The Return Of The Kerton Wireless Review

from the it's-baaaaaack dept

After a brief hiatus, Derek Kerton has returned with his latest Kerton Wireless Review. Click the "read more" link below to read the entire newsletter. You can also subscribe to have it delivered to you via email. This issue talks about differences in consumer and business wireless products and the main reason WAP failed, among plenty of other wireless related topics.

KWR - The Kerton Wireless Review #37
Thursday, March 7, 2002.


The KWR took a hiatus, so as a reminder, this is a free discussion newsletter-type publication produced mostly by Derek Kerton.  It is circulated through our affiliation with the online site Techdirt.com.  We review wireless topics of interest, usually taking a stand and always calling it like we see it.  You are free to subscribe or un-sub, as well as forward this to anyone.


********************************************************
1       Which Will Drive Wireless:  Enterprise or Consumer
2       What is the #1 Reason for WAP's Failure?
3       Handspring Treo
4       Free Wireless Report
5       Bits and Bytes
********************************************************



********************************************************
1       Which Will Drive Wireless:  Enterprise or Consumer

After the ill-received launch of WAP services and the general US and EU flop of the "wireless web", much has been said about the wisdom of targeting original services at consumers.  By early 2001, the knee-jerk reaction of the industry was to quickly rally, re-aim the cannons of progress, and claim that "Our wireless company is now focused on the enterprise segment, please just ignore the fact that our name is e-WirelessFun.com."

This massive lemming-shift in focus started me thinking:  Why are we abandoning consumer services in favor of enterprise services?  Isn't moderation usually a sound strategy?  Perhaps the industry will not be driven entirely by either side.  The mobile phone is the main platform here, and it has strong installed base on both sides of the corporate firewall.  In fact, I purport that either side can make huge mobile data penetration gains, just so long as the product and the service meet the needs of that target segment.

What are some of the two segment's needs in wireless applications?

Consumer:
Fun, bright color, high resolution, sounds, lots of content, fresh data, quality applications, low latency, decent speed, affordability

Enterprise:
Functionality, security, fresh data, quality applications, ROI

So did we meet consumer needs in the early days of WAP?  Well, some niche apps like sports scores and stock quotes may have gotten some traction, but as an industry we failed to deliver, and the customer balked at our product like Rush Limbaugh at a tofu-burger.  The industry over-promised and under delivered, and then to add to our mistakes, many companies and VCs concluded that there was no market with consumers.  That's like the public refusing the XFL, therefore we conclude there is no market for football.  Ridiculous!!  The NFL is doing fine, just as is iMode.  There is, and always was, a market, but the product offered just failed to meet its needs.

Let's look at a couple of examples, Japan and the US.  One had highly functional, high-resolution, colorful handsets while the other had three lines of 24 characters in black-on-green.  One country had a model to attract and stimulate content partners, and to allow the best content to bubble to the top of the menu, while the other country had carriers unwilling to share revenue and selling each top menu slot for additional revenue (no matter how bad the content).  Now which country would you expect to be successful in the consumer space?

I suppose if the US consumer is to be eternally cursed with low-resolution screens, limited processors, high-latency data, dial-up delays, lowly beeps, and black on green, then we should target the enterprise.  As it turns out, the enterprise doesn't need things to be pretty, they just need the right info at the right time to increase productivity.  Therefore, I think the original push for wireless in the US should have been aimed at business, with consumer applications out there as pilot projects to test the waters.

The good news is: the US consumer will not be eternally cursed with lame terminals.  At this stage of the game, it would be unwise to ignore the consumer opportunity.  The US is on the verge of widespread deployment of 2.5G networks, color screens have finally made their appearance, and content providers have learned lessons both from mistakes made here, and successes made globally.  As a consultant for Korea's SK Telecom, I have seen the future, and there's plenty in store to meet the needs of both enterprise and consumers.  In Korea, much like Japan, we're seeing consumer uptake of advanced data services, and very promising new revenue streams.

Don't compound your mistakes.  The consumer is out there waiting to loosen the purse strings for the right offering.  The platforms required are falling into place this year, and I foresee growth around the corner.  "If you built it, people will come."


********************************************************
2       What is the #1 Reason for WAP's Failure?

I threw this title up as a kind of Red Herring.  Actually, WAP was not responsible for the failure of early wireless Internet in the US.  Blaming WAP is like shooting the messenger.  So what is the #1 reason for the early failure of the wireless Internet?  Latency.

Latency is the term used to describe the wait-time between when you request data and when the data is delivered.  This is not to be confused with speed (or bandwidth).  Speed or bandwidth refers to how fast data can travel over the network.  On a 2G wireless network, latency includes the agonizingly slow dial-up delay one must endure for up to 20 seconds before even seeing the first WAP page.

Latency is the killer of quick information retrieval.  It is the difference between impressing your friends at how fast you can access the latest sports score -or having them tease you for being a geek with an overpriced slow phone (sigh).

In 2G WAP, once the connection is established there are usually about 4 seconds of latency for each subsequent page request.  Picture yourself navigating on a small screen, through confusing menus (that the carrier has sold to the highest bidder, not the most relevant content) with each screen taking 4 seconds.  If you are experienced, you may see your sports score after 5 screens, or about 40 seconds total.  This, as I have sadly experienced many times, is about 30 seconds too late for the "Wow!" factor.

The "Wow!" factor is the point where your friends and colleagues are impressed enough with the wireless service you are using that they actually wish they had it themselves.  At this stage in the market development, we are still beyond the "Wow!" cutoff point.  In fact, in my hockey team's locker room where demand for current San Jose Sharks scores runs high, I often breach the "Your phone is so slow we shall towel-whip you." threshold.  Ouch.  Is speed partly to blame?

Turns out, speed has been somewhat irrelevant thus far in the US.  Although our relatively slow 9,600-14,400 bandwidth has prevented rich content and multimedia from appearing on mobile devices, it is not a limiting factor in delivering quick bits of useful information.  A quick bit of useful information, anytime, anywhere, was the true original promise of the mobile Internet.  9,600 speeds are more than capable of delivering stock prices, scores, news, or any text much faster than your brain can digest.

RIM's BlackBerry has been very well received, in part because they have managed to hide latency.  The "always-on" network of the BlackBerry retrieves data in the background, so that when the consumer uses the device, it already has all the data available - zero latency!  In fact, most BlackBerrys are running on the antique, quite slow Mobitex network.  Since the emails on the BlackBerry are just text, the network bandwidth is quite adequate to the task, and the latency has been cleverly hidden from the user.  The always-on connection is the key.

At this point, most of you will know that 2.5G networks are being deployed in the US and will provide an "always-on" connection to the Internet.  Both brands of 2.5G, GPRS and 1xRTT, will offer users the elimination of the dial-up delay.  This is the biggest contribution 2.5G will make, although it may sound surprising coming from me.  After working for a large media company, and now consulting for a carrier with a 2.5G network that achieves speeds of 56k, you would think that I would find bandwidth more important than latency, but I don't.  Here's why:

1)  No Latency:  eliminates frustration, speeds up access to information

2)  High Bandwidth:  enables richer content

I think 1 is much more powerful than 2.  Mobility, almost by its very nature, demands quick information.  If we do not eliminate the frustration involved with slow access, we will never see the benefits of higher bandwidth.  Number 1 eliminates the barriers, while 2 provides the opportunities for growth.  The progress is hierarchical, and 1 must come before 2.

So let's welcome the arrival of 2.5G, the steady eradication of latency, and the satisfaction that comes with Just-In-Time information delivery.


********************************************************
3       Handspring Treo

The Handspring Treo made its first commercial appearance on 2/10.  A very cool device it is.  It combines a PalmOS based handheld computer, a flip-cover, a phone, and a new thumb-keyboard as well as the usual Graffiti text recognition.  This makes the Treo look like a cross between a RIM devices and a flip-phone.

An interesting aspect of this product's emergence is the rate of product development at Handspring vs. the rate at neighbor and friend, Palm, Inc.  If Palm doesn't start reducing cycle time quickly, they will go the way of the Dodo.  They had all the advantages of more staff, and more brand recognition, yet Handspring continues to lead the hardware races.  This applies mostly to the Hardware division, but the OS group needs to rev up, too.

As for the Treo, I like being able to choose to use an earbud or the unit's built-in speaker and mic - a feature that you won't find on current Danger http://www.danger.com/products.php or RIM products.  However, the Treo keyboard is a fair bit smaller than the BlackBerry, and I think it has crossed the line between quick typing and "one, two, three, four, let's have a thumb war."  Be sure to try out the keyboard to see if it works for you.

Handspring is marketing the Treo mostly through its own website, which is a good channel choice for a high-end specialty item.  This direct channel also holds much less inventory, which reduces capital costs and the costly rebates and markdowns that are rampant in such a rapidly evolving industry.

********************************************************
4       Free Wireless Report

Techdirt, a leader in technology intelligence, provides market and industry reports and analysis to client firms.  Techdirt analysts recently attended the Mobile Partnerships conference hosted by the Strategic Research Institute.  Long story short:  Techdirt is offering a review and analysis of the conference material as a free download.   To get it, visit http://www.techdirt.com/reports/


********************************************************
5       Bits and Bytes

In the "More Money Than I Know What To Do With" category, Nokia has launched a subsidiary, Vertu, which will make phones costing on the order of $US 20,000.  Beneath the platinum, gold, jewels and style will be -a phone!  Come on, people!  At some point philanthropy becomes a better choice than lunacy.  Build a school in Zimbabwe for crying out loud.  Custom phone detailers have been doing this work for some time, and apparently Nokia wants to cash in on that segment of the market.  Nokia is right to do so in order to maximize shareholder value, but PT Barnum would have a few things to say about the customers.  Other carriers are expected to follow suit.


More Money Spent on Mobile content than Wired.  A study from Jupiter MMXI reveals that during 2001, European consumers spent $531 million on content on their mobile phones, compared with $226.8 million on content services on a computer. This is particularly promising for the mobile data industry.  It reveals that the consumer mindset that "information should cost zero" has not migrated from the PC to the mobile phone.
http://www.newsbytes.com/news/02/173740.html


2002 Will be the year cell phones surpass wired lines.  At the end of 2001, there were 1.045 billion fixed lines, and about a billion mobile phones, according to the International Telecommunications Union (ITU).  Gary Fowlie of the ITU predicts that, "Within the first few months of this year, mobile phones will overtake fixed lines." 


Strong forecasts from the Yankee Group:  The Yankee Group reports that in 2001, 114.3 million wireless subscribers were voice only, with 11.4 million subscribers combining voice and data. By 2006, Yankee predicts 100.4 million voice-only subscribers and 96.3 million voice and data subscribers.
http://www.washtech.com/news/telecom/14816-1.html


Research In Motion, makers of the popular BlackBerry recently announced  a new GPRS device to run on 2.5G networks. The BlackBerry 5810 is distinguished from other RIM products by the inclusion of voice calling capability, as well as the BlackBerry's usual wireless data applications. VoiceStream Wireless and AT&T Wireless have announced plans to offer the device.  VoiceStream will offer the 5810 for the hefty tag of $499, with a data-and-voice combo plan for $39.99.  This is a nice option for those who are currently paying and managing two contracts for a phone and a BlackBerry.  ATT has not announced pricing.  With the advent of the Danger device, the Handspring Treo, and the talk of Microsoft's Stinger phone, traditional mobile phone makers are going to need to defend their market.  Ultimately, the consumer will benefit from the increased competition, and a variety of devices of all shapes and sizes will be offered.  So much for "any color you like so long as it's black."


In the "Abuses of Mobile Technology" Category: Acme Rent-a-Car in Connecticut was using GPS tracking and batch-sync technologies to spy on the driving habits of drivers.  The system used the GPS network of overhead satellites to monitor such data as driving speed.  Customers would be billed to their credit cards after their rental, without explanation, up to $150 in fines per speeding incident.  Although the practice was described in the fine print of the rental contracts, it was an illegal provision, and the company was ordered to return the fines.  Sa-a-a-ay, isn't that the company that's run by Wile E. Coyote?  Man, that dog just won't hunt.
http://www.usatoday.com/life/cyber/tech/2001-07-05-ebrief.htm


NTT DoCoMo announced vague plans to Expand 3G Network Coverage to 60 percent of Japan's "populated areas" by the end of April, the company said in a statement.  The company is slowly working through the many glitches one encounters as the leader in 3G deployments.


Meanwhile, DoCoMo partner KPN Mobile of Holland has set a date for its i-Mode launch.   On March 16, the organized and quite polite Dutch will be able to access I-Mode services while doing their favorite activities such as bicycling and pole-vaulting across canals.


Air2Web has completed its acquisition of wireless ASP 2Roam.  Included in the purchase are 2Roam's Wireless server Solution, the 2Roam development tools, and the respectable customer base including eBay, Hoover's and Best Western Hotels.


********************************************************


later,
Derek Kerton,


*Mr. Kerton is a Principal Consultant at The Kerton Group, based in San Jose, CA.  For more info, visit http://www.kerton.com

*The analysis and opinions in this newsletter are the property of The Kerton Group, an independent consulting firm.  Any re-use or re-purposing should be cleared in advance by contacting: info@kerton.com.  Clearance is simple and takes about a day.

*We encourage you to forward the newsletter in its entirety as opposed to clipping.

*To subscribe or be removed from this newsletter, please visit:
http://www.techdirt.com/kwr/subscribe.shtml

*Copyright 2002, The Kerton Group

Leave a Comment..