Networks take a back seat

This years 3GSM Congress saw 55,000 industry punters descend on Barcelona. The event was device-driven, and a better show for it.James Blackman and Paul Withers report

There was less talk of technology standards and more discussion about end-user needs at this years 3GSM Congress, which suited the handset vendors just fine.

In terms of brand visibility, Motorola and Samsung Mobile creamed the competition. One side of Barcelona airport and the old bullring downtown, at the entrance to the event, were both swathed in Motorola advertising. Samsung, meanwhile, took three sides of the 10-storey Barcelona hotel by the show entrance.

Sony Ericsson stuck largely to the inside of taxicabs, while LG Mobile contented itself with bus stops. Nokia, the global market leader, kept a low profile in comparison.

Inside, the handset manufacturers concurred that the networks had ceded the floor this year and that the rest of the industry, freed of unfriendly acronyms for unalluring consumer technologies, were getting on with pitching products and services that consumers actually respond to.

The networks, in comparison, were marginalised on the show floor and, as it turned out, in the auditoria too. The headline keynote session, delivered by Vodafone CEO Arun Sarin and Orange CEO Sanjiv Ahuja on the second morning, would have garnered more column inches at previous shows, but its main speakers earnest statements were pretty bland and, in the end, overshadowed by some confrontational remarks from their co-speaker.

Ahuja insisted it was mobile customers who would define the success of the networks over the next 18 months áa in keeping with the shows end-user is king theme.

Sarin, for his part, spoke of the cumbersome nature of network operators and warned them they had to be more fleet of foot to stay ahead of adjacent industries encroaching on their territories.

We have to be faster in acceleration, he said. As an industry, it takes a long time to get things done and we need to move faster or others will eat our lunch. Adjacent industries are moving into our industry, and its taking us too long to deliver new products and services. Its time to stop talking and to actually deliver.

He added: The responsibility to act and change rests with us. We cannot afford to miss that opportunity. We must all grow bigger pools of revenue. Mobile is good, but converged communications and entertainment is better.

But all this is a product of mature western markets. It sounded nice and authoritative, but failed to chime with at least one panellist from a more developing market.

Naguib Sawiris, boss of Egyptian network Orascom, sat through the worthy proclamations of Sarin and Ahuja only to state, with refreshing bluntness, that he was only in it for the money.

Im the largest shareholder in my company so I am very interested in money, he said. Where I smell money, I go.

Orascom is a 20 per cent shareholder in Hutchison Telecom, the holding company that sold a £5.6 billion majority stake in Indian network operator Hutchison Essar to Vodafone just a few days prior to 3GSM.
On stage, in front of a packed auditorium, Sawiris turned to Sarin and stated simply: We are very grateful for your money.

Ahuja did not escape his brusque assessment. Responding to Ahujas boast that Orange has 100 million subscribers in 23 markets, he said to the Orange chief: We [Orascom] will have 100 million subscribers in six markets, which makes my job a lot easier than yours.

He added that having subscribers spread across so many markets can lead to problems and has led to Orascom exiting some African countries.

Such network friction meant a focus on mobile devices and services was a pleasant diversion. The handset vendors were more than happy to claim the show as their own. This was their event, and most of the meaningful noise emanated from hall eight, where the big handset vendors resided.

Motorola senior strategic development manager Stephen Moore said: Everybody is focused on the consumer experience this year, as opposed to the technology behind it. He stressed this could only be a good thing áa not just for manufacturers, but also for the networks, the content providers and everybody involved in the industry.

There is a much more realistic feel to the show in that respect, he added. Things like WiMAX are quite well positioned within the overall consumer experience at the show this year.

Moore talked repeatedly of how Motorola aimed to build up an ecosystem around its devices through acquisitions and partnerships, to enhance the consumer experience of mobile.

As an example, Motorola has more than 200 associated music stores from which users can purchase tracks. It has also partnered with Kodak to provide customers with a dedicated imaging site to which users can upload phone pictures. Moore also talked up Motorolas per-second video playback quality.

These kinds of devices and services are driving ARPU for our network and retail customers, and are what will continue to give us an advantage over our competitors, he said.

Sony Ericsson vice-president and head of product marketing Steve Walker claimed it was precisely this kind of focus on the consumer that had governed its approach since its two parent companies embarked on their mobile joint-venture five years ago áa and which had underpinned its own recent success.

It is just now, and evident at this years 3GSM, that the rest of the industry has fallen in line, he suggested.

Walker said: We set ourselves very clear guidelines five years ago to dedicate ourselves absolutely to the consumer proposition. It is interesting that the whole industry now is pretty much on that train.

Were fortunate that weve had these kinds of propositions, such as the Walkman and Cyber-shot phones, in the market for a couple of years. The success were having proves its the right thing to do. Theres an awful lot of technology in those phones, but its packaged in a way that is meaningful to the consumer áa they can see the benefits without the need for hours of explanation.

Despite this, however, handset manufacturers berated retailers, whether network-owned or independent, for not doing enough to showcase devices properly to consumers.

Retail is critical, Walter claimed. To an extent, customers understand implicitly handsets that are positioned and advertised correctly. But if customers are to see the full advantage of a Walkman phone, it needs to be demonstrated. A cheap plastic dummy just doesnt cut the mustard. As an industry, we are not doing enough to explain to the customer the capabilities of the mobile phone of the future.

He added: There are very few other industries in which you might spend really quite a large part of your money on something without really trying and fully testing the product.

Across the world, this industry as a whole is still relatively undeveloped in terms of bringing the customer experience to life at point-of-sale.

Sony Ericssons new retail outlet in London is supposed to establish the new benchmark for mobile phone retail, said Walker. We dont want to be a retailer, but we want our brand values and the power of these handsets communicated better.

Samsung Mobile director Mark Mitchinson said the UK and western European market is unique in devaluing the product in the eyes of the consumer through handset subsidy.

When customers believe they pay nothing for their mobile handset, the danger is they do not respect or value its capabilities. It is up to retailers to showcase their full functionality in order to hike use and revenues for the networks.

Data revenues are vital to the networks, but its a very difficult market when you dont pay anything for your mobile phone, said Mitchinson.

The industry has to get across to consumers how these products can change their lives. So the networks and retailers must be concerned about the point-of-sale and how much time is spent with these customers explaining functionality and services.

Many products dont get used to their full potential, he argued.
With all this convergence, it is very important to understand that this is not just about a future-proof product, but about how the product can change your life. That is the challenge, ultimately, for the industry.

Retailers were not much in evidence to heed the call, however.
There was no evidence of independent retailers on the show floor, and while a few multinational distributors had taken a stand, these were tucked away along the back walls of the less glamorous show halls.

But Carphone Warehouse boss Charles Dunstone had moored his yacht at Barcelona marina, away from the hubbub of the show, and invited all the top manufacturers to lose their shoes and come aboard.

So it was that Samsung, LG Mobile, Sony Ericsson and others did their business away from public view. And that, of course, is the other main point about 3GSM áa its not just a showcase and ideas forum, 3GSM offers the industry the chance to get down to the nitty-gritty of business and networking.

Indeed, Walker called it the most efficient week of the year in the Sony Ericsson calendar.

We meet a lot of customers in a very short space of time, he said. We literally have over 300 meetings arranged in these four days, quite apart from press and publicity work. So by the end of the show, you get a total overview of the industry. It is an incredibly efficient way for our senior executives to meet a lot of our customers. They cant fly to every market every week.

Motorolas Moore agreed: You get everybody in the same place and business gets done. And its great to be in an industry that has events like this áa where you meet so many people from within the same industry, which gets so much publicity. It makes you feel very alive. Its exciting stuff.

Mitchinson observed that, compared with past shows, 3GSM this year focused on the end-user and the sale and, therefore, the value of the business side of the event for manufacturers increased accordingly.

In years gone by, we could have held these meetings elsewhere. But this show has developed. It is more serious now. It used to be more network driven áa now, its more generally telecoms-oriented and handset-driven. This environment lends itself perfectly to business opportunities, he said.

Sony Ericsson pushes high-tech into prepay

Sony Ericsson broadened its handset portfolio further at 3GSM, pushing more premium brand Walkman and Cyber-shot phones into its prepay catalogue.

It also said it had hit the £80 price-point for camera phones on prepay.

Sony Ericsson vice-president and head of product marketing Steve Walker said: On a global perspective, prepay is still a huge, huge market for relatively simple products áa even in the UK, its still a major part of the market.

Were trying to put the aspirational aspects of the brand into the lower end of the market. We want to do that without giving up the feeling of the brand, so we need to be careful not to just cover cheap phones, but to actually cover handsets that look great and are simple to use.

For prepay, Sony Ericsson showcased its J110i voice and text handset; its J120i, which incorporates an FM radio; the entry-level K200i camera phone, and the K220i, which also adds an FM radio function.
The latter two devices will retail at around £80 on prepay, the first time Sony Ericsson had made camera phones available at that price point.

Sony Ericsson also showed two new Cyber-shot imaging devices áa the premium K810i, which updates the K800i, and the K550i, which migrates the Cyber-shot brand down into the mid-range.

All of these will launch in time for the summer.

The headline act in the Sony Ericsson range for the first half of 2007 is the W880i 3G Walkman phone, which is slimmer than a CD case and packs in a gigabyte of memory.

Music is the food of mobile growth

Mobile will become the music industrys biggest sales channel, said Warner Music chairman and CEO Edgar Bronfman at 3GSM.

Wireless companies will become the most important distributors of music content, he said. The mobile platform represents far and away the biggest opportunity for entertainment generally, and music specifically.

However, Bronfman added that for this to happen it was up to the mobile phone industry to improve. He said $9 billion (£4.6 billion) was spent on music products via mobile phones in 2006. The figure could increase to as much as $32 billion (£16.3 billion) by 2010, according to Bronfman, provided the buying process was simplified.

Despite the complicated buying process for mobile music, Bronfman said the industry had benefited from high consumer demand for music and video products.

Nevertheless, he warned against complacency. Only 8.5 per cent of users with a mobile music-playing device have used it to buy music, he said. Room for improvement all around.

LG beats its rivals to cheap 3G contract

LG Mobile beat eight other handset manufacturers at this years 3GSM Congress in Barcelona to a contract to produce a low-cost 3G handset for the mass market.

The tender for the contract was set by the GSM Association in conjunction with 12 network operators. The handset, called the LG KU250, will be engraved with the 3G for All campaign symbol.

The aim of the 3G for All project is to make 3G networks and services available to a wider user base by lowering costs for handset manufacturers and component suppliers. This will be done by the networks working together, which will in turn reduce costs.

LG president and CEO Skott Ahn said: We will bring people closer to new mobile capabilities and they will benefit from higher-quality 3G services.

We will provide attractive, feature-rich devices and, at the same time, break price barriers for subscribers in the global market.
The LG bid beat around 17 other phones, judged on price, service and support.

LG said it sold 8.7 million units in Europe in 2006, of which two million were its Chocolate phone. It is targeting sales of 14 million units in Europe in 2007, a 60 per cent increase on last year. If it succeeds, that will make up a seven per cent share of the European handset market.

Its first headline acts for 2007 were on show at 3GSM: the Shine, the second handset in its Black Label series following the Chocolate; and the Prada phone, built and designed in association with the Italian fashion house.

LG said it expected the Shine to shift five million units this year, as it launches colour and design variants.

LG vice-president of marketing strategy Chang Ma said: The emerging markets offer growth for handset manufacturers.

As far as developed markets go, we will see a diversifying of consumer needs. We have to develop the right products to meet that.
He added: The major difference between the Chocolate and the Shine is the Shine appeals to a wider market áa both younger and older consumers will like it for different reasons.

It emerged at 3GSM that LG mobile was the fifth handset manufacturer to have approached Prada about a phone tie-up.

Prada said that it had turned down rival vendors, in some cases much larger players, because their proposals invariably involved a straight branding deal. LG Mobile was the first to propose a complete collaboration, with Prada eventually contributing the handsets main design features.

LG also showcased the new LG KU950, which it claimed is the worlds first 3G HSDPA/DVB-H handset.

Microsofts irresistible rise

Microsoft was far more visible at this years 3GSM Congress than at previous events, which is a measure of its inexorable rise in the mobile space.

Alongside sleek-looking devices from the likes of Motorola, Samsung and HTC, Microsoft also showcased a broad range of new handset partners at 3GSM. Names to watch out for in 2007 include Taiwanese manufacturers Asus and E-TEN.

Microsoft Windows Mobile senior marketing manager of mobile and embedded devices Lynette Kucsma claimed version 6 of Windows Mobile made 10,000 improvements on version 5. While she added most of them were not readily discernible, she said Microsoft had incorporated a one-key delete function into mobile email, as well as making it possible for users to flag and prioritise emails.

Another innovation is that Windows Mobile 6 does not upload everything from a users inbox. It does away with non-essential information to speed up retrieval of email. Users can choose to view non-essential data as they choose.

Kucsma said: Windows Mobile 5 would search all your email client, from your inbox to your contacts and calendar, to see what was different, and then bring it back. Here, theres no additional data coming back so its much quicker.

Email is retained and viewed as HTML documents in the updated operating system so that all formatting reflects the PC experience.
Windows Mobile 6 also lets users read and edit Word, Excel and Powerpoint documents on regular smartphones, where its predecessor only enabled such editing facilities on Pocket PC devices such as Palm Treo and HTC Vario handsets.

Microsoft also unveiled its new PlayReady digital rights management technology. PlayReady is platform agnostic, so it will run on any handset. It supports multiple content standards so that content in whatever data format will play easily on mobile phones.

PlayReady also includes a domain feature, which enables customers to share and transfer digital content among a domain of personal devices, such as a mobile, a PC, an MP3 player and a games console. It also lets groups of users swap digital content within a shared domain.

The point is to remove limitations to end users to get more natural use of digital content going, said Microsoft general manager for content access and protection, Chadd Knowlton.

We think that, by enabling the best access to content, we will create the best business opportunities for the industry.

He added: Once there are good business opportunities built around digital goods, the quality of the goods goes up, and you get things like price competition and quality competition áa all of which means better digital goods at better prices for end users, and its a virtuous cycle. Everybody wins.

Motorola fattens up handset portfolio

Motorola is still best known for the near three-year-old RAZR, but it stoutly defended its track record at 3GSM in Barcelona last week and claimed it was still at the forefront of handset design.

Motorola senior strategic development manager Stephen Moore said rival manufacturers were still trailing in its wake. He claimed handset manufacturers that obsessed about slimming down products risked losing sight of functionality and performance.

Motorola has a history of making iconic handsets, both before and since the RAZR, said Moore. The RAZR completely blew the market away and we have certain competitors that are still chasing after that now. But there comes a point when you have to focus on the customer experience áa and there might be a law of diminishing returns in just focusing on thinness.

Instead, Moore talked up the new handsets on show at 3GSM: the kick-slider Z8 with high-definition audio/ video playback and HSDPA; the metallic slider Z6, pitched to music fans; the K3 handset, billed as the smallest HSDPA device and the latest in the RAZR family; and the Windows Mobile 6-enabled Q9 email device.

I would be amazed if it was claimed the Q9 is anything but iconic, said Moore.

How many new form factors are there that havent been created? Not many, and the Z8 kick-slider is a completely new form factor that weve brought to market.

Moore also pointed out that Motorola, ahead of its rivals, had a portfolio of iconic peripherals to draw upon.

Moore added: Our global market share shows that there are lots of consumers who like the Motorola interface, but thats not to say we are complacent. We want to be number one, and we will be number one, and there have been modifications to the interface of the latest batch of products.

Symbian celebrates new OS customers

Symbian said at 3GSM last week it had shipped 51.7 million handsets last year, at a rate of two per second.

In total, 108 smartphone models were made available last year in different markets and across different sectors. It claimed to take an 86 per cent share of the mid-range smartphone market áa devices priced at less than áa¬199 (£135).

Motorola, which has dabbled with a range of operating systems, showcased the Z8 at 3GSM, its fourth to run on a Symbian OS. Symbian also noted that five new Nokia handsets, including the 6110 Navigator, the N77 and three Eseries handsets, were also set to ship with the latest Symbian OS v9.

Also at 3GSM, Nokia and Vodafone ramped up the development of S60 software on the Symbian OS, with the release of the first Vodafone-specific software package to all S60 licensees. Nokia also announced a collaboration with T-Mobile to improve the capability of S60 licensees to develop devices for the network.

In a separate move, Sony Ericsson also issued an open invitation to manufacturers to become shareholders in UIQ Technology, the former Symbian OS that it purchased at the start of February. UIQ Technology licenses the UIQ OS and application suite to handset manufacturers.

Sony Ericsson president Miles Flint said that UIQ would remain an independent company and invited phone vendors to license UIQ, as well as become shareholders in the company.

He said: By licensing UIQ, handset vendors will be able to share development costs and create a unified market for third-party developers, resulting in both a richer media and mobile Internet experience for consumers.

Subdued show for Nokia

Nokia was pretty quiet at 3GSM in Barcelona, all told.

On its stand in hall eight, it showed the second wave of its Eseries business devices and claimed the new range would see email devices reach the mass market.

The trio of new Eseries handsets included were the E90 Communicator, the E65 slider and the slimline QWERTY E61i.

Nokia senior vice-president of enterprise solutions in its mobile devices unit Antti Vasara said: The tipping point for widespread adoption of business mobility is upon us.

It will take new levels of performance, functionality and interoperability to consumers and operators.

The E65 is available already. The E90 Communicator and the E61i will be available by Q2.

Nokia also showcased the HSDPA-enabled 6110 Navigator, which has a one-touch navigation key.

It features pre-installed maps and full turn-by-turn 3D navigation, and will ship in Q2 with an estimated retail price of áa¬450 (£304) before subsidy or tax.

Also on show was the Nokia 3110, which is pitched at the lower end of the market.

It includes a 1.3 megapixel camera, music player and FM radio. It will
ship in Q2 with a guide price of áa¬150.