T-Mobile, Nokia & Skype

Nokia's deal with Skype did not go down too favourably with German carriers T-Mobile and Vodafone, and there had been threats that they would drop the respective Nokia devices (including the long-awaited hero handset N97) from their device roadmaps. Today, T-Mobile provided some "clarification" on the issue: according to a spokesperson, T-Mobile apparently wants to ship the N97 but not with the Skype VoIP client installed ("it is up to us to decide what is on the device").

It was also said that the carrier was looking into options on how to deal with VoIP but that it was still early days. However, T-Mobile does apparently not block VoIP clients, neither Skype nor others... Hm, this does not sound like a convincing policy to me...

To Skype or not to Skype: Nokia vs Carriers

The most excellent German blog Mobile Zeitgeist alerted me (in German) to a little battle that illustrates the pitfalls of creating the seamless user experience: Nokia appears to being in a tussle with (at least) the German arms of Vodafone and T-Mobile over the pre-installation of Skype clients on some of its forthcoming handset models (including the long-awaited iPhone competitor, N97).

Vodafone and T-Mobile Germany (who have a combined subscriber base of close to 80m) have now publicly stated that they will not include any Nokia models into their catalogues, which will have Skype installed. Now, there's a market gone dead then... For other models, look to 3 in the UK (and my post on the Skypephone there...).

T-Mobile said that they "would not let their business be destroyed" by this. Their terms and conditions prohibited VoIP clients already but the carriers did anecdotally turn a blind eye towards this in the past. Nokia's push however now is apparently too much for the carriers who fear network issues. Interestingly, this surfaces on the same day where, in anther part of the world, some queried the sustainability of free data plans for the iPhone (namely the Wall Street Journal on AT&T's policies in respect of the iPhone). Predictably, Skype lambasted the move as "unfair practice".

The name of the game is - of course - the pipe (not new: see e.g. here and here): the WSJ quotes from an Alcatel-Lucent analysis of North American networks during the midday hour of one day, which apparently shows that web browsing consumed 32% of data-related airtime but 69% of bandwidth whereas e-mail used 30% of data airtime but only 4% of bandwidth. The reasoning goes that increased data traffic impacts the networks' capex whilst remaining - at best - ARPU-neutral (AT&T ponders to drop its data plan for the iPhone by $10), cutting down margins and hurting the carrier more than is healthy. Voice and SMS services are - on a bit for bit basis - very, very profitable as they use very little bandwidth.

To conclude though - as the WSJ does - that unlimited data plans should be abandoned "in the short term", pours the baby out with the bathwater: smartphones are paving the way into the wireless future (20% of US households are completely wirefree already!) and it is a space where the carriers have great gains to make; maybe not on the sumptuous margins they were used to but healthy and viable nonetheless. To do as the WSJ asks would be as if one would have asked ISPs to please stop flat-rate plans for Internet access; and look what has become of the Internet!

Accordingly, other voices argue that a) slowing voice ARPU is at least being part set-off by increasing data ARPU (which grew a healthy 32% year-on-year in Q1 and saw more than $10bn in wireless data plans being sold in the US for the first time), and b) that the carriers actually know this for a while now and, accordingly, upgrade their networks to better cope with higher bandwidth demands in order to make the move to data pipes; the fight is arguably now "only" about whether these would be dumb or smart: with app stores, VAS and business-to-business (and machine-to-machine) solutions opening up vast new segments that have been completely unexploited to date, one should think that there is room for the smart pipe operator. So fear not!

Top 5 US Smartphones in Q1 2009

After all the talk (and more talk) about Apple's iPhone, a new report provides some new numbers reminding everyone that there are more phones on this earth than the sleek one from Cupertino. It is not about the iPhone (or not only) but about Blackberry, the iPhone, Blackberry and Blackberry. Yes, this is the first four places in the top-selling smartphones in the US in Q1/2009 according to market research specialists NPD Group (it is only the press release, so pretty lean on information).

Also: completing the top 5 is a phone with an open-source OS, namely the T-Mobile G1 (the first Android handset). I will be interesting to see if there is more to come from this last group (see my post on the state of play of open-source operating systems here).

So the top 5 are:

1. RIM BlackBerry Curve (all 83XX models)
2. Apple iPhone 3G (all models)
3. RIM BlackBerry Storm
4. RIM BlackBerry Pearl (all models, except flip)
5. T-Mobile G1

So: even though they counted all of the 3G iPhones in, they still could not beat the Blackberry Curve. Well done, RIM!

22/23 April: European Media Conference, Prague

I have mentioned this earlier: Next week, I will be headed to beautiful Prague in order to attend and contribute to the European Mobile Media Conference. If you can, make sure to head over (there is even some last-minute discount).

I will be speaking about the phenomenon that is "social games" (are there really that many non-social games?) and I am fairly excited to be able to meet and learn from a couple of rather remarkable people that promise to bring fresh views to the mobile entertainment table. Speakers include carriers (Telefonica/O2, Vodafone, T-Mobile will all be there) and distributors (the CEO of Aspiro, Gunnar Selleg, will be amongst the speakers), OEM and technology platform providers (Nokia, Nokia-Siemens, Ericsson) but also - and maybe most remarkably - a few luminaries from the classic agency world, namely Mark C Linder (WPP) and Jonathan MacDonald (Ogilvy) whose views will surely be tested by the godfather of mobile advertising, Russell Buckley.

Have a look at the full programme and ping me if you are coming!

Smartphone Market Shares & Growth

World market leader Nokia had a bruising 2008, at least in the smartphone field. According to a study, the Finns' market share in this segment dropped by 10% to a - well - still fairly respectable 40.8% in Q4/2008 (as compared to 50.9% a for the quarter in the previous year). Painful!

The big winners were RIM (growth of 84.9% year-on-year), Apple (111.6%) and Samsung (138%) although the latter grew from a fairly low share (1.8%). HTC was up 20% but its carrier-branded handsets (T-Mobile G1, etc) were not listed under its own tab but under "others", so there might actually have been more (probable when considering that the company's profits rose sharply in Q4/2008 on G1 sales).

Apple, interestingly, is said to have suffered a fall of sales during Q4/2008 with growth in that quarter driven by the Blackberry Storm, T-Mobile G1 and strong Samsung sales. On the OS side, Windows Mobile made headway, mainly via the successful HTC Touch line and the Samsung Omnia.

Overall smartphone sales in Q4/2008 were 38m and 140m for the whole year. This seems to tie in roughly with the numbers I discussed earlier this month.

The changes are of interest to the content industry, too. Smartphones make for a disproportionate amount of content consumption, and smartphones also lead the way for the new app stores that are breaking through everywhere after Apple showed its competitors just how much consumers are craving content. RIM is out of the blocks, as is Android. Nokia announced its Ovi Store and runs similar programmes with N-Gage, NCD and Comes with Music already and Windows Mobile has just announced the shop it will launch itself. Remains to be seen where Palm will go with its Pre and WebOS: it only had 0.9% of the market (some faithful Treo users!) and hence lots of catching up to do. And what about the newly coined JavaFX?

Here are the charts (courtesy of Gartner via Cellular News) for 1) Q4 2008 by vendor, 2) all of 2008 by vendor, 3) Q4/2008: by operating system and 4) all of 2008 by OS:

Worldwide: Smartphone Sales to End Users by Vendor

(Thousands of Units)

Company	4Q08 Sales	Market Share4Q08 (%)	4Q07 Sales	Market Share4Q07 (%)	4Q07-4Q08 Growth (%)
Nokia	15,561.7	40.8%	18,703.3	50.9%	-16.8%
RIM	7,442.6	19.5%	4,024.7	10.9%	84.9%
Apple	4,079.4	10.7%	1,928.3	5.2%	111.6%
HTC	1,631.7	4.3%	1,361.1	3.7%	19.9%
Samsung	1,598.2	4.2%	671.5	1.8%	138.0%
Others	7,829.7	20.5%	10,077.3	27.4%	-22.3%
Total	38,143.3	100%	36,766.1	100%	3.7%

Worldwide: Smartphone Sales to End Users by Vendor, 2008

Company	2008 Sales	Market Share 2008	2007 Sales	Market Share 2007	Growth 2007-2008
Nokia	60,920.5	43.7%	60,465.0	49.4%	0.8%
RIM	23,149.0	16.6%	11,767.7	9.6%	96.7%
Apple	11,417.5	8.2%	3,302.6	2.7%	245.7%
HTC	5,895.4	4.2%	3,718.5	3.0%	58.5%
Sharp	5,234.2	3.8%	6,885.3	5.6%	-24.0%
Others	32,671.4	23.5%	36,176.6	29.6%	-9.7%
Total	139,287.9	100%	122,315.6	100%	13.9%

Worldwide: Smartphone Sales to End Users by Operating System, 4Q08

Company	4Q08 Sales	Market Share 4Q08	4Q07 Sales	Market Share 4Q07	Growth 4Q07-4Q08
Symbian	17,949.1	47.1%	22,902.5	62.3%	-21.6%
RIM	7,442.6	19.5%	4,024.7	10.9%	84.9%
Windows Mobile	4,713.9	12.4%	4,374.4	11.9%	7.8%
Mac OS X	4,079.4	10.7%	1,928.3	5.2%	111.6%
Linux	3,194.9	8.4%	2,675.9	7.3%	19.4%
Palm OS	326.5	0.9%	449.1	1.2%	-27.3%
Other OSs	436.9	1.1%	411.3	1.1%	6.2%
Total	38,143.3	100%	36,766.1	100%	3.7%

Note: The "Other OSs" category includes sales of Sharp Sidekick devices based on the Danger platform.

Worldwide: Smartphone Sales to End Users by Operating System, 2008

Company	2008 Sales	Market Share 2008	2007 Sales	Market Share 2007	Growth 2007-2008
Symbian	72,933.5	52.4%	77,684.0	63.5%	-6.1%
RIM	23,149.0	16.6%	11,767.7	9.6%	96.7%
Windows Mobile	16,498.1	11.8%	14,698.0	12.0%	12.2%
Mac OS X	11,417.5	8.2%	3,302.6	2.7%	245.7%
Linux	11,262.9	8.1%	11,756.7	9.6%	-4.2%
Palm OS	2,507.2	1.8%	1,762.7	1.4%	42.2%
Other OSs	1,519.7	1.1%	1,344.0	1.1%	13.1%
Total	139,287.9	100%	122,315.6	100%	13.9%

Note: The "Other OSs" category includes sales of Sharp Sidekick devices based on the Danger platform.

"Recession? Where?" Asks the Smartphone...

I previously looked at recession-busting sectors and products, and here's more proof that not all is bad: two reports point out that smartphones continue to outperform the market rather significantly, recording growth figures of 25.9% year-on-year in Europe; the growth for all of 2007 vs 2008 was even more impressive: they grew by 36.1%. In the US, smartphones increased their share of the overall mobile phone market from 12% in Q4/2007 to 25% a year later. Good numbers!

Half of the (US) smartphones now come with touchscreens, with 70% "instead" (?) having a QWERTY keyboard (my best guess is that this includes phones with a slide-out keyboard, such as the T-Mobile G1 or the Sony Ericsson Xperia).

So how come? The iPhone but also other devices like Blackberries, Nokia's higher-end phones (e.g. the N95) have powerfully demonstrated that the use of a mobile for things other than using voice and SMS (and take the occasional snap with a so-so camera) is not the end of all things. The overall feature sets of smartphones but - possibly more importantly still - the overall user experience is generally significantly better on a fairly comprehensive scale, and this - in particular in times of recession - would suggest a much higher value for money ("if I pay £50, then I get 4x in value of what I would otherwise have."): they now all contain decent cameras, enough storage to work as a decent MP3 player (or in Apple's case even as an iPod...), they do e-mail, connect more effortlessly to the Internet, play more fulfilling games and generally provide a much richer content experience (did I just hear "widgets"?).

For the content industry, this is good news: more powerful devices are generally easier to address and provide a better route to transport brands and production values across to the small screen. The iPhone has shown (see e.g. here and here) that users DO use their phones for all sorts of things if one makes it easy for them. Therefore, the smarter the phone, the higher the consumption. Good, good!

Top 10 Phones in the US, December 2008: the Ascent of the Smartphone

There's new data out on the bestselling handsets, and this time it is not being derived from accessory sales (which may have its flaws as I pointed out here) but from a survey amongst service reps and store managers across the 4 big US mobile networks (Verizon Wireless, AT&T, Sprint Nextel and T-Mobile; these comprise 85% of the total subscriber base). Now, this would arguably reduce the recorded sales for the iPhone since this is also being sold via Apple's own retail stores as well as Walmart, Best Buy, etc. So again not an entirely accurate yardstick, huh?

It is noteworthy that only one handset is available on more than one carrier (and, yes, it ranks prominently amongst the top 1) and that Nokia, despite all waiting, has still not managed to break the top 10.

It is also noteworthy that most of the handsets would certainly be classified at smartphones (the Samsung Rant might be the exception). And this is certainly good news. The T-610 and RAZR may finally have left the building...

So here we go (number in brackets is the previous month's rank):

1. (1) Blackberry Curve

2. (2) iPhone

3. (3) Blackberry Storm

4. (6) LG Voyager

5. (4) LG Dare

6. (5) Blackberry Bold

7. (-) Samsung Rant

8. (9) Samsung Behold

9. (10) Samsung Instinct

10. (8) LG Env2

Source: Rankings are by Avian Research LL.C. (via the above link)

T-Mobile shuts the door on Nokia's Ovi... Or did it?

Funny little press reports today tell us that T-Mobile "ditched" Nokia handsets that are capable of supporting the Finnish giant's Ovi (Finnish for door) multimedia portal. The German originator of these news is slightly more cautious: they also report that T-Mobile denied this and merely point out that T-Mobile has less Nokia phones on offer than a week ago and has - quite noteworthy indeed - removed all those that were "Ovi-enabled".

The background is of course Nokia's move into the multimedia service area (on which I first wrote about here). Nokia scored some early successes, namely with Telefonica (see here) and Vodafone (see here) but the threat to operator-driven content offerings was clear from the start. Whilst Telefonica and Vodafone were quite content on having the Ovi portal to music, video and games offered from Nokia's platform, on their desktop alongside their own offering, T-Mobile allegedly sees this as a threat to its own plans. It is, hence, yet another iteration of the fight of carriers for their ground in the media sector.

T-Mobile might feel strong in the media space due to its iPhone monopoly in Germany but even if (and I suspect that that is not the case), it would be a somewhat desperate attempt: if such drastic moves as locking out the market leader's handsets are required to keep customers on its own content offerings, is it then not a clear sign that such offerings might not actually be cutting it? In particular when the competitor is an OEM that in itself does not really enjoy a particular flair of creativity and buoyancy in media terms...

I would suggest that Nokia is (only?) a noteworthy competitor because of its market share in the OEM market, and not because it is such a good media company. Constraints with a view to placement on the phone's "desktop" as well as walled gardens and consumer fear for super-high data charges (see an absurd example here) drive people to what is there, not what is best. This is not even disrespectful to the fine folks at Nokia; it merely is to demonstrate that a lot of players are not even there yet, so that it is too early to say who is best. The desperate moves of the carriers as well as historical performance on the content side suggests, however, that carriers may not be the best suited ones. Given that content is only a fraction of their data revenues, this may not actually be a bad thing: could it not be pointing them to do what they're really good at, i.e. operating a network. If you want to call it a pipe, fine, but just make it a very, very smart pipe, and everyone (most importantly your customers) will love you!

But waiter, please, I did not order this (SMS)...

Now, this has been puzzling me for years: the US carrier policy (I am not sure how many still do it) of charging the recipient of a text message for that message. How odd is that? You sit in a restaurant, the waiter brings you a bottle of wine that you did not order. You do not drink the wine (because you did not order it and you do not like wine) but you are being charged nonetheless. There is even a bolder version of this: the same waiter works for a winery, and they send you that bottle as a marketing trick, say to lure you into booking travel to the Loire wine region. Yet again: you did not order it, you did not drink it, they charge you. No, you say, this is surely not possible. And I agree.

However, the US arm of T-Mobile (and I am sure others before them) is doing just that: if users that do not hold a special data plan (something like a don't-pay-for-wine-you-did-not-order-plan) are being charged for every SMS they receive, be it your teenage son telling you that he didn't make it [home/to school/to your appointment 3 hours ago], be it your partner announcing that he/she is on the tube and will be home in 10 minutes or be it the tourism authority of the Loire region working hard on improving travel to their area - you pay.

This now seems to backfire as there has been a class action filed against T-Mobile US seeking redress for exactly that. According to the report about it, "the plaintiffs allege T-Mobile USA’s texting policy violates federal telecom law and Washington state’s consumer protection-unfair business practices act" but, quite frankly, I would have thought it would also violate a string of other, more mundane laws about contracts and invalidity of coercive business practices, etc. Unfortunately for all of us who like to drool over those incredible sums in US law suits, "the suit did not contain a dollar figure for alleged damages."

It is about time that this stops: it estranges your customers, it provides for horrendous customer experience, and, really they shouldn't say they didn't see it coming...

German iPhone exclusive again...

German carrier T-Mobile today scored a victory against competitor Vodafone: the court declared that the exclusive deal the carrier struck with Apple over the distribution of the iPhone, the coveted darling of mobile fashionistas, in Germany.

The court ruled that it could not find a violation of German competition or anti-trust laws. Vodafone had invoked an injunction forcing the sale of unlocked devices, following which T-Mobile offered the unlocked device without a contract for a whopping EUR 999. This let a competitor, Debitel, into offering a cheaper contract to owners of such unlocked iPhones under the terms of which they would also get EUR 600 back (the difference between the T-Mobile price for locked and unlocked models).

The decision is not final; Vodafone has the right to appeal. Also, the judgment does not do away with the fact that French law prevents the closed business model favoured by Apple where it is also on offer unlocked. Under European law, unlocked French iPhones can be re-sold in every EU country once deployed in the marketplace.

The biggest impact of this of course is that it effectively puts Apple's approach to force operators to pay it cut of the usage revenues under threat. This might now be averted as cross-border trade will likely remain marginal compared to overall sales.

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.