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Gphone vs. iPhone – suggestions to Google for a winning gameplan August 29, 2007

Posted by John in 8800, AIM, amp"d, blackberry, email, google, gphone, iPhone, john mckinley, mobile advertising, mobile search, Opera, pico-pop, tmobile, wifi, xohm, yahoo.
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With all the dialog about the GPhone effort, starting with a “launching in two weeks” post 3 days ago until now, I though it made sense to see what facts existed to-date (“pretty sparse” would be an understatement), and what people were forecasting about platform, positioning and timing.  

Gphone

I think the article in the Wall Street Journal was, in this world of uncertainty, the most reasonable conjecture about Google’s overall approach and timing regarding the Gphone (and Google’s mobile aspirations).  The article highlights were as follows:

  • Google is focused on developing the software stack for the mobile phone, using Linux as its foundation
  • HTC working on multiple form factors for consideration
  • Launch timing is a potential 1H08 event
  • T-Mobile is potentially the lead US carrier partner, with a desire by Google to also partner with Sprint’s 4G Xohm effort
  • The strategic rationale is to extend their PC franchise leadership into the mobile search and advertising arenas
  • The efforts so far are viewed as lacking the sizzle of the iPhone.

No real surprises here.  Google is smart enough to recognize that working on a reference design and getting multiple manufacturers behind the effort is the only way for a company with no consumer hardware gene-code to succeed in this brutal market (they are avoiding the fatal flaw of Amp’d here).

There is no way for Google to match up head to head with Apple’s iPhone – that’s just not a winning playbook.  I wouldn’t attempt to compete based on the device’s cachet/PMP capabilities.  Think of all of the roadkill who tried that and failed (Creative, Microsoft, et al).

So where are the veins to mine to position the GPhone as a game-changer?  Here are my thoughts on building a great value proposition:

Bring phone-based value-added GPS to the masses.  Google’s first efforts to GPS-enable Google Maps are nice, but the real opportunity is to be the first person to bring a Telenav-like experience to the mass market as part of my data “entitlement”.  I have been using the Telenav solution on my Blackberry 8800 for about 2 months, and I ditched my Garmin and use it exclusively now.  If you want a transformative platform to drive new thinking in local search and advertising, is there a better starting point?  I don’t think so…

Give me a browser that works well in both rich bandwidth and limited bandwidth environments – Opera is a great choice here, and their proxy approach will give you more intelligence/insight.  I love the iPhone browser, especially when I am wifi-connected, but I want a solid performance in lower bandwidth settings, and Opera has the thought leadership here.

Learn from 7+ years of Blackberry history and fix your rich email client.  Biggest thing that bug me:  You have way too  much dependency on the concept of a session.  I can’t stand getting the re-authentication requirement when I go in and out of coverage.  Blackberry championed the concept of spoofing the concept of a persistent session, not requiring it – steal shamelessly here and fix you bits.  Other things to fix (speaking from my context as a user of your Blackberry client):  enable click-to-call when you see a phone number in my email, support blackberry cut and paste functions, and give me a credible mobile calendar interface (it’s way too buggy).

Make the wifi handoff experience as seamless as the iPhone – maybe even give me full session mobility when it makes sense (especially in a voice-related session).  I loved the pico-POP idea T-Mobile is championing (turning my wifi access point into a pico-POP in their network, if I have a dual mode handset).  Help them make that a broadly implemented reality.

Statement of the obvious: Widgetize the phone experience - have both you and, most importantly, your carrier partner encourage supported platform extensions – T-mobile is a great potential partner, given their current US market share.  Apple may drag AT&T across the finish line on this topic eventually (the latest news about AT&T’s crackdown on iPhone unlocking isn’t encouraging), but you still can be the first mover.

Make my mobile search experience yield a “great first choice” result – the 10 blue link model fails miserably, translated to mobile.  Yahoo’s mobile search is beating you here today.

Deliver a great IM experience that integrates AIM (at a minimum) – leverage the AOL interop deal and deliver on the AIM community interface – Gtalk alone will fail to impress.

Proactively support VoIP – if it is a truly global product, give me Skype support Day 1.

Learn from the mistakes of others in your mobile advertising plans – a few targeted messages a day can get you 10x click-through – don’t use the current web ad models as your frame of reference.  Mobile advertising, done well, can deliver real consumer value – I’ve see it done.

Give me better sharing between my mobile and PC experiences (Yahoo remembers mapping locations I use on my PC when I am mobile – you don’t). 

Most importantly, sex sells – don’t ship a pedestrian form factor – the iPhone has set the bar pretty high, and people’s expectations of you, even managed, will still be pretty high.

Should be simple ;)  I can’t wait to see what comes out of Google’s effort over the next six months (Both the results of the 700 Mhz auction and the Gphone launch).  We need catalysts to drive change.  The iPhone is a great start, but at its current price point and with a carrier partner still undecided on the degree of openness to support, we need the power of the Google brand to drive the whole mobile ecosystem to a new level.

Amp’d short circuits – will any MVNO ever succeed long-term in the US market? July 23, 2007

Posted by John in 3G, amp"d, Boost, helio, MVNO, SK telecom, Sky Dayton, Sprint, verizon, Wimax.
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So now we have the second big public service turn-down scheduled for later this week, Amp’d, who mentioned to its customers it might be going off-air Tuesday, 12:01 a.m (Update: they bought another week’s reprieve, and now plan to turn down service on 7/31, hoping to use the week to find a better exit, which looks like a sale of whatever subs remain to another small MVNO called Prexar Mobile).  The company is also now auctioning a number of physical assets as well, but I already have a drawer full of non-functional handsets ;). It looked like it was working hard to get a temporary bridge agreement with Verizon to keep the service alive, but this latest announcement leads to the conclusion that things did not pan out. Unlike the SunRocket business problem, I do think there is room for MVNOs as a business segment. The question is whether or not the US market and its carriers will support development of a wholesale market in the US.

If you look at the MVNO business globally, it is really quite robust. I pulled this writeup listing some of the major European MVNOs, and you can see how that market has grown.

For those not familiar with the term, MVNO stands for Mobile Virtual Network Operator. It is a fancy term for a cellular retail business who buys its bandwidth from wholesale providers (it doesn’t own any spectrum, cell towers, etc.). This sector really grew out of dynamics in the European and Japanese markets. Some of the catalysts that drove cellular companies there to create a wholesale offering were:

  • The fact that that networks in their markets were, for the most part, all using common frequencies and technologies, making for a more efficient market.
  • The economics of being a wholesale provider proved to be attractive, eliminating the impact of ongoing issues of retail customer churn and high customer acquisition costs to the wholesaler.
  • The cellphone infrastructure had a high fixed cost base, and getting more customers (retail and wholesale) to cover that nut made economic sense.
  • A number of carriers had big debt burdens they saddled themselves with through irrational bidding on 3G spectrum a few years ago (they collectively spent something like 260 Billion Euros, which I think is now about 10 Trillion USD ;), and really needed the added economic boost of new lines of business.

So if the MVNO market makes sense, what is up with Amp’d? There were a number of things that made Amp’d a long shot from the beginning.

First, unlike Europe and Asia, the US market is served by different carriers working on different spectrum and different technologies. Much has been written about the US being a third world of cellular technology, all of which point to this carrier technology fragmentation both between each other and the rest of the world as one of the root causes. That means selection of a wholesale provider is much more complex – they are not fungible substitutes. A selection of a carrier has big implications on handset options, etc..

Second, we are in an era, post Judge Green, of consolidation of carriers in the US market. Fewer providers mean a less efficient market, and bad wholesale pricing, if it’s available at all.

Third, the big four carriers have really mixed opinions on whether they will ever support an MVNO industry. Even a carrier like Sprint, who is the provider for Helio, runs hot and cold on the idea of being an MVNO going forward.

We were approached to be an inventor in Amp’d a few years ago. I took a pass, based on a number of considerations:

They were effectively entering the hardware business by focusing on their own custom handsets as a core part of their value proposition. The handset business is brutal – just look at Motorola’s last quarter as evidence. Consumers expect the best. Their cellphone is a personal expression of themselves. That means keeping up with the Joneses and releasing new handsets on a regular basis (every 4-6 months). Amp’s was going to be a long-cycle producer of new devices, which wasn’t a winning play.

They were focusing on a market segment/demographic that hadn’t demonstrated a prior willingness to pay the material handset charges and monthly plan costs that Amp’d had modelled.

The management team, while smart, was selling itself as the Boost team redux. It was long marketing, but not nearly as long technically. There is a great article in Business Week talking about the CEO as product designer, which is well worth a read and expresses my own philosophy in spaces like the consumer electronics industry. Was this core team up to the task of building a better mousetrap?

Their partnership with Verizon, who was to be their wholesale provider, was flat-out a wrong bet. It is not that Verizon didn’t have a good network. It is just that they now were wed to a CDMA network, which would make handset development much more complex (no ability leverage of all the great development from Chinese OEMs like HTC and others).

We passed (did I also mention mega pre-money valuation), and had no regrets.

I guess one question still remains: Will the US ever have a real MVNO market? In my mind, there will be no MVNO market in the 2G/2.5G space. I think only when new fabrics arise (though things like Sprint’s WiMax plans, the upcoming 700 mhz spectrum auction, etc.), and we get some better technology consistency from incumbents as they roll out their 3G offering, will we ever have a shot at an efficient market.

Can anyone succeed here? I do think Helio has a chance, and I hope they prove the case for an MVNO in this market. They have several things in their favor, when compared to Amp’d:

  1. They locked in a 6 year agreement with their wholesale provider
  2. They can leverage all the technology development (software and hardware) of SK Telecom in creating compelling consumer solutions
  3. They are adding feature sets that appeal to the prosumer (really good email integration, etc.) to allow themselves a more upmarket sale
  4. They have a technology visionary at the helm (Sky Dayton).

I don’t see another major MVNO player (other than Virgin in the pre-paid market) making a go of it, and as such, I am not very bullish on the US MVNO space as a whole. Here’s hoping something else happens to serve as a catalyst to get us out of our third-world status sometime soon!

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