MEOW! Mobile
Entertainment Opportunity Watch A monthly report with a personal touch from the world media capitals Los Angeles and New York City. Focus on pinpointing opportunities in the mobile media and entertainment area. Subscribe at: http://www.anttila.net |
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MEOW! Mobile Entertainment Opportunity Watch #3, 2002 May 18, 2002 Hi there! I never intended to discontinue my newsletter - I have just taken a creative pause. You can call it a burn-out if you want... it is of course not nice to push forward with a constant wind blowing in your face - you get the feeling that there is nothing else to report than that you are sweating. I thought the trade shows in the spring would reveal enough news to make the market move. On the contrary, they just revealed what the somewhat Brezhnevian management in the key player organizations of the mobile ecosystem thought would be enough. We lack APPLICATIONS and smart CONSUMER MARKETING strategies. So I have accepted we live in a chaos - it is a refreshing feeling to accept that. I got the idea from one of my friends, Scott Rafer, who said the industry such a mess he decided to take off and go hiking in the Pyrenees. I am still working 12 hours a day but I consider myself primarily a bodybuilder and secondarily a mobile entertainment expert. I train at the Venice Beach outdoor gym where Arnold Schwartzenegger used to train when he was still a beach boy. (http://naid.sppsr.ucla.edu/venice/mapsdocs/new-map27.htm) It gives me a fresh new perspective on how animals must feel like in a zoo in front of all those cameras... Moreover, for the first time in several years I actually meet normal people who have under $100K salaries - and very nice people at that, some with cell phones and some without for a long time to come. And if things get worse I can always join the Chippendales in a year or so... Best regards, Tapio Anttila
THE ERICSSON EPILOGUE: PART I We are getting GPRS... slowly. We will be getting 3G, there is no doubt about that since 3G was always the goal and GPRS was always just a stepping stone the industry designed with the left hand and oftentimes contemplated skipping entirely. I remember vividly meeting that roughly 30-year old Ericsson engineer who somewhere in 1998 carried the modest responsibility of developing their GPRS solution - he was soon to be gone. It was supposed to be 'just a small software upgrade'. Now there is another level of awareness about the challenges for building successful businesses on top of the GPRS infrastructure. But we should not blame the Ericssons of the world too much - they did not have the smart and demanding customers either. Ericsson and Nokia had them when NMT and GSM were developed - but the application was a simple voice call. Then came the Internet and we all had the opportunity to learn how consumers might adopt new ways of creating value with their mobile phone. But the telecom industry walked too slowly and sometimes backwards and the Internet industry, headed by the likes of Ms. Mary Meeker, rushed ahead to fill the pockets with golden nuggets. Neither of them did the right thing. The latter was a legalized crime but the former has received less attention. The telecom industry had the opportunity to learn "the art of being exponential", the ability to feel and understand the market trends and to develop competencies to respond to that. Being focused on the end-user was the key. In 1997, the Prime Minister of Malaysia, Dr Mahathir, organized a seminar to promote the Malaysian Multimedia Supercorridor and to bring in industry luminaries to discuss Internet, distance learning and the applications people could use and pay for. The Ericsson CEO at the time, Dr Lars Ramqvist, indicated to his aides that he was neither interested nor competent to discuss such issues and therefore declined the invitation. A true story, by the way. In the more recent past operators have woken up in a big way and started the "some whip and less carrot" regime towards their equipment vendors. A few months ago Vodafone management reportedly asked the head of Ericsson applications business unit to step down. Vodafone also bailed out the Ericsson MMS product unit by buying their solution for the global Vodafone group (that unit has been performing really well since then). The message was clear: "We decide the speed and the direction and by the way, the finger you feel touching your back is not a finger and it's loaded." But Ericsson will survive - I have my buy order in at $1.45. SO WHO'S GOT THE CARDS? Nokia is not perfect, either, but in my view the biggest differentiator between Nokia and the rest of the pack is that the human resources development function at Nokia was world-class already in the 1980s. There is an inherent ability to adapt at Nokia that many of the other players lack. But even Nokia suffers from internal power play and the difficulty to manage the channel conflicts with their operator customers. The recent reorganization at Nokia Mobile Phones is very significant and worth noticing. A total P/L responsibility of a phone category was given to a top executive level person. This way everything pertaining to that phone category, from chipsets to applications and content, is under the responsibility of one person. This should bring some clarity and focus to the market offerings. Nokia is moving in to stake its claims in mobile entertainment by offering its massive distribution channel and deep end-user market knowledge as assets when negotiating licensing deals with the content industry. Particularly the movie industry with its time-sensitive movie launches suits well to partner with Nokia's capability to offer coordinated marketing support with phone accessories and services, online promotion and - last but not least - massive in-store promotion worldwide. The latest example is the Nokia worldwide launch campaign for Star Wars II - Nokia reportedly paid relatively little to Lucas Film for the rights. Nokia will probably come under $10 sometime this year but it will stop somewhere and head back up. Finns are used to mixing sawdust in their bread as they did during World War II, the issue is to have the courage to switch in a new gear and take some bruises with the customers. With Ericsson the problem was and certainly still is the difficulty to feel the sense of urgency. The 'nothing bad can happen to us' and 'the government will take care of us' syndrome is common to Sweden and France (where Sweden borrowed their king from). The problem is aggravated by the fact that Ericsson is controlled by the socialist-capitalist family institution called the Wallenberg family. Sad, because Swedes have always had more engineering horsepower and a longer track record to build international success stories. Operators are naturally looking at Nokia's initiatives somewhat concerned. Hutchison 3G has perhaps the most advanced media strategy and it is the only 'Global 7' operator to my knowledge that has a content person based in the LA area. My prediction is that fairly soon the other Global 7 operators will follow and become more active in partnering with the media industry. Even industry experts like Ovum have recently stated that application-to-person messaging rather than person-to-person messaging is needed to get the MMS market going (which seems to be delayed and 18-24 months off, by the way). So it is rather 'Mickey Mouses with a meaning' from a server than camera pictures from another phone that will kick off the usage. Therefore content is needed and the operators have the choice to go with name brands and cross-media integration, such as developing mobile services for a popular MTV show or to choose to work with 'indie' mobile content providers such as Animobile (www.animobile.com). Voicestream/T-Mobile is the only US operator which is part of those Global 7. The whole US consumer mobile market is lagging behind for the very simple reason of the lack of demanding customers. The mobile penetration is rising but after the penetration a certain maturing period is needed for a 'mobile culture' to develop. Out of this culture come innovative ideas just like many of the daily household items we use today were invented by a customer. Part of the problem is also the lack of vision in operator organizations. Generally speaking, there seems to be a lack of basic marketing and strategic thinking competence. They are making mistakes the guy running your neighborhood's grocery store would not make. Let's take an example: The Cingular website at www.cingular.com offers ringtones. When you go to the ringtone site you will see that it is not possible to try out those ringtones or read more about them without having a Cingular subscription. That's what I would call anally-retentive marketing behavior. Something your grocer next door would not fall for. There is some light at the end of the tunnel even in the US, though. Sprint is doing a good job building their "3G service" and according to the latest news they will launch commercially the CDMA 1XRTT service before September. I am also seeing and hearing that AT&T (or will it be called mLife?) is making big leaps to become a modern player on the consumer market. Perhaps their failure to cooperate with DoCoMo to launch i-mode in the US was a wake-up call to do some house-cleaning... SMS interoperability starts working nicely and an SMS operator SMS.ac (www.sms.ac) of San Diego rounded up 5 million subs in four months with minimal marketing. On the technology side Qualcomm taught us a lesson with BREW. The lesson was that with extremely smart, aggressive and professional marketing you can make a difference, gain some following (and confuse the market even more). The 'i-mode -like' business model and operational model QC implemented was the right approach but they did not have enough muscle to pull through with an execution, neither did they have the market share to build the strongest ecosystem. Then we have the other technology powerhouse, Sun Microsystem, the midwife of mobile Java. They almost the exact opposite of Qualcomm: they have a huge following, great developer resources, most of the important industrial strategic partners - but they lack the ability to build a vision, business model, marketing strategy and other elements to show the somewhat blind mobile ecosystem how to make money with their wonderful technology. Huh, fortunately Microsoft is not yet shifting gears... Remember the real web revolution started in 1995 when Bill Gates said: "Gentlemen, erase your hard drives! Take the phone and call your significant other to say goodbye! The next six months you will spend in the basement writing code for the Internet Explorer..." There is no similar sense of urgency pressing Redmond today. QUICK TAKES Kenradio is a digital media community on the web run by web-journalist Ken Rutkowski. On top of delivering a highly insightful daily news update, Ken also arranges business networking luncheons on Tuesdays at Rose Cafe in Venice, CA. I joined last Tuesday for the first time and I can highly recommend it. http://www.kenradio.com/ SMS.ac is a company in San Diego who specialises in SMS dating services. This is basically Match.com on SMS. They have built an impressive user base of 5 million subscribers (worldwide but to a large part also in the US) in four months with a minimal marketing budget. The service fulfills a clear need and has achieved to differentiate in important ways such as offering anonymous SMS. The company drives revenues through technology licensing, subscriptions, sponsorships and shared revenue opportunities. They must be getting some kickbacks from the operators whom they are doing a great service by helping launch SMS in the US. http://www.sms.ac/ http://www.sms.ac/corporate/ The trend of prepaid SMS cards seems to be taking off. Atlas Telecom Mobile recently cut a deal in this area with Oberthur Card Systems. The target audience is children in the age range of 8-14. The subscribers can send SMS messages and make and receive phone calls only between predetermined numbers (parents). The card can be refilled over-the-air with parental consent - via SMS. I firmly believe this thing will be big. They have also launched a branded entertainment concept for the World Cup Soccer. I still have a hard time believing that SMS alerts alone would be compelling enough for people to open their wallets - we need integrated multi-channel solutions. http://www.atlastelecommobile.com/ A few months ago, Shell launched an MVNO in Hong Kong under the brand Shell Mobile. Take a look! http://www.shellmobile.com.hk/shell/index.htm Nowire in Finland in cooperation with Lintupalvelu.com has recently launched a bird-watching service for ornithologists and all bird enthusiasts alike. The service is based on SMS and MMS as well as location technologies will be added in the future. Birdlife Finland has made available tens of ringtones imitating various birds (0.90 euros a piece). A share of the ringtone revenue will go to 'bird charity'... http://www.nowire.fi/uk/news/News.asp?nid=46 http://194.215.90.135/birdlife/ringtones.html CNBC Asia out of Singapore has launched an interactive mobile phone service that enables response to TV programs, such as opinion polls. The contract is certainly a win for Matchem who provided the software tools for CNBC. http://www.matchem.com/news_29.html Room 33 was a European mobile portal technology company which was born in my apartment when the founder Zaheed Haque took over my lease in Stockholm in 1998. The company succeeded in raising 40 million dollars of venture funding and subsequently closed down in 2001. The company's software was made public and open source at SourceForge today. Just in case someone might be interested... http://sourceforge.net/projects/hambo/ Oh, I cannot help telling you about this research project at MIT: squeezable mobile phones and communicating through vibrations. This thing will be big once it gets out of the lab... http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020424/tc_nm/technology_telephones_dc_2
FOR FURTHER READING Fritz Jordan form the Bay Area started a few years ago getting into the wireless area. In order to show that he's done his home work he started building an industry database which is a pretty impressive free resource! I have uploaded it on my site for my readers to download and enjoy (an Excel file): http://www.anttila.net/meow/main.htm. You'll be amazed! You can contact Fritz at fritzjordan@earthlink.net. * * * Disclaimer: Opinions presented herein are those of the undersigned and do not represent the position or message of any company I might be affiliated with. |
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