The “magic blue circle”

I recently came accross this quote in the Financial Times from the former Vodafone CEO on November 19, 2007: “The simple fact that we have the customer and billing relationship is a hugely powerful thing that nobody can take away from us”. Would you still agree with this operator statement written in golden letters at the forefront of any “smart pipe” operator strategy? 

Since then, new entrants such as Google and Apple have shaken up the value chain. I have two examples in mind showcasing the tectonic shifts happening: 1) Apple imposing a direct billing relationship via iTunes/App store and 2) Google managing to create its own location data base (via cell ID or Skyhook’s wireless technology) without relying on operators’ network.

As early as in July 2007 (before the 3G iPhone version embedding a GPS chip), Google Maps on iPhone (the combo of Google’s and Apple’s strengths) started offering the “magic blue circle” experience. You could benefit from a compelling user experience like never before, with instant localization without any GPS chipset. Of course, the accuracy may not be good enough if you are looking for a pure turn-by-turn navigation, but honestly this is so simple and useful if as a pedestrian you’re looking at the streets nearby.  

 

Location is at the very heart of the mobile value proposition.

This seems quite obvious but despite having being launched by operators for more than a decade, location-based services never really managed to gain huge traction. In the last two years, a lot has happened as highlighted above because of significant changes in the mobile ecosystem.

Location-based services are finally emerging as one of the most promising new mobile services categories in the mobile industry.  

Roughly a third of European online consumers with mobile phones are interested in using mobile GPS/navigation services, while a majority of smartphone owners with unlimited mobile Internet packages already do so!

Beyond navigation services and mapping, a range of innovative location-based services (LBS) for mobile phones is emerging. Coupled with consumer interest are significant changes in the value chain, with Nokia’s acquisition of NAVTEQ and Web developers’ interest in the mobile platform being key drivers for LBS.

 

Location identifiers help filter and search for information, facilitating interactions between people. If consumer product strategists manage to build a compelling user experience and reassure consumers about privacy and pricing issues, location as a service will become obsolete — and will instead become a core enabler of mobile activities.

  

 

 

 

Vodafone / Wayfinder

Vodafone announced this morning a recommended cash offer to acquire Wayfinder Systems AB. This is not a done deal yet but my first take is:

- Wayfinder like other software vendors really pioneered the market for navigation on mobile phones. Initially, the Swedish company (at that time named Itinerary systems) started in as a R&D project in the mobile phone division of Ericsson in the 90s! It is thus no surprise that Wayfinder recently announced an intensification of its global collaboration on GPS handsets with Sony Ericsson, one of its main clients. Back in July 2007, the company acquired Finnish application provider Navicore.

- According to its interim report (ending September 30th 2008), Wayfinder wanted to focus on a small number of global partners and to planned to reduce costs by 30% in 2009. The company reported close to 2,5M activated user accounts but only 294,000 paying users, who had activated a paid for application in the past 18 months. Vodafone’s offering value Wayfinder at around €23M. I am not a financial analyst so I won’t comment the cash offer in detail but from an industry perspective, it seems to me:

* this is a small amount of money for a global operator like Vodafone

* most competitors are also small players (Telenav, Route 66, TCS, Apello, Webraska, Jentro and NIM). Some of them have already been acquired (remember Gate 5?), some others seem to perform well (NIM in the States) but most of them will struggle remaining independent and going directly to consumers since it implies significant marketing budgets and that they need operators’ support due to large bills of mobile data consumption when accessing navigation services from your mobile phone.

* I would not be surprised to hear other players get acquired or at least signed deep strategic partnerships. Between Nokia/Navteq and Google Maps, operators will struggle differentiating and maintaining competitive advantages.

- Vodafone will benefit from Wayfinder’s expertise, technology capabilities and team and provide resources and scale to distribute Wayfinder products.

Wayfinder had launch Locate Mate, a service integrating into social networks such as Facebook.

I am currently undertaking some research on LBS, so do not hesitate to contact me to discuss this topic.

Nokia: Connecting People

Nokia’s brand tagline is perfectly summarized in the announcements made this morning at Nokia World in Barcelona.

- launch of Nokia Messaging. The offering will launch in Q1 2009 mainly in developing countries and on S60 solutions. However, support for S40 is expected in second half of 2009. The challenge here will be to offer a really seamless integration/synchronization with existing brands and solutions (Yahoo! Mail® and Messenger®, Windows Live, Hotmail, Gmail, Google Talk, AOL Mail and thousands of ISPs).

- Mail on OVI. The interesting point is that the beta version will roll out in 12 languages (with many more to comes) including Hindi, Bengali, Tagalog, Bahasa Indonesia and Bahasa Malaysia. It is often forgotten how fragmented and diverse the Indian, Indonesian (235 million people on more than 17,000 islands) or Malaysian markets are. To adress emerging countries, the offering has to be driven by local content and offerings, in local language and on the mobile device (due to limited PC penetration). The simple fact that the service is available on all currently shipping Nokia Series 40 devices is another clear sign that Nokia is targeting masses. Nokia does neither restrict the solution to its high-end S60 solutions not does it want to address the niches that currently use mobile consumer e-mail. The web access version will launch in February 2009 and will be a key component for driving traffic into the OVI Web site. Consumers need to have strong benefits to regularly visit OVI. If the service is really simple to use, open, and as reliable as the Nokia brand, expect the company to really start promoting OVI.

- sharing your “social location” or “sensing your ‘So-Lo’” as stated by Nokia in its PR. Beyond the announcement of a new flagship device (the N97, first QWERTY NSerie phone with an amazing 48GB storage!), Nokia insists on the concept of ‘social location’: “the Nokia N97 makes it easy to update social networks automatically with real-time information, giving approved friends the ability to update their ‘status’ and share their ‘social location’ as well as related pictures or videos”. Loopt, Whrrl, Where, GyPSii and many other services offer these services today. Business models vary quite a lot but many start-ups should be aware there is no way for them to have a return on investment anytime soon if they rely exclusively on mobile advertising. In addition, such features should logically be increasingly offered on existing social networks. Combined with the growth of social networking and its expansion in the mobile space, LBS are set to finally (8 years after initial launches!) become a key serivce. The new version of Nokia Maps (integration with OVI, 3D enhancements, and availability to pre-plan a journey on the home PC and then to synchronize with mobile) will definitely help. Check out the beta version here.

All those announcements are really at the heart of Nokia’s brand and a clear signal that Nokia is now competing with the likes of Google and other Internet players. I can see 2 main challenges for Nokia:

- How well and how quickly will this strategy be executed? Internet giants tend to be react very quicly and to offer compelling user-experiences. Shifting from a hardware to a software company is Nokia’s toughest cultural and organizational hurdle but the company is used to re-inventing itself.

- How will operator clients react and how will they be associated to Nokia messaging efforts? How will other handset manufacturers evolve? For the moment, they claim to support their clients and position themselves as enablers and partners but I wonder what’s really in the pipeline if Nokia proved to be more successful than expected in their services’ strategy?

Please give your opinions on Nokia announcements. I would be curious to know your thoughts. Simply add a comment below

Apple AppStore and mobile merchandizing

Embracing Apple’s early and innovative success (200M app donwloads in 3.5 months), several players have announced the launch of mobile stores such as Microsoft (Skymarket), Google (Android Market) or RIM. Despite having been availabe for years on numerous Symbian phones, Nokia Donwload! did not manage to achieve comparable success. We know this is all about the user-experience and about the innovative marketing catalyst the iPhone represents for brands, retailers and content publishers.

However, I think many things could be improved. What about the ability to sort apps by prices and other criteria (languages, size, launch date, number of reviews), preview of the apps, obtain more detailed descriptions…

Mobile merchandizing is still in its early days.

I was interviewed last week by GPS business news about this precise topic. check out for the video interview here.

Note:

If you are not yet familiar with Google Earth on your iPhone or if names such as Palringo, Fring, LightSaber, Mylighter, Newton’s cradle, Devise or Mylite Flashlight and Colored Strobe do not ring a bell, have a look at this thorough review (in French) of the TOP 50 FREE iPhone Apps according to Mobinaute. List is available here.