Telco 2.0 News Review

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Well, we've just had CES and the buzz was of course about the Google gadget. Connected Planet asks whether Google might subsidise apps or content on the "Nexus One". Although there's certainly something appealing about the idea of flipping the business model, getting rid of the handset subsidies, and instead pushing the app ecosystem, it seems unlikely - the device is pricey, at $530 a go with no carrier subsidy, so you'd have to push out a lot of subsidised applications in order to make it a financially attractive proposition that way. (Also, this is roughly the model Nokia is pursuing for Ovi.) If the iPhone was anything to go by, that $530 includes a substantial profit margin - but the problem is surely how much subsidy to applications the user could absorb.

iFixit has a teardown out, so the genuinely intrepid can have a crack at costing out the BOM and estimating the margins themselves. We'd guess that the Snapdragon chip doesn't come cheap. Apparently, the device is actually made by HTC, so you might expect that they'll get the the lion's share of the price after the upstream suppliers like Qualcomm, Broadcom, etc. have got theirs.

The capacity crunch is real: shamefaced apologies from AT&T after the fearsome concentration of iPhones at CES brought their data network to a halt. Not that this is new - we well remember helping a restaurant manager by getting their GSM/GPRS merchant terminal to fall back to GSM dialup a couple of 3GSMs ago when the BlackBerries and Nokia Communicators (remember them?) were thrashing Telefonica's GPRS net to death.

LG launched a Linux-powered iPhone-like entity; they're using Intel's Moblin distribution running on Intel's Morristown chipset. We'd guess Intel had something to do with this, eh. Apparently it's "half-way between a smartphone and a netbook", but it's most certainly not a "smartbook" - must be a netphone then. There was also a great deal of froth about "slates", which is the new buzzword for "tablet PCs"; Computer Weekly has a nicely calming post pointing out that devices a bit smaller than a laptop with a reduced keyboard and a big touchscreen are far from new. However, T-Mobile UK wants you to have a 7" tablet in your living room as a "family hub".

Nokia CEO Olli-Pekka Kallasvuo, meanwhile, was pushing the Nokia Life Tools apps-for-the-emerging-markets programme and the need to "democratise the smartphone" - the contrast with Google's half-a-grand gadget is telling and presumably deliberate. Their Calling All Innovators program is about to start up again; this year's has dated British cartoons and more importantly a special section for developing-world business innovations with its own $1m prize.

Palm, on occasion, likes to suggest that its WebOS devices are a cheaper, more democratic approach to smartphones. At CES, they announced that the applications developer ecosystem is being opened up to anyone who habitually counts "0, 1, 2...", that there will be prizes, and that their app store is going to take a Symbian Horizon-like twist - as well as the official one, other app stores will be able to use Palm's database of application metadata. As well as proliferating app stores, we've got proliferating app warehouses, and probably an app containership somewhere.

However, another announcement from Palm shines a different light on WebOS. The core concept of WebOS was that the entire user interface was a Web browser, and all the applications were implemented as HTML/CSS/JavaScript widgets, which could be either local or remote, and which used a Web service API to control the device's lower-level functions. This offered the promise of eventually getting the various flavours of widgetry to converge, so that the standard graphical environment for mobile would be HTML and the standard applications programming language would be JavaScript. That, in turn, would mean that all a device needed to participate in the apps ecosystem would be a proper Web browser and a BONDI-compliant local API. And all would be love.

Unfortunately, whatever JavaScript may be, it's not the language you'd immediately pick for performance. And, of course, on a mobile device with relatively limited processing power and battery life, you need to take this seriously. As a result, Palm has announced an API for plug-ins written in C and C++ - perhaps the first time we've had C embedded in a Web page made of HTML and JavaScript, rather than JavaScript embedded in a Web page being executed by a browser written in C. Apparently games devs, who need to mangle graphics really fast, are the target market.

Alternatively, you could always do the app for a platform that uses Qualcomm's coming 1.5GHz Snapdragon. Soon, we'll have mobiles that are powerful enough to manage the space shuttle's glide approach while doing 3D computational fluid dynamics...for a total of three minutes before the battery runs out. There will, however, be no WiMAX smarties on the Clearwire network this year.

Motorola announced another Android gadget and declared it was confident that they would lead it back to profitability; AT&T mobility chief Ralph de la Vega, meanwhile, made clear that AT&T is diversifying its smartphone range, with Android and two Palm WebOS devices coming to join the iPhone.

Palm's CEO, it seems, doesn't care about the iPhone and wants you to know it. Mind you, we never thought the first generation iPhone would take off, with a grimy touchscreen that invariably won't work and no radio to speak of, and Telco 2.0's Alexander Harrowell has still never to handle one. (He claims it's a deliberate policy to remain rational about these things. Others claim he's just cheap.)

Interestingly, Apple just bought an ad broker, like Google. So far, the Apple strategy has been clear - sell devices, because that's where Apple makes money, and then extend from there by getting iPhone users to replace other consumer electronics with Apple kit. The apps are part of the strategy to get users through the door, which is why Apple is happy to distribute most of the revenue. Another extension is selling content through iTunes. We don't really know what Google's strategy is for Android, but it's a fair guess that it's similar to all other Google strategy - more content to sell ads next to, more users to see the ads.

It's hard to see how an ad broker fits in, unless the real message here is that both Apple and Google want to have a presence throughout the mobile Internet value chain, and land-grab mode has been engaged.

If you really want a cool device, here's the Thales Teorem, a smartphone whose USP is that it encrypts your communications to the standard required for French official secrets - which presumably means "good enough to keep the Yanks out". 20,000 top officials are going to be issued with the devices. Pretty it's not, but this is the sort of thing you need to launch the independent nuclear deterrent. It's an advance on the 1970s, when President Valéry Giscard d'Estaing allegedly kept the launch codes on a light gold chain around his neck...

The French government wants to tax Internet advertising revenues in order to subsidise the online music industry. Apparently they want to collect the tax on the basis of who clicked on the banner ad - which seems to mean they want to demand extremely detailed record keeping from every advertiser in the world...although they will have WLAN on trains that go 300 miles an hour, so they can probably remain smug.

It looks like Netflix has proven a Telco 2.0 insight correct; we've often said that if content is king, distribution is King Kong. Netflix succeeded through being a pure distribution company - using the Web for signalling and red vans as a media bearer, as it were. Then they decided to buy into the content business. Big mistake; it's cost a fortune and it fouled up their relationships with the big content providers, and they're now selling up.

Robin Jewsbury goes to CES, and reports that femtocells are big news. We've known for some time about MagicJack, a Voice 2.0 play that routes your calls via their own cut-price CLEC when you're in range of a femtocell; now they've launched. He also, interestingly, mentions that Ubiquisys's femtocell was being demonstrated on the UK Trade & Investment stand by BBC Research engineers. Hmmm.

Meanwhile, the other UK operators are demanding that Brussels investigate the T-Mobile/Orange joint venture, and TDC may soon be back on the stock market after four years in private-equity hands.

Orange has taken a daring step into the mobile finance future...well, not really. It's launched a Barclaycard with its logo.

The US national broadband plan has been delayed a month to give the FCC more time to filter a huge pile of public submissions. "Fibher Nowe!!!" scrawled on a torn-up phone bill doesn't count, so 90% of it can probably be filtered without losing any Shannon information. This post of Brough Turner's suggests Wi-Fi in the TV white spaces may be more than useful.

The FCC is also demanding an explanation of how Verizon Wireless's early termination fees came to double.

And it turns out that Kodak's wireless picture frames, and any other devices that use framechannel.com as the back-end, are accessible from the Internet by anyone who can guess their MAC address and set a fake user-agent header. Worse, it's possible to make them reset and issue a new activation code, so the attacker could down the frame, create a new account, and put whatever pictures they wanted on it.

Back in the big wide world China became the world's biggest exporter, as well as the world's biggest market for cars. Up until now, the biggest exporter had been Germany for years - although, as the Germans point out, China does a great deal of low-value bulk for export, and imports a lot of very expensive German capital goods to do so. With that in mind, it's interesting that Huawei has just outsourced to India, although it's got a lot to do with India slapping a huge tariff on Chinese SDH networking gear. The Financial Times, meanwhile, takes a look at Alcatel-Lucent, and reports that unlike Nortel it's still here. Industry CAPEX is forecast to rise 1.5% in 2010.

There's been another boss swap at BT Global Services. IBM is keen on industry vertical projects like smart grids and friends:

"We were seeing a variety of projects that you would classify as physical meeting virtual world. These were clearly not back-office oriented but rather out where the business was conducted, like transportation services or power networks.

We saw a significant acceleration in the number of these of physical world projects for a number of reasons, not the least of which is due to the fact that the cost of microprocessors had dropped dramatically. Microprocessors, embedded devices, RFID pricing have all come down to the point where computing at a different scale had reached an inflection point.

The physical world projects started to accelerate and be much more front of mind. All eras, technology or otherwise build on eras of the past. It's our view that problem-solving via IT techniques can transcend limitations of our past."

And a scientific paper suggests that exposure to GSM radio traffic rendered mice less likely to get Alzheimer's disease.