Category Archives: Economy

Mobile Phones and Mobility in a Wireless World

Since Motorola released the first cell phone in the early 1980’s, mobile users, researchers, marketers, advertisers and visionaries extolled the value of mobility in a wireless world.

Mobile user location and distance to other users vanished. More important, psychological distance between users became perceptual—only two inches. “Long distance” morphed to no distance.

Mobile phones and mobile devices un-tethered us from wires and cables. The tin can and string became a fable. Over four billion people on Earth connected 24/7, talking while walking, surrounded by a wireless umbrella. Humans joined a global communications web.

Feature phones and smart-phones added data to voice. The mobile Internet emerged. Information, once hidden to billions, became accessible. A world that never existed to many magically appeared on tiny screens—text, pictures, graphics.

For some, their mobile phones spewed forth music from lands once distant, now local. Camera phones extended vision. GPS and location-based tools re-oriented the carbon footprint, other humans a moving dot on a luminescent screen.

Mobility ceased to exist in a world where everyone was connected. Home, like work, like the park, like the street merged. Carbon footprints moved but mobile users’ minds were static. Like the TV series “Lost,” the island vanished and the ocean’s horizon disappeared.

The Future?

A world where voice and data are one and new, personalized mobile devices extend learning, enhance commerce, entertain.

The island stays hidden but the horizon reappears.

Is Mobile the next disruptive technology?

Not too long ago, the mobile industry was dominated by discussions about chipsets and back-end carrier infrastructure. Now, the conversation has turned to streaming video and iPhone apps – and there’s a whole cast of new characters that have a seat at the table, from Hollywood studios to web giants like Yahoo and Google. Who will be the dominant players, and what content will succeed in this emerging medium? These are questions that executives across an array of media sectors are trying to answer. This report provides insights into the future of mobile, with a particular emphasis on M&A and VC funding activity, and a glimpse into how mobile content (games, music, video, and social networks) will become a thriving business, through either paid or ad-supported models.

Their database of 1,115 transactions shows $343 billion of investment and M&A activity in the mobile sector over the past 38 months. While there has been a slowdown in activity, deals are still getting done and for good reason. There is no question that mobile is the next disruptive technology.

Increasingly, prognosticators are referring to phones as having the potential to be a mobile PC; while likely directionally correct, we think it is a premature call.

The economic downturn could hamper the ability of the carriers to grow the average revenue per customer/unit (ARPU) through content and service packages, but it could push more consumers to become wireless-only customers.

While mobile advertising and marketing has yet to live up to expectations, the medium is becoming increasingly accessible and scalable and the creative is improving such that there are a growing number of campaign success stories. Not with standing a weak economy, we think this is a sector that can do well near term as marketers seem to be embracing its lower out-of-pocket cost combined with targeting capcustomers.

Video usage should increase dramatically as theand hardware could mute near term growth.

Original Article:
The Changing Mobile Industry and What It Means for Media Executives
By Lauren Rich Fine, CFA, and Galen Vaisman

The full report can be downloaded at
http://www.paidcontent.org/reports

Mobile Payment: $860 Billion By 2013?

At the Center for Future Banking they are actively examining the mobile space and attempting to understand the technical, social and business drivers that will define the mobile payments ecosystem. Informa Telecoms and Media’s presented the report called “Mobile Payments and Banking” a few weeks back.

Since the turn of the millennium we have heard that one day the mobile phone could replace the humble leather wallet, by storing electronic cash and enabling convenient electronic transactions. Yet so far, except for a few isolated cases, there has been little evidence that the consumer has embraced this new paradigm despite the availability of mobile payment and banking services in most markets worldwide. However, according to Informa Telecoms and Media’s recent report, Mobile Payments and Banking: Worldwide Market Analysis, Strategic Outlook & Forecasts to 2013, this day is getting closer.

Informa Telecoms & Media forecasts that in 2013 almost 300 billion transactions, worth more than US$860 billion, will be conducted using a mobile phone – a twelve-fold increase in gross global transaction values in just five years.

There is no doubt that the mobile internet is entering a substantive phase. For many years, a myriad of factors have held back the development of truly breakthrough applications that would capture hearts and minds; applications capable of driving through obstacles hampering consumer adoption. In fact, until just the past year it seemed as if the potential of mobile and mobile payments related services to create much value at all would take many years to develop. And while the ecosystems from a non-US perspective are fairly robust, the US picture was moving slowly.

But that is changing. In April 2008, the number of cellular users worldwide passed the 3 billion mark and reached an estimated 4 billion by year end. Growth in third-generation (3G) penetration is also accelerating, reaching nearly 7 percent of the global population by the end of 2008. Now, it seems as if we are reaching an inflection point, one that could have dramatic impacts to current value chains. And even more dramatic effects for participants and current ecosystem players, with a potential to redraw the playing field.

Still, the remaining challenges are real, and will need to be addressed jointly by a wide range of participants, including telecom, banking, regulators and governments. And this does not even touch the potential for wide ranging cross-industry collaborations around mobile banking, media and health. There is no doubt that the stakes are high – we put them at somewhere around $860B.

Are we in the Cambric Explosion of Mobile Advertising?

10 years ago we saw the evolution of Mobile Marketing with first text messages sent around by advertisers on small black and white screens. Since then many forms of Mobile Marketing developed alongside the fast growing penetration of devices as well as their evolving technical capability.

Majority of campaigns are still pull campaigns using SMS, MMS or other technologies like QR-codes to get in contact with the consumer. Nowadays – in the iPhone-age – so-called smart phones allow a quick and excellent browsing experience on the go. So it does not astonish that brands from all verticals, with Automotive, Fashion and FMCG at the spearhead, conquer the fast increasing inventory of sellable ad space in the Mobile Internet. Mobile Ad-Server companies make sure to cover the enormous variety of handsets and display seizes. Application provider launch fascinating apps especially around location based information almost every day.

App Stores of players like Apple, Google and Nokia spill over. Smart phone penetration gets close to 20% in developed countries. In Germany alone this equals an addressable market of up to 15 million people. Under all categories of Mobile Marketing the youngest discipline Mobile Advertising is the one that grows exponentially. If the industry makes its homework (setting standards for media means, defining the currency for reach, lowering the data pricing) Mobile Advertising revenues will explode soon. And Mobile will be a planed line item during the budget process of all major advertisers.

Will roaming be free in the future?

truphone Mobile Voice-Over IP (VoIP) is an opportunity for StartUps like Truphone to compete with the global Mobile Network Operators. Mobile VoIP offers consumers a way for low-cost global calls.

“Until now, the only way to avoid the massive cost of mobile roaming is to carry multiple phones and multiple SIM cards, one for each country you frequent,” stated Truphone CEO Geraldine Wilson. “This means juggling multiple devices and phone numbers to avoid paying the high roaming rates traditionally associated with travel.

“Our customers tell us that they value our current services to make low cost international calls when at home and when roaming. Now they’re asking us to bring it all together. They want one phone, one SIM and one plan. Truphone Local Anywhere delivers this all-in-one solution by providing the first fully-integrated multi-country mobile service for personal users and business professionals. Now these internationalists can enjoy all the benefits of home wherever they may be.”

Video Interview with Geraldine Wilson, CEO of Truphone.

How VISA will change the way we pay mobile?

VISA showed some real life examples of Mobile Payments, Money Transfer and Payment-Related Services at GSMA Mobile World Congress 2009.

The real life examples to demonstrate how its innovations in mobile payment technologies can enhance consumers’ daily lives, providing speed, convenience, security and choice.

Mary Carol Harris, Head of Innovation at VISA, explained several examples how VISA will change the way we will pay mobile?

Here are some user scenarios for mobile payment:

  • Visa payWave embedded in a mobile device will secure mobile point of sale payments. Visa demonstrated both NFC-based and SIM-based contactless payments.
  • Mobile money transfer between Visa accounts, both handset-to-handset and online-to-handset. Mobile Transaction Alerts: Near real-time notification of card purchase activity delivered to the mobile device.
  • Targeted offers and coupons delivered directly to the mobile device and redeemed at near-by merchants.
  • Convenient cashless transactions on the move. Mobile merchants, such as a pizza delivery service, can accept Visa payments with the help of enhanced mobile handsets that double as a mobile acceptance device.
  • Co-branded mobile posters, signposting nearby coffee shops with the offer of exclusive mobile ‘buy one, get one free’ offers.

Key Trends at the Mobile Word Congress 2009

This year’s Mobile World Congress in Barcelona is over, and once again many of the Telecom industry’s top management convened in Spain to exchange experience, knowledge and show their latest technological triumphs – altogether almost 47.000 people met in Barcelona. There is no doubt that the financial crisis has caught up with a number of the Telecom infrastructure providers, but on the other hand it does look like the actual Telecom industry is not going to be hit quite as hard as many other industries – people are still using their telephones and most operators have a healthy cash flow and sensible earnings.

Attending the Mobile World Congress is always fascinating, and again this year there were many opportunities to have serious debates with the industry leaders during the many conferences that were spread across the four days of MWC – and again Strand Consult also made our mark. Participating in the conferences enables us to find out whether our predictions were correct and at the same time gives us an opportunity to read the signals that many of the industry’s most important players are sending out.

One thing we could criticise is that this year’s conference was very Americanised, there were many companies from the USA and a great deal of focus on how Americans perceive the mobile world and how it is developing. Let’s stick to the facts for a second; the USA only has a limited share of the global mobile market, none of the American operators are global market players and the American infrastructure providers are finding it difficult to do business in this industry. In many ways one could say that the USA is just as successful in the car industry as they are in the mobile industry – perhaps not quite fair when you think of companies like Qualcomm and Cisco, but in general the Americans are good at IT, but not quite as good at Telecom.

One of the exciting presentations at the conference was the one where Steve Balmer, CEO of Microsoft, Nokia Chief Olli-Pekka Kallasvuo and Ralph de la Vega, President of AT&T presented their visions for the future. However this year will be added to the list of years where Microsoft disappointed us. Steve Balmer is always fun to listen to, but on the other hand it is sad that Microsoft’s mobile vision is limited to ensuring that everything they have created on the desktop must be able to function on a mobile telephone. Where is the mobile vision where things are moving from the mobile over to the desktop – instead of in the opposite direction?

Olli-Pekka Kallasvuo’s Nokia presentation was okay and this year we found out why Mr Olli-Pekka Kallasvuo is not Mr Entertainment himself; he is a lawyer by education – and they are usually not the funniest people in the world. But at the end of the day one should not judge Nokia on their presentation techniques, but on the products and services they offer, and in that area Nokia continue to announce a wide selection of products. If you examine how Nokia is performing compared to their competition, there is no doubt that they are in a unique position that is constantly being improved. Personally I liked Ralph de la Vega’s AT&T presentation, that showed an American operator that is starting to move in the direction that we believe the world is developing towards. This year’s message was very clear – that AT&T has understood that the market is very fragmented and that different customer segments are demanding different types of products and services and that it is an operator like AT&T’s job to ensure that these products and services are available to their partners. The most interesting message was the announcement that AT&T is allowing access to their APIs, allowing third-party companies to create additional services on top of the AT&T network.

After the three presentations, Walt Mossberg from the Wall Street Journal took the stage as moderator for what could have been an exciting discussion about the current mobile market and how it is developing. While there is no doubt that Walt Mossberg is a highly respected columnist at the WSJ, is he appears to have the same level of knowledge about the globe mobile industry, as George Bush had about what was happening outside the USA. How can you spend the whole debate discussing the iPhone and the significance the iPhone has hand on the mobile market in Walt Mossberg’s opinion, when less than 1% of the 4 billion mobile phones in the world are iPhones? In fact even Opera Mini has been more successful measured in number of users, than the iPhone.

I understand that the USA is currently experiencing difficult times, but to be so nationalistic and have so little focus on what is happening outside the USA as Walt Mossberg had in that panel debate is sad, when it is happening at the Mobile World Congress. That discussion would have been perfect for the CTIA, but was close to a scandal when people come from every corner of the world to hear how some of the industry’s most important people view the future in a global industry. When the world’s top leaders meet in Davos once a year they talk about global development – not about US national politics. A Danish cartoonist has illustrated Walt Mossberg’s opinion in the panel debate like this.

This year there was a great deal of focus on Mobile Value Added Services and there were many good examples at both the conference and exhibition, showing that the number of useful applications is exploding and an increasing number of people are using their mobile phone for other applications than just voice and SMS. What frightened us a little this year was the focus on Application Stores as a solution to the problem of some people only using their mobile phone for calls and SMS. Put somewhat bluntly, you cannot solve the problem of illiteracy by building bookstores. You need to educate customers and ensure that there are attractive products that they want to purchase and use. If you have no conception of the value of a book, there would be no point in learning to read – all parents know this as they go through the process of teaching their children to read.

Again this year many were talking about Android, but where are the phones and how attractive will they be when they reach the market? If you examine what has happened since Google launched their Android vision, the developments have followed our original predictions , and there is no doubt that it will probably take some time before we will see some interesting handsets on the market. So far Google has not produced any products that are especially commercial or even close to being attractive to the mass market. Google is very good at searches, but has still to deliver in the mobile area.

It was very obvious this year that the mobile broadband market is enormous and growing at a tremendous rate and that LTE will be ready when the market starts demanding that capacity size. This market is developing along the lines we described in our report. There is no doubt that mobile broadband has become a huge success and millions of customers each month are purchasing one of these connections. We would have liked to see a little more focus on the underlying business models and the challenges mobile operators are facing due to the influence of mobile broadband on the DSL market – we know that mobile broadband will cannibalise a large chunk of the DSL market players’ customer bases.

The regulative challenges are enormous and despite the attendance of 60 governmental delegations at the Mobile World Congress this year, it is important that the political system starts distinguishing between the IT industry and the Telecom industry. It is important that politicians around the world perceive the Telecom industry as an important tool to fight poverty, a tool that can help society become more efficient and as an industry that can greatly benefit the environment. If I was a politician I would examine how I could improve my society by using modern telecommunication.

Basically it appears that many politicians view the Telecom industry as an industry that requires tough regulation, to help increase politicians popularity among their voters. In the EU it almost seems like Vivianne Redding is trying to purchase popularity among the European populations. On the other hand there is little doubt that the actions of many politicians are proof that the Telecom industry has not been especially good at selling themselves – which became especially clear in Barcelona this year.

Many countries are talking about Green ICT or green IT – why are we not talking about Green Telecom and what the Telecom industry can do for the environment? There is no doubt that projects like the universal charger, and the fact that the Telecom industry can make the world smaller, are subjects that should be on the agenda when talking about how we can protect the environment. In reality the Telecom industry is probably the industry that can most benefit the environment today and if the world’s leaders at the Global Climate Summit in Copenhagen in December chose to include the Telecom industry’s role in their agenda, the world might understand what the Telecom industry can do for the environment. In case you did not know, the Telecom industry is not on the agenda of the Climate Summit in Copenhagen in December 2009.

Before the Mobile World Congress, we predicted that this year’s conference would be the moment of truth for many players in the industry – and it was. We saw those that deliver the goods and create value for their customers and thereby also value for their shareholders – and we saw those that believe that the MWC is about releasing as many press releases as possible with a high bullshit factor. We are certain that many of the latter companies will not be attending next year – unless they start learning from the industry leaders and start adjusting their businesses to the reality that we all are a part of.

All in all it is thumbs up to the GSMA for this year’s conference. Overall it was a good conference with a great deal of focus on issues that will benefit consumers and society. Next year it would be good to have a little less focus on the USA and a little more focus on what is happening in the real world where all us others work – where the cash flow is being generated and where 92% of the world’s mobile customers live.

We look forward to next year’s conference and would not be guessing, if we state that we will be seeing further consolidation in the market during the coming year. We will just have to hope that the political system will have a greater understanding of the industry that is basically creating the foundation of modern society.

Understanding ARPU

In the telecom world, and increasingly in the Internet world, the average revenue per user (ARPU) is a key metric. A few weeks ago, a journalist contacted us: she wanted to compare the development of US and Chinese mobile markets. Notably, she was surprised by the fact that Chinese operators seemed to have a higher share of data ARPU than US carriers. She wondered if China could be said to be more advanced than US for mobile.

At first, it sounded alright: if mobile subscribers use more data, they are probably more sophisticated. Let’s see why it is not that simple, and that innovations might lie even in apparently less developed markets.

Let’s use an example with 4 existing mobile operators and consider a various sets of metrics. Three of those carriers are from Asia. Will you find who they are?

What is ARPU?

Let’s look at the columns one by one.

  • • If we consider the first column, ranking would be 4-3-2-1, Telco 4 being the most advanced, as it has a larger data share of ARPU. Generally the idea of high data ARPU is associated with the usage of smartphones by business users, or entertainment like games and music.
  • • From the second column, we see that in most cases, the data ARPU actually comes from SMS, surely not a advanced usage! And what could be the remaining 95% of Telco 3? It is likely its users are using services beyond SMS. Here, the ranking would be, from the most advanced: 3-2-1-4.
  • • Looking at the last column, Telco 1 and 3 seem like very rich ones, while Telco 2 and especially Telco 4’s lives seem much harder. The corresponding ranking should be: 3-1-2-4.

Hence, the ARPU value and the share of SMS in data ARPU are what differentiate advanced and less advanced markets. Have you found who those companies were? Here is a tip: one if from China, one from Japan, one from United States and one from… the Philippines!

Aside from the metrics mentioned above, there are other factors to take into account when comparing companies, such as:

  • (1) Price ratio between SMS and voice. For instance, if a minute of voice is the same price as an SMS, which would you use?
  • (2) Profitability per user. A new metric we are happy to baptize “PPU”. Telcos in developing markets can turn a profit even from users bringing them just a few dollars a month! In our example, Telcos 2 and 4 might look like poor companies but in fact, their profit margins are even higher than for Telco 1.
  • (3) Average handset cost – not the sales price, as it can be heavily subsidized – which is also an indicator of a market’s sophistication
  • (4) GDP/capita is of course a strong influencer deciding how much money per user can be invested in the ecosystem
  • (5) Total revenue of the operator is also an interesting indicator, as a tiny and very profitable company could be very advanced but eventually have little impact on a market compared to a much larger and less profitable one.

Companies operating in developing markets are very well positioned to come up with innovations for the “bottom of the pyramid”, while companies in richer markets tend to focus on the top and miss out on a lot of potential revenues. Chinese operators seem to try to offer both with 3G and their rural strategy.

Now, have you identified the four companies? Drop us a line to tell us who they are and you will receive an exclusive document about Japan, Korea and China’s mobile and Internet markets! Send your propositions to info [at] plus8star.com with the title “MOCOM2020”.

How Apple impacts the Wireless World?

iPhoneWhile the world is in the midst of major economic problems, I want to contribute to MOCOM 2020 with some positive stories. I believe Apple has made and continues to make significant contributions to the development of the wireless industry. This is acknowledged by partners and competitors alike.

After the less than stellar MacWorld 2009 in San Francisco earlier this month, and in particular, after Steve Jobs’ announcement of taking a 6-month medical leave of absence, Apple’s stock took some losses. However, this week Apple announced their 2009 Q1 results, with record quarterly revenue of over $10 billion and record quarterly net profit of $1.6 billion. Thus, Apple’s future looks as bright as ever, and their flagship wireless product, 3G iPhone as well as iPhone apps on iTunes will continue to have a huge positive impact on the global mobile market.

You may recall that 3G iPhone was launched globally on July 11th, 2008. Within the first 6 months, around 12 million 3G iPhones have been sold, with significant majority in the U.S., to AT&T subscribers. However, as of now, iPhone is available in over 80 countries, through more than 100 mobile operators. So, it truly is a global product. Smartphones are the most important handset category to observe in the developed mobile markets. The features of 3G iPhone in particular are having major impacts on the direction of the smart phones.

The multi-touch screen of iPhone has revolutionized not just the handset screen market, but has also triggered a major momentum towards touch screens for all sizes of display. We are experiencing a dramatic change in behavior: when you see any type of screen in your daily life, you will first “touch” it, and if it does not respond, you may anticipate that there is something wrong with that screen! Bottom line is, we will see some new innovations, cost reductions, and new applications around “touch screens” in coming months / years. It is not outrageous to predict that non-touch screens may go the way of black & white screens! On 3G iPhones, we have both an all-you-can-eat 3G mobile Internet flat-rate and Wi-Fi connectivity.

This combination has significantly increased mobile Internet usage in the last 6 months, especially in the U.S. As of today, about 50% of all mobile Internet access in the U.S. is through a 3G iPhone, including the use of it through Wi-Fi access. Browsers on other smartphones including BlackBerry and Windows Mobile have followed suit and beefed up their feature sets and capabilities recently. So much so that we now have a serious debate as to whether it will be the browsers that will win the battle of mobile content, or the downloaded mobile apps. It is interesting that browsers on handsets may owe their recent success to Wi-Fi capability on the handset! In fact, Apple may be approving 3rd party browsers for iPhone, but this may have some strings attached!
The combination of assisted GPS, large screen and various mapping & navigational apps have made 3G

iPhone one of the most exciting personal navigation devices (PND). This is not only triggering various other mobile devices to take on the PND role (both on-vehicle and pedestrian), but also opening up numerous location-based retail and advertising services, creating significant excitement and an effective value proposition around LBS. Maybe, after waiting for so many years, LBS is finally here, and iPhone has been a major enabler for this market.

One of the major frustrations with 3G iPhone has been the battery or power management. It is fair to say that if you use most of the features of iPhone, you may have to charge it multiple times during the day. Alternatively some important features such as 3G, GPS or Wi-Fi may have to be turned-off to conserve battery, which defeats the purpose of iPhone. However, frustration with the iPhone battery has enabled various innovations around back-up batteries, new battery technologies and power management solutions.

In fact, there is hope that iPhone 3.0 (which is rumored to be targeted for June or July 2009) may have some improvements in power management. Other rumors for iPhone 3.0 include 3D graphics, with the use of quad-core CPU, offering an excellent platform for new gaming apps. Yet another expectation is an iPhone Nano, also targeted for summer this year, to be smaller and cheaper, originally focusing on the Chinese market. It is fair to say that both 3D iPhone and iPhone Nano would be trailblazers, setting major new trends in the wireless market!

Application developers generally wonder which platform to focus on for their development. Sometimes (not always) numbers speak for themselves! Apple has launched the App Store for iPhones in iTunes on July 11th 2008 with only 500 apps, (about 150 of them free); In December 2008, this number exceeded 10,000 apps (which is a remarkable and record-breaking number to achieve within 5 months). In addition, in the same period, 500 Million application downloads to iPhones have occurred. That is about 100 Million app downloads per month!
One of the reasons for iPhone app success was the remarkable ease of app development with SDK and open APIs. Apple’s single OS X platform offers a much bigger global target market, which attracts more developers. Lots of iPhone apps are free, but for those that cost some small amounts, Apple is reportedly giving 70% of the revenues to the app developers. This is a very significant enticement!

YouTube has been one of the flagship mobile apps on iPhone; in fact, YouTube on iPhone has been credited for the ground-breaking take-off of mobile video streaming in the U.S. It is one of the most advertised, most sexy apps and one of the most used multimedia apps on iPhone. It has triggered far more interest in the use of mobile video as well as mobile TV. When mobile TV becomes more prevalent on handsets soon, it will be partially thanks to YouTube success on iPhone.

Social networking apps on iPhone are probably the ones that take advantage of the GPS feature of the handset the most. Instant messaging / chatting, locating friends, but most importantly, staying on-line with YouTube, MySpace and Facebook all-day long, and for professionals staying connected with LinkedIn or Plaxo while on the go, are all new possibilities, that were not feasible just 6 months ago (unless you carried a laptop!) We should expect tons of more innovative new apps in this space, as more and more user demographics are introduced into mobile Internet.
In fact, one major area of innovation we should look forward to is secure mobile applications, i.e. anything from mobile signatures, mobile banking, to mobile money transfers. There are already various but limited services and apps out there, but this is one market that will grow dramatically in the coming months or years. Smartphones such as iPhones are particularly suitable since they can offer levels of security but also significant ease of use.

One type of iPhone apps that I personally use frequently is the on-device portals. They provide me with all sorts of latest news, downloaded periodically, which are ready for me to read whenever I have the time to do so. Going forward, we should expect various innovations around on-device portals. iTunes is one of the most successful digital content delivery platform in the world. It has been reported that to date, more than 6 billion songs have been sold through iTunes. Apple’s recent announcement that iTunes content becomes DRM-free, with variable pricing, will further help to increase the delivery of digital content, including to those iPhones. Even though, there may be challenges to Apple from some Hollywood studios & record labels, this game-changing initiative may drive the whole multimedia industry toward simpler, more innovative and DRM-free digital content delivery business models. For the mobile industry, 2009 is expected to be the year of applications. It is the applications where the user excitements are at; it is the applications that will justify and drive the deployment of wireless broadband / 4G networks in the future; and it is the applications where ultimately the money is.

That is why, when a new platform is being deployed, such as iPhone last year, or more recently Google’s Android based G1 phone, it is the applications that attract the most attention. It is fair to say that, for G1 to succeed, innovative Android-based applications will be absolutely critical.
The vertical integration of handsets and applications is not limited to Apple. In fact, Nokia with OVI, has been innovating similar apps and content delivery solutions, through mobile operators. Nokia’s Comes with Music, albeit currently limited to a few Nokia devices, offers some revolutionary business models. Nokia is already working on Comes with Video. RIM is reportedly working on launching a similar music store for Blackberry, in the next couple of months. Also, Google is working on Android Market as the app store for the G1 phone.

Finally, even though the world is facing some severe economic difficulties, Apple is in a very healthy position. They have over $25 billion cash reserves, 35% gross margins and thus they have the financial means to maintain leadership in innovation and market deployment of iPhones. Apple has a VC fund that they use to steer innovation and applications. Some analysts are predicting around 77 million iPhones deployed in the next 4 years, and that Apple would grab the smartphone market-share leadership from Nokia, by taking 40% of this prestigious high-margin market. Also, the vertical integration with their iTunes App Store will give Apple a strong standing, and will allow Apple to influence the future direction of the wireless industry as a whole. Whether these predictions are right or wrong, it is fair to expect that Apple, iPhone and iTunes will play a major role in the near future of the wireless industry. Especially Apple’s willingness to adopt disruptive, game-changing technologies and business models, should give everyone in the wireless industry, reason to monitor closely what Apple is doing!

10 imperatives for success – particularly but not exclusively in the digital economy

Rolf Hansen, simyo founder and CEO, started Germany’s first mobile no-frills provider. Based on his experience he formulated ten rules that are constitutional for success, particularly but not exclusively in the digital economy.

“The first and most important imperative for any executive in the business world is to be prepared the “dgital revolution “. This means to be informed about all developments in your particular business and in the broader business segment and to be ready for major, sometimes disruptive, changes.

Just as important is the second rule: engage with your customers. They can become everything from sales force to evangelists, but you have to be gentle to them and understand and serve their desires and needs. Always!

No matter how successful you are: avoid hybris. This is rule number three. You should never overestimate your own capabilities and search to cover all parts of the value chain – focus on your core competences and partner with the best.

The fourth rule to accept the marketing paradigm shift, instead of ignoring it. Executives should consider new media and new formats and use the power of (online) co-operation with other companies instead of prevailing in the old world of classic media mixes.

Rule number five: technology at any costs – do not take that bait! Solutions and user interface are king. If the product is complex and there is no joy of use – forget about it, as the customers will not approve it either.

Traditional advertising is no longer the best choice. Managers should be aware that customers are equal to them in terms of access to information and that they want to be treated accordingly. It´s the age of the adolescent customer – and the ultimate end of bullshitting in advertising. So rule number six is: quit traditional advertising now!

The seventh rule is to think “no frills”, to concentrate on real value at reasonable prices and to focus on serving the basic customer desires.

That leads to rule number eight: do not overstretch the internet-expectations as needs and desires will not be changed by technology. Consumers still want to consume – and they expect easy and fun solutions.

Rule number nine: trust is mission critical. It is hard (yet so easy) to build trust – but it is essential, as the age of the internet does not forget a single lie.

The last rule is to always act “human centric” not technocratic. One of the most important understandings for digital businesses is that human impetus and desires remain unchanged, and that the “analogue” aspects of human life will never disappear, no matter how much we love digital.”

What do you think about those imperatives, do you approve? What are your suggestions for companies in the digital economy? What is the key to success in your opinion – today and in the future? I am looking forward to your comments.