Wednesday, May 30, 2012

Mozilla bets on HTML5 and Boot to Gecko to take down the giants a second time

Once upon a time, Microsoft owned a 90 percent share in the browser market. Explorer appeared unbeatable, tied to Microsoft’s dominant Windows, and fresh from crushing former market leader Netscape. 

Not today.

What took down the giant?  Well, lots of things, but largely Mozilla with its open-source Firefox browser.

Today the shape of the mobile operating system market looks much the same, if diversified to some degree. You’ve got Apple and Google at the top, with iOS and Android respectively, with Microsoft making a play for relevance.  They’re all huge players backed by other dominant products.

And here comes Mozilla again, this time with its browser-based Boot to Gecko mobile operating system similar in some respects to both Google’s Chrome OS and Palm’s failed webOS . The company announced the system at the Mobile World Congress in February and recently announced that the first Boot to Gecko phone would come out in Brazil in early 2013, in a partnership with Telefonica (yet another bold move by Telefonica – and you can read about that here and here and here).

According to the International Business Times, “Mozilla and Telefonica will jointly launch the Open Web Devices platform and it will be based on web apps and HTML5 offering developers complete access to core device APIs. Capabilities including calling, messaging, browsing and gaming will be developed as HTML5 applications and will be executed via experiences based on the Firefox browser.”

So why might Boot to Gecko thrive?  Here are three possible reasons:

1. HTML5 is the future: We’ve written about the rise of HTML5 before. If the mobile world really does throw off apps for the mobile web, that could disrupt even the Apple juggernaut.

In a keynote at the recent CTIA conference in New Orleans, Mozilla CEO Gary Kovacs predicted a “momentous platform shift” in the mobile world and predicted that there will be 2 billion HTML5-compliant devices by 2016 and that walled app stores will inevitably fall.

"Will one or two companies be able to curate the interests of five to six billion people around the world?" he asked.

2. Mozilla is aiming at the right market:  It is no accident that the first Boot to Gecko phone will come out in a rapidly developing market like Brazil with a forward-thinking Latin American-focused operator like Telefonica. From a Rethink Wireless post:
[Mozilla] sees this as an easier way to deliver a full mobile experience to fairly humbly specified, and low cost, hardware … By relying on streaming and hosted services, the need for expensive local storage and processing is reduced.
If most feature phone owners in the world can’t afford an iPhone, what will they buy?  Maybe Mozilla. And the first Boot to Gecko phones (complete with a catchier new name) will apparently be 10 times cheaper than the iPhone.

3. Things change … even for Apple and Google.

Mobile is simply an immensely disruptive space right now, with mobile operating systems like Symbian, MeeGo and webOS just a few examples of once significant players discarded by a ruthless market.

And, as Steve Costello asked in a post on the GSMA website, might Google get bored with Android?
When Android begins to look as if its time has come, will Google feel the need to shoulder the burden of refreshing the platform from the ground up? Or will it feel that this role now falls to someone else, either evolving the open source Android code or through a shift to a completely fresh platform? 
If the aim of Android is to drive use of mobile internet services by consumers, it is job done. And there are no shortage of platforms that – could – fill the gap created by the departure of Android.
This brings us back to the rise of Firefox. No one thought Microsoft could be beaten. But they could. Same goes for Apple and Google.

And who’s to say that Mozilla (with help from operators like Telefonica) can’t take down a giant twice?

Tuesday, May 22, 2012

TU Me: Can Telefónica beat OTT players at their own game?

If you can’t beat them, join them. And then beat them. That seems to be what Telefónica is saying with the launch last week of an OTT voice and messaging app and service called TU Me. This cloud-based app allows users to text, call and share their photos and location information using their mobile data allowance. By doing so, it competes directly with OTT services such as Skype, Viber and WhatsApp.

TU Me, available now in an iOS version and soon to be launched for Android, is free of charge. Users need to have the app installed, so for now it cannot be used to make calls to PSTN phone numbers. But the service is available to non-Telefónica subscribers too, so it could easily spread far and wide. By Thursday, TU Me was reported to be the No.1 application in Spain for the Apple App Store, not bad for a beta service only available in English.

So why would an operator, one of the biggest, risk cannibalizing revenues with an OTT service? Such services have been widely blamed for billions in lost revenues for operators. And attempts to charge extra for access to OTT instant messaging apps have not proved popular, as mentioned on Fierce Wireless.

Probably the single greatest justification can be seen in one quote from Telefónica. It would rather “keep the customer than lose them to other products”.

Telecom analyst Dean Bubley, who has long predicted that more operators will shift into the OTT space, writes on his Disruptive Wireless blog that TU Me differs from many of the other OTT offerings out there.  “…apart from Skype and Google Voice, they're not run by companies with 300m+ existing users to whom they can evangelise (sic) and bundle.  Telefónica also ought to have some cost advantages, as it's got its own cloud platforms and back-office capabilities.”

And of course Telefónica was already addressing the OTT threat with its purchase of Jajah, something you can only presume has helped in its development of TU Me.

So how will Telefónica make money from a free service? Additional data revenues, maybe, although TU Me works over Wi-Fi too. Ingrid Lunden at Seeking Alpha says this:
The idea is to get as many people as possible using it, and then monetize it along the lines of how Skype has done - through the rollout of eventual value-added services. That could mean enhanced communications, but Telefónica tells me that it will likely also mean adding mobile advertising and other ways of generating revenue.
We will just have to wait and see how the service will do, how it will affect revenues and numbers for Telefónica and its competitors. At least no one can accuse TU Me of being a case of “me too”. 

Friday, May 11, 2012

Tough times for operators in South Korea

With the highest smartphone penetration of any country in the world, it seems natural to look to South Korea for a glimpse into what the future might hold for operators in other mature markets. And it’s certainly an interesting picture. The question is just how worried it should make the operators.

First and foremost, all those smartphone users – over 20 million in a country of just under 49 million people, according to one recent count – mean truly staggering volumes of data traffic. South Koreans already generate more data traffic per person than anybody else, with volumes increasing almost 20 times last year alone, and are set to reach over 100 gigabytes each – every month – by 2015. To put that in perspective, it’s roughly what today’s US user gets through in a year.

So it’s hardly surprising that LTE is a hot topic in South Korea. Each of the three major local operators has launched an LTE offering, with SK Telecom predicting 10 million users on its LTE network by 2015. But there are already signs that LTE alone won’t be enough – and may even make things worse. KT’s LTE subscribers are using 170 percent more voice services and 112 percent more data than their 3G customers, while SK, having spent USD 2 billion in 2011 on network upgrades, is already talking about rolling out LTE-Advanced by 2013 to keep up with demand. When the best way for KT to show the media their LTE capabilities without signal interference is to hold the briefing on board a ship, as it did last week, you get a sense of just what they and the other operators are up against.

Sounds tough, right? And that’s without the OTT player that boasts 42 million users exchanging 1.3 billion messages every day (in a country of 49 million people, remember). So far the operator response to the runaway success of KakaoTalk has been an ineffectual mixture of denial and overpaying for rushed acquisitions in the same space, as exemplified by SK’s purchase this month of free mobile messenger service Tic Toc (revenues so far – zero) for a reported 20 billion won. KakaoTalk has issues of its own, not least a net loss of 14.2 billion won in 2011, but it’s hard to see how even the ongoing deployment of Rich Communication Services (RCS) based on the GSMA's Joyn initiative can help the country’s operators regain the upper hand.

There is also a political dimension. In the run-up to December’s presidential election the telecom market has been one of the battlegrounds. The in-power Saenuri Party promises to cut mobile voice call rates by 20 percent and force operators to offer unlimited LTE data plans. Estimates suggest this policy could cost operators a combined 1 trillion won in revenues. The opposition, the Democratic United Party, claims it will abolish basic charges while mandating free text messaging and public Wi-Fi, which may leave operators down by 7 trillion won. Little wonder that one telecom insider recently complained that politicians in South Korea “lack any insight about the industry at all.”

What do you think? Is the Korean experience a sign of things to come for operators everywhere as smartphone usage continues to rise, or can the right network strategies, a smarter response to the OTT challenge and different political priorities make a difference?

Monday, May 7, 2012

A new game in town?

There’s no doubt that the success of mobile devices and the app format is helping to fuel games on the go, from Angry Birds to Doom RPG. Analyst firm IHS Screen Digest predicts that the global mobile games business will be worth around €9 billion by 2015.

But are the social and networking aspects of gaming as developed as they could be? After all, many games require teamwork and offer a ready-made community of like-minded people. There would seem to be a host of opportunities for operators and game developers to cooperate and make money and build their business.

Voice is just one example. With many mobile games – especially those based on teamwork – reliable and effective in-game communication would be a great asset. We wrote about this back in January.

Imagine playing a game on a mobile device that required working with others to achieve an objective. World of Warcraft and many ‘first person shooters’ fit into this category. Offering reliable, high quality voice communication “in game” could be one way for an operator to differentiate its offering.

So why are operators and game developers not getting together?

The answer is they are. Or at least they are starting to. Telefónica Digital recently announced that it had entered into a strategic relationship with games developer Electronic Arts. The deal will allow Telefónica, via its O2 brand in the UK, the possibility to run gaming promotions for EA titles. Subscribers get the chance to play games for free during the first three months after they are downloaded.  

Matthew Key, chairman and CEO of Telefónica Digital summed up the cooperation: “By making a differentiated play in this most emotive and immersive entertainment medium we are fostering a much deeper connection with our customers – another significant step in becoming a true aggregator of experiences.”

So, is the game on? Watch this space.