Wednesday, September 4. 2013
Microsoft has just paid $5 bn for Nokia's handset business and $ 2.3bn for a 10 year licence for the patents. The handset business is probably worth far less than $5bn, but the patent option is interesting, as the game is to increase Android's operating costs in the struggle for operating system dominance in the emerging New Device Order. Window PC penetration is saturated, smartphones and tablets (Non-Microsoft Operating systems) are growing, Apple typically takes teh high margin quartile of a market so the battle is between Microsoft and Android - Reuters:
Next step, Blackberry?
Thursday, July 18. 2013
(Above - 2016 Season Integrated Wearable Technology Suit with Wide Area Connectivity Device and inbuilt Directional IPTV Transceiver)
Article in the FT today spurred me into writing something that I've been mulling on for a while:
The revolution will be wearable. Only, like most technology revolutions, it will not come as fast or in quite the form that the visionaries predict. That is the safe bet for what is quickly becoming Silicon Valley’s most hyped new claim: that “smart” devices like watches and glasses represent that next front in personal computing.
There is nothing new here of course - "wearable" computing, device miniaturisation, wireless networks have been with us for ages. But at some point a cost/performance/quality level is reached that allows an entire new sector to go from "interestingly geeky early adopter" to "early mass market". There are 4 main components in wearable systems - small intelligent devices, sensors, power sources, and networks. The time is now emerging where these are becoming a viable wearable system - here are some pointers as to the "why":
What is so far missing is the Killer Consumer App that will push this into the early mass market, as the FT notes. But I will put my neck out and make a guess that it will be around the area of (most likely a dumbed-down derivation of) the rapidly growing "Quantified Self" (QS) movement, driven by branded "smart" clothing to make ypu a "smart" person.
"Know Thyself" said the ancient philosophers, and argued for a sound mind in a sound body. And with QS technology you can know yourself, and how sound your mind and body are on a microsecond by microsecond basis. And obsess over it with charts and graphs, and share your data with others, and build social networks around it. Any product that promises personal growth via combining self knowledge, self obsession and buying branded aspirational clothing is bound to take off - with all the benefits that will no doubt be promised, everyone will "just do it".
Let see how this prediction works out in 4 years time, and how ludicrous and luminous the clothing is - lets hope its not based on midlife crisis level urban cycling gear
Friday, April 5. 2013
A lot has been said about Facebook Home, about its privacy implications (privacy - what privacy?) and so on and so forth (see Techmeme, screeds and screeds of...), but this is standard Facebook modus operandi. Zuckerberg's Law is that every year the amount of personal things you will share on Facebook doubles, the only question you need to ask yourself is whether its you or Facebook driving that.
What fascinates me more, and oddly seems not to have been taken up too much by the Pop Tech Press so far, is the strategic wisdom of building their service out on Android, a platform owned by Google, who is someone who would probably dearly like to gazump Facebook in matters Social. Now Amazon has already purloined Android for its own purposes with Kindle, but that is on its device using its own delivery chain for its own content. This is relying on the Other Guys for a lot more of the value chain, and that means a leakage of value. Facebook desperately needs a big, organic Mobile story, and no doubt they hope/believe that the sheer scale of Facebook's user base will make Android an offer it cannot refuse.
There is a fascinating bit of strategic game theory emerging here, one assumes Facebook sees this as a temporary measure, a "starter home" in Mobile, and is betting they can build their own permanent home on their own rock before this one sinks into the Android Sands. Now the Facebook crew are very smart, so if anyone can pull it off it is them. And as Tim Berner's Lee pointed out the other day, many people now think Facebook is the Internet, and Facebook is no doubt hoping they also will learn think the mobile screen is as well, with Android lost somewhere inside.
But thinking of Tim Berners Lee also makes me think of the last time someone tried to capture the front page of someone else's value chain. That was Netscape - remember them?
History also tells us building your home on another guy's foundations is a rocky road to travel. Especially if the Other Guy is Google. To my mind its like saddling the apex predator to go a-hunting, but then having to pray you can catch enough prey to feed you and it, so it never eyes you up as the next meal.
The one really interesting rider to this piece of game theory will be What Will Apple Do. Mark Zuckerberg, when asked by Wired, said that issue was "above his pay grade", then expanded:
Look, I would love for that answer to be yes. Facebook is in a very different place than Apple, Google, Amazon, Samsung, and Microsoft. We are trying to build a community. We have a billion folks using our services now, and we want to get to 3 or 5 billion one day. We’re going to do that by building the best experience across all devices. Android is growing quickly, and we’re excited that the platform is open and that it allows us to build these great experiences. I think that this is really good for Google too. Something like this could encourage a lot of people to get Android phones, because I think people really care about Facebook. In a lot of ways, this is one of the best Facebook experiences that you can get. Of course, a lot of people also love iPhones—I love mine, and I would like to be able to deliver Facebook Home there as well.
I predict Apple will retire into their top quartile smartphone market segment, sucking up most of the surplus in the ecosystem, after all its what they do in market after market
And then we will see if Google plays Internet Explorer to Facebook's Netscape.
Wednesday, November 28. 2012
Very interesting analysis of the fundamental problem of building mobile consumer service businesses from Vibhu Norby, who has started up two mobile consumer service busineses. In essence he recites the impact that has been there since we first looked at mobile app functionality 5 years ago, ie small screen, small phone brain, closed walls and low returns to creators make for "high friction" service experience - here are the key stats from their first startup:
- Out of 300,000+ downloads and 250,000 unique website visitors, 200,000 people have signed up. So right away, chop off 60% of your audience whom are just window-shopping. As an aside, I have heard privately from an app maker with a 100m+ downloads that 50% of people don’t even open their app after downloading.
Result is at best, they retained about 5% of users through the entire onboarding process. Attempts to fix it raised it only nominally. If you try and ratchet up the total number of downloads, and that costs money - paying Google’s $1 CPC for people to enter your funnel, you’re really paying $20 per user and you will never recoup that cost. Service redesigns are too slow and expensive, and in a non-uniform set of separate walled systems (as opposed to the 'Net/Web) there is little of the systemic innovation that removes friction, so even if the Ad gets through the user has "already calculated in their mind how long it takes to go to the app store, find your app, download it, enter their password, open the app, and go through onboarding, and because it will take so long they simply won’t do it"
In conclusion, I want to say that I don’t think mobile is going to stop growing. We are not going web-first because people use the web more than mobile. I use my phone more than anything else. I just don’t think that an entrepreneur who wants a real shot at success should start their business there. The Android and iOS platform set us up to fail by attracting us with the veneer of users, but in reality you are going to fight harder for them than is worthwhile to your business.
May I repeat what I wrote in 2007 on this subject, in our first research project on the Mobile Internet industry:
The story emerging is essentially that:
Doing a quick 5 year review here, (i) the causes of friction are by and large still true (albeit with different players and for slightly different motivations), (ii) absolutely still applies, see above article (iii) "Pay as you go" and "sticker shock" pricing has largely disappeared as a problem, but (iv) the small audience for any one application means the economics of new content and service creation are still not attractive so apps are small and simple (by service creation I don't mean the initial app, I mean the development of that app into a useful value added service) - there are very few mobile application successes that are not "Web first" services.
Plus ca Change. Or better, the more things change, the more they stay the same. There has been change - better devices, better pricing, fewer annoying ringtones, a huge App development ecosystem - but systemically all that has changed in Planet Mobile is the 2007 mobile operators end to end control of the value chain has shifted to Apple and the "Android mishmash", but the open web environment that drove all the Web service innovation still has not emerged, and the rewards have still not moved to the service creators in any sustainable way - "sell a billion $0.99 games with 30% taken off the top by Apple/Google and you now have the equivalent revenue of a Call Of Duty opening weekend" as the author puts it.
So, lets make a date for 2017 and see if anything has changed.
(Vibhu has also done a very good analysis of the issues around Ad supported consumer Web businesses, but that is the subject of another post)
Update - Ciaran Norris responded via Twitter:
Not all ad businesses need low income/educated ppl to survive. Most are doing everything they can to get ad-dollars from FMCGs, & FMCGs depend on people with disposable income to spend on brands, rather than own-brand products. So he's wrong, & offensive
Tuesday, December 6. 2011
Consider the following 3 facts:
Spot the contradiction.
It seems odd to me that just as these sites are becoming less necessary, they are increasing. Clearly the time lag of consultants suggesting companies adopt mobile assets is greater than the development paths of mobile hardware
Thursday, July 21. 2011
Since setting up this blog we have railed against the myopia of Planet Mobile in general and of Nokia (read here) - the Olde Guarde mobile phone makers and the elements in the Mobile Telcos that have fought tooth and nail against Mobile IP and decent IP devices. (The well powered, user friendly smartphone was technically possible some years before Apple brought the iPhone out, all it required was the will) so it is with no surprise we note Nokia is hitting the wall of its own self-created obsolescence - PaidContent:
Nokia today reported an operating loss of €487 million for the quarter, a decline of €782 million from the same quarter a year ago, when it made an operating profit of €295 million. The declines seen at the handset maker were near-total, represented by a string of negative percentages down the balance sheet.
That doesn't even begin to cover the disaster that is Smartphones:
In sales, smart devices saw a decline of 33 percent, to €2.368 billion from €3.503 billion a year before; in volumes that worked out to a 34 percent decline to 16.7 million units. In comparison, Apple sold nearly 34 million units and the combined Android makers sold around 37 million, according to figures from analyst Benedict Evans.
The "Microsoft Effect" had better be felt, and fast then..... if they want to have anything left of the JV and all the $ they are pumping into it. But they can't carry on doing "more of he same" - our own view is that they are better off putting their young turks in charge, rather than carrying on with the current management team.
Putsch Technology in other words......
Friday, February 11. 2011
Can elephants dance? (Picture from David Anone http://dailytickles.blogspot.com)
Today Nokia and Microsoft announced a JV to retake the Smartphone market - Nokia:
While the specific details of the deal are being worked out, here’s a quick summary of what we are working towards:
So far so good, now here is the harder bit:
The reason the JV is happening is that the assets being brought to the table are not so much incredible but non-credible. The two companies have completeley dropped the ball in mobile over the last 5 years, from positions of strength, due to a combination of world class arrogance, incompetence and intransigence. The question is, can they remove the cultures that made this happen? The next paragraph makes you wonder:
Together, we have some of the world’s most admired brands, including Windows, Office, Bing, Xbox Live, NAVTEQ and Nokia. We also have a shared understanding of what it takes to build and sustain a mobile ecosystem, which includes the entire experience from the device to the software to the applications, services and the marketplace.
That shared undestanding of what it takes to build an ecosystem is a chimera in the smart mobile world, they have both been comprehensively outdone by Apple and then Android (Fool me once, shame on you. Fool me twice, more ...). They are right when they say that ecosystems need to be at scale and execution is key:
My Broadsight colleague Dave Short has a rule of thumb, that Nimbleness = 1 / Size squared - ie double the company size, you get 1/4 of the nimbleness. In other words, Nokia and Microsoft doubling up is likely to reduce, not increase speed.
As to disrupting the market there is an irony here for Microsoft, as they disrupted the PC market in a similar way - find a sluggish giant that has missed a step (IBM) and use its assets (brand, sales channel) to capture a market (Microcomputers, or PC's ase we now call them) with their* new operating system (MS-DOS) and snaffle the market from Apple. Only thing is this time, Google has already aggregated the very fragmented non-Apple market under an O/S - ie Android. The lesson last time was that once there was a major mass market OS, all the other later entrants failed and had to adopt MS-DOS. This was partly because of the dominant OS effect by then, but was more due to the applications Ecosystem that MS-DOS and Apple already had. Android is now the MS-DOs in this industry, so it's highly likely that the New MSFT/Nokia play will struggle in the market.
But for Microsoft, there is an added pressure to consider in mobile. When it was all dumbphones, it was no threat to the Microsoft core user base. Even smartphones are no real threat, more a market missed - but tablets are the real threat, as a good tablet OS will be a major competitor for laptops and PCs.
The saving grace is the huge market share Nokia potentially can upsell to, but they will have to move very fast, every month people are opting fior iPhones and Android phones, and the whole market cycles around in about 2 years and we are well into the Smartphone upgrade cycle.....and if Dave's formula is right, that Nimbleness ain't going to happen. Rosabeth Moss Kanter once wrote "Can Giants learn to Dance" where she argues it is possible, my view on the book was it was more the triumph of hope over evidence. Or, as Telecom TV's ever-sharp mobile device fundi Lelia Makki (@leilamakki) puts it, she is:
"hopeful but not holding my breath."
Me neither - in fact, it seems more a desperate "last dance at the disco" tie-up. I'd bet on Nokia/Microsoft phones running Android in 2 years time (in fact I'd bet more on Kinect protecting MSFT's PC/Laptop assets)
Update - infomation on the new Nokia structure - looks like one small newly created division is responsible for this whole smartphone turnaround, but key assets - R&D, dealmaking, sales channels, even finance - are owned elsewhere in the company. This won't dance, never mind fly, as it will be mired in the peanut butter of the existing Big Battalions. They need to create a proper Joint Venture or Spinout with real independence. And time is fleeting, as yet there is no Nokia/Microsoft smartphone or tablet, they need one sooner rather than later.
Update 2 - Ian Betteridge makes a good point:
Good point - what killed Planet Mobile was the Operating System Tower of Babel - it made apps writing extremely uneconomic and using them extremely frustrating.
Update 3 - interesting theory - Microsoft has set up a Puppet Government in Nokia (the $0 acquisition)
* Ignoring the nip and truck they did with the original PC-DOS of course.....
Wednesday, February 9. 2011
...even if it is from their own Burning Platform - the new CEO wrote a long memo today, saying Nokia was on a burning platform and had little choice but to jump into icy seas:
Over the past few months, I've shared with you what I've heard from our shareholders, operators, developers, suppliers and from you. Today, I'm going to share what I've learned and what I have come to believe.
More on all this over here at Engadget. Given that the smarter industry observers have been saying this for at least 6 years, its no great surprise, but as always poorly navigated large companies, like large ships, have to hit icebergs before they think of changing course.
We've been fairly rude about Planet Mobile's stupi...short sightedness (our term for the the Olde Mobile industry, of which Nokia was one of the largest players) since we started writing this blog in 2006. Here is us in Jan 2007 - the article (over here) compares 'Net with Mobile development and concludes that Time is Running Out:
So, how long has Planet Mobile got to terreform itself? Two trends one should never bet against:
That was 2007, pre iPhone/Smartphone et al - let me bet on "mobile vs tablet" penetration by 2013.....
When the iPhone came out in 2007 Nokia made a false start to"get with it" - quoting ourselves from 2007:
Actually, we did tell them in 2005. I still recall sketching out the iPod's end - to end value chain to 'em in 2005 and saying "someday soon, mobile telephony will work this way".
As for Symbian, it was fairly clear that was fuc - sorry, largely obsolescent - by late 2007 - us again:
(I reference our writings because its quick to find them, but any decent independent observer could see the same thing at the time.)
What would we tell them now, apart from "Told Ya So". Well, in a way it would be "Ye don't want to be starting from here! More helpful perhaps would be to reflect on how IBM reformed itself under Gerstner, or Apple came back from its walk on the dire side - ie use the strategic assets it still has got and merclessly jettison those that are obsolete.
But the main thing they need to do is to re-innovate the product and end to end proposition, and - in my view anyway - the current structure and staff have proven to be unfit for purpose. Better leave 'em out the lifeboat.
Update - WSJ publishes the following view of "what to do"
According to Zeus Kerravala, who follows the hand-held device market for research firm Yankee Group, Nokia’s best hope is to create a vibrant community of developers interested in creating apps for its Symbian operating system. But, said Mr. Kerravala, “it’s a real eight ball they’re behind right now.”
I disagree - Symbian is obsolescent now, and Nokia have consistently misunderstood the market moving to:
- end to end service drives device (Apple/iTunes)
As I note above, I have very little confidence that the existing product crowd in Nokia could "get" this now. Also, I don't think bribing developers to build for Symbian will work, even if it was an OK OS. There are already too many apps elsewhere. If you look at the IT industry in the 80's, HP, NCR et al all had to adopt UNIX for their midrange tins and DOS for their PCs. IMO Nokia needs to do this now with Android (not Microsoft - that is too small a market share), and use their other market advantages to "stay in the game" in the short term.
Wednesday, November 3. 2010
Yes, dear reader, who could resist the linkbait of this one - Facebook has launched a service down the well worn path of allowing local businesses to push their special deals onto your mobile phone. The interesting thing is, as Inside Facebook explains:
So - well worn Use Case, but with Freeconomic play from subsidisation elsewhere to push for-pay startups out the space and grow market share fast (roll over Groupon, and do tell Foursquare the news....).
But it won't be available on the iPad - TechCrunch:
Zuckerberg was pretty blunt when it came to explaining why there wasn’t an iPad launch during today’s mobile event: “The iPad isn’t mobile”. He later qualified this statement to say that Facebook loves working with Apple, but that the iPad isn’t as mobile as a phone (he’s right).
In other words, the use case and demographic for the iPad is not likely to support a shedload of coupon adsh*t on their screens. Guess which device I am using around town from now on
There is a substantial customer subsegment that clips coupons, so there is no doubt a market for this - but what size this is, what they are worth vs the cost to serve, and whether they will wade through all the Adcr*p on such a small screen will be interesting to see, it may well be that Facebook is better off limiting its players to a smaller number of (large, high paying) high street brand names.
Definitely a "watch with interest", as I think the "No iPad" rule means they have clearly carefully considered the market (Zuckerberg thinks the iPad is a computer - we agree). I suspect that the iPhone user demographic will be rarer users too by the way.
(Disclosure - we have helped two interactive mobile Ad startups set up their businesses, so we know there is a market, and roughly where it is....)
Monday, September 20. 2010
TechCrunch reports today that Facebook is building its own smartphone:
TechCrunch also notes that facebook is vigorously denying this without denying it, as it were:
There is in fact a bit of a rush by various players to try and build their own walled gardens in the emerging mobile smartphone world, the belief being that if you can trap the consumer onto your device and deeply integrate with their address book etc then they won't get off your service. (And the worry being that Apple and Google will do it to you if you don't)
And on mobile people actually are used to paying money....
However, it reminds me of the early days of the online media world in the early 1990's, where just about every player with half a pretence of an interest in the emerging Internet market was looking at the end to end value chain they could own, if they could wall in enough customers.
It never came to pass, for 3 main reasons:
In this arena they are also assuming that the mobile telcos will remain passive, yet they see all the data and have that most golden of gooses, the customer credit card (and a s a recent Pew survey noted, customers most want to pay for things via their mobile bill).
So, what to make of Faceboook's alleged attempt to buck the trend and bunker-hunt its users? The biggest issue it has is it doesn't own any end device marketing and delivery capability, and thus credibility. Google, despite all the horses and men at its disposal, was woeful at selling its own device (heck, even Microsoft has struggled) but at least they and MSFT have OS level control. Facebook can't use Android or iOS if they want any form of control of their own walled garden for long.
Maybe they can do a deal with Nokia/Symbian or Microsoft, who both need some sort of lever into the "smart" smartphone market and will have to burn money in buying their way in anyhows - but that limits facebook to whoever uses those phones.
No, endgame is they will have to try and install a deeper software suite that uses the user's address book onto Other People's Phones, and will have to buy their way in (otherwise why would anyone do it?) but they will be unable to make it walled off for long - competition, consumer inclination, mobile telco self interest and regulation will probably all conspire against them.
But then the early 1990's were littered with abandoned walled gardens as well, and everyone today seems to have forgotten the past - or rather is seduced by the "it will work this time" cry of the new apostles.
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