Nokia vs. Sony?

While the talk was about how Nokia's new clamshell phones might be too little, too late -- no one seems to have picked up the other interesting tidbit in this Reuters article, that Nokia is coming out with their own MP3 player...

"...plans events at its headquarters in Helsinki and in Asia, where it is expected to launch one or two fold-away phones, a music player without a phone keypad, a lightweight communicator model..."

Just tucked in to the middle of a paragraph, between the "buzz lacking" fold-away phones and the expected replacement for the brick. Will this "music player without a phone keypad" even be a phone? or will it be an add-on device that connects via bluetooth to your phone?

Nokia seems to have increasingly fixed its eye on Sony, competing to define the digital lifestyle. Lets hope that both companies realize that these devices eventually all need to be open and programmable...

What's the punchline?

Someone failed to tell Guy Kewney over at eWeek about Vocera before he wrote his article, Voice over WLAN Still a Joke That's Not Funny. And I suppose he also failed to do any background research into the matter and missed the recent tests by Vonage of Voip over Verizon's EV-DO network. Not to mention the trials that IDT Corporation currently has underway of VoiP over Wi-Fi in the Ironbound neighborhood of Newark, New Jersey. So why does a reporter blast a technology based on a trade show floor demonstration? Is there something going on here, other than sloppy journalism?

Delays in ITALK2U

I spoke with John Jarvis, CEO of LitFiber, by phone this morning regarding the delay in release of the "Final" edition of ITALK2U. John told me that they are hard at work adding the capability of bridging to a POTS network -- their revenue model for the product. He expects that a new release will be available on their web site by the end of the week.

VoWLAN is back...

As regular readers of this blog know, I have been concerned about the evolution of the acronym for VoIP over wireless networks. My primary concern has been a marketing one -- we are still in the process of explaining to consumers what the heck Wi-Fi is, now we need to explain to them voice applications over these wireless networks... so we start confusing them with VoWLAN.

But I recently saw an article in the respected CMP publication, Mobile Pipeline that used the term VoWLAN (the article is here) so I wrote to editor David Haskin and asked why he used the term VoWLAN. His reasoning is persuasive. Repeated with permission, his email reads:

It's an entirely subjective decision. My thinking was that WiFi (Wi-Fi, actually) is a brand created by the Wi-Fi Alliance that refers to a specific type of wireless technology. WLAN is a more neutral term. It likely won't happen, but if an entirely new wireless LAN technology emerges, I'd rather not be guilty of promoting one technology over another, even if it's subtle.

I certainly have to agree with David. With WiMAX growing in importance and Wi-Bro on the horizon and ever more wireless options emerging, VoIP over wireless will not be limited to Wi-Fi. VoWLAN now makes much more sense to me. Oh well, think of it as a full-employment program for marketing departments...

Why HP and PalmOne will be the last 2 PDA makers

Steven Bush, founder of Brighthand, has this interesting article on the evolution of the PDA market -- Then there were two. The article begins 20 years ago, with the innovative Newton being dreamed up in a lab at Apple and lightly sketches a few historical points on the market's evolution. More interesting is his analysis of the market today, and where we will be in the near term. He observes:

The "Big Three" Pocket PC manufacturers of just a few years ago -- HP, Compaq and Casio -- has dwindled down to one, HP. And the "Big Three" on the Palm OS side -- Palm, Handspring and Sony -- is now down to palmOne.

While acknowledging that other manufacturers such as Dell and Garmin still exist, he believes they will be niche players. What's missing from the article is an analysis on how and why we ended up where we are.

On the Palm front, my view is that Palm made good decisions about partnering -- licensing their OS when Apple had made the wrong decision on this point so many years before. However, they made two mistakes. The first was execution. While the licensed the OS, it remained too tightly connected to their hardware business. By the time they made it a truly independent business, the market was already in decline. And far too much time and energy was spent in this process. Not to mention the process of spinning off from 3Com or being acquired by 3Com. Corporate restructuring may be necessary but it can be very disruptive.

The second mistake was around innovation. Palm became stuck in their approach to the PDA market and change was a monolithic process. New operating system releases were painful for the company and for licensees. The company was not able to take some of the base ideas and technology and use it for adjacent device categories like mp3 players or smart phones, both of which started growing much faster than the core PDA market. This inflexibility and inability to innovate limited licensee growth. Palm's competitor, Microsoft, hasn't succeeded here either, but MS has the drag through revenue and relationship with the desktop and laptop platform that Palm had to compete against. Palm needed more of a constellation of devices supporting the same set of APIs, if not running the same OS.

On the Pocket PC front, rather than saying HP, really we should say Compaq was the winner here. This is a story of early commitment to a market, innovative engineering, hard work, and smart marketing. Despite Dell's proven approach in the PC and Laptop market of gutting cost throughout the engineering to delivery cycle, Compaq/HP has been able to hold their ground in this segment of the market. I attribute this to the innovation necessary so far in the PDA segment and for this reason I would not count out Dell in the future. Once Microsoft publishes a universal reference platform that can be made cheaply in China and is appealing to consumers, Dell will be back in the game. As long as consumers are looking for innovation in the device, Compaq/HP will continue to lead.

But as I have written elsewhere the PDA market is in a period of terminal decline. Perhaps it is more appropriate to say a period of transition -- the things we do with a PDA are not going away. Just the idea that Palm was born on, a personal digital assistant. Perhaps the old adage is true, that it is always that characteristic which gives you your strength which is also your weak point. Palm succeeded because it eschewed the general programmability model of the Newton and focused on providing core functionality and doing a great job in that limited area. Now the market is moving in three directions, away from the core value proposition that Palm was built on --

(1) even more special purpose consumer electronics (mp3 player) though I expect this market to drive toward high volume and low cost rather quickly.

(2) general programmable device with a very small form factor -- smart phone. In this market I expect to see the greatest challenge coming from integration with the rest of the computing stack. Here Symbian is the only player with any significant volume.

(3) integrated platform, running the same OS, from smallest device to largest server -- Microsoft and Linux are the two options today.

So what should Palm do? Ditch PalmOS. Start making devices based on Linux. How about the Palm user interface on top of Linux? Start making devices in other categories outside the PDA -- Linux MP3 player, Linux Video recorder, Linux Smart Phone...

Assault on Smart Phones

For every action there is an equal and opposite reaction... my physics professor tried to teach me something like that. Now I see what he meant. It hadn't occured to me that professional technology industry consultants would advise against the adoption of new technology. Luddites or Amish maybe. But thanks to Cory Doctorow, I now see how short term economic thinking warps some consultants brains... Cory points out an article from the Register entitled Symbian loophole 'threatens operator revenue' which details a report from consultancy Mako Analysis. Of the Symbian OS, Mako is reported as having said

"The increasing sophistication of high-end mobile devices opens up a range of additional problems and will continue to undermine the data revenue streams of mobile operators at a time when they desperately need them to be increasing."

At Mako's web site a full article is available on the topic. Mako explains that with the Symbian OS "...a savvy user can... completely bypass a range of services that are normally charged for by their mobile operator." Mako outlines four categories of services that mobile operators hope to charge for that could be impacted -- messaging, mobile music, gaming and phone personalization.

I don't suppose that Mako is aware that you don't even need Symbian -- with Java midlets, people have been avoiding operator's high prices on SMS for a few years with programs like this one.

At the same time another Register article warns of a University of Surrey study that shows that "Mobile phones drive us mental." The study warned that "...the incessant demand for instant communication heightens stress in the workplace, makes people angry and can prove to be an annoying distraction."

So perhaps instead of simply warning against smart phones, Mako should be arguing that we should do away with mobile phones altogether! Of course that would result in a somewhat larger impact on revenues for their clients...

A more useful role for a consultancy would be to advise mobile operators on how to transform their business models to take advantage of the relentless and unstoppable pace of technological innovation, as opposed to suggesting that it can in some way be halted.

VoWiFi it is!

Thanks to all the readers who sent me suggestions on how to solve the problem of the horrible acronym for voice over wireless networks.

The winner is in! First use goes to techdirt where on March 18, 2003 mmasnick ponders "...VoIP over WiFi (or is that VoWiFi?)..." in this post on the economics of wireless. Techdirt has used the term 15 times since that first use, most recently for this article on giving the homeless VoWiFi...

Lets keep up the momentum and make sure we aren't having to write VoWLAN in future blogs... and having to explain over and over again what it means...

Peerio Interview

Some time ago I wrote about Peerio444 as a competitor to Skype and raised a number of questions about their product and business model. This morning I was able to have a brief conversation with CEO Dmitry Goroshevsky and I have posted the interview on my IP Inferno blog. Enjoy!

Does Nokia have their COOL Back?

I recently wrote in this blog that the issue is not about how cool the phone looks and I still believe the basic premise -- that the next evolutionary step for phones is dependent upon programmability. But two announcements this week from Nokia definitely show that the good folks in Finland are hard at work to prove that they are still the thought leaders in mobility.

First is a very strange new technology which allows a mobile handset user to flash a message across a room to another person via a set of leds embedded on the back of the phone. The BBC has a good photo of the new phone, dubbed the Nokia 3220. The Register explains that this will "change the face of waving as we know it" and Joi Ito imagines what it would be like to have them in an audience, "it would be like a chorus of Hecklebots." More information is available at Nokia's web site

The second annoucement is more interesting in that the long term implications are deeper... Dan Gillmor writes just that "The project is young, but the possibilities are fascinating" while Marc Canter writes simply "This is Killer." What are they both talking about? Nokia's new initiative LIFEBLOG. What the heck is a Lifeblog? Here is what Nokia has to say:

Nokia Lifeblog is a PC and mobile phone software combination that effortlessly keeps a multimedia diary of the items you collect with your mobile phone. Lifeblog automatically organizes your photos, videos, text messages, and multimedia messages into a clear chronology you can easily browse, search, edit, and save. Nokia Lifeblog does the work of organizing the items you create and receive, and you can also add notes throughout the day, or tag and update your favorites so they're always on your phone.

The Nokia 7610 imaging phone will be the first to have the Lifeblog software. The 7610 is a tri-band phone with a megapixel camera, running the Symbian operating system. The phone also comes equipped with bluetooth, an MP3 player, and the standard Symbian productivity applications (email, web browser, etc).

Nokia definitely has a good claim on cool for this summer.

ITALK2U Final Now Available?

John Jarvis sends news that ITALK2U, the P2P VoIP Skype competitor, is now out of beta and available with "...all of its features..." -- However the link he sends still has the test version. So I assume he will be updating soon... when available I will download and post my experiences.

IP Inferno

I have been working on a new project, IP Inferno in which I attempt a new approach to the blog editorial model. Blogs seem to fall into two broad categories, either (a) regurgitated, if idiosyncratic, news feed or (b) the personal voice of the blogger (as interesting as that might be). With IP Inferno I am trying something new -- attempting a roundup of the news and comment on a particular topic, albeit with an editorial slant. I was inspired by a publication called The Week which describes itself this way:

The Week is a witty, informative, important, and completely indispensable digest of the best reporting and writing from the U.S. and international press. In just 40 pages, it will bring you up to date on what’s happening at home and abroad, and what the experts are saying about it.

With IP Inferno I aspire to this formula but with the narrow topic of advanced IP applications such as VoIP, Wi-Fi, and Wi-Max. Why "IP Inferno" as a title? IP is the inferno that is burning down the traditional telecommunications industry... Enjoy!

V oWLAN With an emphasis on the OW!

As in OW! Why are you hurting me with these terrible acronyms? Om Malik's V oWLAN coming on strong is the first time I have seen the acronym in use... stands for Voice over Wireless Local Area Network... This is a very important technology and deserves a better acronym. A google search turns up only 3 references to "V oWLAN" so it is NOT TOO LATE... VoIP is bad enough but we are stuck with that one. Here are my suggested alternatives:

• VoWIP (Voice over wireless IP - at least its close to VoIP)
  
• VoWiFi (Voice over wireless fidelity -- more consumers will understand)
  
• VWN (Voice wireless networking -- pronounce v-win)
  

More suggestions welcome -- lets just try to stop this new acronym before it gets any further...

How high can ARPU go?

ARPU or Average Revenue Per User is the way that mobile operators judge how well they are doing in mining expansion opportunities within their current customer base. This is especially important in western markets where mobile phone use is virtually ubiquitous so no new growth will come from expansion of the customer base. It looks as if the news is good for operators who have bet on next generation services, if you believe the results of a JD Power and Associates survey reported on the BBC. "It is quite amazing really that people are spending more on their mobile than on gas or electricity bills," Gunda Lapskim, a JD Power director, is quoted as having said. Much of this spending is on services beyond voice. But how much will people pay for communication services even if entertainment is included? How high can ARPU go?

According to the survey, the average monthly bill rose by 14% since 2003 -- an average of 534 British pounds per year. If the annual increase continued at 14% for the next 10 years, ARPU would grow to almost 2000 pounds per year. Even allowing for inflation, this still suggests that people would be willing to spend as much on their mobile bill as they would for a new desktop computer... every year.

Here is the full JD Power press release in which the rankings of UK operators are also disclosed -- Virgin is number one amongst pre-pay customers and Vodafone is number one amongst contract customers. "Image" competes closely with "Call Quality/Coverage" as the most important factor...

The issue is not about how cool the phone looks

Martin Geddes blogs Finland, Finland, Finland offering opposing views on whether Nokia can get its cool back (not to mention growth, profitability, etc). What I find interesting about this discussion is that here (and elsewhere - Techdirt and BusinessWeek) the debate is about industrial design -- do Nokia phones look and feel cool? But in my opinion this is not at all what the next evolution of the device is all about...

Nokia made a really smart move -- they jumped on the digital bandwagon early, when a lot of their competitors (and leader Motorola) stuck with analog. The question in my mind is whether or not Nokia will make the next jump from phone to computer.

The handset industry has approached the problem of increasing features in handsets from a consumer electronics perspective -- pack the electronics tighter, pre-wire the features, and focus the device on a particular demographic.

Two years ago I was at the Nokia Mobile Internet Conference and heard Jorma Ollila's keynote speech in which he said that in the future every phone would be unique. That is, you would have a phone that suited your needs, I would have one that suited mine, and 500 million other people would have their own idiosyncratic versions of the "perfect" phone.

The only path to this vision is by making the leap from thinking of the phone as a consumer device to thinking of it as a computing platform -- infinitely programmable to provide whatever feature set a given user wants -- even different feature sets at different times of the day (work vs evening).

Nokia's purchase of Symbian solidifies their intent to own this new phase, but will they understand enough about this alien world and will they understand it fast enough? Microsoft is moving quickly, and we could wake up one day with Windows ubiquitious in our pockets the way it already is on our desktops.

Wi-Fi -- just like Bathrooms and Napkins...

In the continuing saga of the Cometa Networks shutdown, eWeek reports that Cometa customers are scrambling to find alternatives. In the article, Peter Hoedemaker, vice president of retail at Tully's Coffee,is quoted as saying

"Everybody is still trying to figure out the economics of [Wi-Fi]."

Note to Peter -- the economics are in selling coffee.

Perhaps he should go check out this post at Wi-Fi Networking News, outlining Wayport's new pricing plan. Wayport is converting from the common Wi-Fi model of sharing variable revenue and cost with their location partners to a flat fixed fee, allowing the partner to decide how much (if anything) to charge.

In a clear swipe at T-Mobile’s arrangement with Starbucks, Borders, and Kinko’s, in which, according to many sources, the cell company bears the cost of the network and operations and shares revenue with its venues, Wayport’s CEO Dave Vucina said, that a retail partnership “shouldn’t be about how much they can get for free from the provider but should be more about their core business and driving enormous traffic for their core business.”

So Peter -- think about it this way -- you provide a bathroom in Tulley's and that costs you something every month, even though not all of your patrons use it. You provide napkins, even though not everyone takes one. Why not build Wi-Fi into the base cost of operating a Tully's outlet and offer patrons free access just as you do with bathrooms and napkins?

Will Telephony go to Zero (dollars)?

A reader of this blog anonymously posted a comment to one of my earlier posts, How Cheap Can It Get?, asking if the price to make a phone call might one day drop to zero. The answer is YES and that day is already here.

How can you make a free phone call? Download Skype, go to a coffeeshop with free Wi-Fi access, and dial anyone else who has a Skype phone.

While we are still a few years away from ubiquitous free calling (and free Internet access for that matter) this day is likely to come sooner than later

Jeff Jarvis has a report on an article by Eli Noam, a Columbia professor, in which he argues that:

the entire information sector - from music to newspapers to telecoms to internet to semiconductors and anything in-between - has become subject to a gigantic market failure in slow motion. A market failure exists when market prices cannot reach a self-sustaining equilibrium. The market failure of the entire information sector is one of the fundamental trends of our time, with far-reaching long-term effects, and it is happening right in front of our eyes.

Eli seems to take this as a negative, while I tend to think in terms of Joseph Schumpeter's concept of Creative Destruction -- the deconstruction of these industries is enabling an entirely new generation of technologies an industries to evolve.

In the future we will pay for certain aspects of connectivity -- reliability, security, and performance. Like drinking water, in the western world basic access will be ubiquitous (it may just taste funny) and you will pay for the higher quality bottled stuff. Telephony will become just "...a voice application, completely indistinguishable from any other kind of application that can run on an IP network..." (Michael Powell, Chairman of the FCC)

Should I Stay or Should I Go?

The provocative title of a recent Crain's Chicago Business article is Should Moto sell its cell phone biz? Now may be best time to hit the exit though the article goes on to state what most analysts believe -- that Motorola needs an Asian partner to take over manufacturing while continuing to be a design center:

No Motorola business needs bold action as badly as its largest, the $11-billion cell phone manufacturing unit. Now a distant second in a business it once dominated, Motorola has operating profit margins less than half those of its biggest rivals. Cell phone manufacturing is migrating to low-cost Asian producers able to churn out cheap phones for the mass market. Cell phones themselves are morphing from a sophisticated technology into a household product subject to shifting consumer tastes and falling prices.
...
Decisive action on the cell phone business could take one of two forms: an outright sale of the business, or a deal with an Asian manufacturer to take over Motorola's handset production while Motorola continues to develop and license the technology and its brand name. A pair of big European cell phone makers have cut such deals in the past month.

But does this make sense? The interesting problem for all of the handset manufacturers is that virtually ALL of the growth in this market (60 million units) will be in China. According to China View (Xinhua online)Lucky Goldstar has already surpassed Motorola in the worldwide CDMA handset business and is also number one in the critical Chinese market. And they have there eyes set firmly on the GSM prize.

Motorola could hollow out their handset division, handing over manufacturing to China the way they have handed over software to Microsoft. But what is left? The Motorola brand name? Dell would have more success managing this kind of business. If Motorola truly can't figure out how to manufacture mobile phones cost effectively at an $11 billion annual run rate, maybe they should exit the business.

Firefly.. softphone and network but not P2P

A reader anonymously wrote in to suggest that I give Freshtel's Firefly a test drive. While it looks like another nice option, competing with FWD and others, it doesn't appear to be P2P... am I missing something? I believe that there is an important distinction between the VoIP providers with centralized arhchitectures and a P2P architecture. The three providers I have found so far in the later category are Skype, ITALK2U, and Peerio -- anyone know of others? Of course each of these has drawbacks starting with the reasonable argument that Skype shouldn't be considered P2P at all... (see earlier post on Why Skype is No Different...)

Review of ITALK2U

Alec Saunders sent email with a link to his review of ITALK2U and a comparison to Skype. Thanks Alec! In part he writes:

iTalk doesn't yet support conference calling, or encrypted calling, and doesn't have the Skype missed calls list, but other than that appears to be a functional clone of Skype. It's also a bit more standards based, in that it supports H.323, rather than a proprietary signalling protocol, but it uses a proprietary codec, which makes that somewhat moot. Voice quality is similar to Skype, which is to say very good, but I don't know how well it will handle dial-up. The codec seems to be some kind of a learning codec, in that quality improved over the duration of the call. MSN messenger is the same way.

Click on over to Alec's blog for the rest of his rundown and screenshots.

Another Skype competitor

Here is another competitor to Skype in the peer to peer VoIP world -- called Peerio it appears to have a number of advantages over Skype... with a few caveats though. First of all it is open source, second it has a developer API which will easily allow others to build Peerio compatible applications, third it claims to be entirely serverless (as opposed to the directory architecture required by Skype) and fourth it is based on H.323 and SIP standards.

Now for a few caveats... their web site definitely leaves a lot to be desired with lots of holes to be filled (although the promise is there). More problematic is the half-hearted approach to open source. On the site they write:

Despite our efforts, there are two necessary exceptions to the open source principle:

1) The source codes for the Peerio444™ core will not be released.
2) Peerio444™ will not function in embedded systems and is limited to standard PC use (x86 and PowerPC).

Why is that?
The source codes for the Peerio444™ core will be kept proprietary so that we can avoid spawning hundreds of proprietary commercial systems (see Linux) that could jeopardize our ability to maintain a Forever Free platform. To be Forever Free we must protect the system from profiteers. Support and maintenance of the Peerio 444™ core will be limited to our research and development team.

This is like saying that you can do any work on the car except for modifying the engine -- we have welded the hood shut to prevent you from making modifications to anything inside that compartment.

This flies in the face of good open source policy for a whole bunch of reasons but I'll just mention a few here:

• At anytime Peerio can change the definition of what is inside the core and what is outside the core, endangering other projects that have been built on Peerio.
  
• The argument that this protects the system from "profiteers" is spurious -- by contrast placing assets in the open source community creates a level playing field
  
• Most importantly, Peerio will defeat its own strategy by holding back this key element of the product -- open source only works as a viral means of distribution when it is truly open.

Part of the point of open source is that by using it, a developer is no longer dependent upon the whims of a given company for the future of their development project -- The developer knows that the core building blocks will always (Forever?) be available. By holding back this key element as proprietary property Peerio eliminates that key advantage of open source and will significantly reduce the number of companies and individuals willing to invest in the future of the project.

On another front, I have been meaning to test the beta of ITALK2U which has been out for awhile from Endoreal/LitFiber. I downloaded one version and couldn't get it to work, but have been meaning to download a newer version. If anyone out there has had any success, please let me know.