Tag: telcos

Painting a target on the competition

Blackberry Enterprise President John Sims has a strong message for his competition

“We’re coming for our competitors” is the warning BlackBerry’s President of Global Enterprise Services, John Sims has for the marketplace in an interview last month.

Sims laid out how BlackBerry’s future lies in managing big data, providing collaboration tools and securing the internet of things. In the short term however, the company needs emerging markets to keep its mobile handset market going.

In an interview last month on Australia’s Gold Coast at the Gartner Symposium, Sims laid out some of BlackBerry’s vision of the company’s future.

Securing the endpoints

The key product is the BlackBerry Enterprise Services which Sims sees as providing the endpoint security for corporate mobile devices and for the internet of things, something that ties into the company’s QNX investment.

For the moment though its handsets are a key part of the company’s immediate future and Sims sees the latent demand from lapsed BlackBerry as essential to success, “there are tens of millions of BlackBerry users who are still sitting on their old handsets.”

“The classic, when it comes along is targeted at that market. We know people are waiting.”

“When we went from the Gold to the Q10, too much changed. You had to go from the BBOS to the BlackBerry 10 and that’s a big change, we changed the keyboard, we took away shortcuts and we changed too much at the same time. With the Classic we’re almost doing a retrofit.”

With the recently released Passport smartphone, Sims says the company is struggling to keep up with demand,  “The Passport has done well,” he said. “The problem with it is us, not demand. It’s a supply issue not a demand issue.”

A week after that interview, BlackBerry announced the company would give Canadian buyers of the Passport subsidies of $600. How that ties into the narrative of a popular device isn’t quite clear.

Sims hopes the release of the Classic won’t suffer from supply problems, “we think is going to be more popular so we can be sure when it comes out we’ll be able to get that into the market in sufficient quantities to meet demand.

Discovering emerging markets

The other hope for BlackBerry’s handset business lies in developing markets, “Latin America is very important,” Sims says. “India’s very important and then there are number of important South East Asian markets.”

Part of that emerging market strategy is tied into selling mid priced smartphones into the market, Sims says. “People will say ‘the Z3 is a low end device’, if you go visit Indonesia the Z3 is not a low end device. It’s a middle market device.”

“Xiaomi is doing the low end devices at less than a hundred bucks and we’re doing a device at around $170. So we’re focused on the middle market, people who are professionals or aspiring professionals.”

“With those people in those markets we want to establish the BlackBerry brand as something they are comfortable with,” says Sims in outlining how he sees getting the handsets into business people as being the driver for the company’s other services and products.

Struggling with China

China remains an enigma for BlackBerry however, “in the last couple of years we haven’t focused on China, it’s a huge market and it’s hard for external parties to be successful on their own. Local partnerships are important.”

“John Chen (BlackBerry’s CEO) was recently in China and met with some of the local partners to talk about the possibilities of the future. It’s very preliminary and there’s nothing of any substance there yet but it is on our horizon that we’ve got to have something in the China Market.”

We’re coming for you

Despite the struggles BlackBerry has with its handset business, Sims is defiant about the company’s position in the endpoint security market.

“Ultimately it becomes a question of scale, we’ve got scale because we have a global network. None of the other EMM vendors – Good, Mobile Iron or Airwatch – none of them have the Big Data requirements that we have.”

“A year ago BlackBerry was defensive. We’re not defensive any more. People like Airwatch, Mobile Iron or Good should thank us that we were asleep at the wheel a few years ago and that allowed them to build their companies. That party’s over.”

“We’re coming after them. We have targets painted on each of those companies and as we execute our enterprise strategy we’re coming after them. If I was them I’d be feeling the breathing on the back of the neck.”

For BlackBerry the future lies in security services and the internet of things, though for the short term the company’s cash flow and market position depends upon sales of its handsets.

As the interview with John Sims shows, the company’s success depends upon a few key assumptions coming true; that’s a high risk market.

Paul travelled to the 2014 Australian Gartner Symposium on the Gold Coast as a guest of BlackBerry.

Towards the future mobile network

The 5G mobile communications standard is as much a vision for the society of the future as that of technology standards

What will the next generation of smartphones look like? Earlier this week the GSM Association released their roadmap for the future 5G network standard, the next generation of mobile communications that will start appearing towards the end of this decade.

The GSMA is the peak global telco industry body which includes amongst its membership most of the world’s telephone companies and the vendors who manufacture the network equipment, so the organisation’s view is a good representation of the industry’s long term vision.

Much of the future standard is actually an amalgam of existing technology and concepts such as heterogeneous networks where phones and mobile internet of things devices can switch from the phone network to private WiFi systems without users noticing the handover.

The GSMA sees eight main areas for the 5G standards;

  • data rates of 1Gbps down
  • latency of less than one millisecond
  • network densification in determining base station locations
  • improving coverage
  • making networks more availabile
  • reducing operating costs
  • increasing the field life of devices.

That latter point is particularly pertinent as battery life remains a major concern for smartphone users and getting power to internet of things devices is one of the greatest barriers to adoption.

With the 5G standard not expected before the end of the decade, it’s hard to imagine how much technology may have changed in that time, something the GSMA acknowledges; “Because 5G is at an early stage there may be many use cases that will emerge over the coming years that we cannot anticipate today.”

The report though does try to anticipate some of the applications we may see the 5G standard driving such as autonomous vehicles, cloud based offices and augmented reality technologies. All of these though are advancing rapidly under the existing fixed line, 3G and 4G telco networks.

For the moment rolling out the 4G standard remains the industry’s main game with the existing technology only making up five percent of the world’s mobile connections at present. This is the area the GSMA sees as being the big opportunity over the rest of the decade.

In another report the GSMA claims the 4G rollout in Europe, currently at less than 10% of connections but expected to be over half by 2020, will drive economic growth on the continent.

The mobile industry is playing a central role in supporting economic activity and recovery in the region, contributing 3.1 per cent to Europe’s gross domestic product (GDP) in 2013, equivalent to EUR433 billion4, including EUR105 billion generated directly by mobile operators. By 2020, it is estimated that the industry will generate a total economic value of EUR492 billion.

There’s no doubt telecommunications networks are to the 21st Century what the highways were to the Twentieth and the railways to the nineteenth. As with the construction of previous century’s networks one of the big challenges will be raising the capital to build the systems and making wise investment choices.

For the developing world raising the capital required for those networks might be the hardest task of all, however for those countries and regions not making the investments may leave them further behind the western nations than they are today.

Ultimately what eventually is included in the 5G standard will reflect many of the political and economic realities of the next five years; no international standard is free from political or commercial influences during its drafting. The job for the standards bodies is not to get left too far behind market or technological advances.

In describing a vision for the sector’s future the GSMA 5G report lays out many of the opportunities and challenges facing the telecommunications industry over the rest of the decade. With these technologies becoming the centre of our working and home lives, what happens won’t just determine what smartphone we own in 2020 but the shape of our societies.

 

Disrupting the incumbents

Industry incumbents like Nokia and Microsoft are finding their market positions disrupted as Apple, Hauwei and Samsung reinvent the marketplaces.

One of the truisms of modern business is that no incumbent is safe, Microsoft, Nokia and Hauwei are good examples of just how businesses that five years ago dominated their industries are now struggling with changed marketplaces.

In the last two days there’s been a number of stories on how the smartphone and computer markets are changing.

According to the Wall Street Journal’s tech blog, PC manufacturers are hoping Microsoft’s changes to Windows 8 reinvigorates the computer market.

Those hopes are desperate and somewhat touching in the face of a structural shift in the marketplace. These big vendors can wait for the Big White Hope to arrive but really they have only themselves to blame for their constant mis-steps in the tablet and smartphone markets.

Now they are left behind as more nimble competitors like Apple, Samsung and the rising wave of Chinese manufacturers deliver the products consumers want.

All is not lost for Microsoft though as Chinese telecoms giant Hauwei launches a Windows Phone for the US markets which will be available through Walmart.

Hauwei’s launch in the United States is not good news though for another failing incumbent – Nokia.

Nokia’s relationship with Microsoft seems increasingly troubled and the Finnish company is struggling to retain leadership even in the emerging markets which until recently had been the only bright spot in the organisation’s global decline.

Yesterday in India, Nokia launched a $99 smartphone to shore up its failing market position on the subcontinent.

For the three months to March, Nokia had a 23 percent share of mobile phone sales in India, the world’s second-biggest cellular market by customers, Strategy Analytics estimates. Three years ago it controlled more than half the Indian market.

India isn’t the only market where Nokia is threatened – in February Hauwei launched their 4Afrika Windows Phone aimed at phone users in Egypt, Nigeria, Kenya, Ivory Coast, Angola, Morocco and South Africa.

The smartphone market is instructive on how many industries are changing, almost overnight the iPhone changed the cell phone sector and three years later Apple repeated the trick with the iPad, in both cases incumbents like Motorola, Nokia and Microsoft found themselves flat footed.

As barriers are falling with cheaper manufacturing, faster prototyping and more accessible design tools, many other industries are facing the same disruption.

The question for every incumbent should be where the next disruption is coming from.

In fact, we all need to ask that question as those disruptions are changing our own jobs and communities.

Latently obvious – the importance of data networks

The internet of things is going to see more emphasis on reliable and fast network connections.

One of the big buzz phrases of 2013 is going to be “the internet of everything” – where machines, homes and even clothes are connected to each other.

In the near future, we’re going to be more surprised when things when things like cars, washing machines and home automation system aren’t connected each other.

To get all these things talking to each other requires reliable communications with low latency – quick response times – so technology vendors are seeing big opportunities in this area.

Last night Blackberry launched its new platform and the beleaguered handset company’s CEO Thorsten Heins was adamant in his intention to focus his business on the internet of machines where he sees connected cars and health care as being two promising areas.

Blackberry isn’t alone in this with the major communications providers and telcos all seeing the same opportunities.

Cisco has been leading with their role in ‘the internet of things’ and much of their Cisco Live conference in Melbourne two weeks was spent looking at the technologies behind this. The company estimates the “internet of everything” will be worth 144 trillion in ten years.

Rival communications provider Ericsson sees the revenue from this sector being worth $200 billion by 2017, so it’s not surprising everyone in the telecommunications industry want to get a slice of it.

The question is though how to make money from this? Most of these communications aren’t data heavy so metering traffic isn’t going to be the deliver the revenues many of these companies expect.

If offering priority services with low latency is the answer, then we hit the problem of ‘net neutrality’ which has been controversial in the past.

Whichever way it goes, businesses will want to be paying a premium to make sure their data is exchanged quickly and reliably. For many organisations data coverage and ping speeds are going to be the deal breakers when choosing providers.

The ‘machine to machine’, or M2M, internet market is something we’re going to hear more about this year. It’s clear quite a few executives are staking their bonuses on it.

Dealing with the data explosion

Supply the mobile base stations for data hungry customers is one of the great challenges for telcos. How they resolve this will create some unusual alliances.

“Last year’s mobile data traffic was nearly twelve times the size of the entire global Internet in 2000.”

That little factoid from Cisco’s 2013 Virtual Networking Index illustrates how the business world is evolving as various wireless, fibre and satellite communications technologies are delivering faster access to businesses and households.

Mobile data growth isn’t slowing; Cisco estimate global mobile data traffic was estimated at 885 petabytes a month and Cisco estimate it will grow fourteen fold over the next five years.

Speaking at the Australian Cisco Live Conference, Dr. Robert Pepper, Cisco Vice President of Global Technology Policy and Kevin Bloch, Chief Techincal Officer of  Cisco Australia and New Zealand, walked the local media through some of the Asia-Pacific results of Virtual Networking Index.

Dealing with these sort of data loads is going to challenge Telcos who were hit badly by the introduction of the smartphone and the demands it put on their cellphone networks.

A way to deal with the data load are heterogeneous networks, or HetNets, where phones automatically switch from the telcos’ cellphone systems to local wireless networks without the caller noticing.

The challenge with that is what’s in it for the private property owners whose networks the telcos will need to access for the HetNets to work.

One of the solutions in Dr Pepper’s opinion is to give business owners access to the rich data the telcos will be gathering on the customers using the HetNets.

This Big Data idea ties into PayPal’s view of future commerce and shows just how powerful pulling together disparate strands of information is going to be for businesses in the near future.

But many landlords and wireless network owners are going to want more than just access to the some of the telco data — we can also be sure that the phone companies are going to be careful about what customer data they share with their partners.

It may well be that we’ll see telcos providing free high capacity fibre connections and wireless networks into shopping malls, football stadiums, hotels and other high traffic locations so they can capture high value smartphone users.

One thing is for sure and that’s fibre connections are necessary to carry the data load.

Anyone who thinks the future of broadband lies in wireless networks has to understand that the connections to the base stations doesn’t magically happen — high speed fibre is essential to carry the signals.

Getting both the fibre and the wireless base stations is going to be one of the challenges for telcos and their data hungry customers over the next decade.

Paul travelled to the Cisco Live event in Melbourne courtesy of Cisco Systems.

Seniors and smartphones

A phone for seniors shows how the smartphone market is evolving to meet people’s needs.

One of the opportunities with Android based smartphones is the ability for companies to offer modified phones aimed at certain industries and markets.

Ahead of next week’s Mobile World Congress, Fujitsu has announced a phone designed for seniors with larger icons and a less sensitive touchscreen.

The senior market is one that’s been ripe for savvy manufacturers as older people move onto smartphones and demand devices that meet their needs.

Over the years there had been attempts at mobile phones designed for seniors but most of them had been pretty lame and none had sold well.

The difference with smartphones is that most of the design changes are involved in the software and with open source platforms like Android and Ubuntu it makes it easier for companies to build easy to use devices.

Now it’s fairly easy to make these devices, we can expect to see more of them and as smartphones are becoming cheaper – a quick look at the Alibaba website shows wholesale prices for Android based phones as low as $10 (although you have to buy a container load of the things.)

There’s some opportunities for some smart entrepreneurs with these devices and we’ll see some interesting smartphones aimed at certain groups.

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.

Windows Phone 8 launch

Can Windows Phone 8 reclaim Microsoft’s lost mobile crown?

This week’s launch of Window 8 Phone is part of Microsoft’s strategy to remain relevant in a world where personal computers and laptops are being left behind by smartphones and tablet computers.

In many ways, the tablet and mobile market is an opportunity lost by Microsoft – for a decade the market had been desperate for decent tablet computers and smartphones. The Windows tablet and PDA product in the early 2000s ran on was expensive, heavy and clunky hardware that discouraged even the most determined user.

The failure of Microsoft and their partners cost the company dearly when the iPhone and then the iPad stole the market from them. Today Apple’s iPad owns the tablet computer market while the iPhone on its own makes more money than all of Microsoft’s products put together.

Microsoft’s response to this threat to their core business has been slow and wasn’t helped by the company Windows Vista disaster, a mis-step that broke the PC upgrade cycle.

Fortunately Windows 7 put Microsoft’s core business back on an even keel as they contemplated their customers’ move away from the personal computer.

The strategy now for Microsoft with Windows 8 is the “run anywhere” philosophy where a document created on your tablet computer can be accessed just as easily on your PC or on a smartphone. This relies on a cloud computing service and the same operating system running on all devices – interestingly this “hybrid cloud” idea underpins Apple’s iCloud as well.

Being able to run documents across all Windows devices was a key part of Microsoft’s launch today with a demonstration of how Office 2013 files can be accessed.

To get the full features of Windows Phone though you’ll have to be running Windows 8 AND Microsoft 2013 on your tablet and personal computer.

Vendor lock-in isn’t surprising as this strategy lies at the heart of Microsoft’s business model – the problem is the market is moving away from the Windows platform and many of the devices, and people, Windows Phone users will be communicating with are using Android or Apple systems so many of the gee-whiz functions are lost.

One of the functions displayed is Rooms, which allows like minded people to share various features. As the Microsoft media release says;

Sometimes you want to share and chat with one group, not your entire social network. Rooms allow you to create private groups of people who have Windows Phone 8 — like your family members best friends or fantasy football league — and easily connect with just them. Chat, share calendars, shopping lists or photos in an ongoing conversation where only those invited can join in. You can share some aspects of Rooms with friends and family on other smartphones as well.

The problem is that when your family members, best friends or fantasy football league competitors aren’t using Windows 8, the Rooms function becomes little more than a glorified shared calendar – Dropbox and Google Docs provide more features.

For the family user Windows Phone 8 does have unique feature in allowing a children friendly profile called Kids Corner, where parents can quarantine the little ones from the main address books and features while allowing only certain apps to run. Unfortunately there’s only one Kids Corner so the little darlings will have to fight it out over the Angry Birds account.

That Angry Birds app is the harbinger of where Microsoft’s multiple screen strategy will either succeed or die in the ditch as it will be the available applications which will determine whether customers will buy the device over the iPhone or Android competitors.

Looking at the Samsung, HTC and Nokia phones that will be released running Windows Phone next month, all seem to be decent pieces of hardware although the Nokia 920 seems to be a hefty unit compared to the competition. Overall though all three phones seem to be decent competitors with their own strengths compared to the Android and Apple opposition.

The success of Windows Phone will define Microsoft’s place in the post-PC world, now its up to the company and its partners to sell them.

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.