Back from 3GSM pilgrimage

Thomas Husson | February 16, 2007, 09:13 AM

After having digested briefings, meetings, discussions, press releases and demos, I am gonna try to wrap up what are in my perspective the key takeaways of the Mobile Mecca gathering.

As always the autumn / winter collections of new mobile phones were presented. Contrary to the wide range of phones presented by Motorola or Samsung, few new devices were announced by Nokia and there was no sign of the “barracuda” slim concept (the current industry design trend being focused on the “millimeter matters” approach), but as a market leader, Nokia is paving the way for new concepts & trends (see below). LG gained attention with its 10M Chocolate sales and its expected 5M sales of its brand new Shine device, no to mention the surprising Prada phone.

Despite the hype around the Sundance festival and the Bollywood short films, the 3GSM show is still lagging behind CES or E3 in terms of entertainment from what I have been told by US delegates. The show is still very-technology driven but leaving aside Femtocell, Wimax/LTE, HSPA, IMS / SIP, the refreshing news is that in many discussions (I am not only referring to the Iphone touch-screen interface but also to raising interest in rich media and in on-device portals solutions), stakeholders clearly agree that their common challenge is to minimize their diverging interests to enable a compelling user experience. I had the chance to participate to a panel discussion with key industry music executives (see here the related press article)and they all agreed this is still one of the main inhibitors for the uptake of the market. Two days later, the CEO of Warner was even more specific (see this article from CNET). Whatever the content category (music, games, video / TV), it is now clear that the industry has to move from a “buy before you try” to a “try before you buy” experience. To put it simply you never have a second chance to make a first impression!
However, there was no news on the hardware/software turnkey integration that could potentially be delivered by Nokia/Loudeye. Consequently, the main mobile music news was the launch of MusicStation by a UK start-up (Omnifone) precisely providing of a simple interface to access music on a wide range of devices.

Mobile TV raised again a lot of attention with Nokia’s statement that it hoped to sell 20M DVB-H devices worldwide by 2009. Currently only 3 Italy DVB-H offering has really gone live in Europe (the Finnish offer is expected later in March) and contrary to what I see in every single mobile TV presentation, 500,000 users is not the number of users at the end of 2006 but the objective that was set, which is a very different thing, not to mention the split between those who have a daily access from those who subscribe to a full voice/data package including TV…Anyway, the good news is that Nokia is launching a more affordable DVB-H device N77 (after the N92 launched in November 2005) at 370 euros excluding subsidies and taxes. At least this is a way to move away from the chicken-egg dilemma: what should be available first; networks or handsets? The real question is more how much money will operators invest in the phone so that mobile TV becomes really available to the masses? The answer is tricky because to recoup their investment in networks (even if shared in a consortium) and handsets, operators and the other stakeholders need to agree on a revenue share of the expected 5-10 euros monthly subscription fee. However, according to Jupiter Research consumer survey data, few customers are really going to pay for that. So you need interactive services and advertising to complement this revenue stream, and there are far from being significant in the near term. Not to mention the fragmentation of technologies: see my colleague Julie Ask’s post on MediaFlo success in the US, and technical trial in the UK with BskyB. So basically, it means we are far from critical mass as highlighted by Nokia's sales expectations (a high figure per se but nothing in comparison to worlwide sales of mobile phones in 2009)...

The key takeaway is however the emergence of the Internet and mobile convergence, highlighted by significant agreements such as Nokia/You Tube or Vodafone with a range of Internet brands (You Tube, MySpace, Google Maps, Yahoo / Windows Live IM, E-Bay). However, you also have to take into account mobile specificities and operator needs and this is precisely why a lot of other promising agreements were announced in the white-label area such as Jumptap & Openwave or Infospace & Fast to name a few.

This is still the very early days since the real drivers are only starting to be made available: HSPA phones to allow instant access to content, revamping of data tariffs (remember the X-Series?), convergence with Internet technologies…

The current trends impacting the online space are starting to migrate in the mobile world:

- Net Neutrality Debate
- VoIP
- Instant Messaging interoperability
- Consumer-Created Content
- Long-tail opportunities particularly with the development of mobile search and Amazon-like BM (do not believe those who tell you this is already a reality: 90% of songs sold on the leading mobile music store depends on a maximum of 200 songs)
- Ad-funded business models. New made-for-mobile ad formats are still at a trial stage but one day there will be available and there will be a sticky mobile Internet audience...

All those trends are beginning to shape the strategy of all stakeholders but it does not mean their implementation will not strongly differ on the mobile platform. On the contrary, this might well be another story but we’ll have a decade to figure it out.

For once, a french-speaking mobile conference on this issue is organized on March 12th in Paris. Mobile 2.0: Revolution or evolution? To view the agenda or register, have a look at the decidated website here.