BLACKBERRY MESSENGER – ARE YOU APPSTORES IN DISGUISE?

Summary

The BlackBerry Messenger application can become an appstore for message-based content.  What could be distinct about this appstore is the way it can deliver value to a community of users through a unique combination of strengths, rather than a specific strength.  And the mobile networks can get in on the act as well and breathe life back into their own assets.

Analysis

3118A78B.  Is this the shape of things to come?  A possible new source of growth for mobile content in general, and BlackBerry and mobile operators in particular?

3118A78B?  The BlackBerry Messenger application (BBM) from Research in Motion (RIM) allows BlackBerry users to send messages directly to each other – privately and without parental or state let or hindrance.  It is behind some of the recent huge growth of BlackBerry in countries like Venezuela and Indonesia.  Each BlackBerry device has a PIN (a bit like a serial number), which is a code of eight characters – hexadecimal numbers if you want to be precise.  You swap your PIN with a friend and, hey presto, you can use BBM.

That much is well known.  Indeed, the ability to exchange PINs has been around ever since BlackBerrys came on the scene.

What is different is what is behind 3118A78B.  I received this PIN the other week as a “Suggested Contact” via a friend of mine.  Once I clicked on it, I found myself connected to the Stanley Cup Playoffs – the North American ice hockey club championships.

What I have received since then is news updates and scores as the playoffs have progressed through to the final – which, being solely contested by US and Canadian clubs, will of course establish the “world champions” and the right to hold up the biggest trophy on the planet.

3118A78B shows how BBM can become an appstore for message-based content.  The traditional media industry is showing how difficult it is to make money on simple content in the digital age, so being an appstore for content, in itself, is of little benefit.   What could be distinct is value to a community of users that is delivered through a unique combination:

-          the multimedia extension of BBM (sharing pictures, videos, links, etc)

-          the lack of a limit on the length of a BBM message

-          the seamless way in which RIM integrates and runs its applications

-          the usage info gathered at its network controller (NOC) – about to be launched as a set of services under the “Concierge”  banner

-          customer insight from the data a mobile operator gathers.

So, 3118A78B could include clips, commentaries, merchandise, maps, last-minute ticket sales, supporting ads with clickthrus – all with (real soon now) carrier billing.  Further possible life breathed back into the mobile operator’s revenue streams and customer lifetime values.  Other application platforms, such as Apple, Twitter, Facebook or Android each have their own strengths but can’t bring all these elements together.

Once again, RIM is taking an asset it has had since Day One and is seeking to turn it into a marketing strength, rather as it has done in the past with the screen, the keyboard and the messaging systems, and as it is starting to do with the network efficiency of its integrated operations.  Clearly RIM would have to ensure that the core purpose of BBM – ie messaging with trusted contacts – remains the core purpose.  Beyond that, 3118A78B, whilst niche in its own way, is showing that BlackBerry continues to skate towards where the money is going to be.

Stuart Newstead, May 2010

 Many of the criticisms iPad are for what commentators think it isn’t, or can’t do, rather than what it can do. Few have actually touched, much less used an iPad.

Long-time Apple users know the initial release is just the first taste, as Apple will invest considerable R&D to build a market segment through product innovation and evolution.

 Apple plans to take a good percentage of sales from Netbooks. Apple’s real goal is to redefine the market niche.

 Why an iPad? – The Apple View: It’s the third niche 

Many observers missed Apple’s intentions, and didn’t listen carefully to what Steve Jobs actually said in his Keynote introduction on 27th January 2010:

 “The question has arisen lately, is there room for a third category of device in the middle, something between a laptop and a smartphone? And of course we have pondered this question for years as well. The bar is pretty high.

 “In order to really create a new category of devices, those devices … are going to have to be FAR better at doing some really important things … better than the laptop, better than the smartphone …otherwise it has no reason for being. 

 (He offers examples including browsing, email, sharing photos, video, music, games and e-books).

 “Now, some people have thought that that’s a Netbook.  The problem is, Netbooks aren’t better at anything … they are just cheaper; they are just cheap laptops, and we don’t think that they are a third category of device.”

 This selected quote contextualises the goal of redefining a new category, by doing things differently and better. People are generally reluctant to accept change until they SEE why it is better. And so it will be with iPad because, its true, netbooks do offer a compromised experience, and nothing new, and alternative “slates” suffer a swag of limitations that have condemned all to market failure to date.

 iPad as a better Media Access Device 

So iPad isn’t taking any market head-on. It is aiming to redefine how we communicate, access, share and present media.

 Rather than a “computer”, iPad offers a media access device, enabling quick, easy access to movies, e-books, internet, and social communications in all their electronic forms. He was very clear about iPad’s role as an electronic reader:

 “Amazon has done a great job of pioneering this functionality with their Kindle, and we are going to stand on their shoulders and go a bit further…”

 Apple is offering the capable iWork “office suite”; Pages, Keynote and Numbers as practical and useful document creation tools for iPad, with capability to import and export to Microsoft Office. This shows this is no toy reader. It is ready for business and targeted to a new market niche.

 Jobs was also clear on what was required to adapt this elegant office suite to iPad: 

“…could we come up with an entirely new user interface for these apps? It’s very different than running on a personal computer.

“What they came up with is really magnificent.”

 Soft, and special-entry, keyboards and smart gestures result in media/document creation that can rival current tools in productivity, creativity, and speed, but for niche needs. 

iPad as a Business Tool

 Looking at this device’s introduction, my “wow” instincts predict it will profoundly change not just people’s leisure activities, but how we do business

Laptops have been with us for over 25 years, yet none provide a convenient device that a couple or three business people can sit around to conveniently interact with media; whether photos, presentations or documents. The keyboard is the anchor that weighs the device down on the desktop, allowing only for small moves to overcome viewing angle limitations, while the presenter drives the presentation. Frequently, its a one-way watch-and-listen device while I show-and-tell.

iPad promises a truly interactive device for business people. In sales, business development, buying, learning, or just “doing business,” the person being presented to can move themselves from landscape to portrait, zoom in or out, backwards or forwards around the presentation, and click onto links to additional media. Their media viewing experience is different from a laptop, because it is personal. This is very different to just being shown a PowerPoint on a laptop, and suggests business people will leverage iPad to enliven and enrich their discussions with interactive media.

 iPad provides an instant-on “let me show you how we do that” capability. As conversations frequently lead to live media access on the web, or corporate server, 3G data capability will be crucial for business people, to guarantee their media access device can always present what they want, when they want it, wherever they are.

 Forget the “Wait, I have to find a public wi-fi hotspot”. It either makes sense with 3G data for ubiquitous business use, or it won’t make sense at all. This need is apart from the inevitable instant video conferencing capability foreshadowed for iPad, though not available in this first release. Meanwhile, joining Webex style multi-party sessions while mobile will become popular, even though the iPad user will offer voice only, while displaying video from fixed users on the call.

 And there, dear reader, is the rub.

iPad’s effect on Australian Mobile Data networks

 Australian mobile operators have been experiencing massive increases in data traffic, while enjoying only moderate growths in revenue. Telstra reports their mobile data volumes double every eight months.

 While smartphones have played a part, the current dominant driver of mobile broadband volumes have been laptops, not smartphones. While the carriers have responded to improve their 3G data networks, particularly in backhaul bandwidth, they are running hard just to stand still in terms of data throughput, latency and in-building coverage.

 iPad is set to compound this problem. 

For it to succeed as a valid tool for Australia business people. iPad is in part hostage to the Australian networks. iPad’s 7.2Mbps HSDPA will depend on mobile data for its utility, and will suck data like never before, unlike iPhone’s 3.6MHz-only HSDPA capability.

3G data performance is more important to iPad than to current laptops, because to have relevance, iPad applications will typically depend on pulling down current media, less so than displaying internal files. Laptops are often used pre-loaded with static presentations avoiding dependence on 3G. Business people have notoriously little patience with technology when “doing business.” This iPad 3G technology has to “just work” or it won’t be used at work.

 We haven’t seen iPad applications yet, only glimpses in the iPad introduction, but I see Marketing and Operations Departments cranking out Keynote presentations or building their own apps, embedded with live data feeds and frequently-updated videos. The finance, medicine, and airline industries immediately suggest themselves as iPad consumers. Over the coming 18 months, we are likely to see a significant shift in how sales, marketing, business development, operations, and other professionals take their message to face-to-face and real-time markets.

 iPad offers users choices: Hello, you aren’t tied to your phone plan! 

Do Australian telcos yet recognize that, far more than voice, this style of mobile data is going to drive network choice and subscriber satisfaction levels because …

… iPad requires no allegiance to the voice plan!

 So, while voice is “good enough”, will iPad users – when their data is “critical” – buy a different carrier than the one powering their iPhone?

If so, this could offer a tremendous short-term advantage to the carrier that has “the network that works better in more places”. Because iPad, like iPhone, is 850MHz only in the low band, as used by NextG, and does not support the 900MHz UMTS/HSDPA frequency used by Optus and VHA. (It does support 2100MHz UMTS 7.6MHz HSDPA used by all three).

 This is a critical factor for business users to consider. 850MHz is what gets you better in-building coverage, and better range in the bush.

 Telstra’s NextG is acknowledged as offering faster, lower latency, geographically ubiquitous performance with great in-building coverage. It has set a performance standard its competitors will not reach in the current 3G investment cycle. Five years from now, with efficient capital spends, mobile carriers could change that by reconfiguring their networks to use LTE in combination with the extensive geographical coverage of high-speed economical NBN fibre back-haul. By then, the iPad revolution will have moved on, and ubiquitous on-demand mobile high-speed data access will be given as much thought as breathing. It will just work.

 iPad – how big an opportunity for Telstra’s NextG?

Until then, Telstra is presented with golden honey-pots they could grab – the mind share and customer loyalty of small business – provided they are intelligent. I don’t mean by continuing to gouge the market with heavy price premiums and mean data allowances. Their network may offer greater utility, but the others do work … well enough. It’s a question of how good is good enough.

 Telstra has the lowest opex of the mobile networks. They could intelligently lower margins to take increased market share in data, thereby raising ARPUs for a Win-Win. Customers get iPads, laptops and smartphones that work as intended, enabling increased efficiency and effectiveness for those users. Telstra secures market, generates free cash flow and dividends (the current mantra), and Australians in general benefit.

 Or it can continue its current focus on high premiums, and low data allowances, and let their competitors educate the market to accept incremental improvements that raise the lowly bar of “good enough”.

 Telstra has always said that mobile, as the major unregulated sector of the Telco competitive landscape, has done better competitively than the regulated sectors of fixed line and data. iPad now challenges Telstra to pick up its game, not to be bypassed as it was by the iPhone revolution, and demonstrate a new competitiveness and willingness to wow customers with better value, not just expensive performance.

 iPad and Australian Mobile Operators vision for the future

 For everyone’s sake, let’s exhort the Australian mobile industry (Telstra, Optus and VHA) to set iPad and its technology free with innovative plans like AT&T’s. While an Australian unlimited plan is unlikely, given the industry’s difficulties in coping with mobile data, the Mobile Triumvirate are quite capable of offering a low volume (about 750Mb/$20) starter pack and perhaps pay-as-you-go 1Gb/$10 add-on packs for high volume use. And they must allow no-penalty post-paid switching from low-use to high-use plans, to allow users to tailor their needs in anticipation of heavy and light months.

 Innovations in iPad mobile data plans can enable a pluralistic and innovative use of this new technology and positively influence how we do business face-to-face.

 It is likely that VHA and Optus already get this, and will set their price and packaging to complement their already “good enough” data networks, ensuring they woo a large part of the SMB market, as well as their consumer strongholds. Their market are those who perhaps travel infrequently, and either place less value on, or do not appreciate, NextG’s ubiquitous 3G data coverage, and who are very sensitive to pricing.

 What will be REALLY interesting to watch, if Telstra really “gets it”, is how many Optus/VHA mobile phone subscribers take up a NextG micro-sim for their iPad. Because after all, part of the iPad promise is it “works better in more places”.

 So couldn’t NextG truly be a “magical and revolutionary product at an unbelievable price”?

Let’s hope we like their definition of “unbelievable”!

 That’s the Pain Truth about the iPad challenge to the Australian Mobile Industry.

For those of us in the Australian telecoms industry, there is the satisfaction of knowing that events in 2010 could make it a banner year, laying a foundation for growth in the industry over many years to come.Why?

Three important factors:

The NBN in Australia will arrive just in time to support the rapid growth in demand for these capabilities, and change in lifestyle.

Don’t believe in Peak Oil? It is now confirmed by the International Energy Agency’s review in December 2008. Only, the IEA said it will happen by 2020. Their 2009 World Energy Outlook Fact Sheet http://www.worldenergyoutlook.org/docs/weo2009 /fact_sheets_WEO_2009.pdf expects supply to rise to 105 million barrels per day by 2030. Experts like Matthew R Simmons are saying Peak Oil production of 86 mbpd happened already in 2005, and the world will never see 86 mbpd again; see www.simmonsco-intl.com/research.aspx?Type=msspeeches

Who is right? Simmons brings compelling logic to his scenarios, while the IEA continues to rely upon unreliable and discredited reserve data from the OECD. If Simmons is right, we are set for major pricing and availability disruptions in the next three to five years.

At any rate, the West needs to move off its petrochemical dependency, and fast. It will – there are promising bio-engineered and renewable fuels on the horizon – but the question remains, can we move fast enough?

What we do know now is that telecoms will be essential in supporting the profound economic and lifestyle changes required. The process has started already, with NBN Co now moving more aggressively towards public clarity on its objectives, costs and schedule.

So 2010 marks the start of an economic high-growth decade for Telecom providers and suppliers in Australia.

Creator Tech is a continuously evolving work-in-process example of how telecoms technology can impact work productivity and life-style change. From the outset we adopted a “Federated Associates”, non-bricks-n-mortar, remote work process using traditional tools. Now we are moving to web-based collaborative tools, and increasing use of web video conferencing tools, not because of cost, but to save travel time, and energy and because it can be simply a more effective way to work. Yet, in a few short years, the NBN and 4G/LTE will enable a level of mobile telepresence to further enhance these benefits that we can only dream of today.

At the other end of the spectrum, for example, major oil companies are spending big research dollars to find how best to implement completely remote-operated production rigs. The potential savings in production costs are huge, as are the safety benefits. The main enabler is multi-wavelength 10Gig sub-sea cables that can support the massive video bandwidths required for the complex monitoring and control that would be required.

Our planet is increasingly hungry for telecom-enabled solutions, big and small, to help shift our energy production and consumption patterns towards more sustainable alternatives. Our life-style will become inter-woven with pervasive telecoms enabled technology to support these shifts and once again, we will wonder how we did without things we hardly could imagine only a half decade or so earlier.

That’s the Pain Truth about 2010 as the start of a rainbow decade of Telco growth.