Wednesday, 29 February 2012

Mobile World Congress: small tech players

Away from the major vendors and their glitzy corporate stands, Mobile World Congress is a great place to meet young and up-coming businesses with a mobile flavour. This brief post showcases the ones that most caught my eye.

blippAR (based in Holborn Circus, London) provide an augmented reality advertising platform that overlays rich content onto print content. The technology works really seamlessly from an iOS or Android application and has already been used by major brands like Cadbury, Tesco and Omega, but I reckon what will really make it take-off is native integration into the iOS and Android operating systems. That’s in the pipeline.

Siine (also London based) were marketing an improved keyboard experience for Android. This sounds like a small thing, but Siine’s combination of quick templates for commonly used words and general ease of use marks it out as one to watch. I also loved the idea of icons for brands embedded in the keyboard so that “Meet me at Costa at 1600” can be typed in three strokes. A revenue model in the making.

Of course, social networks were very much in evidence this year. Of them, I was most impressed by Lightbox (Shoreditch, London), which both beautifies camera-phone snaps with some clever colour presets and also presents them in a crisp, pinterest-alike fashion. Sort of like photo Twitter, with the added advantage of a photo-blog that mirrors the social feed.

Breaking my London theme, Oonair (Barcelona, Spain) provide a simple video message and sharing plugin that allows people to shop on eCommerce together. They’re already working with Zara and a number of tech retailers. I hope it’s more successful than SkyPE’s integration with eBay!

So, four very different businesses that show that innovation is alive and well in the mobile industry and in the UK.

Tuesday, 28 February 2012

Mobile World Congress: Asha, Lumia and the problem for Nokia in the low-end smartphone market

Nokia announced three new Asha handsets yesterday to great fanfare, in addition to a new, lower priced Lumia. I played with all four devices at Mobile World Congress, a process that got me thinking about Nokia’s current range.

My conclusion is that, despite being great products and well engineered, they’re not addressing a serious problem with Nokia’s range – the lack of credible smartphones in the crucial $150/ €100 price bracket. This part of the market is important as it is outside of the typical average selling price of contract smartphones and therefore not impacted by the distortion of operator subsidy that so damages the success of high end Lumias by making them effectively equivalent in price to the unassailable iPhone.

For those who haven’t encountered it, Asha is a low-end device based on Nokia’s venerable Symbian 40 “smart-ish” platform that is aimed at feature phone users upgrading to a more feature rich device, either in emerging or developed markets.

All three of the new Asha devices are perfectly acceptable handsets: imagine a cheap Blackberry from 2010, combined with a typically excellent Nokia-branded media player and content service and you’re about right on the quality of the device and user experience. They have some application store functionality (and Angry Birds), but nothing like the richness of a true Android, iOS or Windows device.

In the true smartphone world, the launch of the Lumia 610 takes Nokia’s Windows phone range into uncharted territory in the mid-market of affordability. It too is a perfectly acceptable device from Nokia, being well engineered and user friendly.

Unfortunately for Nokia, the schematic highlights the issues with their current two-part range. There is a glaring gap between €90 and €190 where Nokia lacks a compelling smartphone platform and this area coincides perfectly with the sweet spot of Huawei’s range (and ZTE’s in China; and Micromax’s in India).

Until Nokia can offer a genuine smartphone experience in this price point, I’m afraid I can only see their market share globally continuing to slide.

Mobile World Congress: tags, watches and Vita - a visit with Sony

I must admit that I’m a bit of a Sony-phile and still reminisce about the glory days of mini-disc and Trinitron. They’ve fallen on hard times recently, which made my visit to their MWC stand all the more encouraging.

I liked 3 products in particular, ranging in price from EUR15 to EUR300.

NFC tags

At the lower end of that spectrum were a set of four NFC tags. These are delightfully simple one inch diameter circles that you can hang off a rear view mirror or leave on a table. When you place your NFC enabled phone on them, it enables a user-defined programme of settings. For example, it could go silent and set an alarm when you put it on your bedside table, or enable Bluetooth, navigation and music when you get in the car. Simple in concept and an elegant piece of design.

Smart watch

At EUR129 was the LiveView Android watch, which links up to your smartphone via Bluetooth and displays four applications at a time. Flicking through menus was beautifully smooth and there was enough screen real estate to show a couple of Tweets or some Facebook status updates. This might sound a little pointless, but my experience is that when on the move I want snippets of information, rather than a flood, therefore not having to wave a giant smartphone around would be a boon. I’ll definitely be getting one...

PS Vita

...which is also what I said about the Playstation Vita. At nearly EUR300 for the full fat 3G version, some may call this device an anachronism in a world of 0.99c Angry Birds, but it offers something for the hardcore gamer that a smartphone simply can’t deliver. The console is roughly the same size as the old PSP, but sports more buttons, a touch screen and a multi-touch back panel. All of the controls are beautifully judged, particularly the analogue control sticks, which the Sony demo guy said had taken thousands of iterations to get right.

The Vita’s screen is a wonder – rich and deep colours with no discernable streaking even on fast-paced racer, Wipeout 2048. It really is a handheld Playstation 3 and, with Playstation Network allowing users on the two consoles to play against each other, it offers the committed gamer a way of remaining anti-social when mobile. I want one, and if you consider that a smartphone can already deliver the graphics of the original PSP, 2015’s devices will be truly remarkable games machines... if we can add on analogue sticks...

In short, then, it was great to see Sony back on form and experience some slivers of their “four screen” strategy in the flesh.

Monday, 27 February 2012

Mobile World Congress, Day 1: high end smartphones head to-head

Following the recent announcements that Huawei, ZTE, Fujitsu and Panasonic would (re)enter the European mobile handset markets, I spent Day 1 of the Mobile World Congress focussing on high end smartphones. My objective was to decide whether these newcomers could genuinely challenge today’s hegemony of Apple, Samsung and HTC. The answer was a clear “yes”, but the most obvious challenger was more of a surprise. I’ll give you a hint – they weren’t Japanese...

Symbian is not dead, just stunned

Before I could get started on this, however, there was the small matter of an 830am Nokia keynote to get out of the way. You may recall that this time last year, Stephen Elop announced his firm’s “exclusive” partnership with Microsoft. This year, despite being promised “significant industry news”, Nokia delivered more of the same. At the high end there were two new devices, the anticipated Lumia 900 and a new camera phone – the N808, featuring a 41 megapixel camera... no, that’s not a typo, it really is 41 megapixel.

I had chance to chat with some Nokia people on their stand afterwards and played with the hardware. The Lumia 900 is very impressive: beautifully made with a wonderful screen and now pre-loaded maps for navigation. In terms of its overall responsiveness and quality it’s the closest thing to an iPhone... which unfortunately probably won’t translate into showroom appeal. The distorting effect of subsidies means that someone needs to totally change the game in order to unseat Apple, who managed to ship 37Mn iPhone 4S’ in the last quarter. Nokia shipped less than 2Mn Lumias.

The N808 on the other hand is a real mystery to me! It’s a somewhat bulky, somewhat ugly 170 gram, white plastic unit, sporting a 4”-ish screen and a bulge to accommodate *that* CCD and Carl Zeiss Lens. Curiously, it runs Symbian 60 (yes, I thought that was dead too!) and it retails for EUR450 (c. $600). I asked the demo guy and his suited and booted commercial minder a simple question: who’s the target market? “People who want a phone but love taking photos”, was the answer. They got quite defensive when I inquired whether that person existed – lots of phones have good cameras and – as my camera-owning friends say – “cheap body, expensive lens”. That CCD is useless without it and $600 buys a lot of compact camera. I can’t see Nokia selling many of these, although I accept that the technology is pretty miraculous and doubtless has other applications.

Japanese phone players face an up-hill struggle in Europe

Nokia done, I visited the Japanese next. Fujitsu didn’t have any of their forthcoming European range on display, but it was showing Japanese market Android and Windows phones. Neither were impressive, being slow and clunky despite their massive specifications. Only a 13 megapixel camera on them though, which seemed a bit stingy. Oh, and the demo girls seemed to enjoy pouring water on them to show how waterproof they were...

...curiously that also seemed to the be a major feature of Panasonic’s Eluga smartphone. This was more impressive than Fujitsu, being less eccentric in colour, more responsive and having a better screen. Even so, it seemed undifferentiated and I can’t see it selling unless it’s really cheap.

Huawei in the Ascendancy in battle of the State-owned super-techs

At least it worked, which was more than half the phones on ZTE’s grubby, ramshackle stand did. Even its top end smartphones were slow and obviously cheaply constructed. Deeply unimpressive and illustrative of the worst of Chinese technology.

Which can’t be said for their Chinese competitor. ZTE and everyone else were blown into the weeds by Huawei. I played with their latest high end effort, the $500 Ascend D Quad. This was my favourite phone product of the day. Running an in-house quad-core ARM CPU and a bought-in “latest Japanese technology” 720P screen (“slightly higher resolution than Retina”, I was told), the Ascend was not only lightning fast – much more responsive than my Galaxy Nexus – it felt like a seriously high end product. The materials were great quality and it had a look and feel of its own. It’s the best Android phone I’ve seen to date and although different from an iPhone, it’s much cheaper. Very impressive and very unexpected.

Overall though, I was a bit taken aback by the lack of innovation on display from the top manufacturers. Nokia’s stand was the best for phones, but otherwise the atmosphere felt a little muted. Comedy moment of the day: the Groupon presenter on RIM’s stand opening his presentation with a slide entitled “what is a two-sided market”. Perhaps a lesson to RIM about where they went wrong...

...tomorrow I’m going to concentrate on what the operators have to say about their new data business models and pay a few visits to the geekier end of the network tech market.

Saturday, 25 February 2012

What I've been reading this week

I’m firmly of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week – Google makes me want to shine lasers in my eyes, Nokia’s brim is full of Asha, differences in male and female social network use, planes and automobiles go robot and I get nostalgic about the number two.

Mobile technology

I’ve been predicting this for years – heads up display is the next step in mobile technology interfaces. Even without a non-manual way of interfacing with the device, there’s plenty of data that can be dragged off the Internet already and overlaid onto the real world automatically. I just hope they make a version for those of us who already wear spectacles... If not then I’ll have to get ‘em lasered...

But before we get to mass adoption, there’s a bit of a problem with LTE... Battery life was a major problem for WiFi before it became a core part of the mobile phone chipset, however it seems that the solution to the LTE problem won’t be so simple. MIMO, in particular is responsible to the excellent radio performance of the standard, but as the article explains, the need to run two additional power amplifiers makes it a two edged sword.

Asha is more crucial to Nokia than Lumia, in my view. Get this right and they will be the smartphone platform in emerging markets – areas where Apple can’t go at its price point.

Strange, then that two Japan-only smartphone manufacturers have decided to go head to head with Apple in Europe. I think they’ll struggle, to be honest. Subsidy has totally distorted our smartphone market, so the difference to the consumer in buying an iPhone is a few Euros a month. Why buy anything else?

This (rather rudimentary) study suggests that not only do smartphone users prefer using the Internet to texting, but they are much more hooked on browsing than Facebook or apps.

Digital media

A quick stroll through the history of social media, which shows (for those who didn’t know) that it’s been around as long as the Web. I firmly believe that Facebook is becoming the Yahoo of social networks – a confusing mass of different ideas in a market where consumers want to isolate the feature they want and enjoy it...

...and here’s 2012’s who’s who of social media. I find the difference between male and female users of interest – basically men dominate the “geek out” networks like Soundcloud and Foursquare; women are the majority on the actually social networks like Facebook, Google+ and Linkedin. Me, I like Twitter, am on Facebook (yuck), Google+ and Path and I’ve just started Pinning. Social.

It turns out that Groupon still exist and are now acquiring some companies that let them actively participate in the purchase process using barcode scanning and local data manipulation. I’m not sure this will alleviate the relationship damage they’ve caused on both sides of the market by spamming consumers and ripping off vendors.

New business models

A “must read” article on how organisations use statistics and behavioural economics to better target consumers at moments of inflection in the buying (and living) process. I’ll say it again – monetisation of the in-store “third screen” will be a massive component of the next Internet boom.

Three main takeaways from this infographic: games are the highest grossing category on app stores (which we knew); freemium is the best model to get games up the charts (which we also knew), and smart device gamers prefer iPhone, which we sort of knew. The latter is important because Microsoft is still totally dominant in PC games and the categories are coming together at a rate of knots. In the red(mond) corner...

Some interesting data points here; foremost amongst them being how IM is beginning grow in traffic terms. Worth noting how much pressure YouTube places on mobile networks. Although capping has all somewhat alleviated the situation, some networks in the UK are retrenching from that position and offering all-you-can-eat again. A perfect example of the Prisoners Dilemma MNOs find themselves in – someone will always “betray” the industry by offering the rising star for cash cow rates.

Wow – and here’s one estimate on the effect on the mobile carriers. $14Bn isn’t that much in a trillion+ $ global industry, but much of the industry’s margins were here historically and it’ll be psychologically difficult to let it drop.

App creation used to be a really profitable place to be, but familiarity and new technologies like this one are beginning to erode margins by making it simple to create a decent brochure app that has customer data collection features. There’s still money to be made at the top end, but I can see the app creation market bifurcating and consolidating at the bottom end in the coming year.

Emerging technology

Legislating to encourage driverless cars would be much more impactful on safety and the environment than the current tax-based approaches taken in Europe. If only our governments were as forward thinking as the tech industry.

Drone aircraft were buzzing around IBC this year and I expect we’ll see them in all sorts of productions from here-on-in. Very useful for sports as they’re much more versatile than a blimp... if less good for tyre advertising.

Emerging markets

LATAM is a bit of a lost continent in investment terms – it’s not as populous as Africa or Asia and is starting from a more developed base. That said, I’m really excited about some of the digital innovation happening in Argentina and Brazil, in particular in the area of social. Connectivity will help bring this to the rest of the developed world.

PC sales in India fell in Q4 2011 because of the upward price pressure from supply constraint in the HDD industry. I’m sure it’ll bounce. Also note the role of the big PC players in India. Apple is nowhere – substance can still beat style!

Just for fun

This neat little graphic shows how design language is changing to reflect the market trends in recent years. Particularly online and vintage.

Some nostalgia from my childhood: anyone alive in the early ’90’s will remember the BBC 2 “2”, with it’s weird tubular bell music accompaniment. Here’s a collection of 2’s...

Sunday, 19 February 2012

What I've been reading this week

I’m firmly of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week – social video hype turns to dollars, cyber crimes’ billions revealed; Apple, Google set about Microsoft; and 1955’s view of space

Digital media

Online video services and technologies that underpin them were all the rage before the downturn. It’s almost as if the venture community has come into a bit of capital and remembered where they left off. How services like this get funded, I don’t know. Perhaps worth asking the YouView partners.

I’ve always said that QR codes are an intermediate step towards more advanced AR technologies. This interesting technology from Brazil suggests why their days are already numbered.

It amazes me that people still believe that they can make money from standalone instant messaging platforms, but apparently there’s always someone with deep pockets and no idea. Even if Shape is fully monetising its inventory (which is pretty doubtful – even Google can’t do that) then it’s only turning over a million dollars a month and has a frankly pitiful number of users.

It’s rare to find a report on second screen that isn’t over-hyped and off the mark. This one is succinct, but concentrates on the key issue for all buyers – measurement. Without this, social campaigns can’t deliver positive ROI in aggregate.

Someone obviously believes in the potential of these technologies, however, as consolidation has already started!

Some interesting tit-bits of information about social agencies. Basically, it’s small beer today. I also suspect that the biggest “social agencies” are inside the big guys, rather than being indies.

Cyber security

I said at the start of the year that there’d be a major loss of consumer information once a month this year... so here’s one – 5 local councils have managed to lose data on citizens...

... part of a cybercrime problem that cost $114Bn in economic activity in 2011. Which is a BIG number. Then they go and spoil it by trying to suggest that the time lost in correcting it was worth a further $274Bn due to lost economic activity... except that since the most likely victims were 18-31 year old men, I imagine the only casualty was a reduced amount of time spent in the pub. It devalues what is a really important issue for 2012 – combating criminal and state-sponsored cyber attacks.

The Symantec study is referenced in the US Cyber Security Act, which aims to protect critical infrastructure from hacking and resultant disruption. China in particular has tacitly signalled that it supports this kind of activity, presumably because it would allow them to strike the US in any future conventional conflicts in Asia (China lacks the conventional military capabilities to do this without resorting to nuclear weapons)

In parallel, the US military will spend $3.4Bn on cyber warfare in 2013, the same as in 2012. The US seems keen to dominate the “civilian” electronic battlefield in the same way it dominates the military equivalent.

Maybe they should just leave it to Google, who seem very adept at spying on everyone. Naughty Google! Bad!

And on the subject of borderline unethical web services, it looks like we’re not rid of Demand Media yet. Shame.

New business models

A neat business model, although I’m not sure I’d call it crowd-sourcing. In effect, 99designs have created an open market for pitching ideas. Smart, but not crowd(y).

I’m all about “inner geek”. Technology like this is more likely to accelerate the design cycle in fashion than lead to particularly outlandish designs. The underlying story is about the massive increase in computing power that enables modelling of soft materials at reasonable cost – we’ve hitherto been restricted to hard ones.

As Gen Y become more entrenched in the workforce, companies will need to pay more attention to how they service the need for always on, open and honest communication. The only thing I disagree with is the idea that people don’t need to come to the office to be productive. Human beings are social animals – our innovative nature is dependent on the tension and collaboration that comes from co-location. Social and mobile media just can’t replace the sense of sitting across a table from someone. In my (Gen-Y) opinion.

Apple are really putting pressure on Microsoft in O/S – shifting the already outstanding OS X to annual update cycles puts the slow and clunky Windows customary five year re-imagination cycle into stark relief. If Apple could just figure out a way to compete with Direct X and Direct 3D, they’d have the answer to everything Microsoft has in the locker. Windows 8 better be good.

Google are in on the act as well, targeting Microsoft’s enterprise heartland. I think that will be a much, much harder target – Redmond is the place for enterprise and their products are excellent.

Boom! Apple puts the smack down on the GOOG/ MOT axis of evil in a German court! Actually, the story isn’t very interesting. Slide to unlock is a genius feature though.

And let’s not forget Amazon, who have managed to shift an impressive 3.9Mn Kindle Fires. Not a lot next to iPad, but the product is aimed at a different demographic – one that are feeling their way into tablets. I like the Fire and think it’s underrated.

The UK high street banks are taking totally different approaches to online/ e-/ m- and other types of banking. Barclays seem to be the most innovative and although Pingit only seems to have a small range of use cases, it clearly offers something more than the credit card duplication technologies being talked about by their rivals.

Just for fun

A fascinating look into the future of space travel, from the 1955 point of view. If only we could predict the future of technology so accurately now that innovation is not solely the preserve of mega-corporations and governments.

Saturday, 11 February 2012

What I've been reading this week

I’m firmly of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week – $50k the price of ideology, Airforce, NOAA dispense with RIM, Amazon beats up HMV and forces Indian retail consolidation while Netflix “destroys” TV

New business models

Fascinating – ideological hacking has replaced criminal hacking as #1. Also worth noting the rise of attacks originating in Asia. No corporate can overlook this threat to their externally facing web properties.

Although extorting $50k doesn’t seem particularly ideological. Slightly amusing that the torrent got malware infected within hours of being uploaded. No honour amongst thieves!

Bye bye RIM. Even government doesn’t think security is enough of a differentiator to choose Blackberry.

And in tablets, the Airforce doesn’t like Playbook, even though rather a lot of military equipment runs on the QNX operating system, which is important because...

...27Mn tablets shipped in Q4 2011, which is quite amazing seeing as the format has only been in existence for 2 years. Also incredible that iOS has retained the majority of market share, despite being only available on one device and at a high price point. Nothing will change in 2012 – Android just isn’t as good a user experience on tablets. Yet.

Amazon is annihilating HMV in media retail. HMV’s attempt to get into electronics at a time when that market is falling off a cliff in the high street seems typically misguided.

So is this the time for Google to go into retail? I’m not sure that the company has that in its DNA, even if it does start to launch more own brand products in tablets and TV

Singapore is an interesting microcosm – small and very rich. A nice place for Paypal to experiment with mobile retail using QR codes. Suspect we’ll see more of these pilots this year as it’s a simple way of creating AR experiences.

Groupon is a flash in the pan. That is all. It just isn’t differentiated and search gives consumers plenty of opportunity to find better deals.

Digital media

The average social gamer is 39 and 17% of the 100Mn or so players do so on Google+. I’d not have expected that. Mobile is a big issue that social networks have to cope with. At the moment there’s no compelling ad platform and revenues are drifting away. My other concern is the use of social aggregators on smartphone operating systems and applications like Flipboard. I predict a difficult year for social.

Zynga is trying to do a Rovio (and a Pixar) and license its brands for merchandising. Not sure that this will be a biggie. As the article points out, Zynga’s games are aimed at adults. Although they could change it...

Roku has been available in the US for years. It’s a reasonable product and cheap, but I can’t see them gaining much traction. Likewise YouView – a technology that solves no problem.

I’m sure Netflix do want to “destroy” traditional TV. They won’t do it in the UK though, because UK audiences like their content locally produced. It might do okay against Lovefilm, Blinkbox and Blockbuster (yes, they still exist), but not against linear TV.

New technology

Bandwidth capping is becoming more prevalent and online video streaming becoming more habitual, so I expect to see lots more of this kind of protocol-based solution to bandwidth constraints over the next few years

The strength of HSPA in Europe has meant that LTE networks has been used exclusively for mobile Internet dongles. No more, as Vodafone prepares to launch the first LTE mobile handset. UK consumers have at least another year to wait.

I think magnetic hard disks are done in the PC market. The floods have increased prices at a time when people need less storage in the box and SSDs offer much better performance, with greater longevity and lower power consumption.

Emerging markets

A week after Amazon launched in India, two of the incumbents announce a merger. My gut feeling is that the incumbents will have their work cut out, provided Amazon can get a handle on local market conditions. I’d expect them to go poaching some people from the incumbents over the next year. Important for Amazon to get this one right as margins get squeezed in developed markets.

Broadband in South Africa isn’t very fast and isn’t very well penetrated. But no surprise there. I’m sure this sort of story will continue to be used to justify why cellular is the way forward for African broadband. It isn’t, thanks to physics. In ZA, the solution will doubtless be to build out more fibre and to introduce more advanced DSL products, which have already demonstrated their potential to supply up to 100MBit/s connections.

Africa is such an exciting market for consumer goods. This FT article shows how the major brewers have moved into the continent – 1 in 4 of Diageo’s employees are now based there. With consumer goods come advertising opportunities. With advertising come media platforms, of which TV will doubtless lead the charge.

Wednesday, 8 February 2012

If cellular is the broadband connection for Africa, why do all the commentators who say so submit their stories using fixed lines?

As Ory Okolloh recently put it: if mobile phones are the computers for Africa, why do all the journalists who write about them do so on laptops? I wholeheartedly agree. The smartphone is a great handheld entertainment and communication platform, but it isn’t a good device for the creation of much more than a drunken text message.

No, the truth is that that laptop computer - or some variation of it - is almost certainly the utility computing platform for a connected Africa. It can do pretty much everything a smartphone, TV, desktop or tablet can do, yet costs less than any one of those devices. It isn't perfect, but it is the best utility computing device available today. In my view the device challenge is not to identify the computer for Africa, but to create a supply chain that reduces unit costs to a point that is affordable to the middle class (in the first instance).

So if the computer for Africa probably isn't a phone, why should it'd connection be designed for a phone? Or, put another way: if cellular is the broadband connection for Africa, why do all the commentators who say so submit their stories using fixed lines?

My personal view is that the relatively low cost per POP of installing cellular broadband systems versus fixed alternatives blinds commentators of all kinds from the practical reality of using cellular systems for mass market broadband Internet. Particularly if that Internet is provisioned to devices that are will actually have a meaningful impact on the education and workplace prospects of African consumers.

Simply put, the physics and engineering of cellular systems makes it impossible to service a reasonable level of broadband access demand in a market with no fixed offload.

I’ve written before about the fundamental economics of mobile broadband. So now I’d like to extend the analysis to test whether or not it is feasible for a cellular network to cope with the traffic demands of mass market provision. I’ll do this by showing the absolute minimum number of cells required to support the traffic demands of consumer data in a broadband economy with 35 million people in it... One the size of Kenya, for example.

Now for the science bit...

First, we need make some assumptions about the average volume of traffic a typical user consumes. In the UK, the average citizen “consumed” about 17GB of data in 2011. This takes into account the 25% of the population that does not have a broadband connection and the 50% who now have a smartphone. The UK is by no means an outlier in this – US, Scandinavian and developed Asian economies would post higher numbers. I’ve also removed file sharing from the total, as I presume an African Telco would shape it out of traffic or shift it into off peak.

To be conservative, I’ve also made some assumptions about the nature of consumption in an advanced African economy in 2015. Let’s say for the sake of argument that it’s 60% of the average in the UK in 2011. Very reasonable given the continued growth of consumption of broadband data in advanced economies and the increasing size of the average website.

I’ll also assume (and this is really conservative) that the African country has a universal LTE network. No African country will have this in 2015 - as I say, I’m being conservative. To get to a number of basestations, I'll assume 3-network competition. Most African countries have more operators, but perhaps by 2015 that situation will trend towards the mature market norms.

I won’t bore you with the calculation (leave a comment if you’d like it). The upshot is that in order to supply that amount of data via cellular in a competitive market requires about 115,000 cells and 100MHz of paired, cleared spectrum. Furthermore, this network would have no spare capacity for voice, which is responsible for the majority of ARPU and EBITDA in developed and developing markets. For reference, Kenya has fewer than 8,000 cell sites today and the majority are based on GSM.

...and the economics bit

Installing, provisioning and connecting (with fibre) those base stations and antennas would cost roughly $34Bn. Curiously, that’s about twice as much as it would cost to provide every household with an FTTH connection, not that I’m suggesting that’s a great plan in an economy that will have a GDP per capita of $3,000 if it really runs fast for the next 4 years...

So what’s the answer? Well, the success of Alvarion and other providers of advanced Wifi networks in some African countries provides a strong hint that the future African ISP will a hybrid of fibre to the curb and high-speed (and most importantly – very cheap) non-cellular Wifi access.

My benchmarks suggest that the cost of installing, backhauling and installing a Wifi hub in an urban area is around $7,000 – vastly cheaper than even distributed cellular RANs using cloud baseband technology. Clearly using Wifi is more difficult in rural areas, but cellular also becomes more expensive outside cities – hence the recent interest in satellite backhaul.

Perhaps this is why companies like Jamii persist in building out fibre POPs in countries with tiny fixed broadband penetration. If so, they may be good investments. One further thought is that Wifi chipsets are at least a 5th of the cost of HSPA and about a 20th of the cost of LTE. So there is a user device cost benefit of not using cellular for mass market broadband provision, in addition to the network cost described above.

Final thought

Don’t get the impression that I’m down on cellular as a communications technology for Africa. For voice, text and mobile services like payment it has the reliability, flexibility and security to be an excellent technology that makes a lot of money for those companies that can grab enough market share in the short term.

But it is not a substitute to fixed broadband, either directly provisioned to the user’s home or extended into that home with Wifi.

Saturday, 4 February 2012

What I've been reading this week

I’m firmly of the belief that participants in the TMT industry need to read widely in order to understand the present and future dynamics of the market. To that end, this post is a collection of the articles that have caught my eye.

This week – UK broadband speeds jump 22%, Facebook more dependent on pigs than first thought and lacks the cash for mobile, Amazon embarks on an Indian adventure while Stripe guns for Paypal and the FBI hacks Skype

New business models

Sigh – more patent news and what is clearly the opening salvo from Google’s new Motorola patent portfolio weapon. Apple, it seems, are a harder target than Samsung! (see second link)

For all the gnashing of teeth over the years about the poor quality of UK broadband, a good bit of market-based competition between BT, Virgin and Sky has led to speeds being on the rise. Of course, consumers tend to be able to find something to do with that extra speed and capacity...

... for example: Skype, which has been impacting international volumes for years and continues to erode traffic growth. International calls are perfect for VOIP client users, because they are typically scheduled in advance, giving users time to start their applications in advance

I’m not sure that wrapping connectivity into device purchases is the way either. It works for Kindle because the traffic volumes are low and the connections are mainly transactional. Not sure how it works for proper browsing and gaming devices though. I guess Nintendo have to do something!

Sky Go is a great content extender for Sky subscribers and now is coming to the TV set and to Android. Interesting times for Sky as they’re probably close to their realistic ceiling on subscriber numbers and now need to increase ARPU further

Sony has an advantage over the other studios and labels because it’s as much a technology company as a media one. Having its own channel to compete with Netflix, Spotify et al is all very well, but is only a tiny corner of a survival strategy that must hinge around ecosystem experiences combining technology and media

And just to show the challenge they’ll face, Amazon have just launched into the Indian e-commerce market with their Junglee brand. Personally, I’ll think they’ll struggle to gain the sort of dominance they have in the Western world, which they’ll need because the Indian middle class is no-where near as big or as rich as the general press seems to believe

I’m of the opinion that Paypal has lost a little momentum in recent years – it hasn’t really managed to get onto smartphones in a manner that is easy to use or a realistic competitor to the emerging mobile and NFC-type systems that are likely to come to market in 2012 and 2013. Perhaps competition is the spur that they need. Stripe has good backers and seems easy to integrate, but whether it’s a quality alternative to Paypal remains to be seen.

Digital media

Amazing what you can achieve with virtual pigs. Also amazing that a company so loved by ill-informed analysts cannot generate enough advertising to make Zynga an irrelevance. Google bid for Zynga in 2012, anyone?

An interesting thought about whether Facebook will seek to use WebOS to launch its own phones. The article isn’t great, unfortunately - $100Mn will get Facebook nowhere in mobile, nor does the brand really carry any credibility in the mobile space. Look at Kin for examples of software brands screwing up in mobile

A nice little piece of research on the proportion of tweets that people find useful. 36% apparently... which surprises me because it’s so high, although I suppose Twitter is just digital small talk

Perhaps this is why African tweets are so few and far between – when you’re paying for each one, it probably makes one a bit less chatty...

...But when it comes to money, the American Presidential candidates are swimming in it. This infographic shows what happened in 2008 and highlights why social and web is becoming a critical component of campaigning. My view is that CEOs and exec’ teams are the next group to need to focus on their personal social media use

Emerging technology
I’m looking forward to MWC and hope to be able to play with some of these super-fast, quad core handsets, the technology in which is consistently and comfortably exceeding Moore’s Law by doubling in speed every year at least

I’m sure super-cheap tablets will also be news at MWC. None of these will sell in significant volumes and if they do, margins will be horrible! iPad still #1 in shipments and value for 2012 and ‘13

Vizio announced pricing for these 21:9 TVs this week, interesting mainly because it shows how technology is becoming less and less utility and more specialised. 21:9 is really only of use for viewing HD movies, otherwise it’s just a more cumbersome flatscreen

After a slow start, it seems that US government entities are getting serious about cybersecurity and cyberwarfare. Here, the FBI gets in on the act

Breakthrough technology

Understanding the biology of how our brains experience sensations is a crucial step towards creating new interfaces for mobile computers. 2025’s technology, I think

A fabulous engineering and micro-electronics achievement, but don’t expect it to lead to a big change in infantry small arms. Modern combat distances are much shorter than 1600m, so this sort of tech is more likely to find its way into sniper rifles and other specialist weaponry

I suspect that this sort of technology will enable the next generation of drone aircraft to be even smaller and more capable. Neat demo, too...

Wednesday, 1 February 2012

African Telecoms Investment - January 2012

$1,418Mn of investment in African telecoms infrastructure was announced in January, down very marginally on the same month last year, but up 15% on 2010.

As ever, cellular network upgrades dominated proceedings, with large capex commitments being made in Nigeria, Tanzania and Liberia. Staying with mobile for a moment, the launch of 3G networks continue to make headlines, with HSPA being switched on by operators in Zambia and Kenya. There also seems to be light at the end of the tunnel for Vodacom in DRC, where resolution to their dispute with their local partner appears close, potentially unlocking nearly $500Mn of much needed investment into Africa's 3rd most populous country.

Also worth mentioning is the continued success of alternative wireless broadband access network solutions, such as wifi (Burkino Faso), WiMAX (Namibia), satellite broadband (South Africa) and TD-LTE (Nigeria). These are generally quite small investments, but are meaningful in that they extend data provision to (richer) rural communities in a cost effective manner.

In cities, fibre deployment continues in Kenya and South Africa, despite low take up of FTTH (due to high pricing - 10MBit/s costs $100 a month in Kenya). Backers such as Jamii and Dimension Data will be hoping that in the long term they will become the telecoms incumbents that countries outside of the extreme north and south of the continent lack.

Now that connections to the continent are in place and bandwidth is begining to grow onshore, access is becoming an exciting area of investment. Since the access solution for Africa is not predetermined (beyond the fact that it isn't a copper cable), I expect to see a wide variety of technologies being deployed over the next few years, with no standard emerging in the near term.