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?