flash technology presently ships on more than 800m devices worldwide and is used by over one million developers to create video and rich media applications. A year ago, BSquare acquired NEC America’s Adobe Flash Technology consulting business and has now worked on about 40 devices.
The operators may want Android to be more personalized, but they seem to feel they have a little more control over it than they do if they partner with Apple on App Store. Despite the strong success of the iPhone and its related store, for exclusive partners like AT&T, there is a rising backlash from carriers in newer markets ( see Wireless Watch March 25 2009 ). This is reported to have led to the breakdown of multiple rounds of talks with two successive Chinese cellcos, China Mobile and now China Unicom. The problems in the latest near-deal seem to have revolved around the Chinese bar on Wi-Fi in phones, and Unicom’s insistence on installing its own software on the handset, including its own store and iTunes-like application. This was the issue that reportedly killed talks with China Mobile, which also wanted to control the software experience and apps revenue share.
The way that the carrier is sidelined in the Apple model has been one issue that Google and Nokia appear to have addressed to some degree, but Apple has also incurred the wrath of developers with its iron control of its store and its habit of barring apps that compete with its own features. Google made much PR hay from this before Android Marketplace was live, promising a fully open store - but has found there is a difficult balance to draw between openness and ensuring a secure and usable experience for consumers.
In January there was a row over an Android ‘rogue application’ that allegedly wiped data on devices. This sounded warning signals, especially among operators, over the open door policy that Google has boasted of, since consumers may be vulnerable to rogue software that causes harm, deliberately or through poor programming, to their precious phones and data.
There are fears now that if more instances of sub-standard applications arise consumers will be put off using the store - and problems are highly likely as more devices emerge and more developers put software into the Marketplace.
However, now Google is on the other horn of the dilemma, coming under fire for reportedly pulling a tethering app from Marketplace to placate T-Mobile USA, its first carrier partner. Google says it will not endorse apps that violate the terms of service of its cellco partners - T-Mobile does not allow tethering (using a cellphone as a modem for the PC), and so the ‘Wi-Fi Tether for Root Users’ product was barred. Google’s apparent refusal of a tethering app is confusing since Android handsets will soon be offered by many operators that do allow the practise, though sometimes in exchange for an extra data plan fee (like AT&T). That might raise the specter of different versions of the store, or at least different skins, for different carriers - surely the opposite of the open access model that Google so loudly proclaims. As on many occasions before, Google is the scourge of the traditional cellcos in public, pushing for an open internet and new service provider models, but in commercial reality, is as keen to please them and use their powerful channels as any other software house.
