Hugh Spear's Blog

GSM Asia Macau November 18-20 20008

Just finished two days at the Exhibition of the GSM Asia conference in Macau. After ten years or so of attending the major European event for the mobile industry, I thought I should checkout the Asian equivalent. I wrote a list of what I wanted to see before I got there and hoped to find ideas to help me to point my business Dialogue Communications further in the right direction.

So what did I find? 

The first thing which can't be ignored is that the show is tiny compared to the 3GSM show in Barcelona which is almost too big to do any business. There ware around 180 exhibitors according to the publicity, but I felt there were even fewer. They  split broadly as follows:

1. A few major telcos: China Mobile, CTN, Orange, Telenor.

2. A couple of handset providers, none of the big ones and no new handset announcements. I was hoping to see the HTC Android phone, but no luck.

3. A few infrastructure companies, particularly ones selling into China.

4. Most of the rest were application companies in various states of maturity. I will concentrate on these as they were the most interesting.

Application Companies

The application companies were mostly European and looking to sell their wares to the Asia Pacific market. As one would expect they were mainly trying to sell to the mobile carrier community (the GSM shows are really a beauty pageant for the mobile carriers to see what is around).  What I found interesting was that whilst there were a few client only or server only application companies (e.g. serving mobile sites, delivery content or providing ringback tones), the majority had a client and server strategy. Typically it would work like this:

Java client on the handset.

There would be a J2ME client on the handset which would do to something cooler than a normal handset. In some cases this was display full screen advertising whenever there was an inbound call or SMS. In other cases it was form filling to construct SMS and then encrypt it to get to the server. There were also several mobile banking applications which did typical banking type activities.

Smart server either inside our outside the carrier's own IT environment.

In the case of Broca this would be some server which could decode the encrypted SMS forms. In the case of Frog2Frog it was a server which would provide the adserving and reporting. In the case of GIgafone's 'Ringmate' it would provide the advertising to be passed to the client.

The think which to me was facinating about these systems was the difficulty of providing a credible solution in a cost effective way. Here are the challenges:

Challenges to Client/Server application providers.

1. Supporting multiple client platforms. In order to have a 'whole market offering' one must support the following environments: Symbian (various flavours for different Nokia series and Sony Ericsson), J2ME for the non-symbian phones from the far east (e.g. Samsung), Blackberry (increasing its market share at the expense of Nokia at the moment), iPhone (again increasing market share at the expense of Nokia), Windows Mobile (big in the states), Android (will be big and has Motorola support). Plus there are many carrier specific implementations of these environments. It is almost impossible to keep up with the demands of providing applications for all these handsets unless you are very well funded and/or can sell a huge number of applications. Therefore we have to consider how happy the carriers will be when the real world fact of patchy market coverage hits home. I may be very wrong about this. I do remember that in 1997 I thought ringtones wouldn't take off because they sounded rubbish and only worked on Nokia phones. So beware my advice!
2. Servers that must be bought and hosted by carriers. Admittedly not all are in this camp, but several are. At the present time carriers are not too keen to find CAPEX so this is a bit of a challenge. 
3. Servers that must be populated with information from the carriers closely guarded databases. This is a bit of a challenge too, but if you want to do the best job of ad-serving then you want to get hold of this sort of thing.  

So faced with these challenges I ask myself why these companies would not simplify things a little in order to help things along?

Simplifying the product set.

1. The first thing I would do is to do away with the handset application. The iPhone webapps style of working is the way I'd go. Build a mobile web site which is very optimised to different handsets. In the case of the iPhone it is difficult to know which is a webapp and which is an iPhone app in some cases. The advantages of this is that it is easy to develop, deploy, maintain and delete. The disadvantage is that it needs mobile web access and may not look as good as an 'on device application'. But I can live with that.
2. The second thing I would do is to remove the need for CAPEX and installation at the carriers premises. These are two things which will ensure there are no quick sales. So I'd either work with 3rd parties who are already well embedded with the carrier, or have a standalone operating model of the server side which can give the carrier 75% of the functionality out of the box. 
3. The third thing I'd do is to come up with some very flexible pricing models to suit the carriers view of the world. I won't go into too much of the detail here, but if you get it right you'll make sales and then make money.   

Back to my list of what I wanted to see at the show. I've just looked through again and have ticked about 10%. I did actually see that many of the companies exhibiting were clever but not resourced well enough to take their products overseas. I felt that there were good opportunities for Dialogue to strengthen its own proposition and to help to promote some of these companies into our increasing range of territories. This wasn't on my list of what to see at the show, but it is nice to be surprised.

Summary

So to summarise how things looked to me. GSM Asia was a bit disappointing in the number and depth of companies exhibiting, however there were some interesting gems amongst those I saw. I like the client/server application model but worry that it is too ambitious to really get traction in the real world market we are working in. I wish the creators of these systems well however and will be happy to be proved wrong.

Campaigns built using the Dialogue Mobile Site Builder

As promised earlier here is a sprinkling of sites built using Dialogue's Mobile Site Builder. These were all built by Vodafone Australia's Mobile Advertising Agency who are 'power-users' of Dialogue's tools.

Client: Warner Music

Campaign: The Galvatrons

Client: Warner Home Video

Campaign: Veronica Mars

Client: Johnson & Johnson

Campaign: Listerine

Client: Samsung

Campaign: i450

Client: Microsoft

Campaign: Xbox Console

Client: Village Roadshow

Campaign: Get Smart

Client: Foxtel

Campaign: HD+

The new mobile battleground

The announcement of the iPhone 3G from Apple’s Steve Jobs, together with the detail of what will be possible with this device and details of its widespread availability; should stun the rest of the mobile world. However, several commentators have been remarkably underwhelmed.  I read some early reports of the impact of the new device on the world and they ranged from indicating that the iPhone would slightly increase its market share of the smartphone market, to claims that the introduction of 3G and GPS would not be enough to really have an impact.

My personal view is that we are about to witness a paradigm shift in the use of mobile phones which will redefine the future. It is quite simply the most exciting thing to happen in mobile in a dozen years. Here is my reasoning for this opinion:

1. iPhone beats Blackberry. The Blackberry is well recognised as the ‘must have’ device for the enterprise. However, the iPhone 3G has achieved the following to probably knock Blackberry off its perch:
   • Support Exchange natively. This is the single most important email system in the enterprise, and this support  alone will dent  Blackberry’s dominance.
   • Support Push-email. This will give the iPhone users the Blackberry-like experience. Another step towards unseating Blackberry.
   • Application support. The iPhone 3G SDK is providing application developers with the tools they need to provide ‘line-of-business’ enterprise applications to each and every employee. This should not be underestimated.
   • Price. At $199 the iPhone is now a realistic enterprise option.
   • Infiltration of Fortune 500 businesses. There is no better purchasing driver than seeing your fellow corporations taking the same steps.
2. iPhone beats Nokia. I have always admired Nokia’s ability to define the future with its devices. Right from the very first days of using a Nokia 2110 back in 1994 and basing my business around what Nokia had achieved in terms of mobile connectivity; I have always resisted betting against Nokia. And in spite of probably having a better list of features and usability that set the standard for mobile phones, I have to say that now the iPhone has moved ahead. Here are my reasons:
   • Featureset. The iPhone 3G has almost all the toys you need on a mobile device. Nokia has video calling and FM radio but that is about the only difference, other than the low specification of the iPhone camera.  But at least it is a good camera.
   • Application support. Nokia’s Series 60 has been around for 4 or 5 years and there are a few dozen applications available for the device. The iPhone has been around for a year and there are hundreds of applications available already. Add to this the ‘App Store’ that Apple plan, which is said to be worth $US 10bn during the first 18 months alone and you have some idea of the scale of the iPhone dominance in this area. Again, please do not underestimate the importance of this to the future.
   • iTunes. Nokia has its own music store, but how can it compete with something that was based around the market dominating iPod? I don’t think you can.
3. iPhone applications takes the mobile internet and makes it better. For nearly a decade the mobile internet has meant two things, email and browsing. Not web browsing but a cut down web known as WAP.  Although the original iPhone claimed that you didn’t need the ‘baby internet’, which was the internet sub-set created for mobile. It is my opinion that you do need to re-purpose existing internet sites to make them mobile device compatible. It is down to the physiology of being able to put the viewing device in the palm of your hand.  Facebook and many others have created iPhone versions of their applications and many are better than the grown-up web applications. But the iPhone now shows us the really impressive next step of the mobile internet and that is the creation of applications which use internet connectivity and do very specific jobs in the best way possible. For example the eBay application doesn’t expect you to browse, doesn’t expect you to use email or SMS, it does what you want it to do which is to find items you want and help you to ensure you buy them. There are heaps of other applications which also do very cool things, but most importantly there is an application development environment, from the OS to the development tools and the coding language that means that we will see an explosion of creativity.  I haven’t known this since I used Visual Basic for the first time in 1991 and realised that building software applications didn’t have to be geeky. Now for the first time we can do the same with mobile phones the most prevalent devices on the planet.
4. iPhone re-invents SMS. Well not exactly in terms of a point to point communication tool, but in terms of alerting and triggering applications. Apple has its own ‘push alert notification’ technology. I’m guessing that those guys at Apple realise that SMS is the most profitable mobile data on the planet and they want a part of it.

So where does this leave the rest of the mobile food chain. Lets consider the field I’m familiar with:

Handset manufacturers
Well although Apple has raised the bar as far as I am concerned,  there is little other than iTunes integration to prevent the competition from catching up and they can even be better in some respects. But they have to really work at it and take the iPhone very seriously.

Mobile Operators
Well there is a danger that they will be relegated to ISPs in this value chain. But they do control at least one billing relationship with the consumers and they do provide the bearer services for most mobile connectivity. The question is do they settle for this, or do they use their considerable resources to take more value from the market?  The pragmatic view is that it is very profitable to keep adding subscribers and to expand geographically, even though voice and data are fast becoming commoditised. There are still juicy areas of profit like SMS and roaming charges. However if you want to compete in areas like Mobile Advertising, (and which mobile operator doesn’t?) then you need to think about embracing the mobile application environment or investing in the fledgling businesses that can. There is also a tantalising question of whether, or when Apple and the mobile networks will work together to charge for content. I suspect that Apple wants to get a better revenue share deal than the mobile operators will allow at the moment, but lets see how this story unfolds.

Mobile Aggregators
My company Dialogue Communications is in this space, and we can see the iPhone as both an opportunity and a threat. Our Mobile Site Builder is already optimised for the iPhone and I’d urge any business to ensure it has a mobile site that looks good and works well on an iPhone. But there is a threat in the mobile content space from iTunes and a threat to the SMS business from the ‘push alert notifications’. The big area of opportunity is to embrace the applications components and to help the mobile operators to add the value they so keenly desire.

Content Providers
These are threatened by the closed shop of iTunes in many respects, although the largest companies can probably partner with iTunes. Again the opportunity is to get involved in iPhone application development and to create content portals for specific niches that can be more customised to the consumer’s preferences than iTunes.

Of course I could be wrong and the experts from the research organisations could and should be right. But  I'm not going to hang around waiting to see if I'm wrong I'll be acting on my hunches.

Uniques vs Impressions - the mobile advertising paradigm shift

Whilst many marketeers are keen to drive traffic to their websites, they are generally counting the page impressions on those sites and using that to attract advertisers. The problem with this is partly that in the past people have generated 'clicks' artificially in some cases, but it is also that we don't usually know how many visitors we get.

In a mobile advertising environment we have far fewer impressions at the moment, but we can track unique visitors and profile the pages they read on each visit. If we are smart we can also learn more about these people by working with the mobile carrier. For example we will already know the make and model of their phone. And some analysts try to make marketing assumptions based upon this fact alone. But the mobile operator can provide far more information as follows:

1. Pre-pay vs Post-pay customer.
2. Male vs Female
3. High vs Low propensity to spend.
4. Location current, and address where phone user lives/works.
5. Age Group.

If you have all the above information, then you are going to be able to do a great job of targetting viewers with banner ads, and  even though the  traffic  is  relatively low, you  should be able to reach the people you want at the time of day you think they will be most responsive.

The mobile advertising market may be taking off slowly, but I would expect that when the case studies have been circulated a few times that it will become important for every business to have a mobile presence. This is where companies like Dialogue with their Mobile Site Building tool and wealth of experience in mobile marketing can really help.

I talk to people regularly who are busy keeping up their Search Engine Optimisation efforts on their website. They all say they wish they had started a few years earlier when there were fewer sites and it was easier to get higher in the rankings. In my view it is going to be just the same with mobile internet. The people and companies who get in first will do much better than those coming along later.

So what's stopping you?