If anyone doubted the smartphones are the future, iPhone profits should set those doubts to rest.  Apple became the most profitable handset vendor in the world in the third quarter of 2009, surpassing Nokia for the first time, according to Strategy Analytics.

Apple logged an estimated $1.6 billion in iPhone sales, compared with $1.2 billion for Nokia.

The figures validate two points: first, consumers are clearly willing to pay premiums on their phones if they feel they’re getting value (Nokia typically services the lower-end market); second, that value derives from the ability to run hundreds of data apps on their phones, just as they can on their computers.

We’re not yet at the point where voice is just one of many applications the average consumer looks for in a phone. But you can see it coming.

Posted under Michael's Blog

Nokia is rolling out a new “all-you-can-eat” music service this week in the U.K. that’s a prototype for a service it plans to roll out worldwide.  “Comes with Music”, currently marketed only by U.K. retailer Carphone Warehouse,  lets users download as much music for one year on their Nokia phones as they want –and port it to their computers –, but there’s  a catch: they can’t move the music from their devices or their computers. If they want to add more songs after the year, they have to buy a new device.

Nokia will cover the royalties it’s paying to three of the four major labels by adding a surcharge to the phones, according to officials at the CTIA wireless show in San Francisco. They insisted the service is not an experiment, but a prelude to what will soon be offered in the U.S. They didn’t specify a time frame.

Any expansion of the service could be problematic for Nokia’s relationship with wireless carriers, who are rolling out their own competitive music services.

Posted under Michael's Blog

On Oct. 22, hundreds of wireless developers  will converge for a preview of Navteq’s annual LBS Challenge, a kind of American Idol competition for creators of location-based services.

Last year, the creator of digital mapping and navigational software lauded obscure companies like Senda, a fleet management solution; SharpMind, which provides "location-relevant" information for travellers; and TikGames, which engages gamers in a worldwide search for "stolen artifacts."

If GPS on cellphones takes off, those companies may not be obscure much longer. Which explains why Nokia announced today it was willing to pay an astonishing $8.1 billion for Navteq.

For as long as I’ve been running mobile conferences, people have been predicting that GPS will be huge. You know: you’re driving by Starbucks and you get an ad for coffee mysteriously appearing on your phone. Kind of like the "order pizzas over the Internet" of yesteryear.

The technology has been modestly successful in Europe and Asia, but a complete dud thus far in the U.S. — except for some enterprising car rental companies that hawk GPS-enabled Nextel phones.

GPS phones and services are awaiting the kind of promotional muscle that finally turned Bluetooth headsets from geeky oddities to emblems of hip.

Nokia clearly believes the tide is finally about to turn for location-based mobile applications. If so, its $8.1 billion acquisition of Navteq will someday look — well, not exactly cheap, but at least better than Nokia’s stock drop today might suggest.

See Also

• Nokia Buys Software Maker for $8.1 Billion

Posted under Uncategorized

Intel re-commits to the in-between form factor

At the Intel Developer Forum yesterday the world’s largest chip maker re-iterated its faith in the Ultra-Mobile PC (UMPC) and Mobile Internet Device (MID) concept. Even after a couple of years watching curios like Samsung and Nokia handhelds languish in the market, the company maintains the tenacity of Nokia itslef and its N-Gage or Microsoft and its Tablet PC. There’s no talking them out of it.

Intel will develop a new platform with more power, smaller sizes and much lower power constraints. I have to tell you, however, as a reviewer of just about every UMPC and MID that came into the market in recent years, power and battery life are not the problem here. Units like Samsung’s latest Q1 are interesterting exercises in miniaturization. This unit even runs a full version of Vista. For browsing and low level computing the current chipsets are adequate. Battery life is slight, especially under Vista, which drinks more juice than my three-year-old used to suck down.

But the real problem is that the form factor is unnecessary and a bit frustrating. Most UMPCs and MIDs have the screen size of a half-sized Tablet PC or ultra-light notebook but none of their versatility when it comes to input. Samsung tried to put a stylus and split keyboard on either side of the screen, but I find multi-tap or QWERTY on my phone easier to type with. 

Emboldened perhaps by the success of the iPhone as a convergence device, Intel and its few partners on this journey seem to think that users want that richer multimedia experience on the go, but something more compact than a laptop.

Maybe not. After all, for all the technical brilliance of the Sony PSP as a music and film playback device, few of us use it for more than gaming, and many people don’t even use the PSP for that anymore. The other day I first saw someone use the PSP in the gym as a portable music player. When he put the massive unit in his shorts however I fully expected them to drop to his knees from the weight. At over a full pound, a UMPC in the pocket could be really scandalous. Unless it fits in a pocket without embarrassment, then a device might just as well be an ultra-light notebook because it is going to have to go in a portoflio or backpack anyway. 

There is some sort of balance between media quality and portable convenience that the UMPC/MID form factor missed but the iPod and iPhone get.

I won’t pretend to be Steve Jobs, but I do know one thing about a portable convergence device. You want to design it so it doesn’ pull your drawers down in the middle of the gym.   

Posted under Michael's Blog

With Nokia’s purchase of enPocket, the great consolidation starts shaking things up

All of the coverage of Nokia’s planned acquisition of mobile ad network and marketing leader enPocket focused on how this move signaled the hardware’s maker’s shifting business model. But the news has important implications for the nascent field of mobile advertising. With AOL’s purchase of Third Screen Media earlier this year, this is the second major validation of the ad-support model for mobile content. Add to that CBS’s recent multi-network partnership to drive ads into its WAP and on-deck properties and some other deals in the works to launch next week, and we have ourselves a bona fide business model.

As is often the case, the mobile marketing industry met the news scrambling to differentiate themselves in an increasingly cluttered field. Ad networks that remain independent are quick to point out the possible dangers of advertising coalescing around too few players with conflicting interests. Exactly how open will Nokia be with its ad platform, some executives whispered in my ear after the deal was announced. Mike Baker, enPocket’s CEO insists this helps grow the ad market by helping the industry standardize in execution and metrics on a global basis.

How it shakes out is anyone’s guess until we see Nokia execute. What is for sure is that pressure on mobile carriers to embrace an ad-supported model aggressively is now coming at them from all quarters. Advertisers want measurable, target-able mobile marketing yesterday. Media companies see ad revenues as the real driver of mobile content innovation and profits. And now the world’s largest handset maker is building its own ad network.

Only two years ago industry pundits in all of those quarters doubted whether consumers would accept ads on phones. Today, it is clear to everyone, even the carriers, that mobile content cannot move forward without the ad model.

Posted under Michael's Blog

Nokia just can’t let go of its mobile gaming dream

Admire the tenacity of the cell phone giant for doggedly pursuing the dream of its own mobile gaming platform, but Nokia might want to consider re-branding its N-Gage service at this point. The Swedish mobile firm will unveil the next iteration of N-Gage this week, this time as a platform that works across its Symbian devices rather than as a single dedicated device. The original N-Gage phone-cum-game device is reported to have sold over two million units worldwide, and it did spawn the relatively successful N-Gage Arena service of multi-player gaming. But given Nokia’s hopes for N-Gage and the colossal marketing budget thrown at the brand, it is considered one of the great flops of modern mobile history.

The New York Times tells of the development journey for this new system. After discontinuing production fot he N-Gage in 2005, Nokia refused to surrender the mobile gaming field to others and enlisted the help of Silicon Valley design firm Ideo. The result is a platform that allows users to play more casual games with their friends, sample games before buying, and generally streamlines the experience with fewer features.

The new gaming platofmr will allow third-party development and play across Nokia’s smartphones. MocoNews’s James Pierce says the Times goes a big "hard" on the old N-Gage device but I am not sure you can be too critical of one of the worst phones ever made. I reviewed both N-Gage and N-Gage QD back in the day and they were miserable to play on, to talk on and to carry around. The first model was so bad, and the second "QD" model learned so little fromt the mistakes of the first that some of use wonmdered whether Nokia was just institutionally delusional.

What can be said about Nokia is its willingness to throw a staggering amount of money at a problem and stick with it. The company helped underwrite a lot of early mobile game development with the N-Gage project, and its devotion to mobile gaming helped fuel the industry.

We hope that the new N-Gage platform is considerably more inviting than the first two generations. Still, whether a handset manufacturer really can own the customer when it comes to gaming is another matter. Nokia still seems to think that owners will buy or stick with a phone brand because of gaming, and no research I am aware of anywhere supports such a view. If anything, one of the things the mobile gaming industry has had to learn is how much people enjoy mobile gaming but how little importace they place on it. Most people still play the same crappy game that came with their phone. The gaming industry wants desperately for mobilistas to show the same level of dedication and descrimination here that console gamers have with their platforms. It just doesn’t work that way. A twenty-year-old game with lousy graphics, Tetris, remains the best seller on mobile, hands down. That should tell you a lot.   

See Also

• N-Gage Home Site

Posted under Michael's Blog