"Open Mobile Summit"

San Francisco, November 19-20, 2008

Takeaways for our team: Widespread WiMax deployment would be a tremendous enabler for the Internet of Things, as it is expected to cheaper, faster, more available and more open than any of the alternatives. Telcos are clearly unenthusiastic about WiMax, but given Intel's advocacy and clout, they may not be able to squelch it. Another recent analyst report suggests that SDR radio products (or perhaps even Qualcomm's new offerings) may lead to handsets that support both LTE and WiMax, reducing the need for a large initial investment in this time of poor capital availability. Jasper Wireless with its resale of small chunks of connectivity in the machine-to-machine space is another business who services enable more devices to be connected affordably and ubiquitously.

Amazon gives the impression that its strategy includes plans for further devices based on the claimed popularity of the Kindle. The analogy with Apple and its leveraging iPod/iTunes into wider success may be relevant. Given the negative remarks Amazon's representative made about color eInk, I wonder if they are talking to OLED companies or even Plastic Logic.

Trends:Apparently ever single company present at the Conference has an SDK. The joke used to be that there were more Linux distros than users. Now there appear to be more SDKs than developers.

A lot of companies are planning to follow Apple's lead into the more specialized device market. Besides Amazon, Motorola is clearly tipping its hand and others will undoubtedly follow. In 10 years, Amazon or even eBay (which still owns PayPal and Skype) may well be Google's biggest competitor.

Prefatory comments: Notable no-shows were Apple and Microsoft, neither of which makes any pretense of being "open." Apple was much discussed by participants, but Microsoft was mentioned only by Yahoo, who seemed to be publicly wishing for MS to rescue them, and Google, who practically cursed MS in an anecdote about Orange. In what follows I have used the terms "telcos," "network operators" and "carriers" interchangeably, if only because the speakers did.

Session 1: Building the open mobile economy

Rich Wong, Accel Ventures: 55% of the world's population now has a mobile handset, reflecting a growth in usage from 1 billion to 4 billion units from 2000 to 2008. Major trends include software fragmentation, direct sales to consumers rather than network operators, and cheaper smartphones making sophisticated applications widely available. The mobile space will continue to grow during the upcoming downturn just as Google, Amazon and EBay grew during the dot-com crash. It's work noting that at the time of the NASDAQ peak, Altavista was the most popular search engine! Mobile advertising will grow 10-15% in 2009 as it continues to take market share from print. Wong comments that the country of Singapore is the ultimate "walled garden," and contrasts the froth that is India. He compares the iPhone to Singapore and the Android platform to India! The small penetration of smartphones isn't really an issue if their owners access the web frequently enough.

Eric Klein, Sun: Talked about release of JavaFX, Sun's new "rich media platform" for mobile, which is "aimed at designers rather than developers." Sun's Java revenue comes almost entirely from handset manufacturers licensing Sun's products. Smartphone sales are right now only 15M units per year compared to more like a billion total handsets deployed.

Len Lauer, Qualcomm: Phones in the future will not get faster, but more valuable. Qualcomm is targeting netbooks as a growth area and has produced a special chipset for them, the Gobi, which features multiple radios plus integrated GPS. The similar Snapdragon will feature multiple radios plus GPS and be aimed at mobile handsets. All products, including PCs, will have multiple modems and GPS. Netbooks will be connected all the time when they are powered on. NFC and micropayments in the U.S. are 3-4 years away. Qualcomm's multiplatform Firethorn project is their foray into the micropayment space, and they have already signed up some banks and network operators as development partners. Giant retailers like McDonalds will be first. Web companies are already taking business away from network operators. The winner in the space will be the company that figures out how to create one contact list for all applications.

Rebecca Hanson, XOHM initiative, Sprint Nextel: XOHM is Sprint's rather desperate attempt to roll out a WiMax network in the U.S. Network operators appear to be more committed to LTE. XOHM's trial roll-out in Baltimore already has demonstrated 2-4 Mb/s download and 1-1.5 Mb/s upload. Partners for the trial include Comcast, Intel, Google and Time-Warner. Participating consumers get Lenovo, Acer, Asus or Toshiba netbooks with embedded WiMax capability. Sprint advocates the sale of unsubsidized WiMax phones without contracts in regular stores. 30 chipsets for WiMax exist, and a long list of manufacturers (Intel, Nokia, Toshiba, Motorola, Lenovo, Samsung, Dell, Acer, LG, etc.) participates at some level. XOHM applications do not require signing: the platform is truly open. The new business model for consumer electronics is that manufacturers of WiMax-enabled devices like cameras will sell upload connectivity to users for an ongoing fee. Korea already has widely deployed WiMax. Telcos in Brazil, Russia and India are deploying large WiMax pilots. [Since the conference, Clearwire, which has purchased XOHM, has announced a large WiMax deployment in Portland OR.]

Marco Boerries, Yahoo: Yahoo will offer a new mobile advertising platform called Blueprint with ad agencies in partners starting in January 2009. A voice-driven mobile search service using a technology called "Bling" will be rolled out in March 2009. Yahoo is promising to roll-out a special "killer app" for creating mobile banner ads. I asked during the Q&A if it wouldn't be possible to just automatically rescale existing banners intended for large displays. Boerries said no, but undoubtedly he hasn't seen the remarkable seam-carving algorithm for automated image reduction. Boerries says that the apps at the Android store stink, as the store was rushed out before it was truly ready.

During the break between sessions, Daphne Won of Nokia Research asked me if it were true that "Steve Manzer is leading an HP initiative to create an HP-branded Android handset."

Session 2: Builing the open mobile economy

Mike Grant, Analysys Mason: The leader in mobile broadband penetration is, surprisingly, Austria, where 3G is cheaper than DSL. A similar situation exists in Poland and Finland. A significant fraction of users employ 3G as their sole means of internet access as well as their sole means of voice communication. 2008 saw text messages outnumber voice calls for the first time in the U.S. In the June-September 2008 quarter, 13% of all handsets shipped were smartphones, with Symbian continuing to lead iPhone 2:1 in unit sales. The iPhone in fact is just ahead of RIM units in number sold. Apple's big advantage is the similarity of the U.I. across its whole family of products. Nokia is attempting a similar unity of experience with its Ovi platform and LifeTools initiative.

Session 3: Open networks and challengers

Disruptive Voice:A panel discussion featured speakers from Rebtel, Truphone and Skype. The first two companies offer methods to use VOIP from a 3G handset via a downloadable client. Truphone's client can be downloaded from the Apple Store despite Apple's relationship with AT&T. Rebtel is mostly a middleman, selling VOIP connectivity in emerging markets to established western network operators.

Robert Syputa, Maravedis:In 2009, only tablets and PCMCIA cards will support WiMax, not handsets. WiMax and LTE are 90% the same, both being based on software-defined radio. WiMax is trying to take customers from DSL and cable as well as 3G. The idea that WiMax needs a big rollout is wrong, as handsets already have multiple radios, and customers don't know or care about the differences between networks.

Scott Barkley, Jasper Wireless: Jasper is in the machine-to-machine communication business, providing connectivity in a software-as-a-service model to 60 million installed devices. These include power meters, point-of-sale terminals, Kindle and OnStar. New applications including tollbooths, moving walkways and billboards. Jasper helps embedded and mobile device OEMs include 3G connectivity in a wide variety of products. They define their business as "single-digit ARPU (average revenue per unit)" while the telcos are in the multi-digit business. Jasper resells telco connectivity to the smaller businesses. Jasper's business model is all about minimizing installation and support costs. Why would walkways and billboards use 3G instead of WiFi? Because companies that sell these "managed" hardware products offer maintenance services under a subscription model without ever visiting the customer's site. Customers can set up the product without doing any communications configuration whatsoever if the product includes a 3G modem. OnStar has an installed base of greater than 5 million units, with over 1 million smart power meters installed in Sweden.

Ian Freed, Amazon: The Kindle has major advantages of the paper book: portable, easy to read, comfortable to hold, readable in sunlight and instant-on. Kindle also has improvements over the book: 60 second delivery of books over EVDO, 200-book capacity, built-in dictionary, search facility and Wikipedia and periodical access. An important aspect of the Kindle experience is that the user purchases a book, not a download, as the wireless connection is free with the purchase; there are no connect charges. Kindle is a reading product, not an internet appliance! The Kindle was celebrating its 1-year birthday on November 19, and it now represents greater than 10% of Amazon's book sales. Kindles don't come preloaded with books, but purchasers believe that they do, as the download is so fast, and the units are "shipped hot," meaning that books start accumulating instantly during first power-on. Kindle is surprisingly popular among elderly users, for whom the adjustable font, light weight and travel-less purchases are major advantages. Increasingly Kindle is mixing up business models, as Newsweek and the Wall Street Journal have created electronic books, while blogs are sold as periodicals on the Kindle. Amazon requires no contract with the Kindle but it remains a "walled garden." Amazon's overall sales are over half international, but the Kindle won't be rolled out overseas until it is perfected in the U.S. Negotiations with publishers are the main gating item. Color eInk remains too power-hungry. Kindle customers spend 2.6x as much on Amazon products after their purchase compared to before.

Session 4: Open mobile ecosystem: software and application innovation

Mary McDowell, Nokia: Nokia has about a 1/3 market share for all phones on the planet; currently 1 billion Nokia phones are under contract. 72 million Nokia smartphones will be sold in 2008 compared to a 180 million total market. Nokia is also by volume the world's leading vendor of GPS receivers and cameras. Meanwhile, 80% of the world's inhabitants live within range of a cell tower, and more users accessed the Internet in 2008 using handsets than using PCs. Needs are different in developing nations where an entire family will share a handset, and each needs his/her own contact list. Applications which are popular in emerging markets are also different. Educational software is extremely popular in China through the MobileDo service. External developers have created irrigation planning and diabetes management applications, the latter of which is based on a dongle sensor. An architectural information application for tourists is under development, as is an anti-counterfeiting application for luxury goods that is based on NFC. An NFC-based micropayment trial with Vodafone is going forward in Africa. Nokia also is working on handsets as environmental sensors. UC Berkeley and Nokia Research Center in Palo Alto are developing a traffic-tracking app based on data collected from handset GPS devices.

Developers have suffered from the "snowflake problem" with mobile handsets; handset manufacturers have not shown discipline with their APIs. The seriousness of Nokia's push into Internet services can be judged by the amount of investment they've made into the acquisitions of NavTeq, Symbian, Oz Technology (social networking) and TrollTech. Symbian has 1700 employees, 2/3 of whom are engineers. In most contexts, the main limitation on handset performance is now power consumption rather than network availability, storage or processor performance. By next year, Symbian will support seamless, transparent hand-off of connectivity between WiFi and 3G for roaming users. The open-sourcing of Symbian now will not be completed until 2010.

Rich Miner, Google: The importance of the mobile handset cannot be overestimated. The world has 1.5 billion credit cards, 850 million cars, 1.3 billion televisions and 3 billion mobile handsets. Rich Miner was the co-founder of Android, which was later acquired by Google. Already Android has forced all handset manufacturers consider the sale of unlocked phones and, in conjunction with the iPhone, has made all telcos consider unlimited data plans. The changes will spur innovation in the industry. Miner got the idea for Android while working for Orange, which was debuting the first Windows Mobile handset. A bug in Windows Mobile prevented Orange's new push-to-talk service from working with the handset, and Microsoft took 18 months to issue a patch! Meanwhile, he could not get Orange product managers to install internally developed applications or those developed by Orange-acquired start-ups onto the handsets whose release they managed. With Android, the community will quickly fix bugs, and any user can install any app that he or she wants. On most platforms, native code and Java apps run in separate spaces and can barely interact; the browser for example does not have access to the contacts list. Android has no separation between privileged native code and developer-contributed Java. Also, applications can be self-signed, and the fee to join the Android store is only $25. ShopSavvy is an app that gives competing stores' price information based on the scan of a product's barcode.

Thirty-plus companies have signed up for the Open Handset Alliance, with telco partners announced in Japan, China and Europe. Several handset manufacturers have shown Google handsets running Android including some based on CDMA. Google is not directly involved in these efforts; any negotiations are between handset manufacturers and the telcos. The main Android contributions are a JVM optimized for the ARM processor, Surface Manager (2D graphics), OpenGLES (3D graphics) plus a few simple applications (clock, calculator, etc.). Google likes the iPhone because its owners frequently access Google mobile products.

The main advantage of Android for developers is that there will be only one JVM, and Android will always run on the latest Linux kernel. The concept of "porting" doesn't exist on the Android platform. Soon Google will announce a test suite that all compliant handsets should run, plus a list of endorsed 3rd-party applications that are recommended for pre-installation. Google's only enforcement will be to recommend that telcos not offer non-compliant handsets. Every program under Android runs as a different UID in the Unix sense, which prevents applications from reading each other's data. Accessing other applications' data requires an API call.

Session 5: Any Device? Feature phones, smartphones and more

Gary Willihnganz, Intel: Carriers outside the U.S. are starting to subsidize netbooks and other smaller mobile internet devices. Business models are getting blurred; already the top music site in France is run by a telco! Batteries and displays remain the main cost in handset manufacture, although software is up to 23%.

Elizabeth Altman, Motorola:More single-purpose devices like the Kindle that do only one function well are on their way into the marketplace. Motorola already ships Linux-based handsets overseas and is planning to support Linux and Android going forward.

Session 6: How to foster innovation: open vs. closed ecosystems

J.T. Treadwell, Symphony Technology Group (VCs):Apple's iPhone store is the equivalent of a record label: they are ripping off small developers the way that labels rip off musicians. Openness and consolidation are what make the previously unattractive mobile market suddenly look more lucrative for investors and developers. The mobile ecosystem will be healthy when there are $20-50 million companies as well as giants and ma-and-pas. The biggest problem for startups has been big companying simply copying their ideas. The biggest growth area will be enterprise mobile apps rolling out on phones.

Session 7: Apps in the Cloud

Fabrizio Capobianco, Funambol: "Push" technologies have a big advantage on mobile in environment where connectivity will always be unreliable. Synchronization is the right underlying technology. Funambol (whose technology is an implementation of SyncML) is the largest natively mobile open-source project. Fragmentation actually helps small open-source developers, as it gives them an opportunity for niche development (e.g. internationalization) that doesn't interest the big players. The inability to customize the iPhone will limit its international sales, as the iPhone is very much aimed at the U.S. market.

Jay Sullivan, Mozilla Mobile: The problem of fragmentation on mobile is exaggerated. Browsers work fine on the various platforms as long as the content they access is standards-compliant. Widgets that use wget or similar to scrape data from the web can make browser access of data look like a standalone application. Yahoo Confabulator and Nokia WidSet are easy methods for widgetizing browser calls. Push isn't need for mobile apps as Google Gears and SQLite already minimize the pain of intermittent connectivity, allowing, for example, type-ahead to continue during a service interruption. The most impressive apparently uninterruptible package is the Zimbra mail client. HTML5 will support Google Gears and will be much less annoying in an intermittently connected setting. One-button widgetizing by the user will be supported in Mozilla's new Fennec mobile-optimized browser.

Nick Allott, Open Mobile Terminal Project: OMTP is industry's answer to the slowness of the W3C process, the pace of whose torturous deliberations are antithetical to the lightning speed of mobile web development. OMTP hopes as an early activity to create standards for widgets. Many industry heavyweight have signed on to OMTP. The first initiative is BONDI, which specifically tries to address cross-platform compatibility. The most striking aspect of phones is that processor speeds in new handsets vary by 100x compared to about 2x on new desktops. Clearly there are diverse business models!

Session 8: Mobile advertising and the open mobile economy

Jason Spero, Admob: Admob is an ad-server. Over thirty iPhone apps use their service. Phone owners react to SMS ads the same way they do to direct mail: the ads are very annoying if they aren't well targeted. A major trend in mobile advertising is free simple games that feature a brand. Admob's slots are 95% sold out. Ad click-throughs on the iPhone are 1.5% compared to 1% on featurephones. The ability to link voice communication to ads has not yet been exploited; it's an area of opportunity for developers. On phones without GPS, Admob is beginning to use weather and traffic data downloads to figure out location.

Gene Keenan, Isobar: Keenan employs 50 people in a subsidiary of a giant advertising agency. Isobar is the biggest buyer of mobile ads after Procter & Gamble. Telcos often take 48 weeks to approve a new ringtone, while Apple will typically sign an app for its store in 2 days. Mobile advertising still tends to be an after-thought, not the focus of specially designed campaigns. A sign of increasing sophistication is that advertisers are just beginning to target particular advertisements to consumers who own particular models of phones.

Jai Jaisimha, AOL: AOL hosts the number site aimed specifically at men! [The most memorable thing he said.] AOL sees a bright future in serving ads for mobile. A no-cost, ad-supported phone called Blic with capped access time will soon be available in Europe.