Vodafone Germany envious of T-Mobile's iPhone deal?

German news reports say that Vodafone Germany has sued T-Mobile over its exclusive iPhone arrangement with Apple. Vodafone challenges the "combo" of iPhone and a 2-year-contract and asserts that this might be contrary to fair competition laws. Vodafone Germany's chief describes the iPhone as the "fall of man", which is pretty funny, come to think of it. The manager says they would fear that the likes of Nokia and Motorola would follow the example and do the same, which would heavily distort the market. Hmm. Who had this thing with its logos on handsets again? Who was the only carrier distributing Sharp handsets? Ah... Given Vodafone's approach with the rather successful Sharp GX series, which was exclusively (sic!) available to, yes, Vodafone customers, the suit does not feel entirely sincere. One might plead that Vodafone fails on the "clean-hands" doctrine (which, alas, is unknown to German law).

This is of course also noteworthy as Vodafone Global CEO Arun Sarin went on record saying that the iPhone makes for a "pretty poor experience" (unless you are in a WiFi area) and all.

Why then do they insist this is such a bad thing? Do we take it as a sign that the lost iPhone deal might after all have a certain sting to the mighty carrier? This is in spite of it still possibly proving to have been the right decision, with Apple's share in user fees and all. It may well all come down to branding: Vodafone is thought to have spent hundreds of millions on trying to build its Vodafone Live! brand, which it all but abandoned recently. It was the first big carrier to partner with Nokia on the latter's Ovi initiative (see here), which in itself may be seen as an admission of failure of its own service.

Whilst I understand Vodafone's move from the view of the German lawyer I (also) am, the overall approach has something of a child envious of another one's toy.

UPDATE: Further reports shed more light onto this. T-Mobile may be forced to sell unlocked phones and also give up the 2-year tie-in, i.e. offer consumers to buy the iPhone without a contract. This would be a major blow to the Apple business model and one that might force others to open up, too: MoCoNews reports that French laws have similar provisions.

Most importantly perhaps, European laws on the freedom of goods and services would prevent anyone stopping grey imports into other EU member states where Apple struck other exclusivity deals (e.g. with O2 in the UK), which might become a real threat to Apple's business model altogether.

Microsoft buys Musiwave

It did not take too long to bring down the value of mobile music spearheads Musiwave from $130m to $50m. The former was the price Openwave paid for the French company in 2005, the latter is what Microsoft now splashed out to buy it from Openwave ($46m in cash and $4m in assumption of debt). And at this price, it looks like a rather good buy for the world's largest software maker.

Microsoft has acquired what was an early leader in mobile music. Musiwave is a giant in mobile distribution of music content - everything from ringtones, ringbacks and full-track downloads to music recognition, etc. Whilst Microsoft will have seized access to a trusted carrier-grade database and provisioning environment as well as Musiwave's extensive relationships with all players on the mobile music circuit - labels, carriers and device manufacturers. Now it will have to show that it can marry it to its own music-centered services, in particular around its Zunes device and service.

All in all, Microsoft seems to be a much more natural home to Musiwave than Openwave would seem to have been. Good luck to the tall guys in Musiwave!

Vodafone walks through the Ovi with Nokia

Following their relatively recent announcement of a multimedia initiative, Nokia reports a big win with Vodafone having agreed to carry their Ovi platform on Nokia devices that are distributed through the operator. Ovi, which is Finnish for door, was to be Nokia's next big push towards becoming a multimedia company. One of its flagships under that umbrella, the Nokia Music Store, will now run alongside Vodafone's own music service.

Nokia's risk with the introduction of Ovi was that operators would reject having the Ovi links on the phones that they were distributing (not uncommon for them to do), so to have the "world's largest operator by revenue" amongst their ranks is no small feat. Otherwise, Nokia would have seen limited distribution in markets where handset prices are subsidised by carriers, which is true in most!

With Nokia having bolstered its portfolio of offerings in recent months even more (the acquisition of Navteq being the biggest one), this opens the pipeline to a much richer content experience, and this is what might have pursuaded the good folks at Vodafone: with carriers struggling to come to terms on the "right" treatment of content to maximise sales and user experience, a door to a fully-packed store of content and applications must sound tempting.

It might actually mark a turn in the market: could it become the handset manufacturers who will take the lead in the content space and become the funnel through which content providers feed their wares to the consumer? It would make sense in that it is arguably easier for an OEM to ensure that there is optimal performance for a product on a device (after all, they manufacture the device). Such a model would bring relief to the operators who would continue to control the billing relationship with the consumer and hence alleviate fears of removing that bond but they would be a big step closer to becoming the dreaded bit pipe as had happened to ISP on the Internet. I have argued before that this process would - in any event - take longer, so that might alleviate fears.

It is breaking into the control-driven model of operators, and that is a significant development in itself. Nothing will of course change for the content providers, at least not in the short term: it is just that they need to ring a different doorbell now (or rather an additional one...).

The G-System: Google's mobile OS aka Android arrives

So, no GPhone -- yet. Google, with quite a number of partners, today announced the already much-rumoured "Open Handset Alliance" under which a Linux-based OS, nicknamed Android has been launched (the SDK will allegedly be available in a week's time). Here's a video explaining the deep thoughts of the creators (be quick: YouTube has removed it already...).

The whole industry had been waiting for this, and Google seems to have come up with a black-white thing: it goes back to its roots in open source but overlays it with Java, which has caused the content community a lot of headaches (every mobile phone translates it slightly differently, so one needs a gazillion ports). However, Google has teamed up with no less than 34 partners for the launch alone, including such giants as China Mobile, KDDI, Sprint Nextel, TIM, T-Mobile, Motorola (who seem to be dancing on a lot of weddings recently: UIQ and Linux Mobile are also on their plates), Samsung, HTC, Intel and eBay.

So what does it all mean? According to the members of the alliance, it will be better, bigger, faster for everyone: open source means more applications, less bugs and less cost. According to Google CEO Eric Schmidt, it is "a fresh approach to fostering innovation in the mobile industry will help shape a new computing environment that will change the way people access and share information in the future." Commentators note that there is apparently one caveat: you’ll have to use Google for navigation. Now: does that bother anyone? Give me Internet on my phone on broadband speed and I happily surf with whoever gives it to me, I'd say. To enact a platform, supported by a lot of sector muscle, that makes the developers' life easier should be good for everyone indeed as it will undoubtedly bring more usage. Traditionally, carriers feared for the consistency of the user experience. Apparently, Verizon and AT&T have already voiced such concerns also here although the explanation sounds defensive at best: they fear too much advertising. Would it be safe to say they rather fear loss of control?

Quite a few companies have tried to take on mobile as the next frontier and quite a few fared rather miserably on the complexities of the environment presented by the sector (Disney's MVNO attempts, Infospace and a few others spring to mind). With Google's might this might be about to change though. A fresh breeze and a unified development platform would, in any event, be a good thing.

Interesting though that, as in recent releases on OS-driven initiatives, Nokia is again absent. This is not promising any good in terms of unifying the landscape, it seems. However, both Linux Mobile (on which Android is apparently based) and Symbian (in which Nokia holds a huge stake and which it intends to make its platform of choice) are C++-based. And that would be easing development pains after all: much easier to deal with than the Java layers, which until now were statutory but might only be optional going forth.

UPDATE 7 Nov 2007: Nokia has said its participation in Android is "not ruled out at all". It would work with it if it would see sense. Now, a convincing statement sounds differently but it IS noteworthy that the Finnish giant felt the need to comment on it so quickly.

3 with dedicated Skypephone

Hutchison's 3 has had a Skype service under its X-Series for a while now but they have now announced the launch of a dedicated Skypephone, which they developed jointly with Qualcomm (to make use of some specific CDMA features) and Skype and which has dedicated Skype buttons. It is said to being produced by Chinese manufacturer Amoi. The service rolls out in the UK and Ireland from this week and will move to 3's other territories (Austria, Australia, Denmark, Hong Kong, Italy and Switzerland) thereafter.

The move manifests where 3 sees the future value, and it is not in being paid by minute of voice used. The value clearly lies in mobile data. Now, granted, this is easier for 3 to achieve than for many other operators: 3 started as a 3G operators straight away. Their entire network is high-speed, they don't have any old black-and-white devices hanging around anywhere, etc, etc. However, what it does show is a gutsy approach to break with tradition amongst network operators.

Can the situation be compared with the change from dial-up, pay-per-minute Internet to unlimited broadband? It probably can to an extent. What was the result of that? The change of a commodity-driven business model (bandwidth) to a service and product-driven one (e-commerce, advertising, etc) with the subsequent reduction of previously mighty ISP to mere bit pipes that delivered the data but were otherwise largely interchangeable. This is also the sore spot for network providers because they fear that this will happen to them, too. According to reports, a Skype spokesman reported that Skype was usually told to "go away" by operators, noting "obvious tension".

I would submit though that there is actually less to fear for network operators than there was for the traditional Internet ISP because the billing relationship is - as yet - harder to replace for mobile customers than it was for the Internet customer. I believe this to being the case because of two reasons, namely a) the perceived security (perceived because it does not necessarily reflect reality), and b) the limited input mechanisms of mobile devices (punching in credit card details via your mobile's number pad is a proper pain in the neck and nothing consumers will like to do). Due to restrictions of the screen and device size, this remains the case even if one uses smartphones with a Qwerty keyboard or touch-screen devices.

The above will not guarantee the operators' spot forever but it will certainly make life easier for another couple of years. But then? Well, you better be well-positioned for when the inevitable happens: with most operators already starting to open data services, it can surely only be a question of time until a more liberal approach to what their customers are and are not allowed to use will appear; consumers may well ask what added value an operator had to offer.

3 UK CEO, Kevin Russell, does then expect initial "detractions" from its revenue but hopes to make up for it by adding incremental customers, not only through new additions but also reduction of churn and increased loyalty.

3 does what it has shown to be good at, namely leading change from the front: it has shown that it can sell more content than competitors with many times its market share, and whilst it might all be born frmo sheer necessity (where else would 3 turn to survice), it is good of them to again putting pressure onto the others.

Focus on Nokia

This is less of a commentary of the way you would normally find here but more a reference to a rather good Forbes article on Nokia. It is a glowing review for one but it also recapitulates Nokia's changing fortunes in particular in two areas, namely its various attempts to converting itself into a media company (or a hardware company with a powerful media side to it) and its dealings in the US market (where Nokia has fallen to an astonishingly low market share of only 10% by failing to realise that US Americans love clamshells; its global market share is 39.2%).

On the media front, Nokia has been rather busy recently, both on the buy side (Enpocket, Navteq) as well as with another internally conceived programme (Ovi) and some new investments through the fresh Nokia Growth Partners fund, such as Vollee (streaming rich PC games to mobile phones) and Kyte (in short a multi-platform YouTube). And, as Forbes reports, it now also seems to make strides in the US market: it has entered a deal to supply phones to AT&T (starting with the 6555 tailormade for the US market), and also seems to work with Verizon on improving its footprint there.

Nokia will apparently ship 430m units this year alone. In doing so it grabs 80% of the industry's profits on 39.2% of the market share. Going from strength to strength, it seems.

End2End buys Terraplay

Not too much is being divulged about the latest deal in the consolidation of the mobile sector other than that it happened: The Danish mobile platform company End2End has acquired the Swedish multi-player enabler Terraplay. If well-managed, this could be a smart move: End2End has shown some strength recently in managing the mobile content platforms for a couple of operators whilst Terraplay had quite a few wins in the early land-grab to becoming the operators' partner for the facilitation of multi-player gaming. Combining the two propositions is an imminent win: the true value of mobile games (beside killing time) is its always-on, anytime, anywhere nature. A mobile phone is a communication device, and connected gaming makes use of just that - communication.

Given that most operators/carriers seem to choose an outsourced solution (presumably because they have no internal bandwidth for this - relatively speaking - niche opportunity), the combination of a platform provider with a connected applications enabler is a great move. End2End had a need to ramp up their footprint to avoid becoming a little shadow player in the big land-grab. They have just added this little extra now!

Facebook for Blackberry

At CTIA, Facebook, the new $15bn company, and Blackberry maker RIM presented a downloadable application that powers Facebook on Blackberry devices. This is noteworthy for two reasons:

1. It shows the significance Facebook as gained in older age segments. Facebook is recording incredibly high numbers of new users from "older" segments, and these coincide nicely with Blackberry users who traditionally tend to come from the group of "mobile professionals". At the same time, RIM will certainly try to add to its cool factor for non-business use, and what better thing to waste your data allowance than Facebook?

2. The really noteworthy thing however is that the Facebook app for Blackberry shows how connected mobile applications should work: it is slick, quick, with good UI and works. This should be a wake-up call to OS providers, OEM and carriers alike: the Blackberry has a very close environment, and it controls much of the in and out. It is therefore comparatively easy to build an application that actually does what it says on the tin. This however is not god-given. With a unification of the crucial APIs on the carrier side and the platforms on the OS and OEM sides, it should be possible to create a basis for this to happen with all sorts of applications. I am very keen to see the first usage data for this app, and I really hope that FB and RIM will divulge this. They could do the whole industry not only the "next frontier in social networks" (Facebook's Moskovitz) a huge favour!

GSM Association is on the Money; with Western Union

A lot has been said and heard about the role of mobile telephony to boost the economies of developing and emerging countries, and the same is true for micro-finance, so perhaps this should not come as a surprise: the GSM Association, an umbrella association for 700 GSM operators, has announced a project with Western Union, the money-transfer specialists, under which they will roll out a P2P (peer-to-peer) framework that mobile operators can use to deploy services that enable consumers to send and receive low-denomination, high-frequency money transfers using their mobile phones. The first commercial services that make use of the framework are anticipated to be rolled out beginning in the second quarter of 2008.

Similar services have also been developed by private sector start-ups, such as P2P Cash. However, the combination of a giant like Western Union with more than 300,000 "cash points" around the globe and the dominant trade association of operators shifts the focus, in particular as the project is driven by a host of operator groups with interests in countries that will be on the forefront for such projects. They include Bharti (India), MTN (Africa and Middle-East), Orange (Europe, Caribbean, Africa), Orascom (Africa and Middle-East), Smart (Philippines), Telenor (Norway with interests in Europe and Asia, including a majority stake in Grameenphone in Bangladesh, more of which below) and VimpelCom Apparently, already 35 operators with a reach of more than 800 m customers in more than 100 countries have confirmed their participation in the programme.

The significance of small amounts of money for the development of poorer nations has last but not least been highlighted with the award of the Nobel peace price 2006 to Muhammad Yunus and his Grameen Bank from Bangladesh: it was awarded for "their efforts to create economic and social development from below". One of Mr Yunus'/the Grameen Foundation's projects was the so-called "Village Phone". A sister company of the bank holds a 38% stake in Bangladeshi mobile provider Grameenphone. And thus the circle closes...

The idea is simple: combine the two major development drivers, namely communication and money transfers and you're on to a potentially very powerful lever for economic growth. Great effort!

Motorola loves UIQ

US handset maker Motorola acquired half the shares in UIQ, the smartphone software unit, from Sony Ericsson. Sony Ericsson had bought UIQ from handset OS maker Symbian last year. UIQ is essentially a graphic interface adding components to the Symbian OS. Symbian in turn is 47.9% owned by Nokia. Under UIQ, native programming can be made in C++ although the software does support the - in the mobile games space - ubiquitous J2ME standard. Motorola's new flagship Z8 (nicknamed "MotoRzr" as in "riser") is running on it already. The battle of the OS giants begins...

It is an interesting move since Moto has been the most active OEM for the use of Linux Mobile: it has released a whole range of phones for the open source OS featuring the penguin. It is also one of the founding fathers of the LiMo Foundation, an initiative it embarked on together with industry heavyweights NTT DoCoMo, Vodafone, Samsung, NEC and Panasonic (and which was recently joined by LG, McAfee, Broadcom, Ericsson and others). Now, I understand that Linux and C++ work together but must admit that my knowledge is more than limited here. It is in any event noteworthy that Motorola goes with a UI based on Symbian rather than straight-forward Linux. Motorola was quick to state that UIQ would only be "one of the actions to support [a] strategy" adding more investment in multimedia product segments.

With hundreds of millions in development cost at stake, it is probably too early to tell but it certainly is a new twist in the quest to uproot Nokia's top position with the Symbian s60 platform. So, what's next?

Oasys out of Chapter 11

Oh, the bliss of creditor protection... US mobile publisher Oasys emerged from Chapter 11 after defaulting on a rather sizable $8m debt earlier this year. They had $2m in assets versus $11.8m in debt. Not good. Now they apparently managed to persuade investors to convert debt into equity and off they go again. It was all - more or less - pre-arranged: their investors Associated Partners and Rock Hill Partners had apparently agreed to swap debt for equity, and agreed some interim funding, which apparently allowed them to continue product development. Sitting tight in the interim, they now managed indeed what they had told, namely to emerge as the Phoenix from the flames. For how long? Heaven knows. They have announced a couple of titles but will find arguably not find it easy to compete against the ever tightening battlefield that is mobile game publishing. They had been quick to assure that they would continue "business as usual" and - in particular - would pay licensors pre- and post-restructuring, which will be crucial if they want to see the light of day.

UNO and Phil Hellmuth poker are good titles. Will they be enough though? Their investors seem to think so: the restructuring plan, which the investors apparently supported, foresaw to turn away from their attempts in the D2C market and want to run as a "normal" ASP and publisher. If they can win the carrier decks, this might just work. However, in the poker category, my dear employer's WPT Texas Hold'Em and Glu's World Series of Poker titles go strong, and Oasys will face an uphill struggle with their title. UNO could be cool though it won't be a home run either. Nonetheless: competition is good though! Go on, guys!

Motricity acquires Infospace mobile assets

Now, this is a big deal: Motricity puts $135m in cash onto the table of the under-pressure Infospace people to acquire the remains of the Infospace mobile business, including search, storefronts, portals and messaging. The deal was financed by existing investors Carl Icahn and VC Advanced Equities (see reporting from MoCoNews here and here).

The acquisition marks the end of an odyssey into mobile by Inforspace, in which it first acquired and then effectively destroyed some of the brightest stars on the mobile content sky, including game developers Atlas (bought for $6m, sold for $1.5m), Elkware (bought for some $26m and then closed) and IOMO (bought for $15m, then closed in August 2007) as well as ringtone giants Moviso. They lost people, money and ultimately the businesses (e.g. IOMO's founders have recently opened their new shop, Finblade). What a battlefield...

Motricity's, so far predominantly a platform and storefront provider, entrant into the increasingly competitive content publishing space comes at a time where more and more players try to extend their reach on the value chain: one sees platform providers expanding into master content provider relationships, one sees publishers (e.g. Player X) seizing the same position, and all are in a quest to concentrate enough revenue and margin in order to be able to run a profitable business in an environment where still the majority of players are losing money.

The challenge for Motricity will be to grow its business outside the US, and this is arguably where the risks are hiddedn. In the US, the company claims to have now grown their distribution footprint to 11 of "top 13" North American carriers (which leave another 10 that are apparently not top), which however seems OK since they add two of the biggies which they couldn't reach before, namely mighty Verizon and AT&T (I still prefer the name Cingular!). The gamble is arguably being mitigated by the presumed synergies through the search, portal and messaging business, and this is where I suspect the balance of risk lies in respect of the financial considerations: because it harnesses Motricity's existing business, the venture into the publishing side of things appears somewhat less risky. All in all, a deal that might just make sense; if the money is adequate? Who could say? What proportion of growth will come through which part of the business? Hmmm. There have been deals that, on the face of it, looked more reckless in the past (remember the seemingly atrocious $145m Jamdat paid for Blue Lava [incl. $8m non-breakup fee to Tetris, LLC])? It paid off for them as then EA bought them for a rather sweet $680m. I would not suggest that the same will happen to Motricity although, looking at the monies invested into them to date, it will just about have to be the exit its investors are looking to.

Fishlabs nets fresh catch

The wonderful people from Fishlabs from the beautiful city of Hamburg announced the close of their first round of funding by VC Neuhaus Partners. Fishlabs, who are specializing in high-end 3D mobile games want to use it to add connectivity to their games. Wonderful coincidence then that "best friends" Exit Games are also an investee of Neuhaus.

Whilst I am not sure if the words of the Neuhaus Partners Managing Partner according to which 3D games are about to become mass-market are true just yet, the addition of connectivity to the beautiful titles of the Fishlabs guys will make for a very powerful proposition. And it might not matter when the mass market sets in because the niche for these high-end gems might just about become large enough for a gifted development house. The perceived value of such games will be higher and, with Exit Games' connectivity suite, this value can be extended even further.

This seems to be confirmed by a couple of deals they have done in the past months where they extended distribution to highly evolved regions like Korea as well as with some tier-2 publishers like Player X, which has a larger reach than Fishlabs could have mustered themselves.

In any event, I wish them a good catch!

Disclaimer: yes, I have lived in Hamburg and love the city. Yes, I know the guys from Fishlabs and Exit Games and really like them. No, I do not benefit in any way.

SendMe off portal: adding buzz (or rather mbuzzy)

The fine folks from SF-based SendMe Mobile have acquired mbuzzy, the latter allegedly being the "first US off-portal community" (it always is in the definition of the terms, I guess). Whatever the marketing spin might be, it is impressive how the small start-up seems to assert itself into the US mobile content market. They had recently announced a deal to distribute Glu Mobile's games and have also closed deals with Sony Pictures and UK game aggregator Telcogames.

mbuzzy has more than half a million mobile users who have downloaded over 15 million pieces of videos, wallpapers and ringtones (they don't call it personalization, which would be uncool as others stop that offering altogether but social media instead) to their mobile phones. It allows sharing of content and consumption both on your mobile and the PC. Pretty much up to scratch then. They will add the viral element to SendMe's content offering, which is effectively a mix of generally available hit games, imagery and music and simple text-based trivia games. They also run SoLow.com, a reverse auction site.

It is good to see that there does seem to be a market outside the carrier decks in the US after all. After the recent announcements (here and here) from Jamba/Jamster and Zingy/Vindigo, one could have started to doubt: Jamba is rumoured to re-focus on Europe (perhaps surprising after their Simpsons coup) whilst Zingy announced a name change and the closing of its personalization business. However, it seems to be the content mix that makes it. If the viral mbuzzy guys leverage that further, even better. Rock on, SendMe!

Zed's community is precious!

Zed announced that it "will unveil a bunch of hugely ambitious community services at CTIA". The new stuff was apparently previewed at a closed press briefing in Madrid today, to which, alas, I was not privy... Test services will apparently go live in two weeks’ time during CTIA.

Zed had announced it had invested a whopping EUR50 million in a web 2.0/mobile 2.0 strategy to drive subscriptions around community services "such as multiplayer gaming, IM, blogging and so on".

After former owner Sonera had sunk legendary fortunes into developing Zed into some monster brand, most people thought it was more or less doomed. When Spanish group LaNetro took them over though, it re-positioned itself and, with 85% in-house produced own content (no royalties) and sometimes contested subscription bodels grew revenues to a rather impressive $320m in 2006.

Now, in the community area, Zed is said to contribute some of the cash it invested into statiOn, an application for PC and mobile that consolidates all these services in one place for Zed subscribers. Version 2 (what a fitting version number for a web 2.0 app) will apparently be launched at CTIA.

Whilst I believe it is entirely on the money to predict that "the mobile market will go the same way as the wired internet in the direction of community services", I am not sure if a - arguably complex-ish - PC-mobile application is the way out; this does not give anyone anything new. In fact, a lot of social networks and communities already today seamlessly evolve into platform-agnostic things: Jaiku uses mobile as a major part, Facebook Mobile sees more users, MySpace and, again, Facebook have announced recent deals in the mobile space, Yospace (acquired by Emap; see also here) is serving 3 and O2 UK, my fine employer Hands-On Mobile has launched Yatta-Video on SFR and soon on other carriers, and everyone else has a "social network" or "community" suite on offer. So will we really need a specific application (downloadable?) that will help connect the two media? Isn't it much rather about seamless -- dare I say it? -- convergence WITHOUT the need for additional (complex) application layers? Isn't this one of the public secrets of web 2.0, its incredible ease of use?

Zed concludes its analysis that "the future is certainly not in solo personalisation products". Well, yes, that might be true but is it really well enough positioned to capture users on their quest into the social networks, too, in particular in the light of the above? I will never ever discount Zed again, so I am truly intrigued by what they will announce and I really hope it is something exciting and innovative. Go on!