Search Results

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

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

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

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

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

The recent announcement from DoCoMo intending to sell Windows Mobile handsets from HTC in 2H06 came as a surprise to many industry insiders, including myself. DoCoMo, much like Nokia has been a avid Microsoft adversary in the mobile device platform wars (see DoCoMo’s long-term agenda of developing its own handset middleware platform, first with DoJa, then with Symbian and Linux). However, in retrospect, DoCoMo’s move reaffirms not the Japanese operator’s change of strategy, but the fact that Microsoft-powered devices are succesful in the enterprise. At the same time it reminds us that Windows devices are indeed succesful only in the enterprise. DoCoMo’s announcement is an indication of Microsoft’s long-term strategy connecting Windows Mobile OS sales to its other flagship products, i.e. a) its enterprise software and b) the Windows desktop product. On the first front, Microsoft has designed the handset OS for seemless synchronisation with Microsoft’s enterprise products, forging a kind of strategic product dependence that, has been successful in yielding sales dependencies. Windows Mobile has since its first iteration in 2001 been designed for the enterprise environment, boasting features such as runtime security, remote device management and PIM synchronisation, features which took competing smartphone OSes at least two years to achieve (see SymbianOS). On the second front, Microsoft has tried to forge a strategic dependency between its mobile device OS and its Windows desktop platform. This has been rather superficially focused on the user interface and the all-too-familiar ‘Start menu’. On this front, Microsoft has not done that well, opting with Windows Mobile 5 to switch to a S60-style grid menu, rather than insisting to shrink the Start Menu hierarchy into a 178×220 screen. Naturally there have been more subtle design weaknesses; Windows Mobile has never been a standalone device platform (thus far) – try for example setting the alarm clock without getting frustrated at the number of clicks required. In addition, in terms of commercial route to market, Microsoft has made very few concessions – it is insisting on controlling not only the OS, but also the hardware makeup and – more importantly – the middleware. The middleware layer (the enabling software for UI, multimedia and communications functions) is now becoming key to device customisation by industry power players such as mobile operators and content providers (more this on a future post). By retaining control of the hardware and middleware make-up Microsoft continues to turn away business opportunities which mat propel Windows Mobile into the consumer market. The end-result ? Windows Mobile has been generating demand from enterprise customers, but much less so in the consumer market. So far, Windows-powered mobile devices have not become exactly mass-market, other than morphing into tens of operator variants, each selling typically in the order of tens of thousands of units. Like Michael Gartenberg at Jupiter says “Microsoft knows how to sell to business who buy a thousand PCs at a time. They don’t yet know how to sell to a consumer who buys one at a time.” Will Microsoft learn from its mistakes and redesign the handset OS and the associated business model for mass-market consumers ? I wouldn’t bet on it. This would require a fundamental shift in the design mentality of the Redmond giant, one which has been happening every five years for Microsoft since 1995.

The mobile device market is being filled with more and more styles, shapes and designs of handsets, with both mobile phone supply and demand aligning in the direction of increasing handset diversity. Firstly, on the demand side, Western consumers are getting more personal with their handsets and individuals have an increasing desire to distinguish themselves from the crowd. As a result, consumers are looking for fashion and style on a handset more so than the brand name. In terms of supply, there is plenty of push for a diversity of handset styles, shapes and designs. In the last year, manufacturers have released devices with emphasis on sleek plastics (e.g. Moto’s RAZR), fashionable styling (e.g. Nokia’s fashion range) and appliance-specific functionality (e.g. the Sony Ericsson Walkman range). The motivation is to distinguish their handsets from the crowd and target more specific customer segments. Operators such as Vodafone and Orange are keen to customise handsets, and everyone (including Nokia) is willing to co-brand. Fashion and lifestyle brands have, for some time, been trying to enter in the mobile device space (just look at Escada, Elle and Ferrari). MVNOs are also keen to serve an integrated package comprising of not just voice and services, but also a customised handset to match their brand and target segment – just take a look at ESPN’s Sanyo MVP handset. With supply and demand in perfect alignment, a new type of company is coming to provide the missing link: the Customised Design Manufacturer. CDMs buy from manufacturers, customise the handsets, and resell to operators and retailers. Their unique selling point is their supply chain efficiency, in being able to buy large volumes and provide smaller handset volumes to tailored needs. CDMs combine sales and marketing, logistics, customisation (branding, localisation and configuration), support and warranty. Today’s notable CDMs are i-mate, Qtek (both sourcing from the Taiwanese manufacturer HTC) and Emblaze Mobile (sourcing from Innostream). O2 is also functioning as a CDM in Asian markets. So how’re the revenues looking like? Well, I’ve seen the same HTC models ranging widely in pricing: for example, Qtek’s 8010 sold for EUR399 + VAT in Greece, while the same phone branded Orange (the C500) sold for as low as GBP120 in the UK. Most of the difference makes up the profit margin for Qtek. CDMs began life as an interface to small, white-label manufacturers, but I believe they will move to serve Tier 2, perhaps even Tier 1 manufacturers in the next two years (my insight tells me Motorola is a good candidate here). The reason is simple: all major manufacturers have been organisationally structured on the principle of selling a few, mass-market phones. Moving into many, low-volume variants require a complete re-organisation, which, due to corporate friction is unlikely to happen soon. In addition, there are Far East contract manufacturers and ODMs, who are already responsible for a third of worldwide handset production according to Informa figures, yet have lacked the direct channels and brand awareness to make it directly into Western markets. CDMs are just the ticket: they are the gearbox that allows the engine to move the car at many different speeds. They are the system integrator that takes a software bundle and tailors it to the customer. As CDM and operator customisation becomes more sophisticated, device customisation houses are going to become their right arm. Companies like K-Lab, Gemini and Mobile Innovation (now part of Adobe) can provide sophisticated integration and software tailoring services, for both proprietary and Open OS handsets. This is a perfect synergy, with the customisation houses providing the service and the CDM providing the sales and support. Design houses like Ocean Observations, IDEO, Purple labs, Frog design, Fuseproject and Leading Edge Design are going to be involved at tailoring the device plastics to refreshing and differentiating designs. Naturally, device software will play a key role here. It has been Microsoft’s business model from the outset to use white-label ODMs and contract manufacturers to produce the goods, while operators provide the channel and brand. In a sense, it was Microsoft that opened the world to the possibilities of handset customisation. It hasn’t been so much the built-in software flexibility (Windows Mobile is a poor cousin to Windows CE in this respect) – it’s been the business model from the outset. So, what’s the road ahead looking like? My prediction is that the CDM business is going to be booming in 2 years time. All we need now is cheap, white-label Symbian phones and more innovative Windows-powered phone designs. (also published on ARCchart.com)

The Open Mobile Terminal Platform (OMTP) is an operator-led forum that aims to define a set of functional requirements for mid-end, mass-market handsets, which can be tailored to operator requirements. The forum, which was formed in June 2004, has broad support from European operators and currently comprises of more than 50 members (although non-European operators are not well represented). In reality, OMTP’s target is to define firstly an application environment and, secondly, a device customization environment. [tweet_this]The forum’s governance structure (roles and responsibilities) was agreed in February 2005, and its first terminal requirements are due this month. However, the forum has been rightly criticized for being too slow and ineffective so far. At the Mobile Applications and OS conference in March, Gartner’s Ben Wood noted after the presentation from the OMTP that their slides had not changed since last summer. Another attendee commented that the OMTP will be an academic exercise unless it achieves handset manufacturer commitment. It is true that, nine months following the launch of OMTP, their presentation slides had nothing but project plans and governance diagrams.[/tweet_this] It is worth asking when was the last time that mobile operators agreed on a single thing? Yes, there are alliances like Freemove, aimed to facilitate service roaming agreements between operators, but surely that is not too difficult to accomplish (plus it’s a win-win situation). The problem with the OMTP is that mobile operators have always had their own self-centred agendas, and quite a lot of ego. Since Vodafone Live! in 2002, operators have been used to getting their way with handset manufacturers. Nokia used to dictate what devices operators would be distributing in the next six months, but this is no longer the case. There’s another problem. OMTP aims to be technology-agnostic. Before OMTP was formed in the first half of 2004, when Vodafone, Orange and SavaJe were in discussions on an operator-defined Java platform, the initiative had a much greater chance of success. A year later, European operators are now unlikely to agree on a single set of requirements for a software platform, that is implemented consistently and in an interoperable fashion across all mass-market handsets. It is even doubtful whether operators will manage to converge their 5,000 lines of requirement specifications each (which they deliver to handset vendors) into a lowest-common-denominator set of requirements. Operators already have trouble managing a common set of consolidated requirements across all their various country operations. With such a mass of requirements, it is often the case that requirements from different product managers inside the organisation are overlapping or conflicting. It’s no easy task trying to manage everyone’s agendas within a single organisation, let alone across ten different operators. A safe prediction is that OMTP will achieve a broad set of guidelines that will be implemented inconsistently by manufacturers. Even assuming that operators manage to agree on defining a framework for UI customisation, then how are they going to test manufacturer compliance? Don’t forget that operator organisations don’t have that many device engineers, and have even fewer software engineers. A safer bet is on the competition. Shortly after the OMTP was launched, Vodafone and Nokia announced their Mobile Service Architecture (MSA). As an initiative within the JCP, MSA aims to define a Java-based framework for software management on mass-market devices. In practice, the goals of OMTP and MSA are very similar. It’s about defining the specification of the graphical UI and middleware that goes on mobile devices. Let’s look at the MSA. Firstly, it is backed both by operators and manufacturers. Secondly, it is trying to achieve device conformance to its specifications, through the JCP (JSRs 248, 249 and 232, to be exact). This is a route that has been tried and tested with most success in the last five years. Plus, Nokia counts for a third of device shipments, a very respectable base. Vodafone backing two very different initiatives suggests that it’s not very serious about the one of them. And Vodafone understands device software – the first two iterations of Vodafone Live! handsets had customised Java APIs (VSCL). As for Korea, the WIPI forum has already accomplished what OMTP could only dream of. It is a specification for an operator-customisable application platform. The secret of success there was government intervention. WIPI is already being exported to US, with the Earthlink MVNO handsets featuring the WIPI-specified software stack, according to LG’s Jinsung Choi, SVP of Technology Labs. Plus, LG and Samsung, the Korean manufacturers are topping US CDMA device sales, second only to the incumbent Motorola. How long till we see WIPI expanding within the US? (also published on ARCchart.com)

Symbian’s future is not too bright. The software licensing company, founded in 1998 by the leading mobile device manufacturers, to capitalise on the trend for smart devices, has had a very promising outlook. Not any more. Business model To start, Symbian has had the misfortune of being based on one the most complex business models that exist. By nature, Symbian exercises a platform strategy (similar to Microsoft and Palm), with its primary customers being manufacturers and software developers. Two elements have complicated the story though: Nokia’s co-opting strategy towards Symbian and the separation of the high-value software layers (UI, middleware and apps) from the core OS. Furthermore, Symbian has had little control over its customers, both the manufacturers and the software developers. Let me expand on each of these points. Contrary to most open OS vendors, Symbian has had a consortium of manufacturers to deal with, each with their own agenda, with Nokia exercising most control on the board. Product development decisions have therefore been difficult to make, requiring agreement by a number of competing players, hence slow growth and compromises. Nokia’s role towards Symbian is particularly controversial: Nokia has been the main backer of the software licensing company, responsible for the vast majority of Symbian-powered device sales (71% in 3Q04, according to Gartner) – that makes it a great ally. However, if you take a careful look at the software make-up of these Nokia devices you’ll notice that not just the UI(Series 60 or Series 80) comes from Nokia, but also many other critical middleware components, such as PIM applications and their engines, browser, messaging components, sync engines, Java VM, DRM engine, and more. Nokia did not just choose to add middleware components because Symbian had none to offer – it did so because these components are critical to the platform story, i.e. they are the most important layers that anyone needs in order to make productivity, entertainment or many other kinds of applications. That puts control of the high-value layers of the device software in the hands of Nokia – in effect, it makes Nokia a competitor. Now let’s factor in the recent changes in the board structure. Nokia owns almost 50% of the company stock, and combined with Nokia’s majority share of Symbian-powered handsets, it means it can pretty much do what it likes with Symbian. Last, but not least, it is expanding its Series 60 platform to mass-market devices, which means control over Symbian’s roadmap is now vital for Nokia. In summary, having reduced Symbian’s role to one of low-value functionality and having strong influence over the company’s roadmap, Symbian has become Nokia’s software house. For a platform strategy to be complete, the platform vendor has to able to exercise power over another important set of customers, the software developers. If you observe Microsoft’s attention to development tools, you’ll realise why this is the case. Symbian though, has little influence over the developer story. Why? Firstly, no Symbian dev kit is complete without a complimentary Series 60 or UIQ dev kit, resulting in tools fragmentation and developer confusion. Porting across different devices takes effort, even across devices with the same UI on (Nokia even had to issue an article on porting across Series 60!). Neither does Symbian control the dev tools. Metrowerks for one, was bought by Nokia recently (Metrowerks’ Codewarrior is a popular tool for Symbian OS C++ development) – ironically, Microsoft’s dev studio provides more functionality for Symbian C++ development (!). How about the language? Symbian has long insisted on C++, in practice a kind of proprietary version that uses quirky macros for memory allocation, string handling and exceptions, which makes up for a very slow learning curve for developers. In addition, the attempt to layer Java on top of C++ have not met with much success, exposing only roughly 10% of the OS capabilities, in effect crippling the power of Java apps on Symbian-powered devices. Symbian also has secondary customers: operators and end-users. With operators, it has not traditionally made efforts to approach them, although this might have changed recently – the problem is that operators and manufacturers are not really best friends in this industry, and the latter have the say over Symbian’s product roadmap. Plus Symbian did not have the financial luxury to invest in such activities, as, say, Microsoft. As for end-users, Symbian has enjoyed virtually zero brand awareness (the exception being the early adopters or the techies of course). Fortunately, it recently produced a ‘Symbian OS Smartphones for Dummies’ booklet (distributed via Carphone Warehouse in the UK), which has been an instant success with the public. However brand building takes financial muscle and time (Sun got the message and has been touting Java as a consumer brand much more strongly since JavaOne 2003). What’s the message? Those users are unlikely to consider Symbian OS as a reason for buying a particular mobile device. On a positive note, DoCoMo announced at the back end of 2004 that it has created a software platform (read UI & middleware) that will run on top of Symbian OS and Linux. This is a boost for Symbian, since DoCoMo has a high degree of influence over manufacturers (and Fujitsu is the third largest licensee in terms of shipments). At the same time though, DoCoMo is placing Symbian in competition with Linux, while Japanese manufacturers have relatively low percentage of device sales outside Japan. Only one way to go So where does this leave Symbian? It has recently sold a large chunk of shares, which means it can invest longer-term and recruit talent. The control over its platform strategy rests mostly in the hands of Nokia, who is happy to see Symbian’s role as low-value software goods vendor perpetuate. How can it stop being a software cow for the manufacturers though? It needs to turn to operators, its greatest ally. Let me explain. Operators have (since the launch of Vodafone Live!) taken a significant chunk out of the political-power pie within the mobile industry. Operators have been increasingly able to state requirements to manufacturers in terms of a number of device software elements, such as the home screen, multimedia codecs and browsers. As the addressable device market for open OSes expands due to reducing BOM (Bill Of Materials), and the software composition of a device becomes critical for the operator services that it supports, so are operators seeking tighter control of the software make-up of the devices they range. What does this mean for Symbian? It can position itself as a player with the necessary assets to function as a vehicle that will help realise operators’ ambitions for a mass-market customised device. Trouble is that the leading operators are looking at different places for their software needs. Vodafone and Orange have invested in SavaJe, the Java-OSque company. But SavaJe will never achieve the manufacturer acceptance that it needs to go mass market. BOM may be reducing globally, but lead times for integration of a new OS are high and SavaJe is not really mature (it hasn’t even launched in a device yet). A second challenge for Symbian is that operators are worried about Nokia’s influence over the OS roadmap, and quite rightly so. So what’s the way forward? My thesis is that Symbian needs to strike an operator-group strategic alliance for developing a mass-market device software stack (including UI). Symbian does have the capability to produce world-class software (including UI and middleware), but it needs industry backing and political muscle to do so. The right time is now, that the operators have increased buying power over manufacturers. Of course, it’s easier said than done. Operators have not really been able to get together and agree collaboration at a strategic level, apart from areas like cross-operator roaming, which really only meets short-term marketing targets. In addition, operators in Europe do not understand software (the only one who gets it is DoCoMo), so agreeing a strategic alliance with Symbian will take a lot of leadership and vision. Fortunately, in June 2004, 8 major operators (including DoCoMo, Vodafone, T-Mobile and Orange) formed an alliance called Open Mobile Terminal Platform (OMTP) aiming ‘for each Mobile Operator to offer its unique user experiences in a consistent manner across different advanced devices’ – reading between the lines, this is similar to what DoCoMo has already done in Japan, i.e. lay a software framework for device customisation including UI (but probably also extending to middleware), across a wide range of devices (and talking about volume, this means most likely mid-range devices and high end devices are pretty customisable these days anyway). Of all the operator alliances (see 3GSM and Freemove), this stands a better chance of addressing some long-term strategic software issues, as software is the key enabler for delivering customised user experience across handsets. OMTP alone has the opportunity to deliver this ‘experience layer’ over Symbian – naturally operators cannot put all their eggs in one basket (Linux may have to play a role here, too), but Symbian does have the maturity, manufacturer support, and operator-friendly attitude, to make the joint-operator vision happen. Ideally, operators should have also taken a chunk of Symbian’s stock, while the dice was rolling; Nokia’s dominant position in stock ownership makes such a proposition not well-timed. In conclusion, I can see no other strategy for Symbian to follow. It can either put its resources behind an operator-led full device software initiative, or remain a software cow for Nokia. How long till Nokia switches to Linux for its core OS needs? – Andreas [update] But wait .. as I was writing these lines I read that Symbian just joined OMTP, along with Qualcomm, TI, SonyEriccson, Siemens, and Ericsson Mobile Platforms (and joining existing members palmOne, Samsung, Sony, Kyocera and Symbol Technologies)… I ‘m worried that the OMTP effort might just collapse under its own weight and actually achieve little. BTW, there is a non-surprise here: Microsoft is not on the guest list.