Phed up with the iPhone? Over Ovi? Furious about femto cells? Keith Dyer takes a look back at 2007 as seen by Mobile Europe and its contributors.
DEVICES AND DEVICE SOFTWARE
An apple a day…
What to say about the iPhone? Locked or unlocked, blocked or unblocked, EDGE or not, its impact was quite remarkable, taking the mobile industry into the main TV and daily news programmes in a way no other mobile story has done. It's worth asking, why? Well, there's always a circular motion to the hype in such stories, and this one became a virtuous media circle for Apple – the more the media hyped, the more the launch became an event, the more the queues grew, the more the media could report on the launch becoming an event, drawing more people in. Certainly the distribution strategy helped, creating the sense that this was a limited release of rare gems on to the market, rather than some smart, yet mass-produced, consumer electronics. And, most simply, it looks great, there's no argument with that. It's the sort of phone that people see and want – think the Nokia 8810 back in 1998 (no, really) and treble the impact, at least. Owning one said a little about how people wanted to be seen by their friends and colleagues (cool, technically literate but not geeky, non-corporate, an individual). Of course, the industry readership of this piece will scoff and say it was all about the apps, the functionality, the UI and the UE. But the iPhone was a piece of marketing genius in which the brand got fat feeding on a status obsessed culture. It may have been geek fashion, but it was high fashion all the same and fashion, as everyone knows, doesn't make any sense.
Jerome Buvat, Global Head of Research for Capgemini Telecom, Media & Entertainment,
"By entering the mobile phone market, Apple hopes to thwart increasing competitive pressure from 'converged' handsets such as the Nokia N-Series and the Sony Ericsson Walkman phones. Improvements in storage capacity are allowing handset vendors to compete with MP3 players for capacity. MP3 handsets, like the Sony Ericsson W950i, can store up to 4,000 songs – as much as standard iPod minis."
"As IMS Research predicted, the high price tag and single carrier did prove to be an obstacle for some consumers," explained IMS Research Analyst Bill Morelli. "The launch was still a significant success for a new entrant to the handset space. The key issue for Apple is to build on the initial launch numbers. With plans to launch in select countries in Europe and Asia in 2008, the stated goal of ten million units by the end of 4Q08 should be an achievable goal."
Android's OS space odyssey
Just another Linux OS, or a true open OS capable of creating a new class of device in the market? That was the main question around Google's "It's not a phone" Google Phone.
There were two elements to this announcement, of course. The first was the development of Android itself, the Linux based OS that has been developed within Google on the platform developed by Android. The second is the Open Handset Alliance, a grouping of some 30+ software and hardware players invited to innovate devices and applications on the platform. The third element is Google's recent bid for spectrum in the US. It's a level of vertical integration that has some scratching their heads a little.
"The key difference, is that Android is developed to be an open platform, and that applications from one device can be sent or exchanged without issues of interoperability, and that is not the case with several Linux devices today." Florian Seiche, vp HTC Europe.
"Google is up against it in this market. It has had little traction with mobile services and next to no traction with US carriers. It might be why they've applied for an operator license – because they've got nowhere up to now."
Messaging in an instant
Two main themes here. First – it's all been about IM, the delivery of it and the creation of a workable business model for mobile operators. Second, there was the shake up of the traditional SMS vendors, with LogicaCMG's messaging business being taken private by Acision. Back in February we interviewed Neustar's senior management in our lead interview slot, and really that set the agenda for much of the year in messaging. Operators can gateway to existing web communities, but can they, and indeed should they, make the leap to developing their own mobile IM communities? Immediately after that, Telefonica, T-Mobile, Vodafone and others all made IM announcements. Usually these were agreements with one or more of Yahoo! Microsoft and AOL, but occasionally we got a glimpse of what SMS+ services would look like if operators took the lead distinct from the internet service providers. The two approaches look set to continue, with the added attraction of using the presence capability of IM clients to allow users to manage their social networking profiles from their mobiles. As 2007 turns into 2008, MIM looks to be about far more than MIM.
Jeff Ganek, Neustar; "There's a huge end user demand for mobile instant messaging (MIM), and this is in our view the largest, most material, new revenue opportunity that the mobile network operators have. And that is reflected in a fundamental change in the way end users want to use their handsets. Mobile Network Operators (MNOs) are acting now to capture this opportunity and respond to market demand. Things are happening now in the networks and within marketing programmes to change the offering operators put before the end user."
Paul Harvey, partner at Atlantic Bridge Ventures, said that the Acision deal represented "the return of the empire".."It's not just Larry Quinn, it's Gilbert Little, Jo Cunningham, the founders of the SMS industry whose Aldiscon platform formed the messaging platform for CMG. These guys are so passionate about messaging and getting more people to use and send messages I am so pleased to be owning this asset, we can do a lot with it and free up the business. Not that Logica managed it poorly, they just didn't have the resources."
"Both Operator-owned and Internet-based Mobile Instant Messaging services have a crucial role to play in driving consumer adoption of MIM. These two models will grow side by side." Lars Kristian Roland, CTO Colibria,
Italy scorched a path, with H3G obviously in the lead, but Vodafone and TIM both joining in the DVB-H path. France is due to make the big calls next year. The UK, such an active trial market for FLO and DMB, now looks sluggish given spectrum difficulties and the endorsement at EU level of DVB-H. And is there even such a demand for mobile broadcast among the broadcasters? Well, yes there
is. SKY TV have had great success with 3G streaming with Vodafone, but not all relationships will be, or have been, so happy. The question for mobile operators is, how will they best remain in the distribution loop for mobile TV, so they are not, as the industry expression has it, disintermediated?
"While we continue to support open standards and interoperability, we believe that the pace of technological development precludes the adoption of any one standard for mobile broadcasting at this stage." Fritz Pleitgen, President of the EBU, said
"Let me be very clear: I know that competition among different standards can, for some time, be a good way to let the market identify the best solution. But, we have been waiting for too long. The opportunities are slipping away. It is time to break the deadlock". Viviane Reding, Member of the European Commission responsible for Information Society and Media,
"Expectations for the commercial uptake of full-length broadcast TV on mobiles as subscription services are over-optimistic and the demise of Virgin's mobile TV service reflects that. Most mobile TV viewing is for just a few minutes. To be commercially successful, you have to provide a combination of live news, sports updates and video-on-demand made-for-mobile content which is instantly engaging. Simply broadcasting linear TV to mobiles is not the answer." Bruce Renny, ROK TV.
The iPhone and Apple aside, and perhaps because of the iPhone and Apple, 2007 was definitely the year in which music services reached mass public consciousness, and it was also the year in which operators began to look at models other than per-event full track downloads. Telenor and Vodafone signed up to Omnifone's subscription based music station. Nokia waited until December to put its LoudEye acquisition to work and announce, following its OVI launch, its "Comes with Music" strategy – a device plus record industry tie-up. At root, the reconrd companies need their share and consumers will pay for their music, even it appears free – there's the hidden price of the device. Yet there were also accusations that operators are still very poor at making the most of their existing music assets – the long tail, for instance, remains very short in most instances. Then there were the work-around solutions that all but cut the operator out of the deal altogether. The side-loaders and "direct from your PC" streamers.
"The launch of the MusicStation service marks a fundamental change to the way people experience music on their phones". Tim Yates, CMO, Vodafone UK
"Whilst manufacturer solutions have a place in the market, there can be no doubt most carriers believe a first class music experience is a key strategic asset in ensuring long term customer loyalty and network differentiation." Rob Lewis, Omnifone
"Most handsets have limited storage capacities, which is a restraining factor for mobile music adoption. phling! addresses this issue by allowing customers to listen to their music by wirelessly streaming these files to their handsets," says Julien Blin, research analyst in IDC's Wireless and Mobile Communications program.
Nokia buys Navteq for an eye-watering amount and suddenly location leaps up the list of services everyone is tipping for grand success. Mobile Europe readers will know, though, that location has been bubbling away all year. Nokia itself gave a hint back in February when it made its smart2go mapping and navigation platform free to download o certain devices. Tom Tom and Vodafone got together to work on delivery of a joint location and navigation service – due to go live in early 2008.
Wayfinder signed up Blackberry, and also "a large handset vcndor" in a deal worth nearly SEK20 million. True Position continued to bang the drum, commissioning reports to show there was demand for LBS. Jentro's Hans Henrik-Puvogel launched his company's vision of a client-server solution, that feeds web information into the navigation and mapping tool. And operators began to work on integrating local search with location information – delivering contextual results based on user profiles plus location. The last issue is perhaps the most important, as operators began to realise that in future, rather than only selling network access to consumers, they will be increasingly reliant on selling network information to third parties. And what is one of the crucial pieces of network information they hold? Location.
"Nokia believes location context is the most essential feature of mobile devices going forward, Spend on these [navigation devices] has bypassed the mobile operators and the mobile handset makers entirely,"" Michael Halbherr, director of Location Based Experiences.
"Brands are extending their presence beyond the Internet to deliver an enhanced experience via the mobile Web," Eaton observes. "Location takes this experience to another level." Mike Eaton, Vodafone UK head of content.
"Online navigation on a mobile phone will be a much richer experience. Local search is not just about a local mapping database, but about integrating the content available on the web with the navigation experience," Hans-Henrik Puvogel.
"We think there is more to this acquisition than meets the eye. Nokia's vision for the services is very ambitious and today it does not have all the technology pieces it needs to realise that. But did it have to buy Navteq to achieve this?
Little annoys some mobile operators more than the thought that users will be able to use their mobile phones to get onto an IP network over WiFi, and start making calls out over IP, bypassing the clutches of the mobile operator's billing system. The fact that up to no, the user experience of VoIP clients on the handset has been a bit clumsy, and WiFi operators have really yet to get their acts together to offer any sort of uniform experience, has meant that in fact revenue loss to such services has been small. But wait, this year saw a load more dual mode handsets on the market, and even the analysts began to produce their reports saying that dual mode handsets were set to be a massive growth area. Also, the VoIP clients got a bit more elegant. T-Mobile was forced to court by Truphone, a company incensed by the termination fees it was being charged by the mobile operator, and lost the first round in court. Yet instead of pure defence, as might be expected, mobile operators started to be turned on to the possibilities of VoIP – to make it work for them. Of course, 2006 had already seen operators start their march towards FMC and FMS solutions, with the Orange Uniq service and acquisitions of ISPs by all the other major mobile only operators. 2007 saw that policy do little more than consolidate. But late 2007 saw further moves to cellular VoIP from 3, ever the disruptive influence, as it announced the Skype phone tie-up, and actually offered free calls to users. Not that this met with universal approval with even other VoIP providers – who decried the device- and provider-specific approach of the operator. Even so, consumer mobile VoIP continued to rise up the agenda, and right at the end of the year Nokia launched a SIM based USB VoIP device.
"You need to buy a Skype phone, which is based on the irrelevant BREW operating system. It's hardware based, with one operator in eight countires and you need to be a customer of that network." Vyke's Aaron Powers doesn't hole back on 3's deal with Skype.
"3G networks are increasingly capable of supporting VoIP, both for traditional mobile operators and independent internet-based VoIP challengers. Rather than competing head on, partnership models have the potential to create win-win propositions." Dean Bubley, Disruptive Analysis.
"The injunction is good news not only for Truphone but for every company trying to develop internet-era services and for every consumer wanting freedom of choice and lower prices. We are determined to bring better-value mobile calls, text messages and other innovative services to mobile phone users, and it's right that we should not be prevented from doing so.
"To be granted interim relief means we successfully demonstrated that we have an arguable case to make at a full trial. We didn't want to go to court but we had no choice: T-Mobile was effectively preventing the launch of the Truphone service so we had to take urgent action." James Tagg, Truphone's chief executive officer.
4G, that catch all term for LTE, mobile WiMAX and whatever the CDMA grouping is calling its progression path these days (Really Ultra Wide Broadband More Than 3GPP Can Offer Anyway) was on the agenda, as the industry really started to work up to getting the specification done (LTE) or actually start with the implementation (WiMax). This meant that, for the 3GPP progression particular, it is the test and measurement companies that are having their say at the moment. Wider bandwidths, faster transmission speeds and multiple protocols means developers face an increasingly heavy testing load. The test companies showed their first LTE equipment at 3GSM (as it was still called) and were predicting the need to move fast to meet demand from operators and OEMs. OBSAI incorporated LTE into its specifications in July, and then in December Verizon and Vodafone announced a coordinated trial plan for LTE that begins in 2008. Trial suppliers include Alcatel-Lucent, Ericsson, Motorola, Nokia-Siemens, and Nortel.
"The industry is faced with developing physical layer test products for networks and devices for technology that is very different from the current WCDMA and GSM environments. LTE takes mobile operators from a WCDMA environment into an air interface based on OFDMA and MIMO antenna technology." Mobile Europe.
"OFDMA as a basic technology is understood but in a mobile network it's a very complicated algorithm to the handset and base station. MIMO is literally just coming out of the research environment. It's now about understanding how it will work in the real world, in the street and with real interfaces. So new algorithms will be the big challenge." Jonathan Borrill, Anritsu.
" With a host of new devices and applications, and a particular focus on embedded wireless in virtually every piece of electronics you buy in any store, we believe LTE is the best technology with global scale to deliver on the promise." Richard Lynch, executive vice president and cto, Verizon Communications.
The number one issue facing operators from a cost perspective? Everyone says so and in 2007 backhaul became a true battlefield for the multi-service switch vendors. Whether vendors offered translation from one protocol to another, or offered multi protocol support natively, the race was on to offer operators flexible and efficient backhaul solutions that meant that there was a solution other than flinging bandwidth at their access networks. Tellabs, Telrad, Celtro, RAD Data Communications, and a range of others all spied the opportunity. Ovum, not normally the most aggressive of analysts, even reckoned 3G traffic would drive the backhaul market to grow at an annual rate of over 40% over the next five years. There was also a boost for microwave, and need for increased ease of management of microwave transmission networks.
"Backhaul has today become the new, "weakest link" in provider networks," Shahar Gorodiesky, Celtro.
"Mobile operators today are challenged to grow backhaul capacity quickly, flexibly, and economically, to support rapid growth in bandwidth-intensive mobile data services," John Lively, Vice President, Ovum RHK.
"Backhaul typically accounts for up to 30% of mobile operators' OPEX today and with traffic set to rise exponentially as new, bandwidth hungry technologies, such as HSPA, are introduced, mobile service providers are desperate for innovative solutions that will lower costs." Asaf Wachtel, Product Line Manager at RAD Data Communications.
Every year gets its hot technology – and this year it was femto as pundits started to realise that a combination of getting DSL to do your backhaul for you (see above) plus a presence right into the home, could increase revenues and decease costs at the same time. So work was on to get production of the femto access units down to a manageable price. Ip.access ipressed with its cell, based on chips from PicoChip. Network vendors such as Nokia and Sonus saw the market for gateway and core network aggregation and service control. Femto became a real "eco system". All we're waiting for is operators to decide fully on the business model – how far to subsidise, how to manage the tariffs, and it seems likely there will be a major femto rollout very soon. Notes of caution were sounded, however. How will these network elements be managed and controlled within an operator's larger networks? How will they be integrated into a Pre-IMS and IMS architecture, once they are out in the field?â?¨But the discussion also highlighted something more fundamental in the industry: that the pure play mobile operator may be staring down a long, narrowing, tunnel. One of the reasons there was so much noise about femto is that it offers operators a chance to avoid being cut out of broadband and digital home revenues. And as we move into 2008, that will continue to be a key issue.
"Voice over WiFI rollouts have already taken place and there are lots of hotspots. But it doesn't promote data usage on cellular networks and there are issues around possible interference on the
unlicensed brand. A homezone tariff gives away margin, and with a femto cell that doesn't happen, because although you may have femto zone pricing, your cost of delivery per minute is much reduced as well. The pros for femtocell are that only a cellular license holder can do it, and it promotes data usage in the home. It gives operators a physical footprint in the home and something to build their brand from." Stuart Carlaw, ABI Research
"There's major marketing and commercial issues. I'm concerned operators will use the price angle. If you see the applications you can run on it, like presence, and local storage and synchronisation of devices, that's the compelling value add. We need to focus on that rather than just cheaper and cheaper minutes." Phil Kendall, Strategy Analytics.