OJO Mobile

Big news yesterday as Palm announced their Foleo mobile companion at the Wall Street Journal technology conference.

The Foleo is Linux-based device that uses a mobile phone for network connectivity. The device includes email, browsing, and file attachment software from DataViz. The premise is that it does 80% of what a person uses on their computer and with a longer battery life and lighter weight, a better device for traveling.

It’s hard to argue with the 80% claim — I easily spend more than 80% using applications inside of a web browser or my email client. But… I have had the pleasure of working on a variety of convergence devices and innovative form factors while working at Tandy Electronics, AST Computer, and Gateway. One of the things I learned is that 80% devices are generally well received in a focus group setting, but tend to fail when put into the marketplace.

The issue is that with 80% devices, the 20% edge cases tend to fall off a cliff, resulting in an overwhelmingly bad user experience rather than graceful degradation. At the focus group, the consumer tends to be aligned with the surveyor, focusing on the 80%, and these edge cases tend to be ignored or dismissed. The problem is that these edge cases do become more important later in the selling/buying process and can be profit breakers when discovered after the sale. If the new device is comparable in price to a 100% solution, this can be unsurmountable. In the case of Foleo, this might be failure to support Intuit’s Quicken, sync with Apple iTunes or Real Networks Rhapsody, or watch a DVD movie. All things that I tend to do a lot when on the road.

From the product announcement, its not clear what Foleo is doing about security. One of the big issues today around smartphones is that they are difficult for an IT shop to manage (there are a boatload of startups attempting to address this set of problems). IT departments will be concerned about authentication, file encryption, versioning, backup, etc. Nokia bought Intellisync for this very reason. If executives are the primary demographic, this can be a deal breaker unless the device is priced cheap enough that it can be hidden in an expense report.

I truly hope that Foleo is not yet another ‘tween device overcomes these obstacles. I do plan to get one and try it for myself — category defining products in their very nature are break with the status quo. Perhaps my fears are simply my inability to shove Foleo into an existing product category. Few things are more exciting than new products that help me discover new, productive, & transformative behavior patterns.

MocoNews writes about sideloading from claims made by ISuppli:

• Sideloading will increase as more handsets have common interfaces such as USB and Bluetooth (iSuppli estimates 764 million such devices shipped in 2010)
• More carriers will take a multi-platform approach that lets customers buy from an online store and easily sideload the music to handsets

I believe sideloading music works for a couple of reasons:

1. It replicates an experience learned from Apple iPods
2. It works better than over-the-air downloads (faster and more failsafe)
3. It leverages the consumers existing library of digital music
4. It’s cheaper than over-the-air downloads

ISuppli argues that consumers will use both OTA as well as sideloading depending on the situation, so operators should offer both solutions and as a result, there will be a reduction in churn.

I certainly don’t disagree with the recommendation, but continue to believe that sideloading reduces barriers to churn. Sideloading youth have little affinity for the operator’s music store other than arbitrary lock-ins created by proprietary formats and DRM. As I pointed out above, what drives youthful subscribers is compatibility with their existing library of digital music and low (to no) cost. As such, operator-specific “me too” multi-platform solutions are unlikely to reduce churn.

Some operators have begun aligning with Real Rhapsody and Napster for their online music stores. I think this is a good start since it begins to align with the subscriber’s needs, but it does fail to address the issue that most consumers are not using the brand chosen by the operator. Rather, a multi-vendor approach is most certainly the right way to go. Whether I am using Rhapsody, Napster, or whatever, make it easy & cheap for me to get my music on my phone (first). Once I am using my existing music, then I might be tempted to buy something new.

Dean Bubley has a great post about smartphones in his blog Disruptive Wireless. He looks at how smartphones are perceived, sold, and bought throughout the world and comes to an interesting conclusion. To paraphrase:

• in the States, smartphones (RIM, Palm, Microsoft-based) are about the end user
• in Europe, smartphones (Nokia S60) are about the handset manufacturer
• in Japan, smartphones are about the operator

I find this conclusion eye-opening. Even though I have been aware of how different people segment the smartphone business (typically, keyboards vs. open OS), I had never overlaid that segmentation on market regions and appreciated the consequences.

What would be interesting to understand is whether stateside smartphone consumers (who consciously bought a keyboard phone, presumably to do e-mail) spend more on non-essential mobile data services than European consumers (who buy a phone that just happens to be an open OS). Just because stateside consumers bought the device to use mobile data, they may be solely focused on email and unwilling or unable to pay for ancillary services (not atypical if the phone is a corporate purchase). Likewise, the European consumer may not have bought the phone to use mobile data, but demonstrate more consumerism.

I would be interested to learn if there is disparity between what is used (beyond messaging) and how frequently it is used. At it’s extremes, I would expect that this would result in a greater opportunity for consumer services in Europe that function on a premium transaction basis (i.e., opportunistic business models) and subscription-based enterprise, small business, or executive aligned services in the States. Companies like Plusmo and Nokia Widsets, who offer direct-to-consumer widgets, ought to see a very different set of widgets being used.

MocoNews reports that a panel on mobile social networking at MES expressed the opinion that the success of mobile social networking is dependent on advertising.  After spending the last year working in this category I came to the same conclusion. MocoNews reporter James Pearce posits that “maybe the idea is to lower the cost to users of posting and viewing content”.

The answer is yes, but perhaps not in the way that he intended. As I have mentioned before, one of the biggest challenges to our industry is that the Total Cost of Mobile Data (TCMD) is simply too high for mass-market consumers. This is an even bigger problem with the mobile youth (12-24) segment that drives the social networking category.

In Europe, last I heard there are few flat-rate data plans and there is a 50/50 split between pre-paid and post-paid subscribers… something not very conducive to variable cost data access. In the States, we have more flat-rate data plans available to consumer (good) but we have an increasing number of subscribers shifting to pre-paid plans (not good).

Some social networks may look at mobile advertising as a way of funding their mobile business model in contrast to subscriptions. But that will only increase their market share of a very small addressable market (those kids with mobile data plans). In contrast, mobile advertising is important because it holds out the opportunity for subsidizing the “access cost” component of TCMD. Unfortunately, I don’t think most operators are looking at it from this perspective.

My recommendation to them is to carve social networking data usage out of the normal data plan and offer it a very low rate subsidized by advertising. This lowers the TCMD, increases the addressable market of mobile youth, and actually creates a promotable service at the point-of-sale.

Note: RCR Wireless News reports on the same conference with “Mobile social networks misfiring“.

Carnival of the Mobilists #74 is hosted by Martin’s Mobile Technology.  I must agree with Martin’s pick of the week, “Nokia, the computer company?”.  Its a great read and a stark contrast with the general news coming out of Motorola.

Last week, Wireless Week provided an overview of On-Device Portals and this morning, MocoNews offers their own skeptical opinion.

MocoNews asserts that on-device portals are simply mobile applications in a vendor-defined category (i.e., there is nothing special about them). I beg to differ, agreeing with Wireless Week’s comment that there is an “underlying mission … to make content easier to discover and use”, although I would extend that definition to emphasize service discovery.

There is some confusion because some vendors take a more technology and tools approach to the problem (such as Action Engine and NellyMoser) while other vendors take a more brand-centric approach (Handmark and Yahoo).

On-Device Portals provide real value to the consumer, regardless of how they are implemented, but I prefer to emphasize their value in creating awareness & simplifying access over their value for making services easier-to-use.

If we rewind the web to its first phase of commercial deployment, directory companies like Yahoo were more successful than the search companies because their service provided two functions to the consumer. As with search engines, directories helped consumers find stuff. But unlike search engines, directories helped create awareness among neophyte consumers of what could and could not be found on the web. As the web matured, consumers became more sophisticated and the breadth and depth of what was available expanded, shifting the value of a directory to search.

Some have pondered that on-device portals will experience a similar shift. I heartily disagree. Unlike the early web directories, on-device portals serve another function. Handset manufacturers and mobile operators have failed miserably at creating a simple to use “phone top” equivalent to the PC desktop. From a consumer’s perspective, there are three pillar’s to a successful on-device portal:

1. create awareness for services (on and off device) relevant to the consumer (proactive)

2. improve discovery of services relevant to the consumer (reactive)

3. simplify access of services relevant to the consumer

The question I asked at the top was whether this is a demand-creation business or a demand-fulfillment business. Today, its a demand-creation business for two reasons: first, most consumers don’t know that ODPs exist and don’t have access to off-portal ODPs (now that is a mouthful); second, the total cost of mobile data (TCMD) remains out of the reach for most consumers.

The ODP business will shift to a demand-fulfillment business over the next 18 months. Consumers using services like Sprint’s “On Demand”, Handmark’s “Pocket Express, and Alltel’s “Celltop”, expect those services when considering a new service provider and they create awareness for those services among their peers. The TCMD is a function of both the data plan rate as well as the cost of using a data service. TCMD is slowly declining (not fast enough for me) as operators lower data access costs, shift to all-you-can-eat plans, and mobile advertising subsidizes the cost of many data services. All this bodes well for brand-oriented ODPs, while the technology & tools ODP companies will shift from selling platforms to selling services to brand-oriented media companies.

SiRF Technologies and Openwave have formed a strategic relationship to integrate SiRFstudio location capabilities with Openwave’s AJAX-based application development platform.

This is an example of “almost right” that has plagued Openwave for the last few years. Openwave has wisely integrated AJAX support into their platform, created a mobile widget platform, and made that platform available across a wide-range of handsets. They sell this “solution” to operators and device manufacturers.

What Openwave has not done, either because of a business decision or ignorance, is truly executed on a solutions-based strategy. As they say in the press release, the existing MIDAS solution enables the manufacturers and the operators to “create the next-generation of innovative location-based mobile widgets and services”.

The problem is that most operators and manufacturers don’t develop solutions or services (in most markets), they partner with other third parties. In essence, Openwave is telling their customers to buy our technology and then find a third party to build something using our technology. They are not truly offering a solution that the operator can immediately take to market and extract value.

A wiser approach would be to bundle a true “go to market” solution with the standards-based technology. This allows the operator to immediately exact value while retaining the ability to expand the value or multi-source in the future.

When introducing the new RAZR 2, Motorola’s Ed Zander says, according to RCR News, that “It’s not just about form factor anymore”. By this he means that breakout handsets need to have more than a cool industrial design.

Emphasis should be on “more than”, as in “in addition to” rather than “instead of”. Retail price, ID, and marketing driven cache still dominate the reasons why someone buys a particular handset. The RAZR’s success was not just about a cool ID, but about the marketing programs behind it.

From what I can see of RAZR 2, they better have one heckuva marketing program ’cause their certainly is no wow from a product perspective: better voice is like better seatbelts in the car. And an HTML browser? What year is this?

Motorola may be watching, but I don’t think they are truly listening to thought leaders like Nokia, Apple, and Helio.

The things we are most interested in, like mobile user experience, happen after the point of sale and often months after the phone is bought. In the States, unless a handset is so bad as to warrant a return, the handset manufacturers have little incentive to deeply invest in mobile user experience. Good enough is good enough.

This dynamic needs to change. One way is for manufacturers to sell directly to the consumer. Consumer’s brand association begins to align with the manufacturer as does customer support. An incentive is placed on the manufacturer to improve its user experience. A second way is to remove operator subsidies. This encourages the manufacturer to start looking at the lifetime revenue for a handset and handset customer, which includes not only the original purchase by the consumer, but any revenues from manufacturer provided or sponsored data services.

We know that consumers churn handset’s every 12 months or so, what is the manufacturer doing to retain those customers?

Nokia gets this. Helio gets this. Apple deeply understand this. While I might not be enthralled with the iPhone’s ID, if it is successful in shifting consumers perception about “what is important” about a phone, it will be a breakthrough product regardless of the volumes sold.

Reuters reports that iTunes-like video services have no future, based on a study by Forrester.  According to the research report, the paid model must bring in the mainstream viewers to grow beyond the current market.

In mobile, video can be side-loaded or downloaded/streamed over-the-air. This means that there are several costs to the user: the pain of finding the video that you want, the cost of the video (the license cost), the access cost for downloading or streaming the video, and the pain/complexity of downloading the video to your device of choice.

Right now, paying $1.99 for a video is the least of these costs.  If we reduced the license cost to zero, I would expect to see significantly more usage of videos by the same number of subscribers and side-loading would continue to be the preferred means of access.  If we reduced the access cost to zero, we would see more over-the-air downloading and streaming of video and a slight increase in the number of subscribers (since its less complex to get video onto the phone).  Mass-market adoption will only occur with the advent of better discovery mechanisms, such as the TV Guide by Roundbox, on top of these lower costs.

Mobile operators have show little inclination to reducing the cost of mobile data access.  Subsequently, paid video downloads will continue to be viable for quite some time.  No sense leaving money on the table.

Social networking service Dada reports a 56% bump in revenues. Dada is a subsidiary of Italy’s DADA Group, providing mobile phone content in Europe, North America, and Latin America.

Dada is exciting because they appear to have successfully overlaid many important mobile trends with mobile messaging: social networking, group chat, mobile content & services, mobile advertising, user generated content, twittering, and affiliate marketing. I am not going to argue that they have a “good” business model (subscriptions & tokens), but I do believe they are tying together the right components for a valuable mobile service.

Over the last year or so, Dada has acquired Upoc, Tipic (Splendor & Motime), and Blogo. Earlier this year, they launched friend$, a program in which community members can share in the advertising revenue generated by advertisements on their profiles and on their friend’s profiles.

A recent GSMA report entitled “Mobile Services Report: A Global Perspective” outlines consumer awareness, trends and expectations of emerging mobile services. In this report, the top 5 data services (by demand) are messaging related (text messaging, email, etc.). Consumers clearly think of their devices as communications devices first and as Internet, media, and content players/browsers second.

This is not to say that one category has a larger market size than another — perceived value is often higher for non-essentials. What it does tell me is that there are large opportunities for companies that neatly integrate (in contrast to “tightly integrate”) content and service discover and access with P2P messaging, social network profiles, etc. The reasons people are going to their devices in the first place. Intercasting Corp is one company building out infrastructure to do just that with existing social networks.

Back to Dada … The edges are a bit rough, but its kinda cool seeing it come together. At its heart, Dada is about group chat and P2P messaging, but community members don’t stop there … they can discover ringtones, wallpaper, and mobile games from their friends. Neat.