BT has just announced that they are bundling a mobile smartphone service as part of their home broadband package. Interestingly, this new bundle will be presented as a new top tier for BT's Total Broadband home DSL, rather than as a mobile tariff.

The name for this service is BT Total Broadband Anywhere (my emphasis). There's a good product here, struggling to get out, but BT's positioning is in danger of putting the product at risk.

BT have built some nice enhancements to the Windows Mobile UI, similar to HTC's efforts. They've extended the BT Digital Vault, Broadband Talk (VOIP), BT Yahoo email and a number of other BT services out onto the mobile phone, where previously they were limited to use at home on BT's DSL.

Most interesting is BT's choice of Windows Mobile and qwerty for a consumer mobile Internet play: This is BT thinking differently from received wisdom in Europe that qwerty == business. I agree, and think there's a place for qwerty on consumer-centric devices here.

But there are devils in the detail: Broadband Talk only works outside the home within WiFi hotspot coverage. Why? Well, while the proposition talks about broadband, the actual mobile service is limited to GPRS speeds -- i.e. narrowband -- and GPRS is too slow for VOIP.

Equally poorly, the service includes just 10Mb of mobile data in the bundle. BT offer an unlimited mobile data bolt-on for UKP 5 per month. Astonishingly, BT appear to offer no higher amount of bundled mobile data across their four mobile tariffs (e.g. BT BB Anywhere 600 vs Anywhere 250 etc.). This compares poorly with the major mobile players who are moving to between 500Mb and 1Gb data on a fair use basis. For example, Vodafone are bundling unlimited 3g mobile Internet as standard for new contract customers. BT must be careful to ensure their use of the term "unlimited" is clearly linked to the 'DSL' part of the bundle and not the 'anywhere' piece.

BT argues that usage of its WiFi hotspot network is sufficient for them to call this broadband anywhere. BT's challenge is that they intend this to be a mass market product, and only savvy early adopter types are going to understand the difference between unlimited use on (the right) public WiFi hotspots, or at home, but not anywhere else.

BT are also limiting their future positioning when they secure a suitable 3g MVNO/roaming tariff. If this service is marketed as broadband, what will a true 3g service be called?

So could a combined MSN/Yahoo search engine compete with Google in Europe? Well, no and yes.

First the no: we're finishing up a report right now on how European search engines can compete with Google, but the reality is that no one's going to get near Google's search share over the next few years. While Google looks pretty dominant in the US -- they claimed 58 percent of all US searches in December 2007, said Comscore -- it appers that a combined MSN/Yahoo search engine would claim around 33 percent of all US searches. That's real, viable competition. But unfortunately, even if MSN and Yahoo combine, there will be no such strong challenge in Europe. As I've previously discussed, Google has between 80 and 90 percent of search share in the key European markets. So whether this deal happens or not, it'll be incredibly difficult for anyone to compete with Google for European search share.

On the other hand, perhaps yes: a combination of MSN and Yahoo would definitely be better-positioned to compete with Google for paid search revenues than each company is now. I've heard a surprising number of Euroean search marketers say that because MSN and Yahoo each command only a few percentage points of search share in Europe, they don't even bother advertising on any engine but Google. This proposed combination wouldn't entirely solve that problem, of course -- the combined search entity would still have less than 10 percent search share in the big European markets, according to numbers I've seen from various traffic firms -- but it would at least give marketers a reason to run trials beyond Google. And that's a start in the right direction.

I'll probably have more to say on this as more details emerge and as it becomes clearer whether or not this deal will really happen -- but in the meantime if you're a client or press and want to discuss this further, drop a line to presseurope@jupiterresearch.com and we can have a chat.

This is being widely reported as an anti-Google move. But in communications -- email, instant messaging/presence, social networks etc. -- a Yahoo! - Microsoft combination would be tremendously dominant. Microsoft has the leading IM platform in Europe. The second place varies by country: AOL or Skype or Yahoo! but never Google's.

Similarly with free email. Microsoft's Hotmail (now branded variously with Windows Live flavours) and Yahoo!'s excellent email service have an enormous user base and Google is smaller competitor.

In VOIP, the key players are likewise not Google, but the DSL ISPs (including incumbent telecoms operators) Skype, and Microsoft. Googletalk is far behind in take-up.

Related reports:

Instant Messaging Growth, Quantifying the Link Between Skype, IM, and Social Networks.

Social Networking Across Europe, Using Localization and Personalization to Drive Growth

Competing with Free Communications,
Delivering Revenues from Rising Consumer Adoption of Digital Communications

Since then the company managed to gain a significant footprint in Europe (see more info here; Musiwave also signed a deal with T-Mobile which went largely unnoticed in the press last summer) and to a lesser extent in America and Asia. Their discovery engine is now available in java for more than 50 differents handset models.

Microsoft announced yesterday its intention to buy its 3rd French company (after MotionBridge and ScreenTonic). It is good news for the company since it will now benefit from a stronger investment (stand by was the rule in the last few months following Openwave's own difficulties in its core business). As the PR states it, "The acquisition would bring Musiwave's relationships with music labels, device makers and mobile operators that deliver digital entertainment to consumers, together with Microsoft's Connected Entertainment technologies and services, including Windows Mobile, Zune, MSN and Windows Live".

However, the competitive landscape has changed significantly in the last 2 years: Napster/ERICSSON announced their agreement, Sony Net Services and Widerthan were acquired by REAL Networks, NOKIA launched its own music store in the UK, AMAZON now sells digital tracks and ISPs tend to promote converged offerings (Orange to launch in S1 2008 after 9's initiative with Universal catalogue). With OMNIFONE, which is trying to gain ground with its weekly music subscription (back-end is powered by Musiwave by the way but via a non-exclusive deal), GROOVE (the company behind Sprint and 3UK music store) are now the only small independent players in the consolidating mobile music space). Competition is thus increasing and most of these players are obviously trying to challenge Apple's leading share of the digital market with the iTunes success story.

However, depsite the hype, reality still is that few consumers are effectively paying for mobile music. Churn is still quite high and the challenge is consequently to develop discovery and loyalty. It is also to take into account PC sideloading as an inevitable trend, but to give end-users tools to manage their playlists and increase their impulse spending.

Sure, Google is dominant in the US: according to Nielsen, they account for 54 percent of all US search traffic (compared to 12 percent for Microsoft's search properties). But I don't think most of the US-based commentators understand how much more dominant Google is in Europe. According to Hitwise, they claim almost 80 percent of all search traffic in the UK (compared to 5 percent for Microsoft). According to Xiti, Google claims almost 90 percent of all search traffic in France (compared to 2 percent for Microsoft). In Germany, says Webhits.de, Google again has close to 90 percent of search traffic (compared to 1 percent for Microsoft). Microsoft are getting hammered by Google in European search share.

MSN's portal and content traffic looks much better than their search traffic -- according to Nielsen they're the #2 web property in all three of those countries -- but after the sales team does their stuff, only some of that portal inventory will filter into the bid-based marketplace (ie AdCenter), whereas I'm guessing much more of Facebook's inventory will end up there. And in any case, MSN still lags Google on reach in each market.

We're in the final stages of our new European online ad forecast now, and the search revenue numbers look pretty similar to the search usage numbers. With usage that skewed, Google is the only "must buy" ad platform in Europe. And in my conversations with search marketers and SEM agencies, it's clear that a larger percentage of search marketers -- even intelligent, sophisticated ones -- only bid in Google. That's simply not the case in the US, where smart search advertisers have to bid in at least two platforms (Google and Yahoo), and more and more are buying from Microsoft as well.

So if you're Microsoft, and your search business isn't generating much European inventory or European advertiser interest for AdCenter, a deal like this gives you a much better story to tell. As I said last night, Facebook's European inventory should help significantly extend
AdCenter's reach and volume in the UK -- and when you've only got 7 percent as much search traffic as the leader, finding sufficient reach and volume for your ad platform are a real concern.

Of course, all that aside, I agree with Battelle on this point as well: after losing deals with AOL, MySpace, YouTube, and DoubleClick, this might just be about Microsoft desperately wanting to win first prize for a change.

Again, if you're a client and want to talk about this, email inquiry [at] jupiter research - dot - com -- or if you're press and want to talk about this, email presseurope (at) jupiter research *dot* com.

But I want to check in the morning (it's late in Berlin) whether Microsoft now has *all* of Facebook's graphical ad space internationally, as they do in the US, or just some of it. When I spoke to Facebook about their international sponsorship programs recently, they were pleased to promote the fact that they could bundle skyscrapers into sponsorships in Europe -- something they couldn't do in the US (where Microsoft owns everything except text links and sponsored newsfeed items) and which I think will be a pretty effective way to both drive traffic to sponsored groups and to boost the prices of those sponsorships. I wonder if Facebook will now lose the ability to bundle skyscrapers into sponsorships in Europe?

I'll post more on this tomorrow, after I've hopefully had time to chat with Facebook and Microsoft, and to digest this a bit. If you're a client and want to talk about this, email inquiry [at] jupiter research - dot - com. If you're press and want to talk about this, email presseurope (at) jupiter research *dot* com.

But, foolishly, they've not secured the z word for their website: www.globalization.eu. This is very insular thinking, how could anyone possibly think of globalisation without an 's'?

It's even more fun at the dot com level:

www.globalisation.com is a different EU-orientated site.
www.globalization.com does not exist, so much for American global spelling.

First, while there's little doubt this is Microsoft's response to Google buying DoubleClick, it's not at all a like-for-like acquisition. In DoubleClick, Google has bought an adserver; in aQuantive, Microsoft has bought an agency.

DoubleClick generate the vast majority of their revenues from adserving, making it a relativley clean acquisition for Google -- the businesses fit together logically. But aQuantive generate more than half of their revenues (58% last quarter) from their agency business, and generate just one-quarter (27%) of their revenues from adserving. That means it doesn't fit into Microsoft quite as comfortably as both copmanies might like.

Even if Microsoft can convince advertisers that there's no conflict of interest here, I just can't see why they'd want to own an agency. Chris Dobson, VP of Global Sales for Microsoft Online Services Group, told me they have no plans to sell the agency business. In fact, he said they were excited to own an agency, to have access to the experience and knowledge that'll help them build better software products for advertisers. Perhaps that's true, but the easiest -- the cleanest -- end to this story is for Microsoft to sell or spin off the agency piece and keep what's most valuable to them: the adserving.

Which brings me to point two: the piece of the aQuantive business that I think really matters to Microsoft, the adserving, is outstanding. aQuantive's adserving division, Atlas, has always been one of the best in the business, with a reputation for very good technology and outstanding customer service. And while clients tell me competitors are catching up, Atlas is still arguably the best advertiser-side adserver in the market. So from the adserving point of view, at least, don't believe anyone who says Microsoft came away with the second prize: the truth is they've done very well here.

Keep in mind that this is just my first take, and that we'll be publishing a formal JupiterTake on this within a few days. And, as usual, you're a client or a member of the media who want to talk more about this, please just get a hold of us.

In the next few days we'll be publishing a JupiterTake on all this activity -- the benefits and challenges of a major media seller or agency owning an adserving technology, and what it means for these companies and their many clients. And I'll try to blog more on it later today after I finish my calls with Microsoft. But in the meantime, any reporters who'd like to discuss this issue can call me on +49 30 40 50 4889.

It's reported the Starbucks have managed to sign Paul McCartney to their newly launched record label. I'm not sure whether this says more about the state of the music industry or Sir Paul's career...

Apparently he wants to take his solo career back catalogue with him. Personally the prospect of having to listen to even 30 seconds of Wings whilst waiting for my latte is enough for me to forswear caffeine for life.