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Mobile Marketing Forum 08

Does the buck stop with the money men?

It looks like a bad time to be a CFO for a telecoms kit vendor at the moment. Not only have we seen Ericsson CFO Karl-Henrik Sundstrom make a quick exit, after a 36 per cent drop in income for the third quarter, but now, Alcatel-Lucent number cruncher Jean-Pascal Beaufret is off too.

Beaufret’s exit was actually a bit of a surprise - we all knew bad news was coming - but the rumour was that Pat Russo would be up for the chop. Instead, there’s been a ritual sacrifice of 4,000 technicians and a bean counter.

But the bad news from Ericsson and Alcatel-Lucent is symptomatic of the market. Next year, my colleague Mike Roberts expects that continued pressure on vendors will lead to more consolidation. Ericsson, Nokia Siemens and Alcatel-Lucent have established themselves as the top three vendors, but the networks businesses of a number of other vendors are still exposed. One possibility is that the long-mooted merger of the networks units of Motorola and Nortel will finally happen in 2008.

Of course, further consolidation is more bad news for the CFO community. Where do you take your CV when you’ve just left one of the biggest telco kit makers in the world in a spot of bother? Maybe the buck is stopping lower down the food chain these days, after all, it’s already hit a number of chief execs.

Four Candles

Lovers of word play the world over will rejoice at the news that users of social networking tool Facebook can now update their profiles using the speech to text application Spinvox. For those who aren’t familiar with it, Spinvox converts voicemails into text messages and the technology has now been adapted to let users post to their pages on Facebook. Some people love the concept, some aren’t so sure.

The Informer used to have Spinvox on his phone and, sorry, but he couldn’t get on with it at all. Every message came out wrong and he always had to phone his callers back to find out what was going on. A typical Spinvox SMS transcript of a message from one of the Informer’s pals might read:

“Hello the chin warmer. Do you still want to mate with everybody at the pub tonight? I’ll bus, and get two tankards - I’m eating my mum for lunch tomorrow.”

So while it was briefly diverting, the frustration endured longer than the amusement. The problem was that, for some reason, the Informer was unable to deactivate ‘Skinpox’, which he’d been trialling. It was while facing down a lifetime of hilarious miscommunication that the Informer was saved by one of London’s many petty criminals. The phone was stolen.

The Informer’s phone has been stolen many times and he always leaves angry, helpless threats on the voicemail in the immediate aftermath. Presumably the criminal in this instance received a text message from ‘Shinsocks’ that ran:

“You grieving little slit. When I get old with you I’m going to sling you up by the bores and knock your lucky teeth out.”

So, all Spinvoxing Facebookers out there keep an eye on your profile. Facebook was also in the news this week after it emerged that Canada’s own Research in Motion has made the service available to users of its Blackberry handsets. Mike Lazardis, founder of RIM and Dustin Moskovitz, co-founder of Facebook (now there’s two names that are dying for a good Spinvoxing) unveiled the application at the CTIA Wireless IT & Entertainment show in San Francisco on Wednesday.

And in further related news, Facebook is now ‘valued’ at some £15bn after Microsoft this week paid £240m for a 1.6 per cent stake in the firm. The Informer went off and poked Bill Gates. It’s a lot of lolly for a firm that turned in only $30m last year, that’s the kind of money Gates finds tucked away when he’s looking for the TV remote down the back of the sofa.

A few years back Vodafone also invested a massive sum - $3.25bn in two separate lumps - for a small (3.75 per cent) stake in China Mobile, as well as a seat on the board. And this week, the world’s largest operator by subscriber numbers (and that’s China Mobile, folks) reported Q3 profits up 38 per cent year on year, according to Bloomberg. Net income was at $2.9bn, as the firm slashed its end user prices and continued a push into rural areas.

Also on the rise was Nordic carrier TeliaSonera, which reported a 6.8 per cent increase in Q3 profit, to $839.57.

The financials weren’t treating everyone so kindly, though and Motorola posted a quarterly profit of $40m for the quarter, down from $727m for Q306. Motorola may be having a tough time in business at the moment but its latest personnel appointment means that at least it won’t have a drug problem. Karen Tandy, the first woman to head the US Drug Enforcement Administration, has left the DEA to join Motorola as a senior VP. No more sneaky bifters in the john, guys.

Japanese market leader NTT DoCoMo will be drunkenly singing sad songs at the Karaoke club tonight, meanwhile, as the firm posted a 21 per cent drop in H1 profits for this year. The carrier’s customers have been flocking to second placed KDDI and third placed Softbank, which have cut their prices in the face of market saturation. The Doc’s numbers were YEN408.5bn for the first half of the financial year, down from YEN516.89bn for the same period in the previous year. It’s not all bad, though, as the firm’s full year forecast remains unchanged, with operating profit expected to rise one per cent to YEN780bn, which is $6.8bn.

Swedish kit-house Ericsson is now one Karl-Henrik short of a boardroom. Not CEO Carl-Henric Svanberg, but CFO Karl-Henrik Sundstrom who Hara-Kiried his way out of the Swedish firm after it made good (or should that be bad) on its profit warning last week.

As promised, the firm posted a 36 per cent drop in net income for Q3 this year, with profit falling from SEK6.2bn to SEK4bn year on year, on a revenue increase of six per cent to SEK43.5bn. Sundstrom will be replaced by Hans Vestberg, up until now head of Ericsson’s Global Service business unit and executive VP.

The wireless industry’s revolving door kept on spinning this week as former Virgin Mobile UK front man Tom Alexander finally got bored of racing Aston Martin supercars and double-declutched his way back onto the wireless track, taking the job of CEO at Orange UK. Expect plenty of boardroom chicanery. (Boom! Boom! - Ed.)

The role was vacated by Bernard Ghillebaert, who will be assuming the position of executive vice president of sales and customer experience. When he left Virgin Mobile as it merged with NTL, Alexander confessed to UK broadsheet The Telegraph that he was “not really a corporate man”. The paper also pointed out that he’d bagged a cool £20m from his time at the top.

This industry certainly can help a person make a buck or two, as the Informer has yet to prove, and one of its top entrepreneurs was in the news for nothing to do with wireless this week. Mo Ibrahim, who founded pan-African operator Celtel and offloaded it at a tidy profit to Kuwaiti firm MTC last year, is rewarding honesty and integrity in African politics from his own pocket with the Mo Ibrahim Prize for Achievement in African Leadership.

Bestowed by the Mo Ibrahim Foundation-and counting former secretary general of the UN Kofi Annan on its panel - the inaugural award went, this week, to Joaquim Chissano. The second president of Mozambique, and a key figure in the ending of that country’s civil war, Chissano will receive $5m from Ibrahim, as well as contributions to causes that he (Chissano) supports. The Informer met Mo Ibrahim many years ago, as a young reporter, and he was a very nice bloke.

To a group of Aussie shareholders, Telstra CEO Sol Trujillo is not such a nice bloke. According to them, he is, in fact, a flaming gallah. They’re bringing a class action law suit against him, alleging that he withheld information that should have been divulged to them - information relating to a drop in the shareprice.

What they’re saying, according to reports from thelanddownun-der, is that Trujillo held a private meeting, at which Aussie Prime Minister John Howard was present, where he disclosed his belief that Telstra had underinvested in its infrastructure to the tune of AUS$3bn. They also believe he divulged at the meeting that his fixed line business was on the slide, with revenues set to drop off by AUS$1.2bn between 2005 and 2008.

The shareholders are suing for a drop in Telstra’s share price, which they believe they would have been able to foresee had they known about Trujillo’s assessments. Big Sol - who is not the most popular man with Australian stockholders generally - is in court next month to give evidence in the case. Naturally Telstra is pleading innocence.

While we’re dealing with the crazy world of litigation, Vonage - which seems to spend most of its time either in court or writing out large, apologetic cheques - is now on the receiving end of a legal assault by AT&T, which claims that Vonage infringed its patents.

Vonage loves infringing patents like a fat kid loves cake. The firm’s already settled disputes with Sprint Nextel and Verizon this year. Maybe it’s going for all the US operators before trying its luck overseas. It’ll probably fly over here to London in the new year, claiming to have invented the Queen.

Anyway, AT&T reckons that Vonage has stepped on its patent shoes in the area of internet telephony routing and is getting all “Ob-jection your honour! Move to strike. Jury will disregard witness testimony. Council, approach the bench. You want the truth? You can’t handle the truth” about it. No doubt Vonage will settle the matter with cash money once the two firms have fattened up the lawyers a bit.

One of the Informer’s chums calculated this week that almost half of AT&T’s Q3 adds this year bought the iPhone. AT&T didn’t release the number of iPhones it’s sold, but it did say it added two million net new subs in Q3. Apple has shifted 1.4 million units, though, and even if 250,000 have been hacked and remotely assassinated, that still means nearly half of those subs bought themselves an iPhone. AT&T turned in some good numbers as well, with revenues up to $30.1bn from $15bn for Q306. Profit was up healthily, too, at $3.1bn, compared to $2.2bn a year ago.

When the 3G iPhone comes out, and all Apple’s customers click into the upgrade cycle, what will happen to all those first wave models? Well, they can be refurbished and resold, a process which is generating a nice plump market according to ABI Research. The analysts reckon that revenue from second-hand handsets will reach more than £3.5bn in 2007, driven by shrinking handset replacement periods and increased demand for lower cost units in emerging markets. So don’t just throw them away. Unless they keep turning themselves off.

How much is a social network worth?

$15 billion, that’s how much. 23 year old Mark Zuckerberg must be a very happy man today, after Microsoft shelled out $240m for a 1.6 per cent stake in Facebook. The social networking hype machine has obviously been chugging away since Murdoch paid out $580m for MySpace and I wonder how much longer before the wheels fall off the bandwagon? eBay’s already admitted it got a bit over eager when bidding for Skype and all this crazy spending is starting to look a bit ’90’s…

Anyway, the point of this post was about BlackBerry finally jumping on the bandwagon and getting a Facebook app, which just goes to show how closed mobile operating systems trail the rest of the industry. Facebook’s probably seen as passe already and the new mobile social networking phenomenon is probably something like Twitter. After all, Jaiku’s gone all corporate now

Plotting Nokia’s assault on the services space

Nokia has been building momentum in the services space of late - an initiative which has been interesting to watch for two reasons. One, because all this talk of social networking and Moshing is suggestive of the world’s biggest handset vendor shaking off its typically dour, Finnish image. And two, because of the controversial statements coming from the typically dour, Finnish chief executives of the world’s biggest handset vendor.

When talking about the deal to get Boingo wifi onto Nokia phones recently, Nigel Rundstrom, vice president of Nokia Multimedia, said: “This agreement reinforces Nokia’s commitment to become an internet driven experiences company - offering not only great devices but also exciting services around them.”

This builds on Olli Pekka Kallasvuo’s comment at the Ovi launch about how, “devices alone are not enough anymore.”

But Ovi was just the start of it:

Nokia makes demands of social networkers

Nokia plots services route with Navteq buy

Nokia pockets Enpocket

Vodafone: Ovi no threat, let’s work together


Nokia dives into Mosh pit

It’s an iPhone bonanza for AT&T

Well, Steve Jobs probably wasn’t the only CEO rubbing his hands with glee at the success of the iPhone this week. The wonder device may have helped build Apple’s cash pile even higher but it looks like it’s also gone down a treat with exclusive carrier AT&T. The US mobile unit added 2 million subs during the third quarter, while Apple shifted 1.1 million devices. Given that 250,000 of the 1.4 million iPhones sold in total are thought to be hacked, it’s a safe bet that almost half of AT&T new additions were tempted in by the Apple device. It will be interesting to see if this is sustainable as the European version of the device comes on line next month, with the wildcard of a potentially unlocked unit from France.

WiMAX wins ITU backing as IMT-2000 tech

High fives all round at the WiMAX Forum today as the ITU approves WiMAX 802.16 as an IMT-2000 3G technology standard. The move has the potential to allow WiMAX deployments to occupy globally allocated frequency bands and complement or compete with other 3G technologies.

This is a major deal for the WiMAX camp and depending on how talks go at the World Radio Conference (WRC-07), which kicks off next week, there could potentially be a merger of the IMT-2000 and IMT-advanced technology categories into a single category, thereby giving any IMT-2000 technology access to bands reserved for IMT-advanced - or 4G - and levelling out the playing field between WiMAX and the other mobile technologies quite significantly.

Some you win, some you lose

It’s not really the kind of week in which the Informer feels like mentioning football. But, when he wasn’t watching England crash out of the Euro 2008 qualifiers, he was sifting his way through the world of contactless payments, and he came across the news that UK operator Orange and UK football club Manchester City are trialling a new mobile-based ticketing system for matches.

There’s an extra wireless twist as City’s new chairman, Thaksin Shinawatra, used to own a Thai carrier through his family company, Shin Telecom. He was also the Thai PM. He was deposed following a coup last year over the sale of the carrier, so you could say he’s swapped one premiership for another. You might also observe that this news about Orange and Man City isn’t the first time that the words ‘Thaksin Shinawatra’ and ‘trial’ have appeared in the same story.

Anyway, about the mobile ticketing. Select season ticket holders will be given NFC-enabled mobile phones to replace their existing contactless cards. They’ll use these to pass through the turnstiles at games and the firms have suggested that, down the line, the phones may be used to buy merchandise or refreshments. The trial starts early next year. Will Orange score with NFC, or will it rugby tackle the opposition on the edge of the box, concede a penalty and then collapse? It’s a funny old game of two halves.

Team Nokia was a clear winner in the numbers this week, posting some serious results. Net profit for 3Q07 was up 85 per cent year on year to EUR1.56bn. They must be doing something right over there in Espoo - net sales grew by only 28 per cent year on year to generate that profit.

As usual with Nokia, it was the handset division wot won it, with sales of EUR6.1bn. The multimedia unit pulled in EUR2.5bn, while the Nokia Siemens Networks JV - the source of some Teutonic griping last week, you may remember - dropped EUR3.67bn into the pot. Handset unit shipments were up 26 per cent to 111.7 million and Nokia now reckons it’s got 39 per cent of the global handset market. Its oft publicised target is 40 per cent and you wouldn’t bet against it, would you?

It was a different story altogether across the border in Sweden, where kit maker Ericsson issued a profit warning after cutting its Q3 forecasts. Sales are only expected to grow by six per cent year on year, to EUR4.75bn. Operating income is expected to fall by 36 per cent to EUR611m. CEO Carl-Henric Svanberg laid the blame at the feet of the operating community, which has cut back on its expansion and upgrade programme. The firm’s shares lost almost 25 per cent of their value.

Samsung secured its position as the world’s number two handset vendor, meanwhile, shipping 42.6 million units in Q3, a year on year improvement of 47 per cent. The Korean firm also boosted its ASP slightly, to $151 for Q3.

Samsung nicked second place from Motorola, of course, which was in the news this week for buying half of user interface specialist UIQ from owner Sony Ericsson; itself set to overtake Moto in the not too distant future. The Informer did a double take at that one. Motorola has been banging the Linux drum for some time now, so why invest in UIQ? A post on the telecoms.com blog called it an “expression of desperation” which is probably not too far from the truth.

Moto also unveiled some new handsets late last week, after the Informer had gone to bed, including - you guessed it - a ’special edition’ of the RAZR2. It’s not even funny any more.

Sticking with phones for a while, there was an interesting development in “Project iPhone - Tomorrow The World” this week when it was revealed by Orange France, Apple’s distribution partner, that the handsets will be sold unlocked in France. You’ve got to love that. It’s French law that unlocked handsets have to be available but no doubt Apple will find a way of getting round it somehow. Perhaps it will pack the unlocked versions with plastique so that anyone who dares to use the phone on their own terms, a phone they’ve paid for with their own money, will get all of their fingers blown off.

In other iGuff this week, Steve Jobs blogged that the firm is going to allow third party applications to run natively on the handset. “Let me just say it,” Jobs Jobsed, “we want native third party applications on the iPhone and we plan to have an SDK in developers’ hands in February.”

For anyone who wants to get decent speeds when accessing the internet while mobile, and not rely on EDGE, T-Mobile UK has launched laptop 3G access that you can buy by the day. It’s four quid a pop and the firm has also cut its Web ‘n’ Walk Plus and Max plans to £20 from £29 and to £35 from £44 respectively, if that makes sense.

The BBC, meanwhile, in a deal with UK wifi outfit The Cloud, has announced that anyone with a wifi-enabled laptop will be able to access all of its content for free at Cloud hotspots. This is a fascinating development. Presumably the Beeb, which has been busy sacking journalists this week, is paying The Cloud a reasonable sum of money to let users access its site for free. This opens up a whole new way of doing business for content owners and publishers. Instead of putting your content out there and watching users get put off by the cost of access, pay the access provider yourselves and make your money from advertising. Except, of course, the BBC is not a commercial outfit and so can’t carry advertising. But lots of other firms could and, you never know, it might take off.

As might this piece of tech craziness: Korean handset vendor Pantech has unveiled a ‘bone conduction’ handset that lets users listen to callers through vibrations in their skull. Check that out. Unfortunately Pantech has opted not to call the product ‘The Phoner’, or even the BonePhone. Instead it’s gone for the slightly more boring, but less juvenile A1407PT. The product was designed to overcome the problem of communicating in a noisy place, but is also expected to offer benefits to people with certain hearing problems.

While we’re on vibrations, there was some silliness this week when reports emerged that some people are getting phantom calls, when they don’t even have their mobile phones on them. Ooooohh. People are so attuned to their devices that they feel them even when they’re not there. Like the poor souls who have their legs amputated then get a nasty itch on their foot.

Back in the real world, it is expected that the ITU will today approve WiMAX as a 3G IMT-2000 standard, paving the way for deployment in the 3G frequency bands. We understand that the agreement was reached late last night, after numerous objections were eventually overcome. Now who might have objected? Hmmm. The UK, US and Australian administrations in particular pushed strongly for WiMAX’s inclusion, as the Informer understands it, but there are those within the 3G industry that want to keep the 2.5-2.6GHz spectrum for 3G. Last year the GSM Association (GSMA) attacked European Commission attempts to pursue technology neutrality in the 2.5-2.6GHz band and, in the UK, O2 and T-Mobile opposed regulator Ofcom’s plan to reopen 2.5-2.6GHz spectrum, as did vendor Siemens and the UMTS Forum. Why can’t they all just play nicely. Like the English rugby team. Football schmootball.

It was only a matter of time

Ok, enough with the “I’m on the plane” gags already. It’s only a matter of time before mobile phone usage is allowed on planes. And you probably fall into one of two camps in this discussion. Either you hate the idea, that you might end up sitting next to someone yakking away, whilst at the same time worrying about the effect on the plane’s navigation systems. Or you think it’s great that you can make extortionately priced calls from your own phone whilst roaming at 30,000 feet, thereby avoiding paying the extortionate charges for using the on board phone system. Either way, I can’t see it taking off big time because of cost. But people will probably pay for the convenience.

EDGE as sharp as WCDMA?

This might stir up a hornets’ nest, but this consultant chap, Carl Howe, has a point. It’s not all about bandwidth when it comes to mobile ‘broadband’, if the combination of device software and hardware is sluggish, then the web experience will also be. If EDGE is capable enough to deliver in terms of latency, then ‘full fledged’ 3G becomes a little redundant for the average user. So criticism of the European iPhone because of its lack of 3G might be a little premature.

Never mind the speed, feel the bandwidth! Anyway, we’re all getting bored of the iPhone now. I think I’m just writing about it out of habit.

Apple and Orange are officially a pair

We’ve known for a long time, just as we did with O2 and T-Mobile, but Orange has finally been officially confirmed as the iPhone carrier of choice in France. I use the phrase “of choice” deliberately, as you can see what might have been the sticking point over the past couple of weeks.

Orange told me that French law means Apple will have to make a SIM unlocked version of the device available. Yep, that means it can be used on another carrier network. But before millions of French people start setting up their eBay stores, the company hasn’t yet revealed the price of the unlocked version. Some suggest it might set you back Eur1000, in which case it’s still probably cheaper to buy a locked one and risk hacking it. You also won’t be able to get Visual Voicemail and probably won’t have iTunes wireless access either.

Either way, Apple will have to supply the SIM free phone in order to comply with the law but there’s nothing stopping it trying to turn the unlocked Apple into a lemon.

Also, thanks go out to PR firm XL Communications for sending in some “Bored of the iPhone” t-shirts. We probably wouldn’t wear them down the pub but they’re quite funny all the same. Indeed, it is JUST a phone after all.

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