Monday, 28 February 2011

Britain's 20 Favourite Brands eh? Brits give telecoms the thumbs down.

The Centre for Brands Analysis has just published the results of its 2011 Superbrands index of Britain's favourite brands. For those of a telco persuasion, I'll summarise: nothing. Not a sausage. None of the top 20 are telcos. No BT, no Virgin Media or Mobile (Atlantic's in there though at #17), no Vodafone, no O2. No Nokia. And before you ask, no, this isn't limited to British companies. #1 is Mercedes.

The interesting thing from a telecoms industry perspective is that the unholy trinity (as I shall start to call them...I expect you to follow suit) of Google, Microsoft and Apple are in there at #5, #6 and #9 respectively. That's right kids, Apple is less popular than Microsoft. All of you who thought that Stephen Elop's decision to hitch his horse to the Windows Mobile bandwagon was a case of an increasingly uncool brand buddying up with an already uncool brand were wrong! Of course I'm not party to exactly the definition of popularity used in the survey.

It is interesting that as far as telecoms is concerned, hardware and carriage are nowhere (except for Apple making the devices they sell, but the hardware ain't why people buy Apple, see the whole rigmarole about the death pinch). Software is king. Five to ten years down the line those three firms will account for 90% of the smartphone market. They've won the hearts and minds of the public and they've won the battle of the value chain.

NB - BA is a strong #8 which surprised me. I've flown with BA three times in the last fortnight and there's been some kind of screw up on every flight. It can't last surely.

Friday, 18 February 2011

MWC 2011 pt 2 - M2M as a bottom up evolution?

I dealt with all the news at Mobile World Congress 2011 in the last MWC post but didn't really refer to all the lovely M2M discussions I've had during the week. Lots of really interesting stuff. One thing that came up is whether the consumer rather than the enterprise will in fact be the main driver of M2M. I'm not yet convinced but there is certainly an argument there.

There is a big assumption about M2M that it will be driven by big deals between MNOs and blue chip firms such as EDF, Glaxo SmithKline and BMW. Clearly deals for tens of millions of SIMs will make the market take off. However, to date, we've only really seen these kinds of deals where there has been some legal requirement such as eCall or automated meter reading in Sweden.

Glancing for a moment at AT&T figures for M2M units it's evident that there is a massive spike associated with the launch of the 3G Kindle. Slow and steady growth from traditional M2M applications gives way to rapid take off, courtesy of consumer adoption.

It's debatable whether a consumer electronics device such as the kindle should really count as M2M. However, even in the much safer territory of smart metering, consumers are in a position to drive this. UK Smart Metering Group offers a product that users can install themselves to allow them to track electricity usage. The benefits to utility companies of installing smart meters is evident (not least that there is no need to send someone to read the meter). However, they still delay on roll out. But it's not just individuals. Companies can elect to install smart meters at their own premises in order to monitor their energy usage and reduce their bills. Better than waiting for their utility to do it.

So, if you want rapid growth in M2M, the general rule is to find something that the end users will buy themselves. There are also, of course, some cases where enterprises have been in the forefront of pushing M2M. This is usually where it gives such an obvious and demonstrable benefit that companies would be idiotic to ignore it. Security is one application. The other is transport and logistics.

So that leaves us with three main drivers for M2M growth:
- legislation
- ludicrously obvious business benefit
- consumer push

When thinking about which M2M applications will dominate you could do far worse than to just take those three characteristics.

Thursday, 17 February 2011

MWC 2011 pt 1 - Nokrosoft, Google, "4G", regulation, tablets and LTE

Mobile World Congress is over for another year. My feet are sore, I'm glad I instituted a no-drinking rule and I've worn more make-up this week than in the rest of my life put together. Here's my round-up of some of what I saw at MWC.

In the news
As usual I didn't get to see any of the congress sessions. I was just too busy with briefings, client meetings and generally spreading the word about Machina Research. I was aware of some of the goings-on though. Stephen Elop was ubiquitous on the back of his striking move to hitch Nokia's wagon to the Windows Mobile OS horse. He has a lot of explaining to do and MWC seems to have been the place to do it. Apple in contrast didn't turn up as usual, and couldn't be bothered to collect their award for best handset, and were roundly booed for their win. Mike Short of O2 picked up the award after certain others turned down the honour. Elsewhere Google's Eric Schmidt was very complimentary to MNOs about their investments in access networks. At the same time he alluded to the argument about how maybe content providers should pay toward delivery. I won't rake over this one again, but content is the reason people buy access. Notwithstanding all the net neutrality arguments, if network operators demand payment from CPs those CPs may start to demand payment from the operators for providing their valuable content. Subscribers pay for access. That's how it is. If network operators can't make a profitable business out of that then more fool them.

Other interesting news for me during the show, and discussed on the Mobile World Live TV Analyst Daily panel were T-Mobile bringing "4G" (in the form of HSPA+, don't get me started on why that's not 4G) to Europe. Vodafone's Vittorio Colao complained about regulators being out of touch, particularly with regard to mobile termination rates (MTR). This view was echoed by Telekom Austria's Hannes Ametsreiter in the Show Daily mag. Changes to the termination regime (i.e. very low MTRs) will mean low spend users become less profitable and they'll see prices go up. Also, if you thought it was annoying having double-glazing salesmen call you at home, wait til they start calling your mobile (which is a bit too expensive today).

Less interesting (as anyone who saw my very uninspiring response on MWLTV) was the likes of LG's 3D screen and other breakthroughs in mobile phone technologies. I just don't care that much.

LTE - Wait and see
Also interesting was O2's selection of NSN for LTE deployment in Germany. NSN seem to be really kicking on in LTE courtesy of their market leading position in LTE Advanced. Germany is a rather unusual case as the regulator has imposed LTE rollout requirements as part of the digital dividend and 2.6GHz licence awards. One suspects that the German operators would have towed the European wait-and-see line if there had been no such obligation.

The ability to sweat HSPA+ really seems to render the advantage of moving the LTE useless. For 3GPP2 players like DoCoMo and Verizon it's obvious as they don't have access to the HSPA upgrades. Sprint, the only major global MNO to adopt WiMAX, even admitted during the show that it was keeping its options open for shifting to LTE. For smaller WiMAX players like Russia's Yota, shifting to LTE is reasonable as it's a bigger market so unit prices should be lower.

But for 3GPP operators the advantages are modest. This week I heard Ericsson talk about upgrades of HSPA+ to 168Mbit/s and NSN was even talking about 672Mbit/s. I've heard from a few sources that where there are no licence requirements for LTE most MNOs are going to bide their time.

Keep taking the tablets
There was a lot of news on tablets with launches from Samsung, RIM and HTC amongst others. All very interesting but it's yet to be proven that there's a massive market here. And it's not all about who can make the best hardware. Apple wins because their end-to-end experience is better.

An M2M roundup will have to wait...
I've not really mentioned M2M here. There was a lot of it about, not least driven by the GSMA. I think all that's good in the world of M2M is deserving of a separate blog post (or two). Keep an eye out for that in the next few days...

Saturday, 12 February 2011

DTAG and FT/Orange announce strategic co-operation on M2M

A very quick pre-MWC blogpost on what could be the most important long term news from the show. What with all the talk of burning platforms and the alliance of the Steves (Ballmer and Elop) there was an announcement on Friday that didn't attract quite as much attention. DTAG and FT/Orange announced a cooperation agreement covering various areas including network sharing (good idea, everyone's going to do it), WiFi, equipment standardisation and lots of things to do with M2M. See the press release linked above for more details.

Orange has upped its game in M2M during the last 12 months and looks to be doing well, while T-Mobile has been going through a bit of a reshuffle in order to focus on the changing opportunities. So it's interesting that they're tying up. A bit of co-operation to build a market is no bad thing. Particularly one as nascent and potentially huge as M2M. Also, Vodafone is starting to take advantage of its regional scale and T-Mobile/Orange kinda need each others' footprints (a bit like Nokia and Microsoft) if they want to head off their threat and that of the likes of Jasper Wireless. It's interesting that the most specific piece of the deal is for M2M cooperation across France, Germany, Belgium and Luxembourg, i.e. the heart of Europe.

It's only a cooperation arrangement right now so let's not get carried away though.

Tuesday, 8 February 2011

The obligatory pre-MWC post

I, in my new role at Machina Research, will of course be in Barcelona for Mobile World Congress next week, along with my colleague Jim Morrish. We have many many interesting meetings lined up. I'm looking forward to this year's event more than any I've ever been to for years. Lots and lots of lovely M2M (sorry "Embedded Mobile") and mobile broadband stuff is anticipated. There will probably be some handsets launched as well for those that are interested in that kind of thing. And some people will win some awards.

While we have a busy schedule you should have the chance to catch up with us some time during the week. Jim will be a fixture in the Embedded Mobile congress sessions all day on Thursday, while you can catch up with me in an around the GSMA's Embedded Mobile Seminar on Tuesday 15th from 1pm to 5pm (and possibly afterwards for a drink or two). Drop us an email if you'd be interested in meeting up: Matt, Jim.

Also, see us in glorious technicolour on the GSMA's Mobile World Live TV which will be shown on giant screens at the event, streamed to hotels across Barcelona during the week and available at the website during and after the event. Catch me on the Show Daily Analyst Panel from 9.20 to 9.35. Jim will be recording a piece for MWLTV on Sunday on what he sees as major trends in the industry.

Any members of the press out there who are likely to want commentary on the big breaking news, please send me an email and I'll send you my phone number.

Could M2M be a driver for UMTS at 900MHz?

One of the recurring questions related to M2M is technology roadmap and this is an area we're going to be looking at a lot at Machina Research over the next year. Given the 10 year+ lifetime of the terminals (electricity meters etc.) customers don't want to invest in a technology that's going to be turned off and the MNOs don't really want to keep a network going longer than its natural life span. MNOs are definitely moving in the direction of refarming their GSM spectrum for UMTS which appears to put the kybosh on selling too much M2M. A conundrum.

There's a lot of spectrum at 900MHz and particularly at 1800MHz that could be used more efficiently and the MNOs know it is likely to be economically imperative in time to migrate to UMTS. I have my own views on whether it makes sense to abandon GSM altogether, whether it's viable to maintain GSM/GPRS indefinitely to support M2M and whether in fact it would be more simple to just switch off 3G and run with GSM and LTE. But that's not what I want to explore today. The consensus (which I don't happen to agree with) seems to be that MNOs intend to switch to just running two networks (UMTS and LTE). If so, what are the implications for M2M?

The logical thing to do is to go for UMTS 900 as fast as possible. In fact if anything M2M would be a driver for migrating. The logic goes like this:
  • M2M requires 900MHz - lower frequency is generally better for coverage (particularly in-building), although for the latter it's not quite as cut-and-dried as some might have you believe.

  • Refarming of 900MHz to UMTS will happen eventually so any device requiring GSM/GPRS at 900MHz will be rendered useless.

  • No-one wants to change horses mid-stream (to borrow an election slogan from George Dubya). The technology needs to be in place before widespread distribution of units. Otherwise you alienate your clients or incur significant additional cost.

So, why wait to go to UMTS900? You might as well jump quickly and then you can start selling future-proof M2M solutions rather than ignoring the opportunity for fear of selling something that conflicts with your technology roadmap

Of course I've skirted over a number of issues here. Module costs are significantly higher for 3G than 2G which makes it naturally less attractive for low bandwidth applications. As a result there will be pressure from customers for retaining 2G. MNOs may not abandon trusty ol' GSM at all (which I tend to believe). But, if they do plan to, getting ahead in M2M might be an incentive for doing it quickly.

Wednesday, 2 February 2011

Connected cars: real-time data means new business models for many motoring-related industries

Over the last couple of days I've been looking at various applications of M2M in motoring and the automotive industry. One interesting dynamic that emerges is that connectivity to vehicles allows a shift in motoring-related transactions from batch to real-time with major implications for new business models in associated industries. Wherever a business model can take advantage of real-time information we can expect change.

On a basic level, M2M is most applicable where the connected 'thing' is mobile (and so it can't be attached to a cable) and where it benefits from real-time transfer of data for some reason (such as a heart monitor). Cars certainly fit into the first category. Certain applications also require or substantially benefit from the latter, such as in-car entertainment. There are others which don't require real-time data (i.e. they've been functioning fine without it until now) but where the availability of such data can open up new opportunities and create new challenges.

Take satnav for instance. Companies involved in that market were historically involved in selling boxes with little after-sales support. Now that satnavs are becoming connected the relationship with the end-user changes to a term relationship, i.e. x per month. This is a fundamental shift from device vendor to service provider. The nav companies are working through the implications for support and customer care.

There are numerous other examples where motoring-related services and payments will be changed by connectivity. Today in most countries people pay road tax on an annual basis regardless of how big their car is, how much they use it, where they go etc. A fairer* system would include charging for road use based on all of those metrics. M2M can, obviously, create a system whereby users' driving is tracked and appropriate charges applied. So far so good. The usage is definitely mobile. But not necessarily real-time. Users would probably pay on a monthly basis anyway, so uploading usage on a monthly basis would be fine.

With car insurance the ability to charge real-time could have more substantial implications. With insurance you effectively pay your premium based on how you've driven in the whole of the last year. If you didn't claim, it should be a bit less than last time. With connected cars your insurance company can microbill depending on how much you're driving, where you go and how good/bad your driving is. Too much doughnutting in Tesco's carpark and you'll be charged extra. Again, this could be done in batch form, although in an extreme case, a driver could be informed that their insurance would be invalidated if they continued to drive at 90MPH. That needs real-time information transfer. The inclusion of real-time raises the prospect of a whole new dynamic for how insurance is charged for. Prepaid has been well established for mobile for many years, courtesy of real-time charging. The ability to measure in real time opens up the possibility for industries such as car insurance to introduce innovative new charging methods such as prepaid.

*I was hesitant to use the word as these fairer systems almost always end up costing the public more overall than the less fair systems they replaced.