Stop Press: Not Everything At 3 Is Illogical

Frank Meehan, CEO of 3 UK's custom handset manufacturer INQ, is sounding dangerously like he (and hopefully, by extension, 3) have some sort of clue. This would be dangerous new territory for an operator, hitherto not known for getting much except the value of fat voice revenues.

I clicked on the link explaining the new 3 Facebook phone with some trepidation, expecting it to be the standard load of 2.0 rubbish, but was met with the following quote:

"Communications is what the mobile industry should be about. The industry has forgotten its core roots; to make communication easy. Operators are trying to take over music, take over the camera business. They've totally missed out on what has been the key driver – the Internet. Most packages are voice and text. Yet on the PC, you have email, social networking, VoIP."

I'm not especially inclined to think nice things about people who harp on about social networking and anything with a version number, but this does signal that INQ are exploring an interesting direction which ought to be a natural extension of a personal communications device for the mainstream. If they really can get 3 to buy in with "affordable, transparent pricing" then they may be onto something.

Whilst I'd love to leave this post as a purely positive one, there is the minor problem of what will happen when people actually start using mobile data - something that has been concerning Dean Bubbley recently, quite rightly.

I think the real fun will start when operators find it impossible not to offer affordable flat rate data, and people actually use it - they will be stuck between commercial pressure to cut data tarifs and buckling infrastructure requiring major upgrades (to the backbone as well as a general expensive move to 4G). Throw in increased pressure on the bread and butter voice, SMS and roaming prices just in time for a long deep recession, and you have a rather potent problem brewing. Maybe the time to get out of operator shares...

3 Ways To Buy a SkypePhone S2 On 3

A friend just tried to upgrade his SkypePhone to the new Skypephone S2 on the 3UK network - he is 14 months in to an 18 month contract. The prices he could pay:

1. £105 to upgrade 4 months early (with all the lock-ins of a new contract);
2. £76 to purchase a reconditioned used handset;
3. £60 to buy a brand new Pay As You Go handset (which he could use with his contract SIM).

Would anyone at 3 like to explain how that possibly makes sense?

I guess at least if you buy the reconditioned one it ought to work, wheras maybe the new PAYG one will have to take a trip to the repair shop before it's usable?

Carnival

Ubiquitous Thoughts decided to include our last post on this week's Carnival of the Mobilists despite the cynicism, nice :)
This week's Carnival also has some other good posts, and something from Ajit.

iSkoot Pull Fast One on VCs

Congratulations today must go to iSkoot, "the company that brought Skype to mobile phones" (well technically, only one of the companies to do that as Skype themselves have done it too, as have a whole raft of other companies with even shallower business models than Skype itself).

They have now raised a $19m third round of funding from some people in suits, bringing their total fleecing investment up to $33m.

The purpose for this cash injection was to build an applications platform for AT&T. Presumably AT&T want this platform so much, they won't pay for it - but presumably the suits think it is worth at least $19m, and probably a lot more. AT&T have 71.4m customers right now, and operators usually give say a 30-40% revenue share to the people who do the work, so $19m would need $47.5m in sales, which is 66 cents per customer. If you wanted to also beat the interest rate a bank would give you on the same cash, you'd probably need to up that sale price; if you wanted a profit (shock, horror, etc) you'd want to clear over a dollar from every single AT&T customer.

Decide for yourself how ambitious that sales target is, given the usual proportion of customers who download premium applications for their phones on any given network (excluding the early iPhone App Store goldrush, that is, which AT&T can't access).

So - what is this app platform that will generate so much revenue? It's a service to bring "social networking, email, RSS feeds and eventually services like Twitter" onto low-end phones. Right. Forgive me but isn't Twitter (aside from being pointless and loss making) already available, through the wonder of SMS (that extremely high margin data service that operators love above all others)? Are AT&T crying out for services that cannibalise those SMS revenues by generating greater use of GPRS/3G bandwidth (given away for near-free these days, but costing the operator a lot to maintain and scale infastructure)?

OK, but what about the other (more useful) services? RSS and email have been available on all feature phones for a while, and things like the GMail Java app can be used even on the pretty low-end devices.

But wait! There's a USP! iSkoot have a very special magic at their disposal which allows them to integrate deeply into every phone - "Skype, for example, is so deeply embedded in the software stack that Skype contacts are integrated directly into the phone's address book". Would you pay $1 to have your Facebook contacts added to your phone? Personally no (all the ones I know well enough to talk to on the phone are already in there), but maybe some people would. But how is this deep deep deep integration achieved?

Well, the conventional way on the GSM range of handsets supplied by AT&T would be to use the JSR75 PIM API from inside JavaME, available (to any developer) on most of the mid- to high- end devices (and probably a few of the low-end ones too). Not really a $19m USP then...

Could it be something more? Well, iSkoot do appear to have done some of the customisation of the Skype-branded Amoi launched on 3 in some territories a while back. V1 was pretty flaky but a good effort if you have a high tolerance for bugs in your phone's UI - I haven't tried V2 yet... this does indeed feature a lot of customisation, achieved through a lot of customisation effort. This much customisation could be ordered by an operator with AT&T's clout, though doing it to their range are off-the-shelf Nokias, SEs, Motos, Samsungs etc would slow down handset launches, increase the risk of bugs and recalls (this has happened to Orange a few times with their simple front page rewrites) and cost a hell of a lot. iSkoot may well be able to do the work, but would AT&T want them to? It would appear AT&T at the very least don't want to pay for it...

Of course, I'm sure I'm not seeing the big picture here, every operator in the world will need this so there's got to be a hockey stick graph in the PPT somewhere - but, as most of the companies like Facebook are bringing themselves to mobile quite happily, Twitter is custom designed for SMS, etc etc, I remain uncertain why the whole world will need this $19m platform.

Please, someone, show me the light! Or if that is impractical, send me $19m to the usual address and I'll see if I can come up with something similarly world beating...

Pepsi Roll Out Massive Proof That QR Codes Don't Work Outside Japan

Pepsi UK have been persuaded to roll out a massive QR code promotion on cans of toothrot, which should hopefully prove once and for all that slick marketing agency types should not be trusted, and QR codes are a waste of time outside of Japan. This is not news but I reckon this may be the biggest amount of money wasted proving it in the UK...

I ran into someone at an event a few weeks back who had a QR code attached to her name badge, and one on her business card - guessing the answer, I asked her why. She said I could quickly snap it with my phone to get her contact details... then did admit that actually, in her experience, they often came across with the wrong number and some other info missing. She was hot and I was borrowing the new N96 for the night which in theory has native barcode integration (Nokia have offered this in S60 for some time) so I decided to give it a go anyway. Three minutes later we concluded that the photo app didn't seem to be recognising the barcode at all (bad light? user error? who knows) and that just handing over a piece of card is not without its advantages.

The point being - only one major UK phone platform has native QR codes, and it isn't yet sufficiently mature to "just work" like the ubiquitous readers in Japan. Users won't type in a URL to download and install a dedicated app simply to avoid typing in a URL or number, so... those who in theory can do this actually can't, and the rest won't bother to try. Plus ça change...