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The Mobile Only Challenge May 5, 2013

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It was 20 years ago that the first web sites came about.

Taking the step from printed information to web was a long journey for many businesses, and newspapers for example are still struggling to figure out how to make the web profitable.

But in the past year we have come to a turning point. The regular web traffic, coming from desktops (Mac/PC) is on many sites declining, yes, declining! For any business wishing to be aggressive in marketing the fact is that customers are using a mobile device and thus the focus needs to shift to a mobile only environment.

But doing that does not just require ads to be reduced in size. The end to end experience needs to mobile only, because the customer may not even have a computer, scary thought isn’t it?

The desktop experience is as different from a mobile experience as printed paper is to a desktop experience. The challenge to move to a mobile only environment should not be underestimated.

Finding the customer, converting the customer to a paying customer, supporting the customer, getting the customer to purchase again or reduce churn. All this needs to be done by communicating and interacting with the customer, who is using only a mobile device.

Let’s take an example of how difficult it can be, even for a business that would not even exist if it were not for the smart phone explosion.

If you in the popular sports tracking mobile app Runkeeper, go to Settings and “Get one”. This takes the user to a web site, hardly optimized for a mobile device. But with all certainty most users visiting this web page will be using exactly that, thereby sub-optimizing the possibility to do more business.

Why? Well, most businesses have a legacy of assuming the user finds information from a web site, and then after that accesses a mobile web site or mobile app. But when the path starts from a mobile device the handling of that customer becomes confused.

Actually, the original hypertext revolution in the early 90s did for-see this situation of different devices, and originally intended the client (Mosaic mainly) to choose how to render the information. The idea was that browser would choose font, font size, line breaks, background color and so on. However with Netscape’s early browsers, the temptation to create attractive design killed those ambitions, which of course lead the way to the web explosion and gave us new world. It is so different that we have a really hard time imagining how we did any form of information consumption without the internet.

In the same way, we will have a hard time understanding how we lived with information only intended to be consumed with a screen size of 20 inches.

State of the mobile handsets industry March 21, 2013

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So the dust has cleared from CES and Barcelona and all the separate events from the handset industry. Loads of events that sum up the trends, and they are more or less boring to listen to after a while, because they lack any real conclusions. We are also looking at some really interesting trends for 2013.

1. Handset manufacturers.

  • Samsung is still the leader in terms of impressing the early adopters. With the S4 they are ahead and will probably be so during 2013.
  • HTC, Huawei and Asus and loads of others are still wondering what to do to beat Samsung.
  • Apple is still living off of existing customers loving the products and the rumors of new existing stuff. It is time to show off something better and more interesting in 2013.
  • BlackBerry seems to have survived, and is hitting back from outside the main markets, like the Middle East.
  • Nokia. Still unclear what is going on. These guys make fantastic phones, but they are not quite used to fighting in the high end market only. And the logical low price handsets are still a bit confusing. Microsoft needs to step in, possibly buy them out.
  • Motorola seems to have died, at least in Northern Europe, where they apparently closed their Nordic offices. The Google purchase is probably the core reason.

2. Microsoft continues to disappoint.

  • The Windows 8 PC OS is not really ready, still loads of bugs and hundreds of megabytes of downloads from Windows update cause annoying problems
  • The handsets are still way too expensive still, Microsoft should simply sponsor some flagship and take the hit to get something going.
  • The usage of the phones sold are extremely low. I have indications of less than 0.5% of traffic on mobile web sites are from the Windows Phone OS. Who will ever care about this audience?
  • The important apps never released at the same time as the iOS and Android.

3. Mobile browsing is taking over. Regular web browser usage is actually beginning to see decline on sites that have mobile web pages.

4. NFC is a mess. The lack of defacto standards and loads of proprietary systems will in my eyes kill any real break through in mobile handsets for at least 2-3 years.

5. Bring your own device-trend is clear, but IT-departments are panicking, and Dropbox seems to be the number one service to hate, but all their users love it. I would not be surprised if they came out with a business version this year.

6. New OS. Firefox OS, Ubuntu for mobile , Tizen are liked challengers, but it will take a really long time before any of these get real traction. Maybe Nokia will pick one of these up, that would be an exiting change in an otherwise way too predictable environment.

7. Google seems to be struggling, seemingly mostly protecting their existing revenues, rather than doing anything really innovative, aside from their new glasses.

A reply to Neelie Kroes on her talk in Barcelona at the 2011 MWC. February 18, 2011

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This is a quick reply to Neelie Kroes, Vice-President of the European Commission responsible for the Digital Agenda, on her speech partly about EU roaming regulations in Barcelona at the 2011 Mobile World Congress a few days ago.

The mobile market is surprisingly complex in comparison to the ease of making a phone call. The roaming services are even more complex to build, but just as simple to use. So to address the problem of cutting roaming costs is not as simple as enforcing a price regulation.

I see the cap on price as a temporary mean of limiting rip offs, but in the long run, it reminds me more of old Soviet economic planning. There needs to be a fundamental change to the core of the market structure to reach a situation where national charges are comparable to European roaming charges.

Neelie, as a last remark, mentions the proposal of MVNOs gaining access to the different markets. This is the key to success.

The EU visionaries do not always want to admit it explicitly, but the vision is to create an inner European market which works just as well as between the US states. And looking at the USA roaming situation it was really a mess 15 years ago, but today, “national roaming” in the US (equivalent to European roaming) has very fair and reasonable pricing, and the state borders are erased.

Although the situation of mobile data in the US is painfully behind Europe in terms of infrastructure, the US long term national competitiveness among the network operators is way ahead of Europe, and US state (equivalent to national in Europe) pricing is already par with US national (equivalent to European).

How did the US get there from such a horrible mess in the 90s with loads of incompatible standards? Well, many things contributed, but a couple of things stand out.

The period of national (equivalent to European) buyouts in the US of local mobile networks is in the past. For Europe it will be a painful process to eliminate the “small” players in many markets, because inevitably, if we want the national prices to be the same as European roaming prices, we as subscribers to the services cannot have hundreds of companies to choose from with any reasonable way of knowing what is the best offer. We need bigger European players.

A missing factor in Europe’s mobile network regulation is allowing carriers to access each other’s networks at a reasonable rate. If a mobile operator has a spectrum license and one single base station in the US, it can gain access to the entire national network, at a very reasonable cost. This reduces the establishment cost, yet still allows the investment of the physical mobile network to pay off long term.

What the European Commission perhaps has not grasped is that the VC-firms willing to invest in startups focused on anti-roaming companies have disappeared. So the entrepreneurs that Neelie Kroes eagerly spoke about last summer, have been left in the cold. So a really great ambition has actually worked against the idea of creating pan-European market players, who can compete locally as well as on a European basis.

So, what to do? If you look at where national prices within the EU already apply across an invisible border, for example 3 in Sweden and Denmark, you will see that they are only offered on-net. The conclusion must be that we need a couple of pan-European players who can act in all European markets in order for competition to flourish properly. However I do not believe that in the near future more than perhaps max 5% of consumers will choose their price plan based on the roaming tariffs, so clearly an MVNO choice to fill that gap is needed to get this process started. But these entrepreneurs need to be actively supported with regulations, not the vice versa.

Should we really expect VoIP to be accepted by Mobile Operators? January 20, 2011

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As a reply to the blog post by Joakim Jardenberg (a popular Swedish IT/Media blogger) I have a couple of insights that might shed some light on the situation of VoIP applications in the mobile networks in Sweden specifically. Currently I do not work at or with a mobile operator, but I have a pretty good idea of how mobile operators around Europe think, as I used to work close with them for some years in the mobile virtual operator (MVNO) segment.

For the first time there seems to be a real discussion in Sweden about VoIP-applications on the mobile networks. This is a few years too late or a few years too early, depending on how you see it. In for example the UK the VoIP in mobile networks has been blocked for many years. When programming mobile phone applications for iOS (iPhone specifically) the developers can easily get information from the phone if a VoIP-call will be allowed or not for the current mobile data connection. Other more important information, such as if the iPhone in use is roaming or not, is a well defined call, so the VoIP-connection limitation is clearly a known situation by developers. The debate now comes to life again in Sweden, and I think this is due to the recent 4G launches in there.

Joakim says (in relation to the somewhat bizarre statement from 3): “But what? I paid for my data connection? I have paid for the data connection already. What am I hotwiring when this is my own connection?

As a reply to this, I think we all need to understand the differentiation between data connections. If you compare for example an internet connection via Cable (Comcast/UPC/ComHem etc) you will find that you are not allowed to for example host a server there. This is accepted by most, since a “real” internet connection via fiber to for example a server rack is much more expensive to buy and produce.

So let’s look at some circumstances about wireless/mobile data access. The bandwidth is not unlimited due to frequency licensing situations. Priority (QoS) always costs more to handle as it takes more bandwidth for the same amount of data than the actual voice stream. One can compare the GSM standard of just under 10 kb/s to for example Skype that uses roughly 30kbit/s, to a standard SIP connection that usually requires 50-128 kbit/s, so you can see why this becomes a problem if the capacity in the networks needs to be increased by 5 to 10 times. It would mean buying 10 times more stuff from Alcatel, Ericsson and others, as well as more bandwidth, while there is no extra revenue from these calls. This is also the core reason why Operator One has chosen only to offer a service, where we feel comfortable with the “last mile” in the internet connection being carried over technical protocols that were actually designed to keep a stream of data alive without interruption.

Over the next 10 year period I think there will be a gradual shift to pay more for the data connection and less for the QoS-channel (regular phone call). Today an unlimited national call plan is around €40-70 per month, while unlimited (if available) around €10-50 depending on 3G/4G etc. I believe the price for the unlimited calling will be at most €10/month within 10 years from now, while “unlimited” mobile data will probably still vary from 10-€50/month, possibly reduced slightly. Regulatory authorities (Offcom, Bacom, PT, PTS etc) are also onto this, with various models pushing the termination price for mobile network access with increased data usage in the networks.

At the same time Joakim is very right about mobile service providers and that they should face the inevitable fact that they need to see themselves as ISP (Internet Service Providers) or a bit-pipe if you wish. They are fighting fiercely to avoid this. Unfortunately I see a trend in the opposite (and wrong) direction coming from the USA, with Apple, Google, Spotify, Facebook and Microsoft (MSN) becoming the proprietary controlled content bit-pipes that AOL, CompuServe and Prodigy once were. These old fashioned business models failed big-time when the web was introduced to the masses in the mid 90s. With the new dominants we run the risk of having even more restrictions, and reduced with what Apple decides to allow in their terminals, Google recommends what you watch on YouTube, Facebook advises who your friends should be , Spotify filter what you listen to, or Microsoft control who accesses each part of your device.

Calling Cards 4.0 – part 4 January 9, 2011

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Mobile applications boosted thanks to the iPhone in 2009. I am not sure but I suspect Apple named them apps to associate them with Apple. Interestingly enough mobile applications are nothing but a much more extended user interface than what you can find on the traditional mobile optimized web sites. The main difference is that applications use the mobile properties of a handset better than anything done in the past 20 years of handset development. Most of this improvement is of course due to better processing power and battery capacity, but the creation of Apple’s Appstore truly revolutionized the mobile handset industry.

Interestingly enough the most popular and used application is still the regular built in phone, and users are still willing to pay a substantial amount of money to have a reliable service for making their daily calls. We simply want to be able to talk to and interact with other people by voice. Not video, text, Facebook or other media.

With the evolution of what I refer to as the Calling Card 4.0, international voice calls are made much more affordable, but now with the difference that they are dead simple to use too. Previous generations of calling cards were either simple to acquire but tedious to use, or complex to get started with but easy to use. With just a few clicks you can install a Calling Card 4.0 application and you need no other knowledge than how to make a regular call. And paying for international call services are now made even simpler with iTunes, just click a button to add more credit to for example your Operator One account.

There are however major differences between the platforms. On the Android and Blackberry smart phones, there are applications that make it possible to make calls without any other effort than making calls in the regular way, and the call is intercepted and routed differently. With Windows Phone and iPhone you need to start up a separate application and call from the application. Apple and Microsoft blame this limitation on usability and security, while it is more probable that it is actually due to the strong alliance with the mobile network operators and keeping control of their own platform.

I think it is just a matter of time before the iPhone team simply will be forced to open up to allow more and more, as they will see a decreased market share towards mainly Android (Google). But it may have to wait until a future separation with AT&T in the USA. And at that time Microsoft will be forced to follow, probably taking too long this time as well.

Calling Cards 3.0 – part 3 December 10, 2010

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Selling calling cards online, i.e. selling voucher codes on the web, started in the early 00’s. A number of these sites started by selling top up voucher codes for mobile prepaid services and, to increase margins, also sold calling cards with the same infrastructure.

Not long after that, a number of companies that had the idea of administrating regular phone calls from the web started up. I normally group these into three main types of services:

  • Call back services. Sometimes referred to as Callback 2.0, the idea is to call up both parties, triggering the call typically via a web page, e-mail or text message. Companies like Jajah and MobileMiser successfully gained thousands of users.
  • Call through services. Operator One, Rebtel, Jaxtr and Localphone have the approach of making a call that more or less is directly routed to a different destination. This approach is the most similar to a regular call.
  • Other services. There are other methods as well, such as MobiVox that uses voice recognition, essentially returning to the classic dial up operator services from the mid 20th century. Probably the most talked about is Google Voice; originally a company called GrandCental, that uses an incoming call to generate a new one.

Many services offer a combination of alternatives, but usually have a core service, which they build around.

In parallel, standard VoIP/SIP-providers and proprietary solutions such as Skype grew dramatically in the mid 00’s.

The so called ethnic segment, which traditionally used Calling Cards 2.0 services, now had access to the internet and (pre paid) mobile phones. This shift in access to new technology sparked more and more users to use Calling Card 3.0 services instead, while the Calling Card 2.0 services saw a dramatic traffic decline. The decline was also due to the growing number virtual of operators with a clear international calling profile, first launched by Lebara Mobile in The Netherlands in 2004.

A major difference when the calling cards went online was that there was a very clear internationalization. More or less all companies who are online today operate their business from one place, rather than having local representation in each country. With the increased availability of purchasing phone numbers remotely (a.k.a. DIDs) the need for a local sales office has gradually faded away. Business was now in the cloud.

Next post: Calling Cards 4.0 – The mobile apps.

Calling Cards 2.0 – part 2 November 17, 2010

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Let’s continue with the real revolution; the prepaid international calling cards.

In the late 90’s the domestic call rates dropped dramatically, to as low as 2 cents/minute when calling from another landline phone. At the same time, carrier select (prefix) and carrier preselect became more and more popular due to gradual deregulation of the telecom sector. Prices dropped thanks to increased competition in combination with better connectivity between operators. More and more landline operators offered so called flat rates, i.e. a fixed rate per month to call unlimited to other landlines.

In parallel, in countries like the UK, the market exploded for prepaid international calling cards. The access numbers were changed to landline numbers instead of the traditional toll free numbers, consequently offering even “more minutes”. The new calling cards became very popular among immigrants, guest workers and refugees.

Commercial business in the so called ethnic market segment is interesting in that it often falls outside the regular government overlook, simply because the local government does not understand exactly what is going on. From the early 00’s companies like IDT, Lycatel, Vectone, Lebara and many more became established players, and they gradually built their own networks across the globe, cutting prices on international calls steadily and dramatically.

Lebara EuropeCalling cards were printed in colorful and creative ways. In early 2004, one of my first tasks as MD of Lebara in Sweden was to re-launch a calling card called Lebara Europe. I thought we were coming out with a sleek and trustworthy design, with mostly white, clear texts and some nice blue only images. Harout Artin, a well respected Middle Eastern calling card whole seller outside Stockholm, told me: “Erik, it looks like somebody died.”

The creativity in fees gradually went off limits due to lack of control. A calling card with 200 minutes to a particular country in reality was perhaps only 120, or even just 40 minutes. But most people who used them didn’t care that much about the “rip off”, as it was 90% cheaper than most other alternatives anyway.

The cards were thin, stackable and cheap to distribute. The volumes grew to billions of minutes and billions of dollars. The cards became cash, with a best before date on them. Black market trading became very common. Within a couple years the market was a mess, and less serious players entered and essentially destroyed a very nice idea. Leaving the consumer with a horrible product.

Next post: Calling Cards 3.0 – The online calling cards.

Calling Cards 1.0 – part 1 November 4, 2010

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I’d like to tell you the story about the now so common calling cards, how it has developed and what the future holds for them.

Let’s go back to the early 90s, before mobile phones were anything other than something very heavy and typically mounted permanently in a car.

Mainly as a reaction to huge hotel calling rates, the so called calling cards were introduced. The ads from for example MCI on TV at this time were always showing a man on a business trip calling his wife and 5-yearold daughter who were at home; the target audience was almost too obvious. The process of calling a toll free number, and then giving a sequence of numbers (access code or PIN), and finally the number to be reached, was quite revolutionary, and it made calling more affordable. For some cards, at the end of each month, a bill with the calls was summed up. Others were pre paid cards. These new calling cards cunningly restrained the hotel owner from overcharging the hotel guests on a basic need, phone calls. I personally refer to these calling cards as version 1.0.

The incentive for calling card services to be developed was especially high in the US since this was a well defined domestic market, but with a messy telephone network with excessive national (long distance) and international minute rates. Standard rates to make international calls were at this time $1-5/minute. So, even without any major technical break through of routing calls, a saving of 10-30% on pure competition between service providers became a substantial saving for the subscriber, or rather a reduced cost for the corporation that paid for their employees to call back home. The technical advancement lied instead with the technology of accessing a remote account through regular telephone networks, which was to be used in the coming advances of calling cards.

Next post: Calling Cards 2.0 – The prepaid and local access revolution.

Passport when roaming? October 27, 2010

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Vodafone and associated mobile operators offer a so called Passport price plan to be applied when roaming, i.e. when out travelling in other countries. It seems like an attractive offer, but is it really that great for European travelers?

If you are going outside of Europe, Passport is definitely a good idea, even though getting a local SIM card could often be an even better deal. If you are away for a day or two on a business trip within Europe you might want to reconsider Passport.

The structure of the Passport offer is that you pay a substantial setup fee/connection charge, typically around €1 (£0.75p) for every call. On top of that, you add your “regular” charges that apply when in your home country to make and receive calls. Some offers also have a structure of adding the setup fee every 20 or 30 minutes. This might look like a great deal at first, but if you for example are trying to reach somebody who is busy and has his phone directed to voicemail after a few seconds, five attempts will cost you €5 and you have not even come through. Even worse is that if you turn off your phone, each voicemail diverted call will still be debited a €1 setup fee/connection charge.

Also, some service providers do not use your included minutes in the “regular charges”, and actually charge as if you had passed your included/bundled minutes.

After a trip to London a few years ago, I came home with a fairly substantial bill for calls and then started to look at what the actual rate per minute was, and concluded it was more expensive (in my case) to call with Passport.

In order to not get the maximum EU roaming charges applied, you are required to have a separate and explicit agreement with your service provider about this. Passport is one of those explicit agreements, and thereby it is ok for your provider to charge you more than the regulated EU-rates, i.e. not a guarantee that you will have a lower rate.

As mentioned a few weeks ago here on this blog, you should watch out for those calls that are not to your home country or within the country you are visiting, they are charged at a different, often bizarre, tariff.

A final piece of advice is make sure you actually are on the right mobile network, as when you are roaming, you can make calls effortless on other mobile networks than Vodafone’s associated networks. Making a call or receiving one on the wrong network can be very expensive, especially outside Europe. 10-20 minutes calls at €2/minute on the wrong network can become quite a pain if you make just one call per day, that’s €1200 in a month…

To conclude, if you plan to make 10-20 minute calls and very few short calls, Passport could be a great option within Europe. For example when going away for a business trip for 1-3 days and then calling home each night. But watch out for being on the road with Passport and making regular shorter calls, and never use it to call to any other country than home or locally.

Why Blackberry is still so popular in the US and Canada October 20, 2010

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Blackberry specifically has been the dominant smart phone for many years in the US and it’s home country Canada. But this is not the case in for example Europe and not in Japan. Why is there such a difference in smart phone penetration between continents?

I believe that the story goes back to the mid 90s. At this time the US mobile (cell) phone market was really messy, with mixed analog and digital mobile networks, and even the digital networks were not very compatible. Changing service provider required to go into a shop and hand over the handset itself. A number or proprietary technologies emerged, but none of them were particularly good at data access.

Then RIM with their Blackberry came into the market and with their integration with Lotus and Exchange as well as POP/IMAP e-mail the impact was huge. Things all of a sudden actually worked really great. Also the usability was impressive, and also the extremely speedy text based interface. The secret was also a proprietary own backbone network, which connected everything together with a very effective compression of plain text, which reduced the latency and increased the speed even more. The backside was that the handset itself was configured to the RIM accounts, making it difficult to shift service provider. And obviously there were huge corporate bills paid to RIM each month, both to suppliers and to mobile operators, since it was proprietary technology and monopolized.

Meanwhile, in the rest of the world (the so called “international” market…) the GSM-standard became much cheaper and efficient. Moving between handsets and having the SIM-cards be the identification in the networks turned out to be the winning concept, especially since Nokia, Alcatel and Ericsson managed to roll out their technology in the emerging markets quite successfully. Also GPRS and UMTS (2.5G and 3G) evolved and data access became a commodity, where developers and e-mail providers could very easily and cheaply distribute software that accessed e-mail, and now zillions of other ways of communicating through social networks.

Taking a step back 10-12 years ago in the US; AOL, CompuServe and Prodigy had to shift their business model and allow their users to access the web, as their own proprietary technology became uninteresting and could not keep up the speed. The question is now if BlackBerry can continue this path, or if they will be the new CompuServe.

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