Transforming mobile industry

I read the following quote from Olli-Pekka Kallasvuo, Nokia CEO, in InformationWeek:

"The industry as whole is in the middle of a transformation, and it's a very exciting time," said Kallasvuo. "It's moving from a device industry to an experience industry, and we're making a conscious long-term effort to capitalize on that."

It is so true that it inspired me to write a summary on how things have changed in the "smarter" segment of mobile sector (read: smartphones) lately. Let me recap what was the situation in the near past and then talk about how things are changing recently.

In the classic device manufacturer - network operator - user triangle the roles were as follows (simplified version): user purchases mobile phone from network operator (or elsewhere) and uses those services that are primarily provided by the network operator. The manufacturer never gets any money after purchase and the user  is often unhappy with the content/quality of provided (value-added) services.

This is now about to change. The two most important changes (as I see it) are that 1: the above triangle is "rectangularized" by an old/new member of the value chain, a separate content/service provider and 2: that device manufacturers such as Nokia and Apple OR operating system vendors such as Microsoft and Google want to get money after sales, too: they'd like to enter services business. As to point #1, not as if content providers hadn't been present so far, however, the means to access content and the capabilities of devices have not been ideal so far to say the least. As for point #2, there are two reasons why manufacturers would like to enter services business (take it over from operators?): first, there's a great demand from users to consume content that operators have not been good at providing and second, there's great money in it. Apple and Google are very good at providing services now they'd like to be involved in adding new means (i.e. phones) to accessing their services. Whereas Nokia and Microsoft are both in a strong position in smartphone market and naturally they'd like to get more money out of the whole business.

Another aspect in the new business model is whether or not shall mobile OS vendors require license fee for their software to be included in shipping devices. I'm talking about free and open-source mobile OSes, like mobile Linux. Although mobile Linux stacks have not gained so much popularity in the past years, they still do attract manufacturers wishing to lower their bill-of-materials (BOM). Google Android and the new Symbian (Foundation) OS are another two good examples for "license-fee-free software stacks" and Windows Mobile is for fee-based. iPhone's Mac OS X cannot be mentioned here, since Apple doesn't allow anyone to license their software stack, but make everything on their own.

How do mobile OS vendors pamper their developers?

• Of course, with a free SDK to develop on. Most of them can be used only on Windows (except iPhone on Mac OS X), true emulation is available on Windows Mobile and iPhone, where development is done on the same platform as the target platform,
• Free tools for development. Unfortunately not everything can be done with these tools, but you have to pay for their fee-based version should you need to use more advanced features (e.g. on-device debugging in Carbide.C++),
• Signing your own installation package is mandatory for both iPhone and Nokia S60 phones, but not on Windows Mobile and Android. Latter advocates that the user is always capable of making proper decisions on security-related questions and it does not restrict the availability of 3rd-party applications by requiring signature. As Symbian's David Wood put it: let's see what operators will say on it.
• As to developer support, old players are in the best position here: there's a great community support for Windows Mobile developers as well as materials to train themselves. The same is true for people who are developing for Nokia phones. Whereas the first non-beta Android SDK has just been introduced (you can imagine the level of support Google provides at such an early stage), not to mention Apple who wanted developers to sign an NDA that essentially prevents free information flow, writing books on development, etc. This has changed recently, since Apple finally scrapped their iPhone NDA and promised a new contract with less restrictions. Note: if Apple hadn't made this step they would have lost the majority of their developers.
  
• Developers reward programs (MVP from Microsoft, Forum Nokia Champion program from Nokia), fee-based support for ISVs willing to pay for advanced services, webinars, trainings, books, etc.
• Stores to capitalize on applications, themes, etc.

As to the stores mentioned above,

• Apple's (in)famous App Store acts as a central distribution channel for 3rd-party applications. Unfortunately, Apple keeps this place under such a strict control that bitters lots of developers' life who simply don't understand why their programs can't be sold just because they're similar to the built-in applications. On the other hand, Apple keeps only 30% of revenue making App Store more compelling than lots of rival portals, such as Handango.
  
• Having introduced T-Mobile G1 a few weeks ago, Google has also thought that it was a wise idea to create their own Android Market, a market place for downloading Android applications. What is surprising, though, is that Google is not planning to capitalize on sold applications, but expects mainly freebies to populate this place. It wouldn't be Handango if they didn't make the best out of this situation: why not use Handango to get some money for your Android app? It's also worth noting that Google, similarly to Apple, will be able to remove any 3rd-party applications (downloaded from Android Market) from Android-powered handsets if those applications turn out to violate developer distribution agreement.
• Nokia already has their Software Market, however, things might change with the start of Symbian Foundation next year: as Antony Edwards from Symbian put it "[they're]  pushing hard for a ensuring a zero, or a close as possible to zero, cost to the software vendor: so no cut of revenue for the Foundation".
• Finally, Microsoft hasn't maintained their own single portal that ISVs could use for selling their 3rd-party applications, but people had to (and still have to!) use other providers. This article shows what one can conclude from job postings: with the coming of new devices based on Windows Mobile 7 a new portal, SkyMarket will also come in Q1 2009.

Nokia is very keen on transforming from being a device manufacturer to an "internet company". Their Ovi and Mosh are two examples of already launched services, which they just want to further improve with Instant Messaging (by buying OZ Communications) and Comes with Music. On the other hand, whilst strengthening their services portfolio they restructure their businesses so that they focus less on own product development (selling Nokia IntelliSync). Sometimes lowering the prices raises the revenue - wonder how the recent price cut will work out. It's especially important that since  more and more people own Nokia devices, it increases after-sales revenue, too.

I've been already thinking on what Microsoft's reaction will be to open source and then found the answer: Steve Ballmer doesn't understand what's good in open source for Symbian and Google and anyway they won't get into handset business as long as they can make a lot of money from software only.

What they've started to work on lately, which you might have already heard of in the news, is 'Windows Cloud' OS. This idea is not new at all, however, it might affect the way how people use their mobile phones today: all you need is a portable device with a tiny display, some computing power and a good browser (you can call it 'smartphone') plus a good connection to the "cloud". Data, business logic, resource intensive heavy computation - all done on remote server(s) and you get only the result to your handset. I wrote 'this idea' was not new, however, what is new is Microsoft's patent on sharing device resources. Now this one is really new, but I don't know how much I can expect from it in real life - what it shows you, though, that it would be too early to write Microsoft off. Side-note: let me recommend you Ajit Jaokar's thought-provoking blog on how network operators could make use of cloud computing.

One more point to add to why M$ is not to enter the handset business today: HTC, designer & manufacturer of feature-rich phones, says that although they can see the potential in Android devices they do belive that Android and Windows Mobile complements each other.

As to Android, it's amazing to read about the ambitious plan to reach 4% US market share by the end of 2008. If that's so easy with a single device, a not perfect software and hardware AND suppose that they will achieve it - may I ask how on Earth Nokia could not do the same?

Anyway, I found a great analysis over at Telco 2.0 on the strategic impact of Google's first handset on the mobile industry. I especially liked the statements, such as "increasingly intense competition with new entrants who are willing to change the rules" and "the world in which handset manufacturers crammed the latest technology into devices simply for the sake of having the best specification sheet and operators flogged them to consumers on the basis of megapixels and memory is changing" and finally "it has been fascinating to watch ‘old school’ industry commentators pick apart the technicalities of the G1 spec sheet and Android platform, all the while forgeting to look at this announcement through the customer’s eyes".

Finally, some words about other members of the mobile industry whom we don't hear much about (well, at least I haven't lately).

• Sony Ericsson has rationalised their R&D investment recently. This move, however, didn't prevent them from announcing a new run-time environment, called Capuchin, mixing Java ME and Adobe Flash Lite technologies. SE is eyed-up on Android, too, not only Windows Mobile (Xperia X1) and Symbian so this along with Capuchin will make their way to follow Nokia's approach by offering lots of alternatives for mobile software development.
• Motorola is also interested in Android, so much that they are building-up a team of 350 people to develop on Android.
• Samsung is not interested in anything else but manufacturing. This will not make their position stronger in today's competing market.
  

That's all for now about mobile industry news, thanks for reading so far!

All comments are welcome,

Tote

Symbian and Windows on the same device - what the hell?

I've just finished knitting the brows after reading it in the news that IBM launches an initiative that has something to do with the mobile world. "It seems", I thought, "that there's so much money in mobile business that even the Big Blue could not resist".

But now I'm totally down on the floor with the idea of having more than one, potentially completely different, operating systems on the same device. I've just read that Motorola invests in VirtualLogix, Inc. whose "VirtualLogix VLX enables multiple operating system environments to run concurrently on shared hardware and provides a range of performance, fault tolerance and security options to address specific market requirements".

In my opinion, the whole solution abounds with challenges. Technically, from usability/business point of view, whatever. The thing is that each member of the value chain must learn/tackle something new. For example,

• Device manufacturers must be prepared for having to integrate such hardware elements in the same device that enable multiple operating systems to run in parallel also considering the cost of virtualization (in terms of time, but money-wise, too). These pieces of hardware must give the best performance so that the user experience is constantly good on all platforms. For example, whilst a ~500MHz CPU performs well on a Windows Mobile-powered device, it's a dual 330MHz CPU that gives the same performance on an Nokia N95 8GB. Of course, this applies not only to the CPU, but to memory, persistent storage, etc., too. Thus, hardware costs will definitely be higher than for regular phones.
• Of course, there will be a constant fight for giving the same performance as on a normal device and also keep the price of the device as low as possible. As to software vendors,
• Writers of guest operating systems (each operating system will be guest, by the way) must prepare for a new challenge, namely that scarce system resources will become even busier and harder to get access to.
• Some weird situations could also occur, for example, when a resident background application would be waiting for an incoming call, which would eventually be "stolen" by another virtual device with a higher priority.
• In addition, it would result in a much better user experience if commonly used resources, such as persistent storage, were shared. For example, the file system:
• One use case would be to allow the user to seamlessly move files between OSes.
• Another to allow browser applications of the same type running on different platforms (e.g. based on WebKit on Android and S60) to share cookies, forms data, etc.
• On the other hand, mobile OS vendors should be careful about what they would give access to: a secure platform cannot afford making a security hole by letting other platforms access sensitive shared files (such as DRM-protected content) unless a satisfactory level of protection is applied.
  
• I'm not sure as to how network operators could be affected by the introduction of a multi-OS mobile device other than having to adjust something in their administration system. Oh yeah, a seamingly not so important question: branding should apply to ALL operating systems running on the same device. Anyway, I think these issues would be less important and easier to solve than the challenges described above.
• Not necessarily a content provider issue, but it rather concerns the content consumer who would not like to pay for the same content twice in order to be able to use it on the same device, but on a different platform. For example, I wouldn't like to pay again for an MP3 music that I've already downloaded to my Windows Mobile device, but would like to listen to it now on my S60 phone (remember, we're talking about the same phone!).
  
• Finally, the user: I think the experience, as such, would be new to the user. The feeling that she can choose which device she'd like to work with today. However, it's uncertain at what price this feeling would come: in terms of user experience, reliability, price of the device, etc.
  

Personally, I think it's not the right time to introduce such an advanced technology, not as if it was a question now. When smartphones are still often considered as a toy used by mobile geeks, when most people still want to use them only for voice calls and text messages, when enterprise infrastructures rely on/users committed to either Windows Mobile or Symbian, but not both - there is simply no business demand and serious reason to hurry. It must be a long-term plan, though I still wonder if/how/when it will work out.

My two cents,

Tote

Touch(less) UI + Accelerometer

We all know iPhone. Even though it's not available in Hungary as of yet, I've already had the chance to hold it in my hands and play with it. It's simply great. People say that it's because of the touch UI, but I don't believe that. It's not that simple. Lots of other manufacturers have already made phones with touch support, but for some reason the success of their products is not even comparable with iPhone's. I think it's because of Apple's approach to user interface, more importantly to user experience. They made it as simple as possible and it will be very hard for phone vendors to compete with it.

Motorola announced their ROKR E8 phone at CES 2008. It's a touch-driven phone, needless to say. The coolest feature that I found is that it doesn't have a physical keyboard, but it dynamically shows always the relevant keys based on what feature/program is being used at the moment. I remember of a patent that I have read about over at IntoMobile: Nokia had patented their invention of a dual-screen phone with touch support. My first reaction to seeing the drawing from the patent that the keyboard layout could be displayed on one of the screens and it could be dynamic: sometimes QWERTY, sometimes ITU-T, sometimes something else, something relevant. I'm very happy to see it to come true.

You might have already heard about that Nokia was planning to add tactile feedback support to their future phones, which means a little buzz when user presses one area of the (touch)screen. Very interestingly very similar to what Motorola has just come up with. You know, one of the biggest constraints of using a mobile phone instead of e.g. a laptop is screen size. And the size of the screen has so far been limited 1: by the device size (it must fit into one's pocket), 2: it had to have a keyboard. It seems that the trend for 2008 is that there will be no keyboard on smartphones at all. Ehm, I mean no real, physical keyboard - as opposed to virtual.

Have you heard that Nokia recently submitted another patent application for touchless UI? See Unwired View for more details. The basic idea described in the patent is that there would be sensors arrayed around the perimeter of the device capable of sensing finger movements in 3-D space. The user could use her fingers similarly to a touch phone, but actually without having to touch the screen. That's cool, isn't it? I think the idea is not only great, because user input will not be limited to 2-D anymore, but that I can use my thick, dirty, bandaged, etc. fingers as well (as opposed to "plain" touch UI). I'm a bit sceptic, though, how accurate it can be, whether the software will have AI or the user will have to learn how to move her fingers. We'll see hopefully very soon!

Finally, there is one more thing I'd like to mention here. It's the built-in accelerometer. I'm pretty sure that most readers have already heard of that the newest Nokia smartphones have built-in accelerometer. It's sort of a motion sensor that actually hasn't got so much publicity so far. I was always wondering why Nokia has not announced, advertised, etc. this piece of gadget. I mean at all. I can't remember if I have ever read any articles, blogs, etc. from Nokia about that they have put this extra hardware in their phone. You know, an accelerometer in a mobile phone is unusal. Not only to me, but to other people as well.

Why did Nokia not advertise this? If it's expensive, it doesn't make any sense not to advertise it. If it's cheap (I bet it is), then it doesn't have to be advertised, but then why add it to the phone at all? Just to see what the (developer) community thinks about it? What kind of applications can they make out of it? Although it's a good idea, I don't think it's a valid business reason. And you know, it was also unusual that Nokia published an API for developers to use this feature - but it was an R&D API! Knowing Nokia and using their SDKs for ages, I would say it's, again, very unusual. It's like "Let's publish this API so that we can see what others can find out with it, but doing it so that we don't have to announce it".

I wouldn't be suprised if the accelerometer eventually had something to do with the touchless UI. I have the feeling, since I'm a programmer, that even with the array of transducers (see the patent) it's not trivial to figure out what the user has done with her fingers. For example, it might be very important to know in what angle the user's hand is to the device ... and this is the point where the accelerometer comes in handy. It helps to know how the user's one hand holds the phone while making gestures with the other. And this altogether is the new thing.

Can't wait to read your comments,

Tote