Tag: iPhone

The Race To 5G

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Jonathan Margolis, the FT’s erudite technology editor, claimed in the How to Spend It magazine this weekend that “one of the surprises about the iPhone 11 … was that it does not have 5G” and then went on to laud the recently launched Samsung Galaxy S10 5G.

I found that an odd view. Indeed I’m surprised that he thought that it was a surprise. Apple has rarely added network features until they were widely available. That’s both because there needs to be a viable market for a service (if I turn on my expensive 5G phone and don’t see, immediately, a 5G symbol in the top left or right, I will surely feel let down and perhaps worse) and also because Apple will want to be sure components that provide the service are robust, reliable and ready for delivery to as many as 200m phone buyers a year.

Every few years we go through the xG hype cycle. I was closely involved in the 4G rollout some years ago and, despite best efforts, reality was far behind PR for many of the network operators (arguably only EE got delivery done in line with their PR and that was because of some clever reuse of spectrum).

There are plenty of 5G challenges ahead starting with a lack of agreed standards. This, in turn, means risk in buying components which may not be entirely compatible with the final versions. It also means that components are not yet optimised – they are much larger than their 4G equivalents, run much hotter, and take up valuable space that is needed for batteries (which, given those same components will be shorter). And, besides, we know that heat and batteries don’t mix.

There are other challenges ahead for 5G, particularly for operators. Network equipment manufacturing is in the hands of only a few suppliers, installation is a lengthy and cumbersome visit involving many 3rd parties and a dozen visits to each mast, the spectrum available is at a far greater mix of frequencies than previous rollouts (which means modelling and planning are more complicated and that there will be a need for infill masts, especially in highly populated areas) and so on.

The truth is that 5G is still some years away, at a general population level. There will be exceptions – specific use cases – of course. But for most of us, it is 2-3 years away.

So, no, it’s no surprise that Apple hasn’t shipped 5G compatible iPhones. It’s also no surprise that other companies have – some like to be first, some like to claim “me as well”, some want to trial new things to differentiate otherwise lacklustre offerings, and some want to get a sense of how the technology works in the field. This is what makes a market. The early adopters adopt. Some wait a while. Some wait much longer.

Blackberry – Audible Corporate Relief?

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CIOs across the world breathed a huge, collective sigh of relief this week.  Blackberry, the company that makes, ummm, Blackberries, finally produced a new device.

Ok, so the new device hardly deserves the tag “innovative” but it is a pretty good match for last year’s devices from Apple and Samsung.  Blackberry’s previous range was, by comparison, a pretty good match for the ZX81.  A chasm has, perhaps, been leapt.

CIOs will now hope that the clamour for sexy, touch screen, do everything devices from other companies will go away so that they can capitalise further on their not insubstantial investment in infrastructure, licences and whatnot for the existing devices.  Why would they want to go out and spend more (new) money on infrastructure and licences to support devices from other manufacturers when they can just give these shiny new gadgets to their road warriors?

There is, of course, much to ask of this new device.  Will the work/play mode work as well as it’s suggested?  Will the new device be as secure as the old one, or have the Indians and the Saudis already made a play for a backdoor? Will BB be able to issue over the air updates or will corporates be stuck with a tested, accredited version of the same software (and the same functions) a year from now? Now that they’ve released the Q10 and the Z10 have BB shot themselves in the foot, needing to wait a year before they can release the Q11 and the Z11?  Or will they go for the R, S and T10 sooner? How will consumers know the difference beyond keyboard or no keyboard? Is it backward to name a device “10” in 2013?  If email was the BB killer app in 1999 and BBM in 2005, what is 2013’s equivalent – and does anyone care?  Is it enough to be “as good as” the competition?

CIOs that do breathe a sigh of relief won’t be able to relax for long though.  Blackberry, like Nokia, is clearly fighting it out for third place (with less than 4% of the market) and it’s a long way up from where they are.  A family of phones and tablets is what is needed, all working together, coupled with file stores, a huge range of apps and new capabilities dropped in regularly.

The pressure on corporates to accommodate multiple devices and to provide secure, easy to use environments across all of them won’t let up. One size won’t fit all and nor should it.

BB has yet to complete the leap of the chasm.  Instead, they are still in the air, legs furiously spinning.  I wish them luck getting to the other side.

Nokia / Research In Motion Update

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I wanted to take another look at how Nokia and RIMM are doing.  The graph below shows their stock prices compared over the last 3 years – the candlesticks are RIMM, the brown line Nokia.  I’ve annotated the chart with just a few key events – Nokia in orange, RIMM in black (of course), Apple in green.
The two stocks have largely tracked each other over the period, with both down about 85%.  That’s a staggering loss of value:
In December 2007, Nokia was worth $150bn and RIMM worth $64bn
In June 2012, Nokia is worth $9.8bn and RIMM is valued at $5bn.
That’s $199bn of value gone in less than 5 years (though Facebook is certainly trying to make a dent in that value loss over as little as 4 weeks)
I wrote up my “prescription” for Nokia in March last year, not long Stephen Elop had made the decision to go with Windows. I didn’t write a similar prescription for RIMM.
From here, I see Nokia surviving – without Nokia, Microsoft’s mobile strategy is dead in the water. Maybe Microsoft will buy them or, more likely, maybe they will keep pumping money into them to help them deliver.  The Lumia is a good first effort (though they should have thrown them away and started again as I suggested), but it it’s far from enough when compared with the latest Galaxy from Samsung or the iPhone 4S let alone what’s coming next.  They still need to do more – get rid of NSN, embed new features in their phones, make some smart acquisitions, cut more people (sadly) and so on – but it’s achievable.
But RIMM is, I think, done.  They have no one to save them.  They are still to get their product transition going to the new o/s (and Nokia is down over half since even starting that process).  Microsoft, Nokia and all of the other rumoured buyers won’t step in for RIMM – they don’t want blackberries.  Perhaps a PE company will step in and run the company for cash, but that would be a lot like buying Nokia’s Symbian business – it’s declining fast, faster than most (including me) expected.  To turn them around from here, even with the relatively large cash pile that they have, just doesn’t seem likely.

Apple and Pears

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Several meetings in the last month have talked about how the new IT that will result from recently launched strategies will delete the need for training.

The conversation usually starts with someone saying that they didn’t need to read the manual for their new digital camera, or someone pulls their iPhone out of their pocket and says “my 5 year old figured out how to use this with no manual”. Inevitably someone says “we should do it the Apple way.”

This is potentially dangerous. At one level it’s right – “how” a system or, dare I say, App works should be obvious to anyone looking at the screen.

But what it does and why it does it will still need training or guidance. Taking a picture or making a call isn’t nearly the same as assessing eligibility for benefits or figuring out the right dose of medicine to give a patient or evaluating the risk of an offender and probation viability.

The App can hide the complexity of much of what needs to be done but the App alone cannot remove the need for the user needing to know what happens when they press “commit.”

Mind you, I had to read the manual for my new camera. And yet, still, for every 500 pictures I took, perhaps one or two were worth keeping. I need some training.

Why Mail On the Move Isn’t Working

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More and more of the people I interact with on a daily basis are doing all or very nearly all of their email on a mobile device – mostly iPads, iPhones (if they have a choice on the device) or blackberries (usually if they don’t have a choice).

But email tools on these devices have not evolved much in the last few years.

– They are still, essentially, one large inbox (and often one inbox with email from multiple accounts in them). Managing sub-folders is cumbersome.

– They support only basic searching (Apple’s iPad email search is significantly poorer in capability than its spotlight search built into the device and much worse than Mac Mail or Microsoft Outlook). Searching To/From/Subject just doesn’t find what I need often enough (and why can’t I search across all sent mail in one go?)

– There is little or no support for flagging email, moving it to a task application, attaching it to something else you’re working on. In short, if you don’t deal with an email the moment you see it, then you are unlikely to ever go back to it and so your mobile device suddenly becomes a bottleneck – either you’re not answering your email or you’re constantly marking items read/unread as you try and juggle your task list.

– As soon as you have more than one email account, any effort to manage a simple non-duplicated contact list is doomed. I know people who 5 or even 10 copies of every person they know in their address book. The effort to sort that is huge – and you have no guarantee it won’t recur as soon as you’ve fixed it

Lots of work is needed – to build on the advances already achieved (I don’t want to take anything anyway from the effort expended to get universal inbox, the basic search capability, exchange on iPhone etc) – to ensure that we can be genuinely productive whilst on the move.

How Is Nokia Doing?

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In the 6 or so months since Stephen Elop was announced as CEO of Nokia the stock is about flat.


That’s not to say that the stock hasn’t actually budged – from the day of his appointment until the announcement of the partnership with Microsoft around Windows Mobile, it was actually up about 40%, to about $11.75. It’s now at $8.66, although it’s been under $8 as recently as the end of March. Nokia is down 16% year to date, 21% in the last 3 months and 42% in the last year.

Mr. Elop is already taking, or considering taking additional steps:

The Economic Times said yesterday that Nokia is considering selling a controlling stake in its money-losing JV with Siemens (my Prescription on March 26th suggested that they sell the whole thing). The Wall Street Journal reported the same story suggesting that one of the blockers will be an outstanding pension obligation. Nokia’s FD is quoted in the WSL as saying the story is “untrue”.

The Gulf Times reports today that as many as 6,000 Nokia employees are at risk of being made redundant, with a significant reduction expected in R&D staff as I suggested in the same Prescription.

This week Nokia announced its latest Symbian phone (v3.0, known as Anna I gather, of the operating system), the X7. Apparently it will soon be replaced by an equivalent Windows Phone, cleverly named as the W7. I suggested that Nokia come up with a new naming convention – I’m already baffled by the E6 (a business related phone apparently – e for Enterprise?), the X7, the W7, the C7 and the C6-01 not to mention the N-series. Another site promoted the rumour that there would be at least 12 Nokia/Windows devices in 2012.

IDC announced at the end of March that Windows phone would have the number 2 share of the mobile operating system market by 2015 (Android would have 45%, Windows 20%, iPhone 15%). This would all be driven by the Nokia partnership. No mention is made of tablets, revenues or, importantly, profitability.

Meanwhile a customer satisfaction survey by JD Power showed Nokia coming 4th behind Apple, HTC and Motorola with its best score on battery life – always a strong point of Nokia and something that it may perhaps struggled to maintain with Windows as its operating system.

Digital Trends floated the rumour that LG and China mobile may adopt Meego – an apparently dead end platform as far as Nokia is concerned. Meego is open source so they would, in theory, be free to do that (Digia bought the library on which much of MeeGo and Symbian are built in March).

Nokia publishes its interim Q1 report on 21st April so we will find out whether the announcement of the Windows move deterred any customers from buying phones.

Goldman Sachs thinks Nokia is a buy with a target above $12, Moody’s downgraded its long and short-term debt, Nomura thinks the stock will fall 30% or more from where it is today, HTC’s new Sensation phone looks to outperform Nokia’s X7 and the median stock price target is about $9.25 – above where it is now plainly, but not likely to be a stellar performance.

I’d like to see Nokia unveil a clearer plan – perhaps like my prescription or an entirely different one. Waiting until 2012 before we see Windows phones doesn’t seem like a good idea – and in the interim the only headlines will relate to lay-offs, budget cuts, sales of units and other negatives, all of which will drive away customers and so put the stock in negative territory. Mr Elop has a big job ahead of him. Let’s hope he’s not like the CEO of Microfocus who departed after less than a year on the job this week, with the stock price having fallen 41%. Instead he’ll be hoping he’s more like Bart Brecht who say the shares of Reckitt Benckheiser lose $2bn in value upon the announcement of his departure.

Prescription for Nokia

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I last owned a Nokia phone in April 2003. Prior to that I had owned only Nokia phones for at least the previous 10 years. What changed? I fell out of love with what, until then, had been the no brainer choice of buying Nokia every time. Nokia simply didn’t keep up with the market. The P800 came along with it’s tiny stick for writing, then the Treo came out with a slightly bigger stick and a keyboard and then the iPhone came along; and all around those phones were clamshells, phones with cameras, phones with more interesting interfaces and all kinds of other more exciting and more alluring devices. During all of that time Nokia seemed, to me, to be doing largely nothing.
In April 2004 I criticised Nokia for not keeping up – failing to provide good designs, making it hard to transfer data between phones (I even wrote to Nokia in February 2003 to explain the problem they were creating), not providing an integrated mail/calendar/task list capability and more.
In May 2007 I listed the features and capabilities that I wanted in a phone:
  • An initially stable phone that gets software updates regularly (to fix inevitable problems)
  • A battery that lasts at least a long weekend
  • A keyboard that registers your touch simply and effectively
  • Doesn’t crash more than once a week (and, if it does crash regularly, that the reboot time is minimal
  • Works consistently. If it has a back button, it should work the same way all the time. Copy and paste should work in every application
  • Adheres to standards (sending a business card by SMS for instance)
  • Allows me to synchronise text messages, ring tones, speed dials to the PC
  • Let’s me install software that replaces the default software
  • Threaded text
  • Single click access to create a text and select a recipient.
  • Contacts that let you phone or text someone right from the screen
  • Freecell, not solitaire
Some 4 years on not all of those are possible still – battery life beyond a day is still rare, being able to use non-standard applications (yes, even on the iPhone) is rarer still. But most of it is there – we have come quite some distance since 2007 with iPhone initially leading the way and competition from Android and others ensuring that the rate of innovation is high.
So given all that criticism that flowed Nokia’s way, I thought I’d have a go at what I would do if I were running Nokia. I’m assuming that the Windows decision is a done deal and can’t be reversed.
First, some observations:
  • In the year that Apple introduced both the iPhone 4 and the iPad, they spent $1.8bn on R&D and their revenue increased by over $22bn. Nokia, in the same year, spent $5.8bn and their revenue increased only $1.5bn (source: Bloomberg BusinessWeek). Nokia also spent more in 2010 than Samsung, RIMM, HTC and Sony Ericsson (source: Bernstein Estimates and Analysis). Nokia is outspent in R&D only by Microsoft, GM, Pfizer and Toyota (source: 2008 EU Indutrial R&D Investment Scoreboard. One third of that R&D goes on Symbian and MeeGo (source: Bloomberg BusinessWeek)
  • Peter Thiel, co-founder of PayPal and early investor in Facebook, recently noted that companies have a tendency to promote “extensive gains” over “intensive breakthroughs”; that is, they extend or replicate what they already know for incremental gain and think works rather than seek innovative new approaches that will drive long term growth
  • At the end of March 2010 Nokia had around 125,000 employees with 64,000 of those part of Nokia Siemens Networks. 17,200 staff are in R&D and more than 1/3rd of those are assigned to Symbian-related research
And now my prescription. Nokia is going to compete, in my view, on only three things:
  1. Incredible integration between its hardware and Microsoft’s operating system. Those who already have integration (Apple and HP/Palm) already have this; those licensing, like Nokia and including Motorola, are working it hard.
  2. Bundles of Nokia-only features that result either from its close arrangement with Microsoft or from assets that Nokia already own (such as NavTeq) or those that they might acquire.
  3. Stunning hardware capability coupled with awesome design that others will struggle to match, funded by Nokia’s cash flow from its declining dumb-phone business and funnelled through its (soon to be smaller) R&D unit. Battery life will be high on that list but fast processors, great screens, high quality camera lenses, speakers, GPS responsiveness and NFV will all matter. Nokia will be competing here with plenty of other companies who are already ahead of them – Samsung, HTC – and those who want to catch up – Motorola, Palm etc

If that is what Nokia is competing with (or against) then who is the competition:
  • First, themselves. The reaction to the decision to align with Windows has reportedly been strongly adverse. It’s said that whole teams downed tools and walked out for the day. The mood will doubtless worsen as Nokia makes radical cuts in its workforce, cuts costs and closes down pet projects.
  • Second, themselves. Nokia’s non-smartphone business is still a huge cashflow generator. Something like 80% of phones sold globally are still what we might call “feature phones” rather than smartphones. Nokia’s feature phones run Symbian and there will be a strong contingent in the company that fights to keep working on that operating system, enhancing it and getting it to a point where it can compete with other operating systems.
  • Third, the obvious competition

    – Google’s partners, such as Motorola, who have also hitched themselves to an operating system
    – Contract manufacturers such as HTC who have already proved that they can deliver good hardware running Windows devices
    – HP with its recent acquisition of Palm. HP’s last foray into the mobile market was on the back of the iPaq and Windows CE. Now they are aiming to control both the software and hardware but are coming from a low base with little consumer market penetration outside of printers
    – Research in Motion. Whereas Windows Mobile 7 seems to have focused on the consumer market, Microsoft’s obvious corporate presence could allow Nokia to deliver phones that are accepted by companies looking to avoid having their email shipped offshore or to reduce the costs of their mobile operations. This must be a key area for Nokia / Microsoft to move in on. Microsoft and Nokia need to own the corporate warrior market.

    I’m going to leave Apple off this list. Apple is patently making a ton of money from the iPhone off a relatively low market share. Nokia is unlikely to make a dent in the iPhone share (or get anywhere near the margins that Apple has) for some time, if ever (my vote is the latter).

Here’s what I’d set off doing:
  • Break the company up – first transparently through very clear and detailed reporting and then structurally, that is not through tracking stocks. Nokia’s carrier equipment business would be valuable to many other companies, including PE. Owning a division that makes GSM equipment may make for better ‘phones – perhaps in understanding signal strength and optimising battery life as a result – but I think its tenuous. The first spin-off then is Nokia-Siemens Networks (read its mission and vision statement); It floats separately, goes to a competitor or its bought by Private Equity. €12bn of sales including €2bn of R&D and a net loss of nearly €700m and involved in connecting something like a quarter of the world’s population on any given day (source: nokia). At a stroke that cuts the employee count, allows better management focus and reduces losses. A second spin-off would be Vertu. Searching on the Nokia site for information on Vertu gives this as the first result:

    How do I recycle my Nokia phone and accessories?Just drop off your old mobile phone and accessories at any Nokia Care point. Nokia will send the old products to closest Nokia approved recycling company

    That hardly seems like a core business – it is independently operated but wholly owned by Nokia. Brand association with Nokia is limited, revenues are unlikely to be enormous and whilst, arguably, they are great at design, the consumer isn’t pressing for diamond studded phones with perfectly lined up screws. Nokia can licence their technology to Vertu if they want to, but they need not own it.

    I wondered a lot about whether Nokia should actually create a separate smartphone business, leaving its huge cash cow feature phone business to work on Symbian, provide funding for the shift to Windows and to, eventually, dwindle. But I think the potential for flowdown (and perhaps flowback) is too great.

  • Exchange team members between Microsoft and Nokia at both a senior and a working level, but not at the top level. Learning how your own organisation works is already a challenge, learning a new one whilst remaining in touch with the old one even harder. Senior people in key teams should swap between the companies so that their joined up efforts have a better chance of succeeding. Microsoft and Nokia (Microkia? Ugh) should treat this as a joint venture. If either one fails, they both fail although Nokia has more to lose.
  • Massively cut internal R&D spend – you’re spending too much and, as a result, have built a bloated R&D organisation that is spending more than it generates in revenue; it’s trading on innovations that were hits 10 years ago. Nokia is no longer in the software business, it’s in the software integration business.

    Nokia’s R&D spend needs to be focused on only three areas:

    (i) Joining up with Microsoft to develop new operating system features. Microsoft outspend Nokia in total innovation (but only by about €500m). Together they could achieve some great things (at the risk of Microsoft alienating its other partners but, then again, they’re not selling much so it doesn’t matter)

    (ii) Developing new hardware capabilities around touch, battery life (an area where Nokia already excels albeit on feature phones), GPS integration and responsiveness, NFC integration and cool design. Nokia will need to partner widely to achieve innovation in these areas and use its famous reputation for supply chain management to ensure the right quantities are available

    (iii) Looking for, partnering and acquiring new software technology that can make Nokia phones stand out. Notwithstanding the need for Microsoft’s software to run perfectly, Nokia needs to seek out other companies to acquire. Ideal targets would be those that provide equivalent software to the top apps in Apple’s appstore, or even those very companies themselves. There’s no point in trying to start another Facebook or Twitter (although Nokia/Microsoft will need to work closely with those companies to make sure the client apps fly). There is, though, plenty of opportunity in task management, email, group text, contact management (so why not buy Hashable for contact management and introductions, after all Microsoft owns Xobni; RIMM owns Gist).

    I would start from a zero base and add R&D back to key future product areas rather than start at the current spend and strip away. Given that there are more than 17,000 R&D staff, this will result in large lay-offs that will have to be negotiated with various governments (2,000+ will go with the NSN spin-off)

  • Focus software efforts with Microsoft as follows:

    1. Stunningly fast transfer and synchronisation tools.

    – Transfer so that data from other phones running different operating systems can be moved simply (whether that’s Android as the first target or iPhone as the second target); – Synchronisation so that data from gmail, ical/mobileme, outlook and any other emerging cloud services as well as iTunes, Amazon music (and whoever else is managing media) can be imported and managed easily. Just a few screen taps to make any of those happen.

    2. Stunningly fast backup to a PC, Mac and Linux clients from day one. You’re in the mobile business, not the PC business and so you should be client agnostic. Better still, offer backup of all settings, applications (including all settings for games and apps), texts and logs to the cloud – for nothing. Sign up from the ‘phone and let it just happen, with incremental backups seamlessly happening in the background without the user needing to know.

    3. Regular operating system upgrades without a need to re-synchronise the entire media library. Wireless upgrades of what are doubtless 500MB files is perhaps a step too far for now, but I shouldn’t need to copy everything back to my phone after such an upgrade – with 32gb or 64gb of data that’s just become a chore. Release regular updates – every 2 months fixing bugs and adding incremental features to keep people interested in what’s coming.

    4. A series of in-house apps that compete brilliantly with what Google and Apple provide and then go beyond. Nokia already own Navteq and provide on-phone maps (that is, without the need for an Internet connection) – more needs to be made of that, especially in Europe where roaming is far more common. I’d like more capabilities in text messages – group texting for instance. Music, video and other media will need to work brilliantly (first with synchronisation of existing libraries and then with adding new ones) from the get go, audiobooks as well as e-Books too. Your store will be as good as Amazon and Genius put together. You will know what I like and you will recommend new things based on that. You’ll do it by acquiring companies or partnering with them, not through doing it yourself.

  • Develop a brilliant and obvious naming convention. Years ago when I started using Nokia I understood the convention … There was the 6210 which was replaced by the 6310; not long after came the 7210 which I understood to be better still. It all went wrong with the 8xxx series – the 8250 was small and sexy, the 8800 was shaped like a banana. Now, I couldn’t tell you how it works with C, E and N series. The picture above this section shows only part of the current range.

    Nokia is certainly going to release more than one phone a year unlike Apple of course, which makes the need for a naming convention essential, and all the astronomy-related (Galaxy, Nova, Star, etc), inspirational names (Desire, Optimus, Incredible, Inspire), dance/music names (Cha-Cha, Salsa, Aria, Salsa). That leaves a few areas that might work – elements, Greek or Roman gods, cities, big cats (Apple might claim they have those), birds, colours and so on. The trick is going to be providing some kind of unifying theme that ties to phone capability. It must be obvious whether the phone is touch only or touch & keyboard. Potential candidates include simple number T-1000 (for touch) and K-1000 (for keyboard) but more creative names would be welcome.

  • Bundle the cloud with your phones. Cloud based email (with your own domain name if you want it), calendars and contacts must be out of the box ready. Microsoft can give you this tomorrow with their Office 365 infrastructure. Your initial volume won’t be enough to threaten their margins and there will always be a chance to cross-sell more services in the future. You’ll also want to be sure that you have an equivalent of Dropbox (if you haven’t acquired a company like them). And Evernote should be pre-installed and work like a charm, ideally with Nokia only features. It goes without saying that you’ll want all of the big social networks and whoever follows them to work from day one.
I would also make the first phone you design the most amazing phone you can imagine. Develop it, prove you can produce it. Then throw it away and do another one that learns all the lessons from that one and is even better. When you’re halfway through that process, set off a competing team to build the phone that will come after that one and when you’re a third of the way through that cycle, set off the next team. Have them race against each other.
I have yet to get to what Nokia should do with tablets, Meego (or some other operating system that they might want to work on as an R&D project either to spur Microsoft to keep innovating or as a replacement operating system should things not work out with Microsoft), in-car systems and so on. 
Perhaps those are topics for another day.


Apple Made It Very Thin

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From Yonhap News:

Lee Don-joo, executive vice president of Samsung’s mobile division, said that Apple has presented new challenges for the South Korean company with a thinner mobile gadget that is priced the same as its predecessor.

“We will have to improve the parts that are inadequate,” Lee told Yonhap News Agency. “Apple made it very thin.”

Samsung also made its latest Galaxy Tab 10.1 tablet computer larger, faster and thinner than the 7-inch original Galaxy Tab. But the new, larger screen comes at a price. The 7-inch Galaxy Tab was priced at nearly US$900 without a two-year contract from mobile operators, while the price of the iPad 2 starts at $499, with the most expensive model costing $829. Samsung did not announce the pricing details for the 10.1-inch tablet.

NFC, NFW?

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Mobile World Congress, the annual jamboree on all things, well, mobile, intensified coverage this week on the potential for Near Field Communication or NFC. The latest Android operating system (and at least one phone, the Nexus S) has had this capability for some months but what really got everyone going was the rumour that the iPhone 5, due perhaps in the middle of the year, would support NFC too. If you already have a ‘phone with NFC, I’m guessing you feel like the first person to have a fax machine. It’s very shiny ‘n’ all, but what do you do with it?

NFC is already a familiar technology for anyone who travels regularly on the London Underground, bus or train network via the Oystercard. Using the Oystercard is both quicker than cash methods, especially with auto-topup that ensures you never run out of cash on your card, and also cheaper – probably a far greater positive motivation to make the switch (O2 have trialled Oyster-equipped mobiles too). Oystercard may qualify as one of UK government’s most successful projects ever. There are numerous other opportunities to use NFC use in the UK too – for instance, many, if not all, branches of Pret A Manger have terminals at the till where, if you have a suitably enabled debit card (Barclays I believe), you can swipe the terminal and make payment. In 2 years of near daily visits, I haven’t ever seen anyone use them and most of the terminals have long since been tucked out of the way. In the USA, NFC-equipped key fobs have long been used to pay for petrol and other goods too. MasterCard has been testing its own technology, PayPass, in partnership with Nokia and others since 2006 (and since 2009 in the UK with, amongst others, Boots) – indeed, MasterCard say that as at August 2010 they had 78m cards and 245,000 merchants accepting them globally.

This is a technology that has been trying to happen for some time – so is the fusion of mobile and NFC the trigger to growth in mobile payments?

Twice in the last month I’ve travelled through Europe on BA flights. I opted to use their new iPhone app boarding pass – definitely not an instance of NFC use (it’s a standard square barcode) but I thought the experience might be similar. From initial check in to sitting in the seat, I had to give my phone to 6 different people – the checkin person, the BAA boarding pass verifier, the BA Lounge steward, the staff in the duty free, the gate checkin person and the crew on the plane.
There are two things that make me pause for thought here:

1) Each time I presented the boarding card – often many minutes or even an hour or two apart – I had to slide to unlock, open the BA app and select the boarding pass – that is, you have to have the app open and working. Each time you go through the process, there is an opportunity for the screen to dim, a text/call/facebook badge to signal or, worse, the phone to hang, crash or do something otherwise unhelpful (admittedly a rare event, but it does happen).

2) The oddest thing, though, is actually handing over your phone to someone else – my phone is practically tethered to me and giving away control is quite alien. Now partly this is because it’s a bar code that needs to be scanned rather than a contactless payment transaction but I can’t help feeling that when something goes wrong, the first thing that will have to happen is you have to hand your phone over – just as now, if you can’t get your chip and pin card to work, staff in a store try for you, using your card.

Driving adoption of mobile payments enabled by NFC will require overcoming some challenges:

1) Do you need a PIN and how often? In most trials, payments of between £10-20 have been possible without PIN verification at the payment point. This plays to the convenience angle – the cash substitute – but still means you need a PIN (or possibly two – you may choose to lock your phone with a PIN knowing that it is now effectively cash, as well as having a payment-related PIN)

2) Who is carrying the payment risk? With chip and pin – which was effectively a mandatory change introduced by banks – the retailer took the risk if they only required a signature, the credit card company if a pin was used (and, in theory, not the customer in any circumstance, unless the pin had been disclosed to a 3rd party). How this works with NFC payment will directly affect adoption (both in terms of retailers deploying readers and customers using) – if the retailer carries the risk when no pin is used (that is, for a low amount) then either a PIN will always be required or the retailer won’t rush to install terminals; if the customer carries the risk, then adoption is also likely to be low. Of course, this risk needs to be contrasted with the equivalent risk of you losing a wallet full of cash. If the retailer isn’t carrying the risk they would likely be strong advocates for payment via this method – as long as the margin taken by the various people in the chain is lower than the retailer’s equivalent cash handing charge.

3) Will NFC be cancelled at the same time as the ‘phone is blocked from making calls? This is plainly related to the risk question. If you report your phone stolen and the carrier disables call, but somehow low value payments can still be made, who is going to bear the risk of those payments? If it’s the retailer or the customer, there’s trouble ahead.

4) Will any phone and any reader work in all combinations or will it be like the early days of ATMs when you had to go to your own bank, or the early days of MMS when you could only send to another ‘phone on your own network?

5) Is the phone cash or credit? If it’s cash, how do you get money on to it – an auto top-up just as the Oyster card has is the most convenient (you don’t want to have to top it up when you’ve just got to the front of the queue in Pret).

6) If I can move money between two NFC enabled devices, two mobile phones for instance, what steps will law enforcement take to monitor such transactions so as to police money-laundering? And what effect will that have on take up, privacy issues and so on. The obvious one is to limit the transaction size to a low value and to prevent too many transactions from taking place in a short period so as to reduce the chances of bulk laundering. But, doing so will also complicate matters for legitimate consumers – what if you bump up against the limit yourself yet have no idea that you have?

7) What data is transferred to the merchant when i make the transaction? Just amount? Name? Mobile number? Address? Date of birth?

The security and risk issues with mobile payments are complex so it’s very likely that other capabilities will emerge alongside payments that could drive adoption of NFC and then make the move to payments a simpler change

a) Loyalty cards and rewards – no need to carry a separate card to track your nectar points. You could make payment, collect points or even redeem points all at the same time. Or you could just collect points and have an app that tells you how many you’ve got and what you can do with them

b) Mobile check in services – Foursquare has this nailed but perhaps an NFC-enabled check in point by the cash desk or even at the door would mean more people checked in and, coupled with loyalty cards, could drive rewards for doing so

c) Advertising – Bluetooth-enabled advertisements have emerged relatively recently but they broadcast to anyone nearby (push). NFC-enabled posters would require a conscious action (pull) to get the information, making the person a potentially more valuable customer

d) Museum tours / tourist info – placing your phone on an NFC pad next to an object in the British Museum could bring up the details of whatever you were looking at, in a BM app. It would be like SatNav indoors. The data transfer rate of NFC probably isn’t sufficient for much information to be transferred (and it’s unclear, to me, how the exchange of data from NFC to app would work) so the app will still be the repository of the latest information

With many phones shipping this year with NFC there will at last be sufficient mass to perhaps drive the long-pending mobile payments / digital money revolution perhaps started by Mondex in the 1990s.

These days – especially these days – we’re used to revolutions starting and finishing far faster than that. I think this one has already run its course – another Digital Compact Cassette, MiniDisc, Betamax technology.

Me Tu, Nokia?

~ asdmather ~ Leave a comment

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Plenty of people much smarter than me are theorising about what Nokia’s new CEO, Stephen Elop, will announce this Friday at their analyst briefing. The leaked memo he sent out, published by the WSJ, has a perhaps mildly inappropriate description of a burning platform in this post-Deepwater Horizon world but the text does act as a great rallying call for a company that has little outwardly visible sense of direction for some months (Elop was appointed in September 2010).

As to what he’ll announce, opinions are split between a rush to Android or to Windows 7. Either strategy will, perhaps, mark the next stage in Nokia’s route to demise.

They are both “me too” platforms where Nokia will be able to differentiate only with beautiful hardware – and, as the picture above reminds us, Nokia doesn’t always get that right or even vaguely usable. Picking Android will perhaps allow the most customisation and innovation, but at the risk of fragmenting the platform even further and losing developers along the way. Picking Windows 7 would, on the face of it, appear to be Elop’s most likely choice given his CV.

Personally, I would like to see Nokia work hard to create its own ecosystem rather than try and muscle into already over-crowded existing ones. Adopting Android will see them disappear in a sea of near equivalents, adopting Windows 7 would perhaps make them Microsoft’s prime partner and perhaps even allow them some influence over the future direction of the operating system, but not nearly as much as they’d have if they had control of their own hardware and software integration.

I will be watching with interest. I doubt that Nokia will win me back but I’d like to see them remain viable.