Yankee Group, as per usual, had a large contingent of executives, analysts, and support personnel attend Mobile World Congress in Barcelona last week.  Over a delightful tapas meal, a group of us decided that it might be fun and useful to share our thoughts on the best and worst practices we observed from exhibitors at the show and consolidate them into a short list.  I volunteered to consolidate the sagest advice from the greater YG team. 

Below is a simple list of recommendations based on the best (and worst) practices we observed. 

Read the rest of this entry »

Carl Howe beat me to the punch on Microsoft’s Windows Phone 7 announcement, but having just played with a Phone 7 demo device and being briefed by Microsoft on the new OS, let me expand on three of Carl’s original comments:

- WP7S is focused on the consumer. Absolutely. In the words of Michael Chang, Senior Product Manager, “Microsoft in the past built for OEM’s – with this product, Microsoft built for consumers.” Consumers here means actual people, too, not office drones who need only productivity applications. Critics will highlight that WP7S doesn’t offer the most cutting-edge features, but Chang says this misses the point: “We don’t want to build a phone that does everything, but we do want to build phones that help you live.”

- WP7S is differentiated in its offering. Yes, but moreso through its integration with other Microsoft properties than in any unique aspects of the UI or consumer experience. For example, the way WP7S integrates social media is slick, but no more so than what Motorola offers through its MotoBlur streams. But the deep integration with Zune (for music content) and X-Box Live (for gaming) demonstrate how the scope of Microsoft’s businesses can be an a tremendous asset in mobility.

- Microsoft gave up on legacy code that was holding it back. Yes – and this is perhaps the most significant aspect of the 7 Series annoucement. Chang talked about how Microsoft, after some serious soul searching, recognized the need to make “fundamental changes” in mobile, and chose to “blow up” the engineering team and start from scratch. (Chang even used the word “humility” to describe Microsoft’s approach to new product development.) This was no doubt a painful and – considering how fast the industry is moving, and how quickly Apple and Google/Android are gaining device market and mindshare – costly decision, but ultimately should prove to be exactly the right course of action.

Since we’re still months away from seeing an real WP7S device, it’s probably not worth making too much of Microsoft’s new OS. (After all, Samsung also recently announced a new OS – Bada – and they’ve been showing off an actual phone at Mobile World Congress to demonstrate its capabilities.) But in an era of non-stop Google vs Apple media coverage, WP7S is a good reminder that there are more than two horses in the race for the future of mobile computing.

I’ve always been one of those who stated that Google had no interest in being an infrastructure player. I guess I was wrong and this is proof once again that disruptive thinking is hard to anticipate (I guess it’s the whole point…)

Google has just announced a few hours ago that they were deploying a 1Gb/s FTTH “experimental” network in the US that would reach 50.000 to 500.000 homes. The announcement is light on details, like for example a timeframe, but reading between the lines there’s a few things that can be derived from it:

• Google doesn’t expect anything significantly disruptive to emerge from the National Broadband Plan (see the end of the first paragraph)

• Google intends to work with municipalities, which suggests PPP type approaches. This is smart and potentially fast.

• Google intends to prove by example the validity of an open access model. Google’s brand would likely solve the issue of existing open access networks struggling to attract customers because micro-ISP brands are not trusted.

• The real questionmark is “how much is this an experiment”. I have no doubt that Google wants to try and spur service innovation onwards and demonstrate best practices in deployment and open access. But do they want to become a wide-scale infrastructure provider is the real question behind the announcement…

One thing’s for sure, this is a big kick in the anthill. I will no doubt be writing a full report on this this month exploring the implications in more depth, so stay tuned!

(Cross-Posted to www.yankeegroup.com)

Now that CES is a week behind us and I’ve had some time to put my thoughts together and recover from the dreaded CES flu, I’ll be writing a few blog posts on three big CE products/trends that garnered considerable attention during the show:

1. Connected Cars
2. eReaders
3. 3D-TVs

 I’ll start with a short post on connected cars, as this is really the first year where they received standout coverage: Over 380 in-vehicle technology exhibitors graced CES’ floors this year, Ford CEO Alan Mulally delivered a keynote, and a CEA press release issued before the show claimed that sales of in-vehicle technology topped $9.3 billion in 2009. Yes, you heard correctly, $9.3 billion.

A number of players will profit when more technology finds its way into our cars. Some statistics presented during the show highlight just how much network operators, automotive companies and legislators stand to win. Take a look:

• Network Operators: Demand for voice and data carriage in connected cars will open up a new market for network operators. On average, over 26 million hands-free calling minutes are purchased each month by OnStar subscribers. Alcatel-Lucent’s ngConnect Program prototype also demonstrated what LTE data plans will do for in-car streaming media.
• Automotive Companies: In-vehicle technologies are driving automobile purchases more than many analysts had anticipated. 32% of Ford buyers indicated that Sync was critical or important in their purchase decision when buying a car. What’s more, 70% of customers who participated in Sync demos across the country indicated that they are more likely to buy a Ford vehicle.
• Legislators: Legislators concerned with driver safety will be pleased with some statistics from Nuance, a speech recognition solution provider. Analysis of driver eye movements shows us that drivers keep their eyes on the road 200 to 300 percent more when using speech rather than manual input for tasks like music selection.

Given the diverse set of players in this emerging market, Yankee Group is including a number of questions on connected cars in its updated Consumer Survey. As data begins to come in, expect to see a publication on the subject in the near future.

Possibly the best proof of the value of expanding connectivity is the role it plays in providing healthcare in emerging markets. As I mentioned in today’s webinar, during the research for our book I spoke with Dr. Hamish Fraser, director of telemedicine for Partners in Health, asking him about the importance of network access in how care-givers connect with patients.

“Where we work, connectivity saves lives,” he said very simply. “The network lets us find patients, alert them to the arrival of medications, and monitor their health. When we can do that, people’s life expectancies rise — we’ve proved it. And when their children live longer, the parents invest more in their development.”

Partners in Health has done ground-breaking work in Haiti, training Haitians in community healthcare and creating Haitian-staffed hospitals around the country that have changed, and extended, many lives.

Following the devastating earthquake this week, their hospitals thankfully are still standing. If you’re looking for an organization that is on the ground in Haiti already and can benefit instantly from your support by increasing its supplies of medications, bandages, and more, please consider going to www. pih.org and making a donation on line.

For some context on the challenges of helping Haiti, see Tracy Kidder’s excellent editorial today in the NYT.

Farewell to the Noughties, a decade sandwiched between two crises: The dotcom bust and the current – but sputtering – downturn.  In that time, Europe accomplished much: The Euro was adopted, DSL went mainstream and telcos went NGN.

Not least, consumers woke up to the pleasures of mobile content, although it’s questionable whether MNOs will ever see a fair return for their expensive 3G licenses. Roaming charge crackdowns and market saturation haven’t helped financials either.

Time again to put a nebudchadnezzar on ice? There’s plenty under the tree for 2010:

1. Ethernet will be everywhere. Ethernet is in the LAN, it’s in the WAN, it’s transforming mobile backhaul economics, and it’s converging the datacenter. Fiber remains best, but clever vendors (see Hatteras, Actelis) are delivering copper-bonded Ethernet in the first mile. And new Ethernet exchanges (see CENX and Equinix) aim to speed order to cash with their interconnect services. Want a unifying communications fabric? Well duh!

2. The CDN bubble will burst. Telco CDNs can offer compelling features, but how many service providers can the market sustain, even if video traffic is exploding? Many partnerships are already in place: Tata Communications with BitGravity, Verizon with Velocix, Deutsche Telekom with EdgeCast and Global Crossing with Limelight Networks and EdgeCast. If you’re not in the game now, you’ll need deep pockets to buy in.

3. The cloud’s hot air will expand. Resilient, liquid (and probably Ethernet-based) connectivity is going to save the outage-prone cloud. To invest in cloud services enterprises require robust network as well as applications-specific SLAs, as well as network redundancy, say Yankee Group enterprise surveys. Offering on-demand VPN connectivity to cloud services (on a wholesale or retail basis) could help defuse concerns about their security and resilience.

4. Equipment vendors will want to be your new best friend. The ratio of CAPEX to revenue currently stands at 12.6 percent among European operators, according to Yankee Group analysis. It’s not going to recover much. That’s why European equipment vendors like Alcatel Lucent, Ericsson and Nokia Siemens Networks are on a charm offensive with managed services propositions and aims to transform telco business models. Listen to their pitch. And talk to Huawei:  With a new SDP partner program and growing software division, it’s got more in its arsenal than cheap kit.

5. Smart wholesale will become sexier than dumb wholesale. Get big, get niche or get out. Embrace revenue-sharing models with non-traditional partners. And work mobile angles: International remittances, GRX to IPX interconnect, content transcoding, white-label mobile UC and M2M are among many rich avenues of investigation.

Best wishes for the New Year – and decade – look forward to continuing the conversation!

With the global recession sending not just companies but public-sector budgets into massive decline, lots of pols want to know what to do to help the major growth engines in their regions spin back up.

My home state is no exception; the meltdown in Massachusetts tax revenues caused a gap of at least $600M in the state’s FY2010 budget, putting us in the top 5 in absolute size of gap when we’re 15th in population. A recent gathering of some of the good and the great in the state’s tech sector, attended by our governor, assessed the burgeoning reach of the digital technology sector in the state’s economy and considered prospects for stimulating its growth.

Massachusetts Governor Deval Patrick admiring my moderating? Or my haircut?

The good news: the state’s tech hub has fared better than other sectors, and by many measures — VC investment, attractiveness to entrepreneurs, more — is the second-ranked state in the U.S. (following of course the state with the biggest budget woes by far).

The bad news: the number of things we could consider doing to help is legion. Participants debated changing state laws regarding non-compete agreements (which personally I believe is a red herring, but that’s another post), the role of the academic sector in creating awareness of the local employment opportunities for students after graduation, and more.

I led the Q&A, but the entire time I just wanted to yell out: “Build out the network!” In my opinion, the expansion of a high-capacity, intelligent network infrastructure is the single biggest contributor to economic productivity we have available to us, either at the state level or worldwide, because it:

1. Brings service work to people in remote locations (where factories may have closed or other options are limited)
2. Attracts businesses to the area that depend on network capacity and speed
3. Helps businesses eliminate physical infrastructure expense
4. Recaptures productivity from workers on the move

Happily, the first question the governor was asked touched on the state’s leverage of federal broadband stimulus funds. The Anywhere Network needs to get to the towns of western Massachusetts just as much as it needs to reach India and sub-Saharan Africa.

Dec 7th, Google announced its next step in the journey towards enabling an Anywhere lifestyle for both businesses and consumers. Although trials have occurred over the past year, Google is now launching a national campaign by sending out window decals which contain QR codes to over 100,000 local businesses as part of the Favorite Places program. By scanning these QR codes, consumers will be given detailed directions through Google Maps, read detailed reviews of the merchant and possibly even receive a mobile coupon.

Following upon the recent successes of integrating mobile into the Black Friday shopping experience (see blog post by fellow Yankee Group Analyst Dimitriy Mochanov titled “Retailers Beware! The Mobile Shopper is Here!”), proliferation of smartphones and data packages put these capabilities in the hands of the consumer. With this Google Favorite Places announcement, local merchants do not need to invest in a mobile platform to provide reviews or drive foot traffic into the store. Merchants leverage Google’s investment and do not require infrastructure to drive consumers to their store. However, once merchants offer mobile coupons they will need 2D barcode scanning capabilities at the point of sale (PoS) to redeem the coupon from the handset. Now that we’ve gotten the details out of the way, let’s examine what QR codes may mean for general consumers and merchants.

QR codes can provide value but how much value depends on how merchants use them:
• Directions through Google Maps: In this first iteration, Google is providing a consumer with step by step directions to a store. The problem is that the consumer is scanning this QR code once they are already in front of the store. The value to the consumer here is limited. However by integrating the same QR code within your online advertising? Now Google Maps can provide walking and/or driving directions which becomes a real value add to the consumer.
• Ratings & Reviews: Providing reviews for a restaurant or store is limited when the consumer is right outside. Why not just see if the restaurant is crowded or try to visually see the presentation of the food yourself? However the value here for the QR code is to let the consumer read reviews of the level of service provided and intangibles such as cleanliness that the consumer cannot easily observe from outside the establishment.
• Mobile coupons: A consumer is outside your store and has scanned your QR code, but how do you get them to come inside? You have a captive consumer ready to interact so the mobile coupon is the best option to get them inside. The other options discussed above provide information while mobile coupons provide transactions and revenue. Utilize them.

After scanning QR codes this morning on my 2 year old Blackberry Curve, here are my results (which are unscientific but at least show what an average consumer will be up against):
• Size matters: When scanning the QR codes directly from my computer monitor, the size of the code matters. None of the Google Favorite Places in Boston worked with 3 different app readers on my Blackberry Curve. Once I enlarged the size of the code they worked just fine. It appears that the stickers Google is issuing for merchant windows are large enough where this doesn’t become a problem but is still worrisome for merchants looking to integrate mobile into their offline and online marketing strategy.

• Consumers don’t discriminate, neither should technology: With no common standards utilized throughout the US, app readers work on different types of codes. Consumers don’t discriminate between QR codes, Datamatrix codes, or any other proprietary code but the app readers themselves are not universal for all of the various code types. In the mind of the consumer they think “hey, here’s a funky looking code, I’m sure my app reader will work” and not understand the nuances between the technology. If you don’t believe me, read the reviews in the various application stores. The 3rd party app readers have very poor ratings but it is often not a technology problem reading the codes. Consumers are just trying to read interoperable code types.
• Cameras aren’t a limiting factor: Using a 2 year old Blackberry Curve and an original iPhone (without autofocus) to test out various codes, these older camera’s worked just fine. New phones with high resolution cameras and autofocus should experience even lower failure rates.

A whole host of other issues still combat this industry trying to gain popularity anywhere outside of Japan. For QR codes to become popular inside the US very soon merchants will need to deliver value to consumers, whether that is information based or through cost savings. In the end, the merchants are looking to drive transactions and revenue and the best opportunity to do so is with mobile coupons. These coupons will drive price sensitive consumers to open the door and come inside.

IPTV is a perfectly awful, sophomoric joke inspiring moniker and it needs new name. If that wasn’t already clear from the fact that virtually no operator lets the acronym get within the last 100 meters of it marketing–heck you still can find VoIP as the awe inspiring label among some providers–the fact hit home during this week’s Cable-Tec Expo in Denver. Maybe it was the 16 inches or so of snow that was dumped on the area as the event was getting started, but a surprisingly large portion of this very traditional cable show was dedicated to figuring out how cable operators should migrate their video infrastructure to all-IP. This trend will be the focus of a future (shameless plug alert) Yankee Group report in part because it offers significant opportunity and potential for chaos among both operators and vendors.
But what to do about that name? Several vendors I spoke with at the show were hesitant to even verbalize what cable considers a four letter word. One VP of marketing even flat out said “everybody hates IPTV” while the acronym stood in two foot high letters as a prominent part of his booth. A handful of vendors have started pasting IPTV with somewhat chunkier sobriquets such as “broadband video” and “video over IP.”
A few suggested that the real issue is IPTV’s strong brand identified with telcos. Cable operators would prefer giving away free HBO for life to adopting something that came out of the “evil empire” as one operator called all telcos.
The reality however is that as unappetizing as it may be for vendors and operators alike, the name is likely to stick around for some time. Part of the reason is that there isn’t a significant difference between the gear that brings IPTV to cable and telcos. The path to an all-IP network it turns out leads to multiple networks that look eerily similar.

The wireless market is littered with companies failing to extend their strong brand into the potentially lucrative US smartphone market. Compaq, HP, Motorola and Nokia, to name a few, all tried and failed to become a meaningful player in the US smartphone space. There is recent news about the introduction of a smartphone from Dell’s consumer business unit. Dell introduced a proof of concept device in Beijing back in August, but that for was for its Chinese partner, China Mobile. Questions remained about plans to launch in the US. Last night in Silicon Valley Micheal Dell put all speculation to rest. Dell is launching a smartphone in the US in early 2010.

The looming question is whether Dell can avoid the fate of those who failed before them. One of the keys to success in the smartphone market is a sleek, sexy and contemporary design. Dell is not familiar with those adjectives. Apple vaulted to the top of the market based on those virtues. However, while design is important there are other attributes that contribute to the success of smartphones. RIM, the leader in the US smartphone market, continues to hold its own against the sexier iPhone.

Attributes of smartphone success:

So what attributes are key to smartphone success, besides a cool design? There are 3 other attributes that will position a smartphone for success: street cred with enterprises, integration with other services and a user friendly operating system. The Dell device will likely have all three of these things in spades. It’s these attributes, in conjunction with the design that will result in a resounding success for Dell.

1. Design

Let’s address design first. The fact that the device is emanating from Dell’s consumer business unit demonstrates recognition that all mobile devices must be consumer devices first. Nokia’s n900 and e62 were examples of devices that had enterprise chops but missed the mark on design. They were the smartphone equivalent of orthopedic shoes – functional but not fun. I expect the Dell device to be similar to Blackberry devices in that it will be just cool enough for consumers to adopt. Like Blackberry it will be a well crafted compromise of design and usability.

2. Enterprise credibility

This is not a requirement for smartphones but it’s critical for companies as many don’t aim to please the enterprise at all. However, appealing to the enterprise is one way to gain a foothold in one segment of the market. This was the approach taken by RIM. Dell certainly has an abundance of street cred with enterprises. While they won’t necessarily be selling directly to enterprises it will give comfort to operator sales representatives who, despite having a wide array of devices available, make their own assessment of what will resonate with enterprise buyers. Dell’s enterprise brand is unparalleled and is not a risky alternative for enterprise buyers. This market can be a stronghold for Dell as it musters momentum among consumers.

3. Integration with services

Dell has its own enterprise services with which the device can interoperate. While the remote back-up and recovery services might be interesting to enterprises it’s a snooze-fest for consumers. However, the not so well kept secret is that Dell selected the Android operating system for its device. In doing so it wisely hitched its wagon to a rapidly growing developer community focused on consumer friendly applications. Again, Dell and Android will be a perfect marriage of fun and function.

4. User friendly operating system

The last category that’s critical to mass market success for smartphones is a user friendly operating system. The Motorola Q had a sleek design and an operating system that the average consumer found cumbersome. This explains Motorola’s recent commitment to a bevy of Android devices. Nokia’s recent announcement that its devices will run operating systems other than Symbian is a nod to the fact that the OS matters. Android, the OS of choice for Dell, has momentum and mass market appeal.

Many are quick to dismiss the viability of a Dell smartphone given its reputation for uninspired design, but function matters. Dell brings a dose of pragmatism and Android a dash of fun. Together I expect them to cook something special.