Racer mobile phone - the name of the winners not written in the press release

Racer, the new Android phone sold below symbolic threshold of 100 UK Pounds, produced by ZTE and distributed by 3-UK, has been announced this week. This is probably an important milestone in the mobile phone history. Funny enough, the name of the true winners is not written in the press releases.

The announcement indicates an important smart complementary offer; 3UK granting a volume data bucket of 150MB for top-up on a prepaid account.

3UK and ZTE are obviously mentioned in the press release.

Through this launch, 3UK, desperately tries to attack its strong competitors with an appealing offer for youngsters. Vodafone, T-Mobile/Orange and O2 are able to follow when they decide. If the phone is a success, it's just a question of months to come back to a similar balance between telco players on the island.

On the other hand, ZTE makes a step towards a position in the top-5 mobile phone manufacturers but there is still a long long way to run.

Funny enough, the name of the big winners of this important milestone is not written.

Android is mentioned but Google is not. Through its "free licensing model", Google will win the scale battle with Apple. Google copies the Windows model used by Microsoft against Apple during last century. Google does not directly produce cash through this kind of offer. But advertising inventory (display and search) will indirectly grow at an higher pace and this growth is directly linked to G revenues.

The name of the other winner is Facebook, with the same logic of increased inventory, since target of this phone is most probably youngsters, heavy Facebook users. This can be extended to myriad of mobile phone application providers.

Names of losers are rarely written in press releases.

We can not say that Apple will loose with this kind of move but it defines the borders of a profitable corner.
Apple, luxuriantly trapped by the very high value of his brand and its vertical approach - mandatory to change the game at the beginning but limiting the scale during next phases of growth -, will loose against Android in terms of mobile OS market share. As a consequence, iAds, advertising initiative from Apple, will then probably be restricted to high-end brands while Google presents a universal inventory for any brand, any shop.

This announcement now materializes another level of danger for Nokia. Lost in Symbian, Meego, Linux mobile OS announcements, Nokia is still the number one but does not manage to tease interest of developers for applications - the next criterion for people to buy a phone.

Moreover, the whole telco market could start to see ARPU (average revenue per user) declining faster at this stage. Through this offer with such a pricing for device and data, number of data users could reach a tipping point where messaging traffic could start to significantly migrate from charged SMS to free instant messaging.

This only if the Racer phone is good and is a commercial success.

To be continued ...

Benoit Quirynen

Identity Portability : a small mobile portability issue in UK reminds a global email portability issue nearly everywhere

For more than a decade, regulators in Europe have forced telcos, in a sense of teasing competition, to ease transfer of mobile phone number from an operator to another one. Today, nothing exist for email portability.

In UK, new rules applied from 2011 onwards still include a statement indicating that the consumer must first ask authorization to donor operator. UK is the single country in Europe where this preliminary authorization is required.

In the scope of identity portability, mobile number certainly is a key identification mean. But email is probably today as important for residential consumers.

Some petitions about email portability in order to restrict the power of AOL have been proposed to FCC in US. Email portability has been approved by Knesset in Israel. Where does European Commission stand for email address portability ?

Perhaps European Union should also define rules in this email portability area, some persons being locked with their ISP only due to their email address. And this regulation should not be restricted to ISPs. It should also be applied for email service providers in general.

Differentiation should then be done based on the service (user experience, availability, multi-screen, easy configuration, etc...). In my humble opinion, Gmail is today far ahead in this area.

Some will argue that anyone is free to buy a domain name. But complexity of configuration severely restricts adoption by the mass. So there is still a sense to have email service provider domain names.

There are several ways to bring technical solutions to this problem with different levels of facilities. There could be a progressive approach after a transition period.

Such a regulation would not necessarily hurt ISPs and/or telecom operators. On one hand, operator email addresses (e.g. x.y@belgacom.net) are the best anti-churn weapons for ISPs when they fight with their direct competitors. On the other hand, this pushes more and more residential consumers to migrate their digital identity to an over-the-top email service provider (hotmail, gmail, yahoo, facebook will follow - all in US).
Fighting against each other, European ISPs are collectively loosing an important service in their global communication offering, thus leaving the floor for (mostly US) players eager to grab more and more ground space in the service plane territory.

To be continued ...

Benoit Quirynen

Mobile advertising : slow growth rate or normal growth ?

Today, ABI research publishes new figures about mobile advertising. Worldwide market would reach 1.2 B$ in 2015. In 2006, analysts were announcing 12B$ for mobile advertising in ... 2011.

According to the same "ABI research" study, yearly market would reach today 313 M$, a bit more than 40 times less than expectations of 2006, 4 years ago. Last year, other analysts were predicting 5B$ for 2014.

Should we burn all analysis and even do the same with analysts ? What will be the actual figure in 2015 ?

Nobody actually knows. Figures published today sound much more accurate and realistic. On one hand, online has become much more mature, draining budgets from other media. On the other hand, mobile advertising starts to represent something, not necessarily the formats thought in 2006 but new formats, focusing more on respect of consumer. Moreover, start-ups and some big players started to grasp some requirements to build a scalable market.

Why is this so slow - reaching 10% of initial forecasts 5 years after initial target ?

The crisis probably did not help, directly hurting the amount put in the advertising envelopes. Moreover, analysts are sometimes paid by people expecting hockey stick shapes and thus tented to grow the figures.

But the main reason probably concerns the complexity to move an ecosystem and to understand the consumer expectations, complexity certainly underestimated by analysts. It took nearly a decade before Google generated decent revenues with significant volumes from search.
Some will argue that Facebook appeared on the market in 2006, now federating a bit less than 10% of "planet earth inhabitants". But Facebook had the chance to grow organically with no regulatory constraint (until now !), no need to make agreements with thousands of telcos worldwide (each with a different strategy), no need to align with local partners. And Facebook generated around 800M$ in 2009, mainly from advertising.

Will Facebook revenues continue to grow significantly ? At the end, it's a question of impact and volume. Does a "social ad" on Facebook prove the same impact as a permission-based targeted mobile ad ? Can Facebook compensate a possible lower impact by higher volume of "automated optin" ?

Will telco seriously engage in the race or will they passively wait for over-the-top players and device manufacturers to take the whole cake ? Will another Facebook or I-Phone phenomenon emerge in the mean time, keeping mobile marketing as a "second life" or "MySpace" ?

Considering all these constraints and resistance, if mobile advertising market reaches this 2015 figure, it's perhaps not so bad. But it could turn to be much more. It all depends on all of us - consumers.

To be continued ...

Benoit Quirynen

Treaty of Tordesillas in 1494 - a business split still under discussion for telecom

1494, Spanish and Portuguese kingdoms ruled a dispute about ownership of the new world. Today, Portuguese prime minister wants to make use of its golden share to prevent Telefonica to control Vivo Brazil, the largest telco in the huge - fast emerging - country.


In 1494, "Treaty of Tordesillas" drew a meridian line (Tordesillas meridian) to determine ownership of the new world : Western part to Spain (all known America), Eastern part to Portugal (islands on the way to America). At this time, it was unknown that South-American territory was extending eastern this meridian line. In 1500, only 6 years later, Cabral, Portuguese navigator, discovered eastern part of Brazil, de facto becoming part of Portugal according to the famous treaty. From this presence in Eastern Brazil, Portugal extended his territory to take more than 50% of South-America.

In 2010, Vivo is the largest telco in Brazil. Through a JV, Telefonica and Portugal Telecom control major part of Vivo. Both Iberian telcos struggle with declining revenues in their home country and consider Brazil as the way for growth. Last week, Telefonica made an offer to buy shares of Portugal Telecom in this JV. Portuguese government now wants to make use of its golden share to protect interests of Portugal.

Spain still has to pay today for an error of about 12° longitude, 500 years ago. When drawing a line to share territories in a fast evolving business, you never know how, where and when it will end ... In ICT, business agreements and M&A operations are often handled much too fast, under immediate market pressure, without clear understanding of the consequences, especially since a lot of new territories are still to be discovered in this domain. What will happen in ICT world 2016 ?

To be continued ...

Benoit Quirynen

Microsoft, the "GM of software" in 2020 ?

Less than 3 months after the launch, "the other Steve" (Ballmer) stops the Kin. This "youngster social network phone" did not really virally spread. There is no shame to fail once but repetitive failures can seriously hurt long term.

Microsoft is suffering a lot with new initiatives. They keep going below the radar with mobile. Their IPTV is confidential in terms of numbers because IPTV is rather limited worldwide. Nintendo Wii sets XBox nearly out of the shelves. HP bought Palm, giving up Windows 7 for tablet. This famous tablet could seriously damage their well established PC kingdom. Windows Live is nothing compared to Facebook. Hotmail is suffering from Gmail. Bing maintains a comfortable second position, never able to compare with Google.
Microsoft, the "General Motors of software" in 2020 ? Unable to choose a battle to win it, it tries to resist on all fronts. 


The problem is not short term. The big M generated more than 14B$ profit in 2009, mainly through Windows & Office. But on this battlefield, they are attacked by serious players.

For new races, Microsoft tends to become the "Poulidor of technology", always being a second or third, never winning one. They just can't invent a product consumers love. And for years now, each new trial, a kind of "Me Too plus minus something", damages their brand. Who is today proud buying a consumer M product ? Who will show off with a whatever "Windows xyz" ?


Some will say that Microsoft did never invent anything, just smartly copy-pasting. On the other hand, the same must recognize Microsoft brought scale to massive computer usage. 
Others will argue that, during last decade, nobody bought an M product because they loved it. It was just needed. At that time, this was sufficient to become #1. But a successful "20th century strategy" does not probably work the same way in 21th.


If Microsoft wants to build sustainable consumer products, perhaps they should press "pause button" during 2 years, just keeping pace on different fronts. They could then benefit of this period to invest and come back with something very innovative, an amazing product 1.0, something changing life, a product people love, implementing a dream.


After cash generated by W(indows), mitigated success of X(box) and failure of Z(une), will Microsoft focus on a "Y" product, something fundamental, even metaphysical in order to recover #1 position ? And don't tell me it's just about the "Y" of Yahoo, except if the ambition is about keeping (a less risky but short term profitable ?) #2 or #3 position, as GM in last decade.

Microsoft has cash. There are so many things to invent. Don't tell me they lack imagination and creativity !

To be continued ...

Benoit Quirynen