Mobile Sands

June 8, 2009

Visiting the Sprint Store to See Palm Pre

Filed under: Smartphones — Tags: , , — AJ @ 1:03 pm

I was among the legions of smartphone enthusiasts who walked into Sprint stores this weekend. The Pre was, as expected, sold out by mid-saturday. I tried a trial unit and I must say, I was not disappointed!

All the cool features that Palm has been touting in its advertising – from multi-touch to the ability to run multiple applications – were there and worked really well.  I really liked the keyboard. It was much better than typing on the iPhone’s screen and felt more responsive than QWERTY keyboards I have used on Blackberry and Motorola Q. Though Palm does not have an large App store, the device comes pre-loaded with several great apps like Pandora, facebook, Google maps, and youtube – all of which worked nicely when I tried them. And the browser renders multimedia-heavy pages beautifully (I tried www.lonelyplanet.com).

Bloomberg estimates that a total of 150,000 Pres were sold this weekend. According to salesperson at the store I visited in Boston, they were allocated 60 devices, and were sold out by 11 AM on saturday. They were expecting 40 more devices on Monday and a similar number on Tuesday. I am 61st on the waiting list at this store and was told to expect a call on Tuesday evening.

While I was waiting for my turn to try out the Pre, I noticed Sprint’s Airave femtocell (displayed in a glass box near checkout) and asked the salesperson what it was and if I needed one. She replied that it was router that expanded wireless coverage but no one who lives in Boston really needs one; maybe in certain high-rises or in far-out suburbs. After taking a dig at T-Mobile’s coverage in the city, she calmly reassured me that “since Sprint uses the same technology as Verizon, our network is as good as theirs.” Ingenius!

June 6, 2009

Smartphones may Herald the Golden Age of Internet Radio

Though Internet Radio has been around since the mid-nineties, it has not seriously challenged good-old FM radio (“Network radio”) in the same way that Internet video (YouTube, hulu and others) have challenged Network/Cable TV.  The reason – over 60% of radio listening is done “on-the-go”. And of the 40% of radio listening that is done at home, most is done while doing other things around the house – not when the listener is on her PC.  Well,  3G-capable smartphones change all this.  

Pandora, NPR, Y!Music and more

Pandora, the web-based service that let users create their own radio station, is the #1 free music application on Apple’s App Store, and is ranked #20 among all free apps.  Other personalized streaming audio apps on the iPhone include Slacker and CBS-owned Last.Fm.

Interestingly, network radio has been quick to enter the smartphone radio market.  NPR makes 300 of its stations available through the Public Radio Tuner app, ranked #5 among all free music apps.  Clear Channel, the largest owner of FM radio stations in the US makes some of its channels available through iHeartRadio.  Many CBS stations can be heard via AOLRadio.  Yahoo! Music launched an iPhone version of their service few months ago, and one can listen to thousands of radio stations from around the world using apps like Radio, ooTunesRadio, allRadio and WunderRadio.  

Many Internet Radio apps are quickly making their way to other smartphone platforms as well.  Slacker offers a Blackberry App. Pandora has been available on Blackberry, Windows and over 50 feature phones for a while but it recently made a  conscious choice to focus on Palm Pre as its second major smartphone platform. As a result, Pandora comes pre-installed on the Pre.  Mumbai-based Geodesic is focusing on Blackberry and Symbian phones instead with its Mundu Radio application.

Unlike mobile video, carriers are not blocking Internet radio

Wireless carriers are not blocking Internet radio applications because its bandwidth requirements are in line with 3G.  Internet radio stations use streaming rates between from 28.8 kbps to 128 kbps, speeds that can be easily supported even over moderately loaded 3G networks.   Someone who commutes for 2 hours/day for 22 days a month and listens to Pandora at 128 kbps would download around 250 MB of data – not a very large amount, and definitely within the data caps imposed by most 3G providers.  

Time for 3G carriers to challenge Satellite Radio

The main value proposition of satellite radio has been that one can listen to hundreds of radio stations, without the hassle of searching for the right one when crossing over from one metro area to another. Well, now a listener can do exactly that and much more with Internet radio on her mobile phone. She can listen to thousands of radio stations from around the globe or even better, listen to a station completely personalized to her tastes.  And do all this without paying anything over and above the price of the a 3G data plan.  

Though 3G carriers are not actively promoting Internet radioon phones  and challenging satellite radio, they should, and make a play for the dollars that are going to Sirius/XM today.  Sirius/XM charges $9.99 – 19.99 for its multiple radio station services and had 18.6M subscribers at the end of Q1’2009.  If these 18.6M subscribers were convinced that they could get the same selection of radio stations (or even better – personalized radio stations!) on their 3G phones – in addition to email, web and more – it would be easy for them to sign up for a $30/month plan.

May 15, 2009

On MIT NextLab and Mobile Ventures for the Next Billion Consumers

Filed under: Mobile Apps, Netbooks, New business models, Smartphones — AJ @ 7:16 pm

Yesterday, I attended the “finals” of MIT NextLab, a social entrepreneurship class that aims to “launch mobile ventures for the next billion consumers”. It was heart-warming to see how ubiquitous connectivity (via SMS) and low-cost mobile computing devices (smart phones) can be used to make a huge difference in the lives of poor people in developing countries. Still, the premise that somehow these socially beneficial projects could be turned into self-sustaining ventures without expanding the addressable market seemed a stretch.

MIT NextLab and the Next Billion Network Project

The NextLab course is offered as part of the Next Billion Network (NBN) initiative at MIT Media Lab. NBN’s goal is to encourage grass-roots level development using cell phones in developing countries. The program was founded by Telmex’s Jhonaton Rotberg little over two years ago. Telmex, its mobile arm America Movil, Nokia and Bank of America are the primary sponsors of the activity.

 Like most good entrepreneurial ventures (or successful IT projects), NextLab projects start with the end-customer. Each student team is paired with a NGO, corporation or some other representative group in a developing country who has a problem that needs to be solved. Projects are typically designed for a 1-year team period, encompassing two semesters, and MIT’s winter and summer breaks. At least one project started in this class (MoCa) has continued for almost two years, while few others have been taken over by local partners or are stand-alone ventures.

 Videos of this year’s projects are worth checking out. These projects address problems like making healthcare accessible in remote rural areas (MoCa), enabling people without bank accounts to do basic financial transactions (Dinube), making the life of truckers in Colombia easier (Hammock),  creating an even-playing field for small farmers in Mexico (Zaca), fighting crime in large cities via crowdsourcing (Civirep), and spreading adult literacy in India (CelEdu).

 Freemium Model for Social Enterprises?

 Most student teams claimed that they could somehow create a business by selling to the customers they are currently working with.  Though laudable, in my opinion,  it is very difficult to build businesses that cater ONLY to people who have very little or no money. Proponents of creating such businesses argue that they can make up for low gross margin per customer through scale. Alternatively, social ventures try to sell to governments or well-financed NGOs.  However, but for a few exceptions like Bangladesh’s Grameen Bank, success stories are tough to find.  

Take the One-Laptop-Per-Child (OLPC) initiative as an example (also, see Wikipedia link). OLPC was launched in January 2005 at the World Economic Forum with a singular focus of bringing a $100 laptop to the poorest children in the world and with a business model of selling these machines to governments and NGOs. It was not until late 2007, when the original business plan was not working out, that OLPC (half-heartedly) decided to sell its machines in the US via its “give-one-get-one” program. By then it was too late. OLPC’s XO was never designed with US consumers in mind and most consumers who got one were disappointed. By mid-2008, netbooks stormed the market and there were few takers for XO. But this does not mean that model of leveraging technology developed for the poorest to meet needs in more affluent markets is flawed.

One way to create viable ventures would be to gain scale by selling to poor customers in developing markets but earn profits by catering to more affluent customers in developing and developed markets. Such a business model would be similar to the freemium (free + premium) model used by many Web2.0 companies.

One company that is following such a model is AssuredLabor. This company started as NextLab project in the fall of 2007 with a local partner in Brazil, and that is where they built their prototype. In mid-2008, the team decided to turn the project into a stand-alone venture, with Boston as their first pilot market in the US.  Technology commercialized and developed here could be applied back in Brazil as well as other developing countries.

Many current NextLab projects hold similar potential. Hammock’s SMS-based logistics management system may be useful for small delivery companies in developed markets. CelEdu’s mobile games could be used to teach foreign languages. MoCa could play a role in connecting clinics in rural America to hospitals in larger cities. And, at the same time, these ventures could keep on providing technology to their NGO partners in the developing world at affordable prices.

May 8, 2009

Palm Pre May Revive Sprint’s Fortunes

Filed under: iPhone, Smartphones — Tags: , , , , — AJ @ 8:44 pm

Palm Pre has been getting rave reviews from all those who have seen it and many believe if there was ever an iPhone killer, this is it.  In a few weeks, Pre will be available exclusively on the Sprint’s network and combined with all the operational improvements Sprint has done in the last 18 months, it may very well revive Sprint’s fortunes.

What’s special about Pre?

 It has singular design vision – just like the iPhone. Almost two years ago, Palm managed to hire Jon Rubinstein, previously Apple’s head of hardware engineering and the guy behind Apple’s product design revival over the last decade – from iMacs to iPods (see details in Newsweek story). As WSJ reported in December 2007,  Jon has been actively involved in designing Palm’s smartphones and setting its strategy. Plus, as the Executive Chairman of the company, he has given “design” a seat on the board.

Palm started building buzz around the Pre at CES 2009 and it wowed everyone who saw it. Here is a link to a video recording of Pre’s CES debut. And here is another video that shows some of the really cool features of the phone – including its advanced multitouch capability, QWERTY keyboard, and amazing graphics.  At the heart of Palm Pre, is a new operating system called WebOS. According to a recent article in The Industry Standard, developers who have created apps on WebOS agree that it lives up to its hype. And according to Fast Company, Palm Pre can give iPhone 3.0 (the next-gen iPhone) a run for its money.

Though Palm will not have the tens of thousands apps that Apple boasts at the time of launch, it is working on getting all the top applications on the device before launch, from Google and Facebook to integration with MS Exchange and Pandora.  Just like iPhone, its browser is based on WebKit and beautifully renders web pages. And yes, it has a music store too – from Apple’s arch-rival – Amazon. 

Sprint has dry powder

 Palm Pre may be able to work a charm at Sprint only because Sprint (under CEO Dan Hesse) has aggressively trimmed its capital and operating expenses over the last 18 months, and has maintained positive free cash flow despite losing almost 6 million post-paid subscribers. 

Sprint has countered some of  the subscriber losses by winning pre-paid subscribers (its Boost service added ~700K subs in Q1’09) and adding more wholesale subscribers (like Amazon Kindle).  But more importantly, it has slashed cap-ex (Q3’07: $1.2B, Q1’09: 0.3B), and trimmed operating expenses (SG&A Q3’07: 2.7B, Q1’09: 2.2B). As a consequence, it generated $536M of FCF in Q4’08 and $796M of FCF in Q1’09. At the end of March 2009,  Sprint had $4.5B of cash and cash equivalents – a significant war chest to compete with the biggies.  (All numbers from Sprint Investor website)

A resurgent Sprint – small, nimble and hip?

If Palm Pre lives up to its hype, it would help Sprint reverse post-paid subscriber losses.  Consumers want cool devices, and just like Apple, Palm has its cadre of loyalists.  Not only can the Pre win new subs for Sprint, it can create a positive “hip” halo around Sprint.  The Pre, combined with the growth of Boost Mobile, could help Sprint reverse the trend of subscriber losses and may even add 5M between March and December 2009.

The world (yes, that is correct) needs Sprint. The US has been the center of wireless innovation – from new air interfaces like CDMA and WiMAX to devices like Blackberry, iPhone and now Pre – because it has carriers that need to compete.  And for competition to be vibrant, Sprint needs to be successful.

March 14, 2009

Windows Mobile Needs a Killer App To Attract Developers

Filed under: Android, App Store, iPhone, Smartphones, Windows Mobile — Tags: , — AJ @ 5:22 am

Earlier this week, Microsoft announced that like Apple, Android and Nokia it will give developers 70 percent of app sales revenue.  However, unlike other platform providers, it will provide  “transparency throughout the certification process, and guidance and support from the stage of development to the final sale to the consumer.”

Microsoft’s differentiation sounds good on paper and I have read analysis which claims that since developer relations is Microsoft’s strengths, leveraging it against the czars of Cupertino is a wise thing.  Even if Microsoft can economically provide cradle-to-adulthood support to hundreds of thousands of developers, will that be enough to attract the best developers to WinMo?

The best development teams are breaking down walls to create fantastic apps. They will build their apps for platforms which consumers buy.  Android is a case in point. Despite all the buzz around it, Android Market has around 1000 apps compared to over 27,000 on the App Store. Unless the G1 moves off-the-shelf as fast as iPhone, majority of developers will not invest in it.

To really get legions of developers on board, Microsoft must find a way to make Windows Mobile devices fly off the shelves. To do so, Microsoft needs to internally develop (or acquire) at least one application that alone provides enough reason to buy and love a WinMo6.5 device – a killer app.  Blackberry’s killer app is Wireless Email and Apple’s killer app is Safari.  What does Windows Mobile have up its sleeve?

To close off, I don’t think is lousy in supporting developers, it is just selective.  Recently, I went for a talk by Jamie Gotch, one of the two developers who created the hit iPhone game, FieldRunners. Jamie talked about how extensively Apple promoted their game once it had received great reviews from users and the press.  And this afternoon I was reading about how Apple has allowed another top gaming app iMafia – a multiplayer online role playing game – to do microtransactions. Bottomline –  if a developer builds an app that consumers love, Apple will bend the straitjacket and provide it great support.  Rest of the developers should just be happy that they get to hang out with the hip crowd.

March 9, 2009

Blackberry App World Looks Well Thought Through

Filed under: Android, App Store, iPhone, Smartphones — Tags: , , , — AJ @ 8:58 pm

Recently, RIM disclosed more information about its planned application store, now called “Blackberry App World”. Information on a FAQ posted on RIM’s website shows that its store addresses several shortcomings of Apple’s store and tries to replicate what worked well for Apple. Here are few things that I liked:

  • Leverages Paypal to reduce purchasing friction – Customers with Paypal accounts will not have to go through the hassle of establishing a new account to download their first app. This is similar to Apple’s strategy of leveraging iTunes accounts to reduce friction on its App Store.  However, it remains to be seen if Blackberry will use free apps on its store to drive Paypal sign-ups,  something Apple does.
  • Sets $2.99 as lowest price to entice developers to invest – Blackberry is pushing for higher quality applications because it is unlikely to beat Apple on the sheer number of applications (Apple claims to have over 25,000). Though there is no guarantee that a $2.99 application will necessarily be better than a $0.99 one, it does provide developers with a business case to invest more.  Blackberry users will not lose out on apps are available for $0.99 on App Store because most such apps have free (“ad-supported”) counterparts that will eventually make their way to Blackberry
  • Allows developers to offer “Try and Buy” – Blackberry allows developers to chose if they want customers to try their application before they buy it. This is a better model than Apple’s, where developers who want to encourage trials have to create and distribute a “Lite” version or Android’s where all apps are “try and buy”by default (since they are returnable in 24 hours)
  •  Offers flexible licensing schemes to attract enterprise software vendors- Blackberry allows software vendors to run their own license distribution servers. This enables software vendors to implement pricing schemes in which they sell a pool of software licenses to large corporations.
  • Is customizable per operator – Gives operators (and developers) control over which apps are distributed in which markets.

Blackberry’s policies combined with the fact that it offers a higher revenue share (80%) than all other application stores should win it developer support. Now, Blackberry needs to do three more things to effectively compete against Apple:

  1. Offer a fantastic shopping and usage experience to buyers
  2. Convince operators and developers that it has momentum
  3. Create awareness about the applications available on its platform

Let us wait and see how it goes.

    March 4, 2009

    Apple allows Amazon to Sell eBooks on iPhone

    Filed under: App Store, eBooks, games, iPhone, Smartphones — Tags: , , , — AJ @ 3:35 pm

    Apple approved Amazon’s Kindle eBook reader app on the iPhone today. A few days ago, it had allowed Indigo Books’ Shortcovers eBook store.  In a previous post, I had speculated that Apple may not do so and try to sell eBooks itself. Not so.  In the last two months, Apple has also allowed several third-party browsers – something many did not expect last year.  

    These deciscions indicate that Apple cares less about selling digital content (books, apps, games, music) and more about dominating the smart phone market; that it regards Nokia, Blackberry, Windows and Android as its competitors competitors – not Amazon.  And that it regards building a profitable app ecosystem as a way to strengthen its position as the leading smart phone supplier.  This seems like a very wise strategy.  

    Now that Apple has opened the door to companies who want to sell different forms of digital content on iPhones, one of these days, we may even see a digital music storefront show up in the App Store! And maybe some startups will try to create niche marketplaces to sell apps on the iPhone.

    I did download the Kindle app on my iPod Touch.  It looks like a rushed job – a land grab rather than a landmark. Right now, it is exactly what Amazon’s spokesperson calls it – a companion to Amazon’s Kindle device.  A user cannot browse or buy books from the app; that can only be done online or via Safari.  Not exactly, “1-click” shopping.  Further, Amazon does not provide any free, off-copyright books. I expect App Store users to rate the Kindle app at 2.5/5.  Still, not great news for startups like Lexcyle. Or for publishers who are troubled about Amazon’s power in the book industry and would prefer open formats like ePub rather than Amazon’s proprietary format.

    February 21, 2009

    Android Market’s Return Policy Will Discourage Developers

    Filed under: Android, App Store, iPhone, New business models, Ovi, Smartphones — AJ @ 5:03 am

    Looks like Android team did not see PinchMedia’s presentation on “iPhone AppStore Secrets” before publishing Android Market Business and Program Policies that allow buyers to return an app within 24 hours of purchase! 

    PinchMedia is a New York based company that provides app developers with an analytics library to monitor usage. 30 million of the over 500 million downloads from Apple’s store had their analytics software. The numbers collected by PinchMedia show that less than 30% of people who paid for an app used it after 24 hours.  This is not surprising considering that the average number of apps downloaded per iPhone exceeds 30. Those who did not use an app 24 hours after buying it effectively got suckered, but considering that most apps are priced around $0.99, looks like many consumers don’t mind doing a paid trial.  And if you are a developer burning the midnight oil, paid trials rock.

    No one gets paid trials in the Android Market (are paid trials evil?).  So once buyers realize that the new fart app (or the advanced tip calculator app) is’nt any more useful than the one they already have, they return it.  This no questions asked return policy will definitely increase the number of paid applications trialed, but is it good for developers?

    I don’t think so. The folks at Google could argue that “no-questions asked” returns leads to happier customers.  But will these happier customers pay more for apps on the Android Market than they do on Apple or Nokia’s stores? Unlikely. With a few exceptions, two apps that do approximately the same thing will be priced at approximately the same price in different app markets.

    If the average retun rate on Android turns ends up being 75%,  a developer will need four times as many downloads on the Android Market than it  gets on the Apple’s store to make the same amount of money.  That may happen someday, but for now, developers are better off creating paid applications for Apple and Nokia’s Ovi (Symbian) stores.  And I hope the folks at RIM do not follow Android’s path while creating the Blackberry Store.

    February 17, 2009

    Dividing the Mobile Apps Pie – Nokia, Apple, Google, RIM and others

    Filed under: App Store, eBooks, Mobile Apps, New business models, Ovi, Smartphones — Tags: , , — AJ @ 3:45 am

    Dividing the Pie – Ovi Style

    Nokia launched it Ovi mobile application store today.  I read the developer agreement posted on Nokia Ovi’s website.  Like Apple:

    • Nokia is offering developers 70% of the selling price, less applicable taxes.  
    • Nokia has the right to review all applications and decide which applications get published
    • Nokia will not distribute applications that compete with Ovi (so don’t expect an Amazon Kindle store here!)

    Nokia allows “Operator Biling”

    However, unlike Apple, Nokia plans to offer operator billing.  This is a huge differentiator for Nokia and clearly one of the things they are uniquely qualified to do. With this option, customers who do not have credit cards or who have do not want to be bothered with entering their credit card information, can still buy applications. This can significantly increase the market size of apps, particularly in the developing world, and on low/mid-end phones.

    However, from a developer’s standpoint – there is one catch in operator billing. With this option,  a developer does not get 70% of the selling price, but 70% of what the operator gives Nokia.  It allows operators to potentially get a very large cut of the mobile app revenue by mandating operator billing as the only acceptable payment method.  

    Nokia and Apple vs. RIM and Google

    In comparison to Nokia (and Apple),  Android and Blackberry offer more attractive terms – to both operators and developers.

    Palm, Samsung, PocketGear and Handango

    The cut taken by Apple, Nokia, RIM and Google pales when compared to the 50% that Palm is asking. Palm uses PocketGear (previously part of Motricity) to run its app stores.  Since Samsung is using PocketGear as well, I expect them to offer the same deal. 

    Of course, the revenue share offered by all the phone vendors is better than the 70% that Handango charges developers who have sales over a million dollars! 

    Microsoft’s Plan?

    Microsoft  has not  disclosed  how the pie will be shared on Windoes Mobile Marketplace. Going by Microsoft’s record, I would expect their revenue share plan to resember Nokia’s or Apple’s rather than Google’s. 

    And of course, we will just have to wait and see what Vodafone and China Mobile have up their sleeves!

    February 13, 2009

    An Amazon App Store?

    At MWC next week, Nokia, Samsung and Microsoft are expected to either showcase their mobile application marketplaces (“app stores”) or at least share detailed plans regarding them. Google has announced that its Android marketplace will start supporting paid apps next week. Blackberry  and Palm have already joined the race to build app stores. The one company that has every right to be in race, but has been conspicuously quiet is Amazon.

    An “App Store” is a store

    Handset vendors rushing to emulate Apple’s success may be forgetting that Apple was one of the world’s leading online retailers of digital content – long before it launched iPhone or its App Store.  Apple, in fact, launched iTunes “jukebox” in Jan 2001, 10-months before the first iPod hit the market.

    Apple’s experience in selling music and video online is evident in the way it organizes mobile apps in the iTunes store, from creating top-10/top-50 lists in a wide range of categories to highlighting notable new apps and providing automated and staff recommendations.  Consumers have shopped with iTunes for years. How many handset companies have this kind of expertise?

    So, why not partner with Amazon?

    In coming years, for a handset to succeed, it will need a rich set of applications. People will not only buy a handset for how it looks or what it costs, but for what it does. Applications will be source of stickiness for both handset vendors and operators. Operators and handset vendors who will not have access to a large ecosystem of application developers will lose subscribers, market share and profits. See my previous post comparing Verizon and AT&T’s performance in Q4’2008.

    Not only is Amazon trusted by millions of consumers and has the technology to sell in a compelling manner, but it also has demonstrated that it can succeed in selling digital content. It started a digital music store in Sept 2007 that, in 14 months, became the #2 digital music store. Still far behind Apple, but way ahead of Microsoft. With Kindle, it has shown that it can not only sell lots of DRM-free MP3, and but also work with a large number of publishers and create a profitable, new market.  Can Nokia claim such success with N-Gage?

    I am all for the creation of mobile application marketplaces and wish that the new entrants succeed. I just have a nagging feeling that these attempts will look similar to the attempts of dozens of bricks-and-mortar retailers to enter the online retail business in mid-1990s.

    Place in the sun for Third-party App Stores

    Thankfully, all handset-platform vendors other than Apple are allowing third-parties to create marketplaces. This has allowed companies like Handango and PocketGear to be built, and is allowing Samsung to launch an app store. This keeps the doors open for Amazon to build an app superstore in the future, or for other customer-focused niche marketplaces (think Zappos) to appear.

     

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