The original Kindle: A flawed consumer device, saved by ubiquitous connectivity

The blogosphere today is abuzz about the New York Times article claiming that New big-screen eBook readers may help save the newspaper business. Techcrunch claims it is a hopeless search for a non-existent lifeline for the news, not the paper business. ZDNet claims that it really is a Trojan Horse to tackle the margin-rich textbook business. Wow, I had no idea. Next time you see a college textbook mogul let me know.

I own an original Kindle. Its ergonomic flaws have been documented by many, including the too-large next and previous page buttons, the lack of a place to hold the device, and the poor fit and finish of the device itself. Compared with its main competitor, the Sony Reader Digital Book, the original Kindle feels cheap and poorly designed.

But regardless of its drawbacks, I use my Kindle quite a bit and promote it as a worthwhile consumer device in my Anywhere presentations. Why? Because connectivity is its killer app. I typically describe as “a flawed consumer device saved by ubiquitous connectivity.”

Let me explain.

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I found myself stuck in one of the all-too-common, huge traffic snarls on my way for a client meeting in Mumbai, India and wondered if professionals in that city and in India, overall, could telecommute and do their bit to prevent traffic congestion and make a dent in the air pollution. In conversations with friends and colleagues I was surprised to learn that telecommuting was not practical in Mumbai and Bangalore, one reason being that reliable high speed broadband connections are still  not available at a reasonable price. As someone explained to me, the practical definition of broadband in major cities in India today is a “sometimes on” connection with speeds ranging from 64-256 Kbps. Though national policies have been defined to provide for an ”always-on” connection with minimum speed of 256 Kbps, adherence to that policy is a different, seemingly unrelated issue.

It is evident that consumers would tolerate any speed when given a choice between no broadband and some broadband! Broadband adoption stands in contrast to the huge strides made in introducing mobile phones to a large middle class population. Setting aside the fact that broadband penetration as of June 2008 had only reached 4.38 million subscriptions (less than 1 percent of the population) according to the Telecommunications Regulatory Authority of India (TRAI), I wanted to highlight the challenges faced by this small percentage of the population that has broadband:

·     Frequent Downtimes: Most ISPs have higher downtimes compared to mature economies, which occur due to a variety of reasons such as power outages, cable faults etc. The downtimes vary from a few hours to a couple of days in a month.

·     Cap on usage: This is almost an unwritten rule followed by Indian ISPs where heavy users are capped either by data limits (as low as 400 MB to 1-2GB per month). Traffic-shaping is applied to links experiencing congestion during high-usage times of day. when a certain limit is crossed. Some ISPs like BSNL and Bharti offer unlimited downloads for an extra fee and have also introduced high speed BB packages.

Sadly, in India broadband adoption has not lived up to the promise from a few years ago. The absence of a wider base of users and the lack of active promotion of content creation in areas such as education, agriculture, health care, and e- governance in regional languages make it all the more difficult for benefits of connectivity to be shared amongst everyone. It is unlikely this situation will change dramatically if the “rationing” mindset that limits data downloads is not replaced by a more progressive outlook that can take advantage of a middle class willing to pay for reliable high speed broadband access. Yankee Group believes that while the widespread adoption of broadband is critical in supporting social and economic prosperity in India, it is also as important to deliver high speed broadband reliably to customers that have it today.

On Friday last week I was invited to a preview of Orange’s Spring/Summer 2009 Collection. As I’ve mentioned in the past, Orange structures its product innovation work in bi-annual runs it calls La Collection, just like fashion collections. in the course of a short hour, I and a number of internal and external people were rushed through all the latest and greatest to come out of Orange’s labs. Here’s a quick run-down of what I saw and what struck me:

• 24/24 Actu: the first service that I saw was probably the one I found the most interesting, although that might be because it’s personally of interest to me. 24/24 Actu is a web portal that aggregates national news from various sources, both print, audio and video. It breaks it down in themed and searchable chunks. Essentially, the user types in a topic in the search bar and gets all articles, radio snippets and video clips related to said topic. The service is functional and a user pilot is to begin soon. The only snag: the business model is “currently unknown”.

• New Livebox: After 5 years, Orange’s lifebox gets a facelift, both external and internal. On the looks side, I’m not all that impressed. It’s still big and has a less sexy design in my opinion. Not that I care much though, to be fair. More interesting to me is the ergonomy redesign. The menus and navigation finally look like something, and though we’re not at Fios Media Guide levels yet, we’re getting there. Widgets are promised, both from Orange and third-parties.

• Hi-Fi Adapter: This is a device that you plug on your (traditional) stereo and allows you to stream all the music content on your PC (or from Orange’s LiveRadio service) on your stereo. Gimmicky, but nice.

• Tabbee: A concept I’m really struggling with. Tabbee is a 299 EUR touch screen device that allows you to access internet through the home wi-fi. I have a lot of trouble thinking anyone would dish out that much money for a device that sits at home and allows you to do the same thing as you PC, only on a smaller screen. If I want to check out my email without walking to my PC, I use my iPhone…

• Media Remote Control: the idea of the media remote control is that your smartphone works as a universal remote control to select content on your PC or other available devices and stream it to any other connected devices. I thought the technology was sleek, but I don’t really think this is hugely likely to catch up.

• Medical office: this is a service dedicated to doctors. It allows for automatic backup and encryption of any files and correspondance on patients. It’s certainly user friendly; beyond that, not being a doctor myself I have no idea how attractive it may be to one.

• Telepresence: you don’t present telepresence anymore, but since Orange is embracing Cisco on this line of products, they do. Sleek as ever, and Orange, unsurprisingly, offers a fully managed service on top of reselling the equipment and selling the connectivity.

• Visual Voicemail: taking a leaf from the iPhone book, Orange launches VVM for all mobiles.

• IM for emerging countries: this service is effectively an SMS-based IM mobile client which can interoperate with existing IM clients. The idea is to have a non-IP based service that doesn’t rely on a mobile data network. The pricing will be key, of course, and it sounds like it will be pay as you go, which I think is an issue…

• Application Shop: Again, inspired by the success of the iPhone app store, Orange intends to launch a device agnostic app store. The store will install each app as rendered specifically for the customer’s mobile. This competes or completes Orange’s existing app delivery channels (own web portal and Gallery) depending on your point of view.

• Orange TV Player on iPhone: this is an iPhone app that allows you to stream and view Orange distributed TV channels on your iPhone. Looks sleek and makes good use of iPhone ergonomy and capabilities. It’s a paying service (of course) and must squeeze the juice our of your battery like all hell, but it’s sexy.

Overall an interesting collection. I kept thinking throughout that none of this was really very innovative. The communication spin was that simplicity was also innovation and while you might agree with that, I felt that none of what I saw was exactly conceptually new or unexpected coming from a telco such as Orange.

That’s not to say that the services presented are uninteresting or without potential (though I would argue that some in there are unlikely to experience more than confidential distribution), but I think it’s a misnomer to call what was shown there “innovation”. Coming at a time where the French press questions Orange’s capacity to innovate, I’m not sure that, sleek as some of these services were, the Spring Summer 09 collection will have convinced them otherwise…

If you need visuals to form an opinion, Telecom TV has covered the event:

Remember that scene in the The Graduate, where the older guy whispers in Dustin Hoffman’s ear? He’s revealing where future riches lie. What he says is: “Plastics.” Not a bad steer in 1967.

Today, the word in your ear is - wait for it - interconnect. Wikipedia claims that interconnect is the “physical linking of a carrier’s network with equipment or facilities not belonging to that network.” Oh yawn, right?

In fact - as a raft of CTIA Wireless and VoiceCon-linked announcements from Cisco, GSMA, Telcordia and others underscore - our industry’s current and future revenues critically depend on supply-side ‘interconnect’ mechanisms that go far beyond physical network infrastructure.

Although superficially fragmented, the crowded landscape below needs to merge fast to monetize the much-touted benefits of hyper-connectivity.

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In a recent Yankee Group report on Nokia’s Service Strategy, I mentioned said that some handset manufacturers could pursue a similar strategy and some could not. I said Research In Motion (RIM) aka Blackberry was one of those who could be selling applications but wasn’t doing so extensively. Last week the analyst community was given a chance to peak under the hood of RIM’s applications strategy, and the hot topic was the announcement of Blackberry App World.

Whereas I could only find just under 90 applications for sale on the RIM / Blackberry website, the company says there are “thousands” available through third-party developers and the new App World is designed to facilitate their distribution and sale. The revenue split with developers is very attractive but the company will not discuss — for obvious reasons — the splits they are negotiating with operators. Giving about 10 points more than usual to developers, RIM says they are not trying to make a huge profit on the site but rather to encourage applications and the relevance of the Blackberry to end users.

In the logic of my recent paper, RIM is subsidizing the developer side of the two-sided Blackberry application market to encourage the supply of applications and by so doing, encourage the development of the Blackberry operating system itself.

The launch will come “soon” but for now only in the US, UK and RIM’s home market of Canada. Asia Pacific is the next priority (no date yet) and other regions will follow.

Certification of applications will have two steps: certification of the developer and certification of the particular application. RIM says this should take less than 10 days but this still means a careful certification process and so not a rapid buildup of titles. But given Blackberry’s core franchise of users perhaps an Apple App Store kind of title list is unnecessary.

The company expects most applications to be enterprise oriented but App World will be designed for individual purchases not for CIO’s licensing their entire Blackberry base. This reflects the trend we at Yankee Group call the “Consumerization of the Enterprise”. Enterprise-oriented smartphones like the Blackberry have to serve two masters: the CIO AND the individual user.

See Josh Martin’s blog posting for the big picture of today’s Apple announcement. Note to everyone who always complains Apple is so secretive: Yes, Apple was talking about features in a product that isn’t out yet. Hell has truly frozen over, just in time for spring.

But hidden in the presentation of peer-to-peer networking, direct iPhone control of glucose measuring peripherals (really!), and cut-and-paste capabilities that you shake to undo was a feature that should have caught nearly every developer’s attention:

In-application purchasing.

Why is this such a big deal? Because in-application purchasing:

• Gives developers more ways to make money. Incremental purchasing takes the sticker-shock out of amortizing development costs. Not making much money on your $0.99 ebook-reader application? Charge another $0.99 to download another book to the same reader. Writing the next great global flight simulator? Now the flight-sim developer doesn’t have to charge $29.99 to amortize the cost of all that global scenery; he or she can charge $9.99 for the initial application and charge the user another $4.99 for each new country of scenery.
• Eliminates the need for developers to process payments. In the old days of software development, developers had to expend time and effort finding ways to get paid for application add-ons, either through credit card processing, Paypal, or, horror of horrors, cashing checks. No more: in-application purchasing goes through Apple’s iTunes payment processing system and ends up in the developer’s bank account once Apple has taken its 30% cut.
• Adds oil to the gears of mobile commerce. Google has shown that if you process billions of little payment transactions, pretty soon you are making real money that’s hard for other people to replicate. Apple has already parlayed $0.99 songs into a multi-billion dollar a year cash cow with iTunes; in-application payments will likely turn iPhone applications into the same type of blockbuster business. By removing much of the friction of buying and paying for mobile software, Apple will turn iPhone customers into some of the biggest consumers of paid software on the planet.

I said last summer in How Developers Should Choose Between iPhones and Androids that developers should choose Apple’s iPhone as their platform if they wanted to make money fast. Today’s announcement just reinforced that view. Competing handset makers may scoff at the iPhone glitz and relatively small market share, but fortunately iPhone developers won’t mind. They’ll be laughing all the way to the bank.

Reproduction of Henry David Thoreau and his cabin on Walden Pond in Concord, MA

The past month or so, I’ve have been hearing a curious groundswell of an idea: that our Anywhere vision of ubiquitous connectivity is a bad idea and harmful to our society. The chorus started in an article by William Deresiewicz in the Chronicle of Higher Education as noted at Nicholas Carr’s Rough Type blog:

If six hours of television a day creates the aptitude for boredom, the inability to sit still, a hundred text messages a day creates the aptitude for loneliness, the inability to be by yourself. Some degree of boredom and loneliness is to be expected, especially among young people, given the way our human environment has been attenuated. But technology amplifies those tendencies. You could call your schoolmates when I was a teenager, but you couldn’t call them 100 times a day. You could get together with your friends when I was in college, but you couldn’t always get together with them when you wanted to, for the simple reason that you couldn’t always find them. If boredom is the great emotion of the TV generation, loneliness is the great emotion of the Web generation. We lost the ability to be still, our capacity for idleness. They have lost the ability to be alone, their capacity for solitude.

Hmmm. The old days were better because we couldn’t find people and had to sit by ourselves? That argument seems like a stretch.

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There was a wolfish grin on the man’s face, and I swear he licked his chops.  “Oh yes, there’s going be a lot of money, really quite a lot, in presence brokering,” he said.

It was a conversation that I had at Mobile World Congress in Barcelona. I’ve been mulling it over ever since.

If you’re a fan of Charles Dickens, you’ll remember Mr Micawber, a character from David Copperfield. Despite a spell in debtor’s prison, Mr Micawber remained the eternal optimist. His catchphrase: “Something will turn up.”

Presence brokering is another manifestation of a global pursuit for monetizable assets. Telecom operators are rummaging through their asset base to see how the pieces might fit. Put together a subscriber database, geo-location information and some comms applications and hey presto!

The thinking goes that quite a lot of network horsepower will be needed to figure out where a subscriber - let’s call her Miss Jones - is at a given time, how and when to reach her (maybe with a targeted ad), and how to share her personal information with various contacts. Because Miss Jones might want to discuss her bra size with her friends, but not with her clients. Or is it the other way around?

Irrespective, exchanging rich presence information across global networks requires technical brilliance. But who will collect the value in such transactions? And as the telcos seek new client types, what’s the likely backlash from Facebook’s recent actions: A blanket attempt to assert ownership and distribution rights on any content and personal info you have uploaded - whether or not you are still a Facebook member?

If you’ve worked in aerospace, you’ll have heard of TCAS, the Traffic Alert and Collision Avoidance System. It’s what planes use not to crash into each other. Let’s make a bet that instead of presence brokering, the real killer app - for us privacy-loving citizens at least - will be presence avoidance brokering.  Caveat emptor.

I didn’t expect to come out laughing. It also probably wasn’t quite what the presenters intended. But here on day 2 of the Mobile World Congress, the CEOs of some of the biggest companies in the world had us in stitches as we emerged blinking into the mid-morning Barcelona sunlight.

Cesar Alierta got it going. Telefonica’s Executive Chairman was discussing the benefits of nurturing entrepreneurial spirit and risk-taking mentalities as we struggle to cope with the recession. He instantly made us all feel a whole lot better by explaining that we only need to succeed 65% of the time. This is what he tells his lucky managers at Telefonica. Even with a 35% failure rate they’re on track for success. I’ll be calling my boss later this evening to pass on this pearl of wisdom. Too bad he completed my performance review last week.

Steve Ballmer also cheered us up. We were grateful to hear the Microsoft CEO explain that all this recession and depression stuff is really just an “economic reset”. That’s right - an economic reset. I guess a quick CTRL-ALT-DELETE and RESTART should sort out the credit crunch then. I knew computers were pretty powerful these days, but I had no idea they could do this. Thanks Steve.

Vittorio Colao Chief Executive of Vodafone didn’t let the side down either. “Please don’t call me a carrier” he pleaded. Perhaps I was the only one laughing at that line - I thought it was a joke. There was a serious point in there somewhere. Something about operators operate so they should be called operators, not carriers (confused?). I guess when you make CEO at a company as large as Vodafone, you can ask to be called whatever you want - and get it. It reminds me of the old joke about what do you call a gorilla with a machine gun? - Sir. (Well it was funny when I was 12).

There was also something quite humorous (though again without much intent) in the CEOs tripping over each other to be the first to achieve the utopian state of openness. It went something like this:

“We’re more open than you”. “No we’re more open than you”. “I have an idea - let’s all be open together and then we won’t have to fight about who is truly the most open of us all”.

Olli-Pekka Kallasvuo, President & CEO of Nokia was at it. So was Mr Ballmer but he did frequently  -and refreshingly - slip back into “we’re going to kick your ass” mode.

The trouble is (this is the serious bit) they’ll never get this mobile services thing fully open because they’re pushing at the door from both sides. The carriers (sorry, operators) want less OS fragmentation because it’s all getting a touch too confusing for their customers. But almost in the same breath as they make this request they extol the virtues of the iPhone, which - last time I checked - is available from only one carrier in each market - so hardly open according to any reasonable interpretation of the term. Capitalism may not be flavor of the month right now, but let’s give good old open-market competition a chance to whittle the mobile OS range down to a manageable number before we sacrifice that competition in the name of openness - whatever it means.

But this serious stuff was just a brief interlude before we were chortling again as the CEOs discussed something about smart shops replacing dumb pipes, and  app stores opening up at a pace only matched by the speed at which the recession is closing down physical retail stores. Irony is funny right?

But among the laughter there was also real optimism - lots of it. This whole Smartphone thing is really taking off. Demand for anywhere-anytime connectivity is exploding. Consumers want ubiquitous access, faster throughput, and richer services. This industry is finally starting to deliver on what kids want. It’s no longer designing products based on the tastes and desires of predominantly male, 40-something executives in suits. Mobile access to social networking is a great example. We finally get it. Right after I phone my boss about the performance thing, I’ll be straight onto SpaceBook and MyFace to see who’s been poking me. We get it alright.

Following my reports on mobile Web sites — Building the Anywhere Web and The Best of the Anywhere Web — I’ve gotten questions from readers about how the mobile Web is changing with the advent of new networks, new phones, and new markup strategies. It turns out Smashing magazine has put together a nice compendium of just such trends for 2009, helpfully titled, Mobile Web Design Trends For 2009 . Companies that want a quick rundown of current mobile Web best practices should give it a read.

For those companies that want more than a quick rundown of how they can improve their existing site, Yankee Group objectively assesses mobile Web sites using our Mobile Web Scorecard as part of our consulting relationships. Businesses that wish to receive more information on how they can improve their mobile Web experiences using this objective methodology should contact their Yankee Group salesperson or send us an email.