The 21st Century Global Summit 2007 Sounds grand doesn't it!
Flattery will get you everywhere my granny used to tell me and she was bang on. "Attendance is via invitation only" it says on the web site. I asked to be invited and I was. There began a truly Over the Top Experience.
Let's start with the venue - Blenheim Palace - birthplace of Sir Winston Churchill among its place in history. A beautiful late summer's day made for such a scenic setting that very few could resist getting their phones out to snap a few quick pics.
We even had a Gala Dinner and a tour of the palace itself to make us feel really important. It really was truly splendid...
So too was the accommodation. Although previous "guests" may not have found it so comfortable, I really had no cause to complain at the standard of the Malmaison Oxford. Perhaps that isn't quite true - the curtain blinds took a while to close - and I did talk to one delegate who made an art form out of critiquing the accommodation but I think that was just because he was hung over.
If you get the chance - and someone else is paying - do spend a night or two in this hotel which has been created in what used to be a prison. I was in solitary confinement, in the wing that used to house the real bad boys.
Then there was the conference bag - a Knomo Logan Briefcase worth nearly £200, especially inscribed for the 21st Century Global Summit. I guess the attendees liked it because, as yet, none have appeared on eBay.
Quite a Facade None of it was real. Amdocs spent their time talking to us about the gap between the perception that the telecoms industry creates of itself and the reality that it delivers. The conference itself was a fine example of this. After all the glitz and glamour of the palace and the prison, the conference itself was held in the stables.
Once we got down to business, you could see the core theme - Over the Top - emerging. Not just in the mirage that we had been presented with in the form of the venue, but also in the discussion about the telecoms future in the 21st century.
A New Catchphrase Over the Top is best exhibited by Apple and the iPhone. This poster child for all things good in 21st century telecoms shows how companies that run over the top of operators and use the new infrastructure to deliver their services are the ones that are winning.
Of course the consumer product is a fine piece of engineering, but what is lost on the market is that it would not have happened without some serious effort from AT&T. Apple were clearly wearing the trousers in that relationship, but here are some facts for you on AT&T's contribution.
40,000 development hours 130,000 feature / device eligibility restrictions 25,000 test scenarios 1,029 milestones 136 new activation servers
Why does this matter? Everyone wants to be loved, but that is not why this is important. A Harris Interactive Customer Experience study highlights the problem: 40% of telecoms customers are either highly or somewhat dissatisfied.
When they do things well, the best result is that telcos go unnoticed. When they screw up, people lose their internet or their phone - they lose their lifeline. 5 nines is simply not enough. The only way to keep customers happy is 100%. Which is asking a lot, especially when you consider the matrix of vendors and channels that also contribute to things breaking.
But it is vital. Telcos are trying to carve out a role for themselves in the future that depends on them being trusted as the guardians of the platform that ties all the pipes, pods, plexes and panels together. The new 5 Ps.
Trust. How do you build a trusting relationship with your customers when the only time they care about you is when you screw up?
The Platform to the Rescue The 5 Ps are straight from accenture, but they seemed to be describing a lot of what I have also seen but been unable to turn into such a set of buzzwords. Maybe that's what an MBA will do for you?
The Platform is very Telco 2.0 too, so there is clearly a consensus among advisers to the industry. This consensus says that telcos need to be open to external innovation but need to add value by providing the hooks that allow content to extend beyond the limitation of devices. These same hooks also allow devices to exist outside of the boundaries of the walled gardens in which they are sometimes created.
The platform is also the guardian of the identity in this model, which fits with some of my recently published pieces. It struck me however that it may already be too late. The identity and in fact even the whole platform piece could also be where the likes of Facebook and Google play.
Another Missed Opportunity I'm afraid my conclusion is that this is a good idea that should have been implemented 5 years ago. Now, there are other players in the space that can replicate the platform's core features without the need for hooks into the network. For sure, the hooks would make the telco version idealistically better, but by the time telcos have all built something consistent, the networks will be redundant because we will all have moved onto other planets in the galaxy.
It is hard to see networks being able to stay open, while closing off the opportunity for software based services in the form of social networks to go over the top and steal this position. Is this yet another example of telcos shutting the door after the horse has bolted?
Is it me or does this happen a lot? It seems that telecoms is forever trying to ride the last wave, rather than looking for the next one. We don't seem to take developments seriously until they are mass market, by which time it is too late. This year it is Facebook, last year it was IPTV. Prior to that we had Google, VoIP, IM, etc...
Innovation - Google Style It is worthwhile looking at how Google operates and contrast that with how telecoms companies do product innovation. Google bought 77 companies last year. Some, we may never hear of again while others will become features in Google's product set of the future.
There is of course a risk in buying companies before they have proved themselves. There may be no market, their plan may be crap, the technology may be flawed, but if one of these ugly grey creatures does turn out be a beautiful swan, the bad eggs can be forgotten.
Cisco did the same to build itself into the monolith it is now, and in both cases, the act of buying immature entities has meant that monopoly concerns rarely arise. How is a $100m acquisition going to flip Google into a monopoly position? Simple: it isn't - for a few years, until it grows by which time regulators cannot block the purchase.
Innovation - Telco Style What innovation? Perhaps this is unfair to many of the people who work in R&D and Product Development, but in the big scheme of things, telco innovation happens mainly in the marketing and pricing departments - not in technology. Gone are the days when Bell Labs and Martlesham led the way in device and optics development because those components were parts of the core network. Innovation now occurs over the top of these now mature entities.
I just don't think telco transformation is possible because the telecoms service provision market is so fragmented by artificial competition. This is where there is a huge difference between Google and even an enlightened telco.
Google operates globally, a telco operator has a small market in a restricted geographic niche. Because so much of the new platform requirement centres on ubiquity, telcos are horribly constrained in their ability to provide what developers need.
Which developer is going to build 4 different platform interfaces per country? They aren't are they? So the idea that a standard telco platform can be created is, I'm afraid, fanciful. Some of these companies can't agree on the day of the week, let alone a standard service delivery platform model.
Are Telcos Dead? This is a bleak picture that I am painting. Telcos can't innovate and they can't consolidate. Other industries can - notably software developers - so it is inevitable that others will win the battle for hearts and minds. Telcos will forever be the bad guys because the only time you care about them is when something breaks or you see a cheaper offer.
Oh dear, time for the last rites... But that is to ignore the simple fact that none of this exists without the network. Can Google exist without networks? Can Facebook? No, of course not - don't be daft, Jeremy - take away the networks and Google would have to build a replacement or they too would be nothing.
A Necessary Evil There is a stigma associated with becoming a commodity that telecoms has been fighting ever since the industry was born. This is propagated by the people inside who think something along the lines of "there is more to life than bits and bytes. My brain is too big for such mundanities".
Whether it is job protectionism or something more altruistic, I don't know, but it seems to me that perhaps what is required is an acceptance that this is exactly what networks are.
It is not just the networks though. I always find it hard to sit through a Cisco slideshow because I find it very hard to map the presentation to the reality.
Really, Cisco make routers. I'm sure they do: every time I have bought one, it has been because they are cheaper and offer better throughput that Juniper or someone else. And yet the slides talk of management, features and service layers and blah blah blah. I know price and performance are boring - but cut the crap and cut the cost.
I'm not picking on Cisco. Sun are the same and soon enough even the Web 2.0 application providers will fall into the same camp. We all grow old, but it seems that telcos are increasingly like some 1970s refugee that cannot shrug off the effects of Woodstock.
Conclusion We are all a means to an end and that end is getting ever further away. My clearest conclusion from such an over the top experience was that the value from our efforts is being created at least one and increasingly two steps beyond the traditional broadband value chain.
Once upon a time, getting onto the internet was value in and of itself because of the new things that you could do with email. Telcos could realise that by charging for access to email. Job done.
Now though, the value comes in being able to choose which car to buy without having to leave your house. It comes in being able to live in a beautiful and yet cheap setting and work from home instead of commuting. How does the monetary value of that flow back through the broadband value chain to pay for the networks that make it all possible?
It needs to - somehow - because the networks need to be paid for or they won't get built. We tried that once before and have used the get out of jail free card already.
But is there light in this very dark picture. Telecoms companies offer interconnection and routing. These skills are needed - on the networks of course - but also to manage the flow of money through the value chain. Route the packets, route the money. Result?
# posted by Jeremy Penston @ 9/17/2007 12:21:00 PM 0 Comments
Wednesday, 27 June 2007
Article 565,801 on the iPhone
Drop the cynical "not another iPhone story" and take a step back for a minute to think about what you are seeing. What can you pick up from it about how marketing works in the early 21st century? I'm not going to give you any answers, just guide you along the way.
The hype is self fulfilling. It starts with suggestions on the grapevine that there is a secret project from an established brand to revolutionise an industry. No-one except the gadget-freaks care but still, denials are issued that add to the intrigue. Then after the fuss has died down, bang: a beautiful picture of an elegant phone and an agreement with one of the most powerful players in the field. Mass coverage, "game-changing" promises...
From this point on, Apple's marketing was turned over to its fan base. Occasionally, leaks would emerge to add fuel to the fire and then in the lead up to launch, a three week crescendo. This started the week before their annual conference a few weeks back with another biggie (the YouTube deal) from which time its been a case of "an apple a day keeps the doctor away". Little snippets have been emerging, encouraging speculation about the product, the price plan, the launch, in fact anything and everything.
It reached the point where Gizmodo called it The Jesus Phone, at which point Apple, before even launching the product, knew that their project was a success. Since the initial announcement in January, there have been 6 formal press releases from Apple on their baby. Five mega-journos got an iPhone to play with and all had to promise to hold their stories until yesterday (and say nice things no doubt). The rest has slipped out, been picked up and has developed a life of its own. Those 6 releases have been turned into 565,800 articles, according to Google Blog Search. Hence the title of this piece.
Importantly, the price of the iPhone has been kept hazy for as long as possible. Clearly not wanting to put people off by telling them the $2,000 story, this hasn't been high on the agenda until now, but after all the first-day-freaks have paid their dues at the altar of St. Jobs, the real work begins.
Getting people to make a rational decision to switch, rather than an irrational decision to consume, is going to be a long slog. There is a strong base of iPod fans with a connection to the brand that might be expected to lead the second wave of sales, but these folks have a phone and an iPod already.
Maybe they will want to join the new wave revolution, but even these people will be tied to mobile contracts for a period of time which will allow them time to see through the hype and look at the reality faced by the early adopters. If your iPod works, why do you need to spend silly money on a phone to replace it? If you want to upgrade your iPod, a) is the iPhone really an upgrade with so much less capacity and b) you already have a phone.
A new feature in all this is that this is Apple first, AT&T in the shadows. We have seen handset fashions dominate the network provider's offerings in the past and rightly so. There is not much you can do to sell a network with its invisible benefits highly visible prices, but the iPhone takes this to the extreme. Apple are wearing the trousers in the deal with AT&T, they are the brand. Here buy an iPhone, (whisper) sorry but you need an one of our contracts too...
What cannot be avoided for long is the price of the units, which are out of line with their 10m volume prediction by the end of 2008. Am I the only person who is astonished that the smallest rate plan is for 450 minutes, which to me is huge - no wonder it is so damned expensive? There is a small niche being targeted here...
They have to get to people who never thought they needed a smartphone to go out and get one, and this is not going to happen at these prices. They have two crucial Christmas sales periods but do you really want a present that comes with a bill for $60 a month? Mums and Dads aren't going to fall for this expensive gimmick, so you'll need a nice girlfirend if this is how you plan to get one... Will it be a quick dose of ecstasy when you open the box followed by the realisation that you are hooked into an expensive monthly commitment?
It seems that Apple's past is going to gift it an entry into this new market, much as the Virgin brand allowed that company to cross over into new markets. Clearly, the launch is going to be a success and sales figures are going to be thrown around like confetti by proud Apple execs. But the real work starts now for them if they are to avoid the post launch slump that followed the similarly hyped launch of the PS3 earlier this year. That was a product which sounded great but is turning out to be a little too pricey for most. Is the same going to happen to Apple?
# posted by Jeremy Penston @ 6/27/2007 06:57:00 PM 0 Comments
Monday, 25 June 2007
iPhone Mania
It's easy to be jealous of Apple. They are in your face and they are successful. You see their little white earphones on fellow commuters in the morning, you hear them brashly disparaging competing products, and you read about them. Not just here, but all over the web. iPhone Mania is here and all for a product only available on AT&T's network in the US.
Bloggergeneratedcontent, mostofittoo. The PR department doesn't have to do a lot - just a few tidbits to the gadget freak bloggers out there and they're away. Sitbackandwatchthehypebuild. Unlike many gadgets though, their products break into the mainstream because Apple has that intangible - coolness.
The company was born on April Fools day in 1976... A child-prodigy, they took on the bullies in the playground with the Apple Lisa and got a whipping. Undeterred, they bravely came back for more, stronger and better looking with the Mac. Suddenly they were the teenager everyone wanted to be friends with (and more).
Whether it was hormones, or just being a stroppy teenager, the company went off the rails in their late teens until they hit a golden streak in their 20s with a change of tack, the iPod. Now, having just turned 31 and backed by AT&T and Google, the company is ready to take on the world (starting with a small corner of the United States).
The ups and downs of the Apple story, together with the visual brilliance of their product design make people want what they have to offer. Their exclusive with AT&T is for two years during which time expect to see significant iPhone driven switching.
What is happening is that the US mobile phone market is, perhaps for the first time, becoming style concious. Things have always been thus in some markets... I remember sitting in a cafe in Milan one evening in 1998 watching as the Italians strolled past, Nokia held casually in position as they stalked up and down the strip. Phones have always been a fashion accessory in Italy, but in the US, they evolved from pagers and were for years worn on belt-clips like an old fashioned gunslinger. At least the iPhone puts that to bed.
For sure, the AT&T launch will be a success in the US. Pre-orders and waiting lists show that to be a slam dunk as long as the yet-to-be-announced pricing plans don't get in the way. Are they hiding something by not publishing them yet? Of course they are. They don't want the details to get in the way of a good story.
This whole piece is a touch peculiar to me. On the one side you have a service that needs high bandwidth and on the other a network that is increasingly using 3G, and yet the iPhone device stitching them together is boasting EDGE, with 40 - 200kbps connectivity when the network is capable of so much more...? Of course the iPhone has a WiFi connection, so YouTube clips can still be downloaded over broadband, but its not ideal. Who's not ready? Apple or AT&T?
The irony of the Google -> Apple -> AT&T link up is surely not lost on those who watched the Network Neutrality debates. Has Google vs AT&T become Google + AT&T? Do you think that YouTube is going to get the same best efforts wireless connection to the iPhone or will we see QoS used to make sure that Google gets to its public "best on AT&T"? Google using priority routes..? Never.
Which brings me onto the other piece of "where next for the iPhone?" Starting with a small corner of the United States is a strategically good move. It gives the perception of scarcity, adding to the coolness of it all for those on other networks and in other countries. It also gives Apple a controlled ramp up minimising the impact of any critical post launch issues faced. It may also have been a strategically necessary move for both parties too. It is understood that the AT&T network integration required was not trivial but was driven by AT&T's desperation for an icon to drive its rebirth.
But it is only a start. It is this ability to start big and get bigger that gives Apple much of its kudos. They have set expectations high in the past and have exceeded them. For different reasons, regardless of whether you are a new entrant or an established network operator you have a decision to make about how to approach Apple. They don't need you, but you might need them...
Of course, there are new entrants in many markets that would bite Apple's hand off for the chance of an exclusive in their territories, and that is the threat to all established operators worldwide. Here is a device, which in your competitors exclusive hands, could suck you dry if you let it. You'll no doubt see an emphasis targeting the not so unique touch screen USP with devices like the latest UTC or Prada phones.There are plenty of other devices which work the same way, and for them, the iPhone is a probably good thing because of the knock on impact. For the operator however, having the real thing on your books might be precious.
Its a dog eat dog world, right? Will operators stick to the "lower subsidy" policy, or will they go for broke and launch another device subsidy price war, either to sell or beat whoever is selling the iPhone? Apple don't care, they still get paid, as will the makers of other smart(er) touch screen phones. Will operators never learn...?
Or is it that they have no choice. Your money or your life? Certainly, in order to prevent an iPhone led exodus onto a competitor's network some pretty drastic sacrifices might be required.
We have seen device led markets, but have we seen anything "game changing" as AT&Ts CEO would have us believe the iPhone is? Has a handset manufacturer ever sailed so close to the wind with its lock in to an exclusive network? Probably not.
But does Apple not also need the operator? They are clearly getting a lot from AT&T!
Will Apple be blown off course as it tries to cross the Atlantic and Pacific Oceans to negotiate the countless treaties it needs to extend its reach? Will it be able to get its network rolled out before the rest of the market catches up? This is Apple's biggest weakness, and crucially is not something it faced with the iPod.
The iPod worked with a USB connection into any internet enabled PC, for anybody who bought one or was given one for a present. The iPhone is not the same. The iPhone is part of a system that requires elements in the network to make it operate as it should. Apple needs to work with the system. Can it do that or does it's coolness genetically predispose Apple to fight the establishment? Will it be coolness or jealously that wins? YouChoose.
# posted by Jeremy Penston @ 6/25/2007 06:25:00 PM 0 Comments
Tuesday, 12 June 2007
Make time for this
I recommend that you read this excellent argument that "the iPhone is not the next iPod" on fastcompany.com. While I disagree with my interpretation of the headline - I believe that mobile phones, including the iPhone will eventually render your standalone iPod surplus to requirements - that is not in fact what the article argues.
The conclusion of this excellent, balanced analysis is that "The iPod set an impossibly high bar, one that the iPhone will not match or even come close to. But the new device could still be very successful, particularly in the long term." Like I say, well worth the read.
In the piece, Steve Jobs is quoted as saying "we are all born with the ultimate pointing device - our fingers" which links well to something else you should make 10 minutes to think about. Jobs may be right about our fingers being good for pointing at things, but we are also (hopefully) born with the ultimate browsing device - our eyes. I saw this link on The Register which for me at least, certainly had the wow factor. Seadragon, Photosynth... Microsoft. Remember those names.
The application reminds me of the old fashioned micro-fiches that you used to find in libraries. There is also a bit of James Bond about it, but most of all it's Dirk Gently's fundamental interconnectedness of things. I won't say any more - have a look for yourself!
# posted by Jeremy Penston @ 6/12/2007 11:53:00 AM 0 Comments
Thursday, 7 June 2007
Be aware or beware?
My apologies to those who have seen this before. Maybe I'm just dumb. I am certainly dumb-struck...
Whilst catching up with my morning reading, I saw this advert for the iPhone on NewTevee.
"Whatever it is, it's incredibly advanced...", oh yes?
"It seems to have sort of a touch-screen interface...", that's the blue flecks mate.
"Is it an iPod, captain?", "No, its something much, much more, and it's going to change everything", I'd better get my coat then. Or do I need a spacesuit?
For further amusement, also have a look at the "I'm an iPhone... no you're not" and the "iPhone Commercial - Newton" where the cool new device on the block has a swipe or two at the current geek-squad.
When I did my marketing-101 courses, I was always told not to slag off the competition. It makes you look like a bully. Either the rules have changed, or Apple have chosen not to play by the rules. Perhaps Apple's target market want that edginess? It certainly gets you noticed.
Marketing is changing and here is a prime example. Does it work for you? Do you want to be associated with the brand? Will your teenage kids...?
# posted by Jeremy Penston @ 6/07/2007 12:53:00 PM 0 Comments
Wednesday, 6 June 2007
Little blue flecks
"Nokia N95. It's what computers have become", so say Nokia in their promos.
They could however just as easily used "It's what music players have become" or "It's what cameras have become". Heck, they could even have said "It's what mobiles have become". After all, that's still what it is. A phone.
The iPhone is a phone too. But it's a launch product that needs some razzmatazz to break the mould. It is a statement of intent not for one, but for two new companies hoping to establish themselves in the Mobile Phone world. New AT&T need a visionary statement as much as Apple do, in what for both companies is an attempt to reshape the status quo.
As this is the US market, the headline is the price for the iPhone itself ($499 or $599). If this were Europe, the price would quickly be subsidised down by the networks in exchange for a 12 or 18 month airtime contract. For example, the Nokia N95 retails online in the UK for around £400 (nearly $800), but if you buy airtime (from O2 for example) by paying £25 a month for 18 months, you can get the N95 for half price. Pay £50 a month for that period and you can have the phone, gratis.
I would not be at all surprised to see AT&T go down that route in their launch too. The currently published headline price is teasingly high, painting the image of a quality piece of consumer friendly electronics. If you could get the iPhone (with a contract that you need anyway) for half price, it feels like a steal, right?
After a period of time (after the Christmas sales perhaps), expect to see the core offering reduced further in price and a higher spec device appearing at the old, higher price point. That's how computers have evolved and as Nokia reminds us [the phone] "is what computers have become". Or should that be the other way around?
Apple may be portraying the iPhone as a new market entry, which it is into telephony, but are no doubt aware that it is also a replacement for the iPod. The data pricing plans are still a hindrance, but the Sony Walkman series of phones are clearly attacking the iPod's core market and have been for some time. I highlighted this threat in a research piece last year. Apple could not afford not to have an alternative if / when these barriers are removed. Who controls these barriers...? AT&T for one.
What price (in AT&T's bundle) unlimited free data "calls" to iTunes...?
The iPhone will probably not do well with Crackberry users, who will simply not have enough time to spare in between emails to switch over. Where the iPhone could do very well is in the anti-blackberry market, where consumers want mobile data to mean "fun" and not "work".
I think the iPhone will do particularly well in the US where the above phenomenon is at its most acute, and also because for once (in mobile at least), the iPhone is something that was invented here. Americans like their own brands best.
So how will it do in Europe if / when it arrives? Debatable perhaps, not least because of the issues of embedding technology with so many different network partners. The competition is probably already more intense, what with the Prada and the HTC already being available, there is time for others to be ready when Apple comes to market. There is certainly cause for some scepticism that the iPhone's initial targets will be missed.
It may also depend on whether Apple can find network operators as desperate to make a statement as the new AT&T is, or whether the iPhone will just end up on page 33 of their catalogues. H3G perhaps? But their coverage sucks, so why would you?
Hearing all the buzz around the iPhone this week has reminded me that once a market reaches maturity, the brand and the package are all that count. But a phone is a commodity and commodities are about brands. It no longer matters whether the product A is better than product B because in fact, it is often impossible to tell which is better.
So many features and so little time to compare and prioritise... As long as they both work, the brand wins. Apple are good at branding, but then so too were Virgin.
In the end, what matters is that you trust the product and you buy it because it looks, feels, sounds and smells good. It reinforces your view of yourself and your position in the social hierarchy. Think washing detergent.
Touch screen interfaces? The little blue flecks that confirm that what you are getting is not simply cheap white powder...
We even had a Gala Dinner and a tour of the palace itself to make us feel really important. It really was truly splendid...
Then there was the conference bag - a 
Once we got down to business, you could see the core theme - Over the Top - emerging. Not just in the mirage that we had been presented with in the form of the venue, but also in the discussion about the telecoms future in the 21st century.
