Category: telcos

ABC Nightlife February 2013

For February’s ABC Nightlife segment Tony Delroy and I are looking at software prices, the new breed of smartphones for seniors and the future of the telco industry

Paul Wallbank joins Tony Delroy on ABC Nightife across Australia to discuss how technology affects your business and life. For February 2013 we’ll be looking at the software rip-off, smartphones for seniors and Telstra’s roadmap for the mobile economy.

The show will be available on all ABC Local stations and streamed online through the Nightlife website.

Some of the topics we’ll discuss include the following;

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

2013 – the year of the incumbents

Deloitte consulting’s technology, media and telecommunications predictions for 2013 sees smartphones, tablet computers and televisions causing a data crunch.

Bigger, quicker and more congested are the predictions from consulting firm Deloitte’s 2013 Technology, Media and Telecommunications survey.

In Sydney last Friday, the Australian aspects of the report were discussed by Clare Harding and Stuart Johnston, both partners in Deloitte’s Technology, Media and Telecommunications practice.

Most of the predictions tie into global trends, with the main exception being the National Broadband network which Stuart sees as addressing some of the bandwidth problems that telecommunication companies are going to struggle with in 2013.

Technology predictions

For the technology industry, Deloitte sees 2013 as being a consolidation of existing trends with the trend away from passwords continuing, crowdfunding  growing, conflict over BYOD policies and enterprise social networks finding their niches.

Some technologies are not dead; Deloitte sees the the PC retaining its place in the home and office, with over 80% of internet traffic and 70% of time still being consumed on desktop and laptop computers.

Deloitte also sees gesture based interfaces struggling as users stick with the mouse, keyboard and touchscreen.

Media predictions

Like 3D TV two years ago, the push from vendors is now onto smart TVs and high definition 4K televisions. As with 3DTV, much of the market share of smart and hard definition TVs is going to be because television manufacturers will include these features in base models.

Deloitte’s consultants see 2013 as one where “over the top” services (OTT) like Fetch TV and those provided by incumbents delivered start to get traction on smart TVs with 2% of industry revenues coming from these platforms.

Catch up TV is the main driver of the over the top services with 75% of traffic being around viewers watching previously broadcast content. This will see OTT services firmly become part of the incumbent broadcasters’ suite of services.

The bad news for some incumbents is the increase in ‘cord cutters’ as consumers move from pay-TV services to internet based content.

Smartphone and tablet computer adoption which is expected to treble will be a driver of OTT adoption as viewers move to ‘dual screen’ consumption, the connections required to deliver these services will put further load on already strained telco infrastructure which is going to see prices rise as providers respond to shortages.

Telecommunications predictions

The telecommunications industry is probably seeing the greatest disruption in 2013. With smartphones dominating the market world wide as price points collapse.

One of the big product lines pushed at this year’s CES was the “phablet” – while the Deloitte consultants find it interesting hey don’t seem convinced that the bigger form factors will displace the standard 5″ screen size during 2013.

As a consequence of the smartphone explosion is that apps will become more pervasive and telcos will try and build in their own walled gardens with All You Can App to lock customers onto their services.

With smartphones moving down market, largely because of the cost benefits for manufacturers, Deloitte also predicts many new users won’t access data plans given they’ll use the devices as sophisticated ‘feature phones’.

Data usage will continue to grow, particularly with the adoption of LTE/4G networks, although much of the growth will still be on the older 2 and 3G networks as lower income users choose plans which don’t require high speed data.

The looming data crunch

There is a cost to booming data usage and that’s the looming shortage of bandwidth, Deloitte sees this as getting far worse before it gets better.

With bandwidth becoming crowded, prices are expected to rise. In the United States, the “all you can eat” nature of internet plans is being replaced with “pay as you go” while in Australia data plans are becoming stingier and per unit costs are rising.

The London Olympics were cited as an example of how the shortages are appearing – while the Olympic site itself was fine, outside events like the long distance cycle races strained infrastructure along the route. We can expect this to become common as smartphones push base station capacity.

Where to in 2013

Deloitte’s view of where the telecom, technology and media industries are heading in 2013 is that incumbents will take advantage of their market positions as technology runs ahead of available bandwidth.

In Australia, governments might be disappointed as telcos internationally aren’t interested in bidding huge amounts for bandwidth. As Stuart Johnston says “globally what we’re seeing is that carriers are not as willing to spend. It’s not the cash cow that governments are expecting.”

For government and consumers, we’re going to get squeezed a little bit harder.

While things do look slightly better for telcos, broadcasters and other incumbents there’s always the unexpected which eludes all but the most outrageous pundits, it’s hard to see what the disruptive technologies of 2013 will be but we can be sure they are there.

The main takeaway from the 2013 Deloitte report is that smart TVs, 4K broadcasting, tablet computers and smartphones are going to be the biggest drivers for the technology, media and telecommunications industry for this year. There’s some opportunities for some canny entrepreneurs.

Twenty years of text messages

A BBC interview with the inventor of the SMS service illustrates how fast technology changes.

When the mobile phone arrived we thought that text, particularly those clumsy pagers people used, would be dead.

Little did we know that an overlooked part of the newer digital cellphone technology would see short messaging become a key part of the phone system and a major income generator for telephone companies.

Short Messaging Services – or SMS – was an add on to the digital Global System for Mobile communications (GSM) standard which became the second generation (2G) of mobile phones.

While intended as a control feature on the phone networks, SMS took off as a popular medium in the mid 1990s and soon became a major profit centre for mobile carriers.

The Twentieth anniversary of the first SMS being sent passed last week and the BBC has a great interview, conducted by text message, with Matti Makkonen who came up with idea.

One of the notable things in the interview is Matti’s humility – he doesn’t like being called the inventor or founder of text messaging as he explains,

I did not consider SMS as personal achievement but as result of joint effort to collect ideas and write the specifications of the services based on them.

We can only imagine what would happen if the idea of SMS messaging was invented today, there’d be an unseemly struggle over patents while hot young Silicon Valley entrepreneurs would pitch venture capital firms with plans for niche services that will make a billion dollars when sold to Yahoo! or HP.

As it was, SMS services were insanely profitable for the telcos. In the early days, text messages were being charged at over a dollar each – for a service that cost the carrier almost nothing.

Over time those handsome profits have been eroded as SMS became bundled into all-you-can-eat packages and then the internet introduced new mediums to send short messages.

While SMS isn’t going away while mobile phones are an important part of our business and personal lives; the service isn’t going to be as critical, or as profitable as it was over the last twenty years.

Short Messaging Services are a great example of how individual technologies rise, evolve and fade with time. They are also a good lesson on how quickly a premium, highly profitable service can become commodified.

How do communications networks stand up to real times of disruption?

We often say modern communications are disrupting society – but what happens when they themselves are disrupted?

One of the big problems during and after Hurricane Sandy was how the cell phone network fell over.

As the Wall Street Journal describes, many parts of New York and New Jersey still didn’t have mobile phone services several days after the storm.

Yang Yeng, a shopkeeper selling batteries, candles, and flashlights on the street in front of his still darkened shop in the East Village, said his T-Mobile phone was useless in the area. The situation, he said, reminded him of the occasional cellphone-service outages where he used to live, on the outskirts of a small city in southern China.

What’s often overlooked is that mobile networks are different products from a different era to the traditional landlines most of us grew up with.

The older landline phone systems used their own power and the batteries in most telephone exchanges had enough juice to supply the Plain Old Telephone Service (POTS). So in the event of a blackout most services kept running.

Of course POTS services could still be disrupted – a car could hit a pole on your street, those poles could burn down in a fire, your local exchange could be struck by lighting or a blackout could last longer than the telephone company’s batteries.

Most importantly, in times of major emergencies those exchanges would get overwhelmed by frantic callers trying to contact the authorities or their families.

All of the above would have happened during Hurricane Sandy, so it is somewhat unfair to single out the mobile networks for their ‘unreliability’.

There are some differences though with modern mobile and fibre based networks that shouldn’t be overlooked when understanding the reliability of these systems in times of crisis or disaster.

A hunger for power

Modern communications networks need far more power than the POTS network. Fiber repeaters, cell towers and the handsets themselves can’t be sustained in the way low powered rotary phones and mechanical telephone exchanges were.

The cost of providing and maintaining reliable batteries to these devices is a serious item for telcos and it’s no surprise they lobbied against laws mandating the use of them in cell phone towers.

Even if they were installed, the fibre connections to the towers are also subject to the same problem of needing power to connect them to the rest of the network.

Of course the problem of keeping power to your handset then kicks in. Many smartphones or cordless landline handsets struggle to keep a charge for 24 hours, further reducing their effectiveness during any outage that lasts more than a day.

Bandwidth Blues

Even if your cellphone does keep its charge and the local tower remains running and connected to the backbone, there’s no guarantee you can get a line out.

In this respect, the modern systems suffer the same problem as the old phone networks – there’s a limit to the traffic you can stuff down the pipe.

This isn’t news if you’ve tried to make a call on your mobile at half time at a sporting event or at the end of a big concert. If there’s too much traffic, then the system starts rationing bandwidth; some people get a line out while others don’t.

Prioritising traffic

Another way of managing demand during high traffic times is to ‘prioritize’ what passes over the network – voice comes first, SMS second and data a distant last.

This is why on New Year’s Eve you might be able to call your mum, but you can’t post a Facebook update from your smartphone and all your text messages come through at 5am the following morning.

During emergencies it’s fair to assume that if the mobile network stays up, social networks won’t be the priority of the operators and this is something not understood by those advocating reliance of social networks during disasters.

No best efforts

Probably most important to understand is the difference between the utility culture of the POTS operators and the ‘best effort’ services offered by ISPs and many mobile phone companies.

Under the ‘utility model’, the telco was run the same way as the power company and water board – largely run by Engineers with a focus on ensuring the network stays up for 99.99% of the time.

That four or ‘five nines’ reliability is expensive and the step between each decimal point means an exponential increase in costs and spare capacity.

Over the last three decades the utilities themselves have seen a reduction of reliability as the costs of maintaining a network that has a 24 hour outage once every three years (99.9%)* over three times a year (99%) interfere with a company’s ability to pay management bonuses.

ISPs and most cell phone networks never really had this problem as their services are based upon ‘best effort’. If you read your contract, user agreement or condition of sale you’ll find the provider doesn’t really guarantee anything except to do their best in getting you a service – if they fail, tough luck.

As we become more connected, we have to understand the limitations of our communications networks. The assumptions those systems will be around when we need them could bring us unstuck.

*the definition of uptime and what constitutes an outage varies, the definition I’ve used is a 24 hour blackout or suspension of supply in any given area.

Signing off voicemail

Voicemail’s decline is a symptom of the telecommunication industry’s shrivelling profits.

A survey by US phone company Vonage reports cellphone users are ditching voicemail and moving to alternatives.

Messages left on user accounts in July fell 8% while retrievals fell 14% compared to last year.

While those figures may have something to do with the billing practices of US carriers, it shows a much bigger trend in the telecommunications sector away from products which have been very profitable over the last two decades.

Voicemail, like SMS text messaging, has been a lucrative earner for telcos since the arrival of mobile phones.

Users get billed for calling a number then for leaving a message – often with a few delaying menu items to make sure callers get hit with a couple of billing units. In turn the receiver is charged for being notified they have a message, billed again for retrieving it and then pays a monthly fee for the privilege for all of this.

Five bites of the cherry for one phone call – nice work if you can get it.

This entire revenue stream is now dwindling as customers start using Internet based services to send messages. While the telcos charge extortionate rates for mobile data it is still far cheaper per message than the alternatives.

In many ways the profits from voicemail and SMS were a classic transition effect – a profitable window of opportunity opened for a short period when a new technology was introduced. Now those windows are closing.

For telcos, they have to find some profitable new channels. Even if they achieve their dreams of becoming media distributors or even content creators they’ll find both of those fields are far less lucrative than the mobile phone networks of a decade ago.

While telephone companies aren’t going to grow broke soon, today’s data networks aren’t the golden goose many people expect from telcos.

The smart telcos will adapt and survive, the ones who think the good times of a decade ago are coming back soon are in for a miserable future.

A world of criminal sheep

Are we are all criminally inclined sheep that need to fleeced and controlled?

Notorious unpaid blogger Michael Arrington recently described his battle with a bank over direct debit charges.

To overcome a fraudulent recurring charge on his credit card, Arrington cancelled his account only to find the bank moved the recurring charges to the new card, a ‘service’ designed to avoid fraud and save customers the hassle of re-establishing legitimate direct debits after a new card is issued.

Both of those are noble reasons but the core of this philosophy lies in a contempt for customers which can be summarised in two principles.

A customer is;

  1. A sheep to shorn of any available cash through sneaky fees and shady business practices
  2. A criminal

In the 1980s business school view of the world, customers are criminally inclined sheep who have to be regularly shorn to enhance profits and controlled so they don’t go anywhere else.

Only businesses operating in protected environments can get away with this today and the two obvious sectors are banking and telecommunications.

The telco industry long soiled its nest with consumers with dodgy charges and a contempt for customers which reached a peak (nadir?) with the ring tone scams where kids had their phone credits pillaged by fees they never knew they had signed up for.

While those dodgy charges paid the handsome bonuses of telco executives, it proved to another generation of consumers that these companies see their customers as sheep to fleeced on a regular basis.

Ironically it’s that lack of trust that dooms the telcos in the battle to control the online payment markets – their practices of the 1980s, 90s and early 2000s mean few merchants or consumers will trust them as payment gateways.

One of the strengths banks bring to that market is trust. Like cheques, credit cards succeeded as a payment mechanism because people could trust them.

In screwing customers over direct debit authorisations, the banks are damaging that trust as Arrington says “I really don’t think I’m going to be giving out my credit card so freely in the future.”

That’s a problem for businesses as direct debiting customers have been a good way to ensure cash flow and reduce bad debts but when clients perceive there is a high risk of being ripped off they will stop using them.

Businesses that insist on direct debits will be perceived as potentially dodgy operators who rely on locking customers into unfair contracts rather than providing a decent service for a fair price.

So the banks’ position of legal power works in their short term interest and against them – and the merchants using their services – in the longer term.

While bank and telco executives with safe, government guaranteed market positions will continue to treat customers like criminal sheep it’s something the rest of us can’t get away with.

The winners in the new economy are those who deserve to be trusted by their customers and users, if you’re abusing your market and legal powers then you better hope politicians and judges can protect your management bonuses.

Eating the Old Man’s lunch

Optus’ purchase of Eatability is ironic given Fairfax’s and Telstra’s failure with Citysearch.

Optus today announced the purchase of restaurant review site Eatability for $6 million.

Eatability is one of the services that’s destroyed the business models of both the phone directory business and that of newspapers.

Thirty years ago the Sydney Morning Herald launched its Good Living section and it became the way people went found where the good places were to eat.

Diners wanting to make a reservation at the hip eating places being reviewed in Good Living picked up the phone book.

Now they do neither, they go to web sites like Eatabilty or Yelp where they get reviews, contact details and everything else they need about the venue.

Which killed the advertising revenues that newspapers and phone directories depended upon.

The sad thing is both the newspapers and Yellow Pages could have owned this space. Citysearch was setup by Fairfax to address the online market and it was sold to Telstra when the newspaper chain struggled to make it work.

Citysearch today languishes neglected and nearly forgotten under the Sensis umbrella. Optus now owning Citysearch’s biggest local competitor which must bring a hollow laugh to those involved in the early days of Fairfax’s digital experiment.

Whether Eatability thrives under Optus remains to be seen, but it illustrates just how incumbent strengths like telephone directories are being eroded in the online world.

Old men have to start moving quickly if they don’t want upstarts eating their lunch.

Little disruptions

A hotel’s change to iPhones is symptomatic of a change in technology.

Seasoned travellers learned long ago to treat the phone in their hotel room with caution as massive mark ups on call charges were a nice profit centre for most establishments.

With the arrival of the mobile phone, that revenue stream started to shrink and now one hotel in Vancouver has decided to replace their room phones with iPhones.

The Vancouver Opus hotel already supplies iPads in their rooms and the phones seem a natural extension to that, particularly given the chain has a “virtual concierge” app to guide guests.

Increasingly it’s only the older hotel chains that rely on excessive charges for things like telephone calls and Internet access. Those establishments rely on the more senior business traveller who are locked into a 1970s way of travelling.

When you stay at cheaper accommodation or newer boutique establishments, you find many of the expensive extras in the major chains are available cheaply or free. It’s a quandary of travel that a backpackers’ hostel will offer free Wi-Fi while the Sheraton up the road will charge $60 for an often inferior service.

The opportunity for the Sheratons, or the Hiltons, or the Four Seasons to charge those sort of rates is dying at the same rate their older clientele is retiring. Its a dead model.

Fortunately for those hotel chains, slamming guests with fat phone charges was just icing on a very rich cake, the loss of those revenues over the last two decades has been unfortunate but not fatal.

Other businesses though might not be so lucky – if your business relies on big, unreasonable markups then right now you are in a sector very ripe for disruption.

Can Singapore become a global VC centre?

Singapore’s SingTel has an interesting way of dealing with competitive threats in a new market.

While Silicon Valley grabs most of the headlines about cool new businesses Singapore has been quietly building its own position in the global venture capital industry.

SingTel, the city state’s main telco operator, setup their own venture capital fund in 2010 with Singtel Innovate investing between S$100,000 and thirty million in various ventures.

The strategy from SingTel, which is closely aligned with Singapore’s government, is a very canny one – it allows the telco to move beyond being a “dumb pipe” just providing the phone network and fits into the nation state’s aim to be one of the centres in an increasingly Asian centred global finance system.

Yesterday SingTel launched a new Australian startup venture, the Optus Innov8 Seed fund which offers investments of up to A$250,000 in new start up businesses in return for equity or other stakes.

To identify the right investments SingTel are partnering with various start up groups and incubators in Sydney and Melbourne which is an interesting way to filter out unsuitable businesses.

Being funded by a telco, the Optus Innov8 program is naturally focused on the technologies that are going to help their business in an evolving market, the areas they are currently looking at are mobility solutions and digital convergence.

For Singtel and Optus this is a long term investment as equity stakes in new technologies will position the business well as their industry evolves and margins come under pressure in their core telco market.

To businesses looking for investments, the Innov8 program is a welcome addition to the funding landscape but Singtel also offer access to Asian markets with operations in India, Indonesia, the Philippines, Thailand, Pakistan and Bangladesh.

Edgar Hardless, the CEO of SingTel Innov8 says “if you’re looking at going into the Indian market, we can help with introductions. Same with any of our other markets”.

Those introductions are useful but probably more important is the market intelligence that a partner like SingTel can bring on board. Understanding foreign business conditions is a great advantage for a foreign venture.

Asian markets can be tough, particularly for Australians who have been bought up with a US centric view of the world, but there are plenty of success stories. There is a successful group of entrepreneurs catering to the massive Indonesian market while companies like Dealize have moved their head office to Hong Kong.

Dealize was part of the Pollenizer incubator which is one of Innov8’s partners. At the launch, Phil Morle of Pollenizer pointed out that his business has set up a Singapore office to take advantage of the favorable investment conditions there.

While Innov8’s program is relatively small, it’s a much needed addition to Australia’s start up and venture capital scene and will help some new businesses in the app and mobile space.

Hopefully a few other corporations are looking at SingTel’s lead and thinking how they can tap into these new industries that may disrupt their own.

For Singapore, the city state has always had a number of advantages for the finance industry. By expending into new financing new sectors they are securing their own future in the 21st Century.

Locking in the mobile market

Where are the next challenges for a phone industry that’s re-invented itself?

Mobile phone carrier Vodafone yesterday announced its purchase of Cable and Wireless, the company that rolled out the telegraph and phone networks that connected Britain’s empire.

Vodafone’s purchase is one of the final phases of the telco industry’s long term restructure where customers – both home and business users – have switched from land lines to mobile devices.

It’s long been acknowledged the profit in this market lies in devices and data usage which is why Cable and Wireless steadily declined over the past quarter century.

While there’s good money to be made in running undersea cables, which is what C & W did, the big profit is in delivering the data over the “last mile” to the customer.

For most customers, that last mile is the radius around a cellphone base station.

In Australia, this is best illustrated by Telstra’s undisguised glee at being able to offload their legacy copper network and backbone services to the government owned National Broadband Network allowing the former land line monopoly to focus on the mobile, data customer.

That data aspect is important too, one of the big changes in telecommunications over the last 25 years has been the rise of data.

A quarter century ago, voice communications were the main traffic of these networks. For companies like Cable and Wireless, data was a profitable sideline with services like Telex and ISDN being lucrative business niches.

Those rivers of gold distracted incumbent telcos in the early years of the public Internet as they tried to protect those expensive data plans and discouraged customers from using the net.

Over time, a new breed of Internet Service Providers rose who could supply those data services customers wanted.

Ironically, the same thing has happened with mobile phone manufacturers and the rise of the smartphone. Unlike the incumbent telcos, they haven’t adapted.

The incumbents phone manufacturers like Nokia and Motorola missed the rise of data communications and the mobile web as the iPhone and Android devices delivered the portable utility that “dumb phones” couldn’t deliver.

For Nokia, that miss appears fatal with the company rapidly running out of cash as their smartphone devices fail in the marketplace and margins collapse in the sectors they still dominate.

Research In Motion – the manufacturers of the Blackberry phone – are in the same trap. While their devices were data orientated they were more akin to corporate “feature phones” where they did one or two things well but couldn’t deliver the full features mobile phone users increasingly wanted.

The rise of the iPhone threatened Blackberry’s market and the arrival of the iPad with applications like Evernote killed most of the product’s demand.

Blackberry and Nokia’s decline while companies like Telstra and Vodafone survive – not to mention massive profits of companies like Mexico’s Telefonica – illustrate the value of government licenses to telcos and the breathing space it gives the management of these licensees.

We shouldn’t underestimate though the risks to all these businesses if they don’t adapt.

Towards heterogeneous networks

Why HetNets are a great hope of the technology sectors

A new idea might cut the size of many phone bills, as usual though the devil is in the detail.

One of the hallmarks of the technology industry is the use of jargon; every few months a new buzzword or phrase comes along that captivates the industry and dominates the tech media.

A phrase that’s going to become common in the next few months is Heterogeneous Networks, the concept that mobile phones will be able to switch between phone systems and wireless networks without the user noticing.

Overnight the two major standards organisations agreed to work towards a common framework for phones to run these networks which also go by the name of HetNets.

For consumers the benefit with heterogeneous networks is they can reduce costs as phones automatically switch to cheaper, and usually faster, Wi-Fi hotspots.

The benefit for mobile phone network operators is that data demands are swamping their networks that were originally designed for voice communications. By offloading some of the load to private Wi-Fi systems they hope to manage their systems better.

Of course one should never underestimate a telco’s desire to make a buck and most telecommunications companies see the opportunity to make a few dollars out of offering the feature.

A major concern in putting together these systems is going to be security, using anybody’s Wi-Fi network requires a degree of trust and if a smart phone or tablet computer is accessing these without the owner knowing the risks are substantially higher.

These risks are even higher still if the banking and telco industries manage to convince people to use their mobile phones as an electronic wallet.

Seamlessly connecting to networks is one of the holy grails for mobile device manufacturers and software designers and it’s something that consumers will probably welcome when it becomes reliable.

For the moment we can expect to hear breathless articles about developments in the area and the promises from suppliers about the technology.

As usual the early adopters will leap in and suffer the usual disappointments and heartbreak that is life on the bleeding edge of technology.

Eventually though, long after the hype has settled down, these systems will become commonplace and expected by consumers.

Whether it makes more money for telcos though is another matter.

The high stakes of Lumia

Microsoft and Nokia have a lot riding on their new mobile phone product

Yesterday Nokia and Microsoft gave a preview of their upcoming Lumia 710 and 800 phones for the Australian market. It’s make or break time for both companies in the mobile space.

The phone itself is quite nice – Windows Phone 7.5 runs quite fast with some nice features such as integrated messaging and coupled with good hardware it’s a nice experience. Those I know who use Windows Phones are quite happy with them (I’m an iPhone user myself).

Whether its enough to displace the iPhone and the dozens of Android based handsets on a market where both Nokia and Microsoft have missed opportunities remains to be seen.

The battle is going to be on a number of fronts – at the telco level, in the retail stores and, most importantly, with the perceptions of customers.

Probably the biggest barrier with consumers is the perceived lack of apps, to overcome this Nokia have bundled in their Maps and Drive applications while Microsoft include their Mixed Radio streaming features along with Microsoft Office and XBox integration.

As well the built in services, both parties are playing up their application partners with services like Pizza Hut, Fox Sports and cab service GoCatch. Although all of these are available on the other platforms.

While application matter, the real battle for Nokia and Microsoft is going to be in the retail stores where the challenge shouldn’t be underestimated.

Apple dominate the upper end of the smart phone market and Android is swamping the mid to low end. How Windows Phone devices fit remains to be seen.

In Australia, if they going to find salvation it will be at the tender hands of the telco companies.

The iPhone is constant source of irritation for the telcos as not only do Apple grab most of the profit, but they also “own” the customer.

On the other hand, Android devices are irritating customers who are bewildered by the range of choices and frustrated by inconsistent updates that can leave them stranded with an outdated system.

So the Windows Phone does have an opportunity in the marketplace although one suspects commissions and rebates will be the big driver in getting sales people at the retail coal face to recommend the Microsoft and Nokia alternatives.

Overall though, it’s good to see a viable alternative on the market. For both Microsoft and Nokia the stakes are high with the Lumia range – it could be Nokia’s last shot – so they have plenty of incentives to get the product right.

Microsoft has consistently missed the boat on mobile computing since Windows CE was launched in 1996 while Nokia were blind-sided by the launch of the iPhone in 2007 and have never really recovered.

To make things worse for Nokia, the market for basic mobile phones where they still dominate is under threat from cheap Android based devices. So even the low margin, high volume market isn’t safe.

For both, the Lumia range is critical. 2012 is going to be an interesting year in mobile.