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« Tech Predictions 2009: Bricolage IT | Main | Technology that Matters »
Apple/O2 versus Blackberry/Vodafone versus Google/T-Mobile
The launch of the Blackberry Storm, the ‘answer to the iPhone’, produced all the coverage you might expect. And of course it all centred on the features of the Storm, and the comparison with the other touch phones features, the old ‘speeds and feeds’ argument to differentiate. As I have commented before when all products have the same ‘tick the box’ features that doesn’t help, and these days it is more rewarding have a trial of the usability of the phone for what you want from it as that’s when the differences really show up.
What struck me was buried in all these comments was the fact that RIM, the makers of Blackberries, had worked with Vodafone to develop the Storm specifically to allow Vodafone to compete with O2, who have the exclusive rights to the iPhone in several markets. All very logical and obvious, but now add to this the tie up with T-Mobile and the Google G1 phone? I am not sure if this is just a fluke, but it means that three of the largest mobile operators have just changed the basis of competition between themselves, and at the very time of entering a new market phase around ‘touch phones’. (btw in the same direction 3 Mobile says it is planning to launch the INQ1 which is a Social Networking optimised phone (usability rather than features again), it may not be a touch phone, but it is very much in the same direction as the big operators are taking with specialised phone products).
The obvious name missing from this currently is Orange, but then so too, are the names Nokia, or Motorola. May be that the next announcement? After all Nokia have now got the System 60 package for the development of the hardware so can’t be long before they join the game.
Given that the operators have more, or less, fought themselves to a standstill over pricing, and even with ‘all you can eat’ for a fixed fee tariffs knowingly restricted their own revenues, clearly something has to change. There is a further challenge in many developed markets of total penetration restricting the numbers of new users. The ‘walled garden’ of unique services for which you can charge premiums hasn’t worked too well either, as most users want access to the open Internet to get what they want. So clearly its time for something new to differentiate and hopefully create some real value!
The numbers suggest that O2 has done very well in the developed markets where they are the unique supplier of the iPhone, though the commercial deal they signed with Apple is supposed to have been far from generous for them. A significant number of users defected from other Mobile Operators and were prepared to accept a pretty pricing and demanding contract in order to get, and use, an iPhone. So no handset subsidies here! Okay now you have the subscribers, and locked in via the handset, now what? These new Touch phones are not simply different in the interface, they are the next generation of capabilities, and that makes them a huge market for ‘services’, but not quite in the same way as the old style ‘walled garden’ approach.
The Apple App Store is one approach, but then so are a lot of other downloadable Apps, which means there are three market opportunities; one the obvious ability to sell Apps, and the operators have to figure out how to take a share of this; two around ‘user complexity’. Windows Live Mesh, as an example, is about supporting ‘user complexity’ in terms of the numbers of devices, availability of the same content on each device regardless of which device it was created on, etc; three around real time communities such as Twitter, but focused on servicing ‘groups’ with information on members locations, or similar services that the operator can be uniquely collate, and sell as added value.
The more you load on your phone, the more challenging it becomes to change to a different make with a different operating system, and there is the challenge of users getting ‘locked in’ to a propriety interface, something that Nokia, and Blackberry, have benefited from in the past. Apple has created an whole market franchise around across PCs, iPods and now the iPhone. Add to that the Mobile Operator running your own ‘life style’ community and services and may be the ‘churn’ challenge might start to become lower, and having seen some recent figures on the impact of this on operators this must be a crucial issue to address.
Viewed this way the competition over iPhone, versus Blackberry Storm, versus Google Gphone looks more like a battle between O2, Vodafone and T-Mobile. It also raises interesting questions about those players who currently don’t seem to be in the fight, both phone producers and mobile operators. It looks suspiciously like the three teams could take the premium user end of the market shifting both the more valuable accounts as well as the phone units, especially with Christmas coming. However the long term question is whether this new generation of technology will also be able to create more than a new generation of competition to grab users and sales.
Can the operators figure out how to create a new generation of services to match the new device capabilities in a manner that the users think creates real new value and will pay for?
Posted by Andy Mulholland on November 24, 2008 | 
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Comments
# on November 24, 2008 9:34 AM, Lee Provoost said:
On the other hand, loading the phone with apps to make it more "Internet enabled" creates also a danger that you are not really unique anymore. People are more and more sucked into social media apps like Facebook, Youtube and Twitter and you see phone manufacturers offering clients for these.
That also means that I can easily switch from phone since I actually only care about my access to my email, facebook, twitter and some other online apps... (a Java application like ShoZu comes forward to this for instance)
Btw with all the hype around the super expensive feature loaded smartphones, we forget that there are still very nice simple devices out there, check the Peek (getpeek.com) which has been voted as number 1 gadget in several magazines (Wired, Oprah, etc). They only provide email and still they manage to become quite popular in the US. How? Simplicity of use (you don't need to be a nuclear power engineer to configure and use it) and the very transparent subscription model. Almost no one competing with that :-)
# on November 24, 2008 10:25 AM, andy mulholland said:
Hi lee
Interesting counter point! my wife is notably technophobic and and likes her Samsung Tocco touch screen phone for its similicity - see picture and touch!
and yes she is only using it as a phone with a directory and an occasional SMS.
The high end Samsung Omina was rejected as too complex as was the iPhone!
At the end of the day the mobile operators need to find some additional revenue over just connectivity charges though and that makes the model wome what like airtravel where the handfull of business class passengers make all the profit and the ecconomy seats just cover costs.
# on November 26, 2008 4:54 AM, Nick said:
Yet oddly enough, the phone that I want to use the least, and the one that gives us the least functionality for browsing the web and viewing email, is still the phone that I am subjected to use for work (and we don't even have the option for the storm). Hopefully someday soon that will change, but I'm not holding my breath. I'm just going to break the rules :)
# on November 26, 2008 9:46 AM, Jan Willekens said:
It seems that Nokia already answered your question at the end of the post with their plans to start a network services division. They'll start in Japan by becoming an MVNO on Docomo's network and selling very high end (read expensive) phones to a niche market. My guess is that this is just (beta) testing the water before they enter a larger market. It should be interesting to see how this will affect their relationships with operators. See http://www.reghardware.co.uk/2008/11/24/nokia_network_operator/ for more info.
# on November 26, 2008 6:22 PM, andy mulholland said:
mmm usually its a make or break moment when you start to compete with your major customers! Or is it that they are focusing on a niche that is starting to develop that is outside the current operators markets?
# on November 27, 2008 1:40 PM, Paul Thomson said:
Hi Andy – Let’s no forget orange and its exclusive release of the highly regarded HTC Touch HD: http://www.htc.com/www/product/touchhd/overview.html
This phone has be hailed as an iphone / storm killer and boasts a number of impressive features such as HSDPA and a 3.8-inch, 480x800-pixel, widescreen WVGA touch screen.
The only issue from my perspective is that I believe that they have priced themselves out of the market.
# on November 27, 2008 3:46 PM, andy mulholland said:
Good point and on that point has anyone got hold of, or seen a blog from someone on the new Nokia E63? yup I know it doesnt fit the model because Nokia have not tied up with an operator but this is a fascinating new phone on paper at least.
this is the one with virtualisation to create two phones on one sim and in one unit. one is personal and one is business, seems a great idea!
but who knows if it works?
# on November 27, 2008 3:46 PM, andy mulholland said:
Good point and on that point has anyone got hold of, or seen a blog from someone on the new Nokia E63? yup I know it doesnt fit the model because Nokia have not tied up with an operator but this is a fascinating new phone on paper at least.
this is the one with virtualisation to create two phones on one sim and in one unit. one is personal and one is business, seems a great idea!
but who knows if it works?