Thursday, August 30, 2007

Diebold Patent the Patently Obvious

Diebold are best known as the ethical, unpartisan maker of vote tracking machines who's CEO pledged to deliver the 2004 US presidential election to Bush. Some people may also have heard that their voting machines were found to be deeply flawed and insecure by a Princeton Computer Science department (PDF of research) - apparently, security by obscurity really doesn't work, though you can always use your lawyers to try to gag any site which reveals this. Others may know them as a company that makes ATMs (cash machines, for those in the UK). But few knew until today that they are a hotbed of mobile innovation. Using their extensive knowledge of the ATM industry, and presumably some advanced research one of their employees did in his lunch hour when messing round with this new-fangled phone thing he had bought, they have patented the following utterly non-obvious ideas:
  1. Using a phone to find the nearest ATM (according to MocoNews)
  2. Using a phone to interact with an ATM to prevent card skimming, PIN surfing etc
  3. Using a phone to pay for things at banks / checkouts
  4. Connecting an ATM to a mobile network as it's principal means of communication
  5. Remote control of an ATM with the phone's keypad
  6. Using phone to make voice calls
Actually, they only patented five of those - I sneaked one in as a joke. They reckon these innovations could be in customer's hands in 3-5 years.

You have to assume that they decided to do some research into mobile banking, and before they started their patent lawyers specifically instructed them no to look at what anyone else was doing in the industry so that they could claim it was all internal innovation. Which is why they came up with a bunch of things people have been doing for years (1,3), extremely obvious applications of a mobile network as a means of reaching the net (4), ideas with limited utility which simply won't work in any usable way on handsets in the real world (5) and an idea which is the subject of a large number of startups and activity from other players like Visa (2).

It would be nice to sigh "Only in America could this patent be granted", but sadly given the type of company they are they'll probably try to bully smaller players into licensing something to establish precedent using their lawyers and political connections, and then generally strangle innovation in search of a quick buck. Ah well.

Tuesday, August 28, 2007

Operator Euphamisms: "ensuring customer experience is paramount"

Apparently Orange wants Nokia to work with them to "ensure customer experience is paramount" - the reason? Nokia want to put their own music distribution channel on their handsets which allows MP3 sideloading. Sideloading is exactly what every user does with their conventional MP3 players, so it is stretching credibility to suggest that consumers wouldn't want it available on any phone which replaces a dedicated MP3 player. Certainly it would be nice to have a single MP3 player which gave the option of sideloading, Nokia's channel and Orange's channel all through one interface but methinks this is not what they really mean.

If Orange's music channel really only sells 100,000 tracks a month to the many millions of Orange customers with their millions of MP3-enabled devices, I think Orange should just do the decent thing and take the channel round the back of the barn with a shotgun. This seems proof enough that people won't pay over the odds for music locked to a handset.

Presumably "ensuring customer experience is paramount" is also what AT&T are trying to achieve by crippling the Blackberry 8820 to make the iPhone look better. iPhone might need all the help it can get with its current pricing model though, a picture becoming clearer now the launch dust is settling a little.

The depressing thing is, this isn't news, it's business as usual. I remember being enraged when I discovered a friend's Vodafone-branded K700 could not sideload anything over IR or Bluetooth, or use MP3 ringtones, unlike the Orange-branded version I had. Presumably Vodafone was keen to ensure that the customer experience involved paying £3-5 for a portion of a song transcoded into polyphonic MIDI or a small JPEG. This was in mid-2004, and it wasn't really breaking news then...

Thursday, August 23, 2007

Torn Two Ways

USAToday have an interesting piece on the handset/carrier mess in the US which is keeping them back in the dark ages of mobile (iPhone not withstanding). It's inteeresting to me mainly because it nails all the major problems with the way carriers sell devices there (handset locking, feature crippling holding back content use, contracts prohibiting 3rd party app use, etc). These echo the problems faced everywhere else in the world but taken to the next level, enforced more strongly so as to put an even greater stranglehold on the content markets and lead to the bland handset lineup US users 'enjoy'.

The most defensible of these annoyances are early-exit fees from a contract - the handset was subsidised by the monthly fee, so it is quite reasonable to expect the consumer to have to pay off that subsidy before the contract can terminate, whether it be a one-off fee or a monthly charge; the others are just the result of operator stupidity and paranoid lawyers, as I have yet to see an actual real justification for preventing a user from using the software their handset was designed to run (which is legal and frequently done in many parts of the world).

However true all this carrier-bashing is though, it doesn't remove the naivety of consumer advocate Josh Silver's statement that "public policies in this country allow (Apple) to chain that technology to one massive company, AT&T, rather than allow consumers to make the choices they want". Public policy no doubt plays its part but one of the key barriers to portability - even if the operators were under European-style regulations to allow it - would be the mishmash of technologies used across the US.

I would love to see how Josh intends to take his GSM iPhone on AT&T and make it run on Verizon or Sprint's CDMA networks, let alone the legacy iDEN networks that Sprint acquired with Nextel. This portability we enjoy in Europe can only be achieved when a single wireless technology is mandated across a country at the start - it is the policies of the government 10 years ago that were at fault and the US government today could only hope to partially solve the problem, allowing portability across equivalent technologies.

Wednesday, August 22, 2007

Can You Make Money From Mobile Banking?

We were getting upset that our questioning of Monitise's pre-floatation quotes had dropped to #6 on the Google results page for 'Monitise', when suddenly as if by magic their financials came in. Following their AIM floatation their share price dropped about 20% in the first week of trading whilst the stock markets were still bouyant, before settling into a slow slide to their current position at about 60% of the flotation price in somewhat harsher climes - so what does this mean for the profitability of mobile banking, and financial servies beyond that?

Looking at the financials breakdown PDF, those "12m" customers they had (which should be "33m" now apparently - they never did clarify their real number, to my knowledge) have contributed to £500k in revenue in the last year, alongside consultancy revenues and "the intial flow of business from overseas". That'd make 4p/customer if we ignored the consultancy and assumed the 12m customers. I'd be inclined to suggest they have fewer customers but most revenue came from consulting - it would be very interesting to know more but the detail just isn't there, at least for a non-accoutnant such as myself.

This does raise a valid point on mobile banking - who should pay? I can't see Monitise's charge of 20p/balance to customers, on top of their operator data costs, being very appealing which leaves only the banks funding it as they fund their web sites, to cut customer interaction costs in the long run. That means either up-front consultancy fees to customise the service, or some sort of per-usage payment from the banks based maybe on cost savings (a very vague concept... I wouldn't like to be a software vendor drafting a contract based on that). These revenues suggest that Monitise cannot be making any real money on the customisation for the banks (with over 5 banks live now, that's be under £100k per bank - peanuts that couldn't scale to justify their valuation), but are they getting any per-user fees? We may never know, but banks are not known for their generosity (outside of the bonus pools of course).

Looking at Monitise's longer term position, I'm slightly stuck:
"As a result of the demerger and capital reorganisation of the Group, a merger reserve of £33.0 million and a reverse acquisition reserve of £(25.3) million have been created."
By my understanding that means they spent £25.3m to get a fairly poor MIDlet, a back-end integrating into Link and some sales work (having used the system, I am guessing/hoping they spent £25.29m or more of that on the backend and the sales). This leaves them with about £8m, which would mean revenues had better head north soon else they're going to be doing some strong cost restructuring soon (parent Morse pumped £8.8m into Monitise in 2007 alone). But I know very little of financial reports so this could misrepresent their position and everything may be peachy... I'd love some clarification from someone at the company?

It's very interesting to see these results, albeit an early set based on only a year or so with the earliest banks to launch. If I was a cynic, I would say that Monitise are busy proving that there is little to be made from charging bank customers 20p/balance with no backup revenues - but it does leave as an open question where money is to be made by mobile application developers. Can you make money when you have to pay off the multi-million early investments being thrown at these start-ups? I really hope Monitise proves that you can (writing a good mobile client might help - their proclaimed "consumer-centric product roadmap" must be a new thing introduced after the client I saw).

Friday, August 03, 2007

Nokia To Become Big In Mobile - Open Gardens Exclusive

Never one to let a week slip by without giving the world something to chuckle about, Ajit at Open Gardens has stuck his neck out and said he reckons that a company other than Apple - his bet is on Nokia - will be the company to own most of the mobile data market. This despite Apple's clear innovation lead being first to market with a mobile data device (I think it helps the argument to ignore the few billion that had been sold before the iPhone launch).

This is the sort of out-there, just-maybe-possible prediction that only a visionary genius could spot - expect Nokia's share price to rocket today in vindication.

(In unrelated news, Nokia just announced a profit increase of two and a half times this quarter which may mean they'll grow beyond the 36% market share they had in Q1, but this news is surely small beans compared to the endorsement of a mobile visionary such as Ajit)

OK, he's talking about mobile data not just mobile, but as the purveyor of far more mobile data access devices than anyone else in the world (including of course Apple) and an aggressive strategy for pushing data-capable devices into the hands of consumers whether they like it or not (eg. trojan horse marketing of S60 phones as consumer-oriented) which predates the iPhone announcement, it would be hard for Nokia not to end up owning a significant chunk of the mobile data market.


Japan Not Buzzword Compliant Shocker

I just wrote a comment on Pukupi's recent blogpost suggesting that japan was falling behind in mobile for its lack of mobile AJAX support - but it was rejected instantly, reason not stated. I am pretty certain that 6+1 is 7 so either they are automatically barring my comments (I've never baited them before so sounds unlikely) or they dislike Yahoo email addresses, so I figured I'd publish it here instead. Might be worth reading the original first...

I'd argue that the in-browser Flash Lite experience I've seen on Japanese phones is incapable of doing very much well, let alone an interactive webapp, though I'd imagine in some cases it could get by.

Ironically Japan is probably one of the only places in the world where the 3G networks are fast and reliable enough to actually make AJAX halfway feasible on mobile, and DoCoMo have the muscle to push a single standard implementation to remove the large cross-browser fragmentation issues, but with standardised well-integrated DoJa support offering a richer experience maybe DoCoMo don't feel the need?

I'd completely disagree with the idea that AJAX is a tool of choice for any developer who wants to develop something for a normal user on a phone though (can you name any successful deployments where this is the case?), even though you're right in suggesting a task-oriented focus for users. For the forseeable future mobile AJAX will be stuck targetting the minority niche of users who actually own a new S60/iPhone handset and live next to a 3G aerial/WiFi hotspot with flat rate/free data tariffs.

The Japanese are just going to have to accept that they are stuck in mobile purgatory with the most used mobile services in the world and superior mobile functionality to the rest of the world, but without the manifest benefits of full buzzword compliance.