Connected cars have been getting a lot of attention in 2012 so far

Connected cars are fast becoming the topic that has the telecoms industry’s tongues wagging excitedly. This year, Ford’s chairman gave a keynote presentation at Mobile World Congress, RIM showcased a connected Porsche at its BlackBerry World 2012 event, and Google secured the first ever self-driving car licence in the US. And as the connected car market continues to evolve, mobile operators are finding that they have a key part to play in the ecosystem, and are having to invest time and resources to ensure they are not overlooked as the connected car market matures.

In-car connectivity can be enabled for a range of applications, such as navigation, safety, such as for emergency calls, usage based insurance to monitor how safe a driver you really are, entertainment and even congestion charge or toll payment.

Currently, revenues that operators are seeing from the connected car market are modest. Both 3UK and the Netherlands’ KPN told Telecoms.com that the income they receive from their efforts in the connected car market are “negligible”. However, the telecom industry will benefit from the growth in connected cars although the size of the opportunity will depend on the type of connectivity that prevails in the car.

There are two different approaches to providing in-car connectivity; the built-in approach and the brought-in approach. The built-in approach involves the automobile-OEM embedding all of the hardware required for the connectivity into the vehicle at the point of manufacture. With the brought in approach, the user is required to bring in their own device, whether its phone to tether or a broadband dongle to plug in.

Smartphone integration and tethering will lead to greater data consumption in the car, according to industry body the GSMA, but will effectively restrict the value of telecom operators to selling more data. Embedded telematics, however, provides telecom operators with a much broader opportunity to provide more advanced M2M support to vehicle manufacturers.

Research conducted by automotive technology consultancy and research firm SBD on behalf of the GSMA concurs that today, the global total revenue for the automotive embedded telematics market stands at around €1.5bn. But the association’s research forecasts that it will grow at CAGR of 24.6 per cent over the next 15 years to reach €20bn by 2025, by which point all cars on the road are expected to have broadband connectivity.

The bulk of this revenue is expected to be from the sales of vehicle-related services and content. However, SBD also forecasts that connectivity revenues alone will increase to almost €4bn by 2025.

For the operators, this requires ensuring that geographically, their network coverage is extended.

“We’re investing in expanding our coverage,” explained KPN’s strategic partnership manager Alan Beveridge. “Covering the population is one thing, but cars go to places where people don’t live, such as motorways, so we need to ensure that we can provide coverage in these areas.”

This involves spending large volumes on infrastructure and venturing into new markets. Although KPN’s mobile business operates in Netherlands, Belgium and Germany, the operator is taking a global approach to the connected car market. Beveridge explained that, because consumers often take their cars across national borders and car manufacturers don’t always tailor their vehicles to specific markets, operators cannot be too narrow in their approach to connected cars.

“This means that we have to reach roaming agreements with operators abroad – it’s much the same way as we facilitate roaming for handsets,” he added.

Another challenge lies in the fact that operators are dealing with a new type of manufacturer, not just handset and tablet manufacturers. Automobile manufacturers are new entrants to the telecoms market, and according to Toyota’s general manager for telematics and special projects, Derek Williams, ascertaining value for money is no easy task.

“We can only pick operators to work with based on the tenders that they bring to the table. We select operators based on the offers they submit, so at this stage, we don’t really know whether we’re getting value for money.”

He added that the firm is also having to venture into unchartered territory, by agreeing SLAs with operators, using its own IT departments expertise to ensure network security in the cars and dealing with customer complaints when there are network issues.

In addition, the GSMA believes that car manufacturers will need to begin setting up app stores for the applications that will be delivered in-car. Renault is one example of a car manufacturer that has set up its own app store, R-Link.

The Android based in-dash control, communications and entertainment system can download apps for drivers to run in their cars. Initially, 50 apps have been made available and the open philosophy of Android is clearly a major feature when deciding which platform to run its future portfolio on.  

RIM too, could have a part to play in the delivery of software to cars, since its QNX platform is used in 60 per cent of the cars on the road today, the firm claims.

Regardless of the software players that take the lead in the car space, operators will still have to compete for business of car manufacturers. And while the future looks bright for operators, with the forecasted revenues suggesting that it will become a lucrative revenue stream for them, KPN’s Beveridge warns that they must act today or risk losing out to rivals.

“Although the revenues from telematics that we’re currently seeing are negligible, we have to invest today. We need to invest for the connected car market to take off. We can’t wait for customers to demand these services first, because they don’t know what capabilities will be available – there’s nothing to demand yet.”

Sanjay Jha, former CEO of Motorola Mobility

Sanjay Jha, who revived Motorola’s devices business and led the company through its acquisition, has been replaced as CEO, after Google finalised its takeover of the firm.

Dennis Woodside, who had overseen integration planning for the acquisition and previously served as president of Google’s Americas region, has been installed as CEO in his role. Jha will continue to work with Google to help ensure a smooth transition.

“I would like to thank [Jha] for his efforts and am tremendously pleased that he will be working to ensure a smooth transition as long-time “Googler” Dennis Woodside takes over as CEO of Motorola Mobility,” said Google CEO Larry Page.

“I’ve known Dennis for nearly a decade, and he’s been phenomenal at building teams and delivering on some of Google’s biggest bets. Dennis has always been a committed partner to our customers and I know he will be an outstanding leader of Motorola–and he’s already off to great start with some very strong new hires for the Motorola team.”

Woodside said that he aims to focus Motorola Mobility’s “remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world”.

Google is further refreshing the management team, as Woodside has also brought on board new members, including former Director of DARPA Regina Dugan, former supply chain VP at Amazon Mark Randall, former CFO of Marsh & McLennan Vanessa Wittman, former head of HR at Visa and Nvidia Scott Sullivan, and former Google VP of consumer marketing Gary Briggs.

“Motorola Mobility has many outstanding leaders, including people who were behind the original RAZR in 2004 and recent successes like the Droid and RAZR MAXX,” said Woodside. “Our colleagues joining the team come from varied backgrounds, from DARPA to Amazon and NVIDIA, but they all share a track record of leading innovation at speed, and a great deal of excitement about the mission ahead.”

Woodside started his career at Google spearheading investment across Europe, the Middle East, and Africa. He was responsible for the overall go-to-market, product offering and acquisition strategies in these markets, which saw a 20-fold increase during his tenure, according to the firm, and revenues grew to over $2bn.

Microsoft launches So.cl, a social networking site for students

Microsoft has attempted to get into the social networking space by launching its own: So.cl, which is specifically aimed at students.

According to the firm, So.cl combines social networking with web browsing and search in order to improve the way students learn. It intends to help students better search for educational information and share the results of their findings more quickly, with others.

The network was created by Microsoft’s Fuse labs in conjunction with the University of Washington, Syracuse University and New York University. It has been tested within the universities in a closed beta trial but has now been launched publicly.

Eden Zoller, principal analyst at Ovum, explained that So.cl is not a fully-fledged social network and although it is too early to suggest it could rival to Google+ or Facebook, the chances are it never will.

“The fact that So.cl is targeted at students echoes Facebook’s beginnings and has made many assume it is a Facebook clone. But So.cl is, as Microsoft stresses, an experiment and designed to be layer on existing social networks,” she explained. “Microsoft is being sensible in positioning So.cl in this way. The opposite approach of Google, which entered social networking all guns blazing with a full on service, is having modest success.”

Zoller added that So.cl is powered by Bing and is about social search and sharing, with little value add beyond this and nowhere near the kind of features offered by Facebook or Google+.

“If So.cl gains significant traction, which we think unlikely, then Microsoft might well ramp up the service with additional features, particularly mobile where Microsoft can tap into the Windows Phone platform. But for now So.cl will most likely remain an experiment at heart, which is no bad thing and Microsoft will still walk away with valuable insights and experience that can help improve its overall search capabilities, which is its major priority.”

Google's Sajith Sivanandan sees great potential in Malaysia's broadband market

We speak to Sajith Sivanandan, Country Head at Google Malaysia, about the growth he has witnessed in Malaysia’s broadband scene, and the opportunities he sees for Google as a result of this growth.

What progress have you seen in Malaysia’s broadband networks and consumer usage patterns over the past year or so?

The progress has been impressive. The private-public partnership initiative between the government and Telekom Malaysia has made high-speed fibre broadband a reality for 200,000 households in 18 months.

Malaysian Communications and Multimedia Commission figures put household broadband penetration at over 60 per cent of the population at the end of 2011.

At the same time, it estimates that the number of internet users in Malaysia is around 18 million today, including those accessing via mobile broadband.

With over 120 per cent mobile penetration among Malaysians, it appears that Malaysia is on the cusp of something big with regards to the digital economy.

What online services do you believe particularly resonate with Malaysian consumers?

Booking their travel plans online is certainly a huge draw for Malaysians. We increasingly see interest and activity in retail, finance, technology and telco verticals.

What major opportunities do you see for Google in the Asian digital landscape?

Mobile is the biggest opportunity, along with introducing new modes of digital advertising via our search, YouTube and display platforms that engage and inform the consumer. This combination, given the sheer size of the Asian population, puts Google in a fantastic position.

How can governments and regulators encourage even greater growth for Asia’s broadband scene?

Malaysia’s private-public partnership is a good example of how the state can come together with service providers to address a supply-based approach which was conceived in 2008, while planning for demand-based is being developed, as is the case now.

Dileep Agrawal, CEO, WorldLink, Nepal

If you have recently been frustrated by buffering while watching an HD video-on-demand stream, then hold that thought. For those in the less developed parts of the world, watching HD video at all, is, quite literally, something of a pipe dream.  In these countries, for those fortunate enough to be able to move past existential concerns such as food and housing, internet connectivity and bandwidth is still a mere fraction of what those in developed countries are used to. It’s a pain point of which Dileep Agrawal, chief executive of Nepalese ISP WorldLink, and a speaker at the Broadband ip&TV Asia conference in May, is only too aware.

WorldLink has been serving Nepal with internet connectivity since 1995 and owns 90 per cent of the infrastructure that it uses to deliver services. This is a network consisting of Ethernet and optical fibre to both consumers and enterprise customers. ADSL however, if off the table, as the incumbent Nepal Telecom has not agreed to unbundle its network for others to use, and as such dominates that market.

Nevertheless, as of February 2012, WorldLink has a total of 22,000 customers and in addition to providing basic internet access offers VoIP, web hosting, network integration and support services which Agrawal sees as being all part and parcel of being a modern data services company. “Nowadays, it’s not just providing simple internet but providing value added,” he says. “Providing just simple internet services is a difficult job in any economy now.”

The major challenge facing WorldLink is dealing with the high prices it has to pay for backbone internet access compared to developed nations and the fact that it is land-locked that ensures that prices remain very high. As a result its customers on average pay for a relatively lowly sounding 384Kbps service. In practice WorldLink delivers a one megabit connection, consisting of 512kbs of international bandwidth and 512Kbps of local bandwidth. Agrawal admits this isn’t fantastic compared to more developed economies. “Penetration is traditionally lower [here] and the speeds are terrible,” he admits frankly.

The customer experience is boosted at least by the fact that Google has installed local caches in the country. It’s not purely for altruistic reasons though as Agrawal is quick to explain. “It’s for YouTube. [Google] wants YouTube to stream better. Its gives a better experience to get more people watching. They want advertising .” Still, he’s not complaining. “It’s nice that they have put servers in our country as our customers don’t complain to us that there’s too much buffering.”

But what about content located in other parts of the world? “Getting higher speeds [for customers] directly impacts us as we need to buy more upstream bandwidth to the internet. That’s the only limitation. And that upstream bandwidth is still not at the price levels that people buy at in Europe, America, or Singapore; any places where bandwidth is available in plenty. In major areas it would be US$5; we pay US$100.”

Worldlink buys most of its international connectivity from Indian operators Airtel and at present there’s a lack of competition to bring prices down. “It varies because there aren’t many operators selling bandwidth to Nepal, so the competition there is less,” Agrawal explains.

“We have connectivity to China but it’s not too reliable, and it’s not operational yet. So we have very few choices of who we can buy from on the Indian side, because there are very few people that have built their network up to the border of our country.”

There’s no immediate technical solution to this situation, but time and political stability will eventually enable a more competitive market to spring up. “It’s down to the political will on our side to negotiate with the government of China. We have not tried, as politically our country has not been that stable in the last few years.”

However, it’s clear that progress is being made. Where Nepal was paying US$300 per meg a few years ago, it’s now at US$110 and Agrawal believes that in five years it will be down to just US$5-S10, which is level at which developed countries would expect to pay now.

He’s keen to see that future pay dividends both for his company and for the prosperity of his country. “We still haven’t been able to experience the transformational benefits that have occurred in more developed economies where internet penetration is higher and the bandwidth higher”. Things are changing though, as those who are able to afford it, and those who live in coverage areas are turned on to the benefits of connectivity.

“I’ve been in the industry for 15 years now and initially it was just mail that people used. We could see people who did international business had a competitive edge and were able to close more deals. With the advent of the internet it’s given them a new edge in terms of being able to advertise and promote themselves globally.  And I’m pretty sure that with more bandwidth people will be able to access internet resources in a much better way. And once you have access that there’s a lot of educational content that you’ll be able to access and society will benefit from that.”

With ADSL blocked off by the incumbent, WorldLink has three methods of connecting up its customers, Ethernet, fibre and fixed wireless and Agrawal explains the technical reasons behind ow it makes the choice of what to roll out.

“The Ethernet service for residential customers is theoretically capable of delivering 100Mbps in the last mile, but the network is not reliable enough to deliver an enterprise grade service.  We pull fibre to the node, and from there, we pull outdoor (shielded) CAT5e cable on utility poles with outdoor switches at every 100 meters.  The switches are cascaded in series and then further branch out to extend the network into streets and lanes. A customer is connected to one of these switches using outdoor CAT5e cable.  The switches are powered using DC voltage passed through the CAT5e cable.  [However], we experience periodic cable cuts or switch and power failures, resulting in service outage.

“For enterprise customers, we pull optical fibre cable from the node to their premises.  This is more reliable as it is not dependent on any intermediate switches or power failure.  Fibre media is more reliable as well.”

WorldLink is inevitably keen to explore any means it can to reach its potential customers,  and as such, has two fixed wireless technologies in its portfolio. The Motorola Canopy for its Enterprise customers, and a lower cost device from Ubiquity Networks for home users. Neither are based on WiMAX or LTE. “Both are proprietary,” Agrawal says. “We would love to roll out WiMAX but the spectrum for that is not available.”

With the proximity to India spectrum this is a situation that’s not likely to change anytime soon due to the recent political scandals round telecoms licenses. “The stumbling blocks are surrounding India today is that people are scared of spectrum. It’s a dirty work after what happened in India. Politicians are very scared of taking any decisions on spectrum issues for fear that it might backfire on them in the future.”

This leaves WorldLink to focus on rolling out its existing technologies to other areas outside the main areas of Katmandu. “We are moving our focus to underserved , semi-rural markets where we can get some customers who are happy with the fixed wireless that we provide. Katmandu is 60 per cent of the market and rather than just focus on it we’re trying to shift outside.”

With so many challenges, Agrawal is keen to come to attend the Broadband Asia conference to meet and talk with others to explore ways to innovate out of the constrictions it faces to improve its service and grow its customer base. “I’m looking forward to understanding what the feelings around Asia for broadband growth. What works; what doesn’t work? What business models are coming in? TD-LTE is coming into the picture and we’d like to try and meet different ISPs and operators that we can collaborate with.”

Armed with first-hand knowledge of how things are going in other areas of the world, Agrawal is confident that he’ll be able to improve things for WorldLink and its customers. “It’s a very exciting time but when things don’t happen fast enough it can get frustrating.”

The Broadband Asia conference is taking place on the 15th-16th May 2012, KL Convention Centre, Kuala Lumpur, Malaysia. Go to the website now to register your interest.

Eric Schmidt wants to put a Android phone in your pocket. Though not personally and not for free

Google’s chairman Eric Schmidt has said that there will be an Android device in every pocket if the search and advertising company “gets it right”. Speaking at the Mobile World Congress in Barcelona, Schmidt said that this would be accomplished through significant handset cost reductions, and predicted that this year’s US$400 phone would be next year’s US$100 phone. The aim, he said, was a  US$70 smartphone, as this was an inflection point where a new market of opportunity arose.

The charismatic Google chairman opened his talk with a run through of the main features of Google’s new Chrome browser for Android, and each of its impressive features, such as a link preview pop-up and a stylish tabbed browsing view, were  greeted with Apple-like rapture by a partisan audience.

Schmidt went on to explain that while smartphone marketshare had seen impressive growth, on a global scale the digital divide was still huge as for every person online there were three that were not.

Schmidt predicted that for the privileged few the continuing success of Moore’s law would ensure that the future would bring devices offering effectively unlimited speed and processing power. Such technology would enable projects such as Google’s self-driving cars to become reality, and, rather more bizarrely, robots that could attend rock concerts on your behalf if you can’t attend, which would transmit the experience to you via holo-projections.

He also waxed lyrical about the eventual state of technology to become less important as it integrates seamlessly with people’s lives. “The web will be like everything and like nothing. Like electricity, it will always be there.”

After predicting that there would eventually be an Android phone in every pocket Schmidt explained that even in the absence of internet connectivity, such devices could talk directly to each other via mesh networks, this creating virtual communities, that would act as a “digital watering hole”.

Schmidt also addressed various issues such as the cost of internet access for developing nations, suggesting that the key to doing this was to keep the content as local as possible through caches, due to the last 10 miles of access usually the most expensive part.

He also expressed sympathy with the current plight of telecom operators stating that, “it’s very difficult to be a telecom operator right now. It’s a difficult regulatory environment, difficult to raise your [tariffs] plan and you have to upgrade to 4G when it’s difficult to raise capital. And all the while customers are using enormous amounts of data and governments are charging loads for more bandwidth”. Despite this expression of empathy however, there was no indication that Google would be making any direct financial contribution to ease the plight of operators anytime soon, stating only that Google was, “investing heavily in applications that will drive the excitement about wireless data. That is the only source of growth right now, and the operators will be able to recoup [costs] through this.”

Advice for regulators were also proffered, with Schmidt suggesting that they had, “a tendency to regulate what it happening now rather than the outcome. The unintended cost of regulation is a loss of innovation.”

Schmidt also manged to turn a tense moment into one of mirth following a request from an Iranian audience member to remove the ban on downloading the Chrome browser in his country. Schmidt said that there was nothing he could do as US imposed sanctions tied the hands of the search engine provider and when the person expressed disappointment Schmidt responded, “I’m with you – but in prison – there’s like, no bandwidth.”

Google is bringing fibre to Kansas

Google has confirmed that it is ready to start building its Google Fibre network in Kansas City (Kansas) and Kansas City (Missouri).

The company states that it has now developed a comprehensive set of detailed engineering plans for the project, after sending out engineers to measure utility poles, study maps and survey neighbourhoods.

The first phase of construction will involve building the fibre backbone for the city (divided along the state line by a river), with subsequent phases to see the eventual connection of homes to the network.

The new network is expected to offer speeds of up to 1 Gbps, but it won’t come cheap: some estimates place the network’s cost at between $ 3,000 and $ 8,000 per connection.

Google launches Chrome for Android

Google has announced the availability of a beta version of its Chrome web browser for the Android platform. The browser is available on handsets and tablets running the 4.0 Ice Cream Sandwich OS, and is downloadable via Android Market in select countries and languages.

However, this version of Chrome will not support Flash, as Adobe is no longer developing the browser plugin for mobile devices following the release of Flash Player 11.1 for Android and BlackBerry PlayBook.

The Chrome for Android browser is available on handsets and tablets running the 4.0 Ice Cream Sandwich OS, and is downloadable via Android Market in select countries and languages. The browser is based on the Chromium open source project, and supports HTML5.

“Chrome for Android Beta is focused on speed and simplicity, but it also features seamless sign-in and sync so you can take your personalized web browsing experience with you wherever you go, across devices,” said Sundar Pichai, SVP for Chrome and apps at Google.

However, Mark Doherty, strategic solutions manager at Adobe Systems Doherty recently told Telecoms.com that while HTML5 is certainly one path forward, it will take years to produce widely consistent web standards necessary to support everything required by the creative and publishing industries in HTML.

“Content owners just weren’t that interested in optimizing Flash content for mobile browsers, but they are keen to build applications and so Adobe is supporting that model,” said Doherty.

The Chrome for Android browser has been redesigned from the ground up for mobile devices, and Google’s Pichai said that the development team reimagined tabs so they fit just as naturally on a small-screen phone as they do on a larger screen tablet. Users can flip or swipe between an unlimited number of tabs using intuitive gestures, as if holding a deck of cards in the palm of their hands.

“One of the biggest pains of mobile browsing is selecting the correct link out of several on a small-screen device. Link Preview does away with hunting and pecking for links on a web page by automatically zooming in on links to make selecting the precise one easier,” added Pichai.

Vodafone's Peter Becker-Pennrich

As the global director for terminals marketing at the Vodafone Group, Peter Becker-Pennrich holds decision making powers over a procurement strategy that deals in serious volumes. Vodafone buys between 60 and 70 million handsets each year, spending $8bn across it’s footprint, including affiliates and partner markets.

Just eight vendors account for 98 per cent of the handsets Vodafone offers and Becker-Pennrich says he expects this number to go down. He won’t reveal how many models are in the Vodafone portfolio, saying only that it is a number similar to that targeted by Telefónica, which is looking to slash its 240-model range by more than half. He adds that he anticipates “quite a bit” of reduction in the number of models on offer during 2012.

As Telecoms.com speaks to Becker-Pennrich, late in November 2011, the handset sector is in an even greater state of flux than usual. Over the past few months Nokia and Microsoft have blasted back into the smartphone market, Apple’s talismanic leader Steve Jobs has died, RIM has continued to founder and Ericsson has announced its departure from the handset market, with Sony buying it out of the two firms’ JV Sony Ericsson.

Do you think that vendors are managing to differentiate themselves successfully in the smartphone space – particularly the competing Android vendors?

I don’t think they’re doing it very successfully in terms of impacting customer choice. If you were to compare devices from Sony Ericsson, Samsung, HTC and the rest, you would actually find quite a lot differences. But what we see from the behaviour of customers in the market is that they typically gravitate towards the large brands. It’s very hard for the smaller players to find ways to differentiate on top of what has become a very standardised design, which is a small tablet. There’s not much design innovation you can bring around tablets and on the OS side the choices are limited. So in terms of customer perception the differentiation is relatively low.

Will that change and, if so, how?

My personal theory is that, if you look at the last ten years in this industry, we’ve always gone through cycles that are driven by some form of technology innovation. So when we started Vodafone Live! we had the clamshell form factor coming into Europe, along with colour screens and cameras. That used to be a €400-plus segment but it went down in price over time.

So camera phones brought the Japanese players to Europe, who had not really been present before, while Nokia missed the boat. Later, the arrival of 3G brought the Korean players in. Another trend was for flat phones like Motorola’s Razr, and another was the slider form factor.

Now, what happens at the beginning of the innovation cycle, typically, is that whoever owns that innovation is able to capitalise on it and build a brand value.  Later on, as the innovation cycle flattens out and more players are part of it—and price goes through the floor—it’s very hard for the players who were not part of the first wave of innovation to explain to customers why they demand a premium price for their brands.

Then current trend for smartphones—started by the iPhone—has been unusually long, but it’s still just a trend. We’re at the very tail end of that trend right now and you can see that the players which led that trend initially are very hard to challenge. Vendors who can theoretically build similar products are struggling to convince consumers to take the risk and go for a lesser known brand.

So there is little differentiation right now, but I don’t think we are headed for a PC model, even though people have said that over the past ten years every time we get to the end of the innovation cycle and there’s nothing else on the horizon. I think there is always going to be something new that will change the world again.

If that’s true, what do you think that something new is going to be this time?

There are a couple of candidates. One is outside the phone space; I expect that the connected device category—by which I mean any consumer device that has a SIM but is not a phone, which is led by the tablet segment—will grow massively next year, simply because prices will come down significantly from where they are today. The number one or two reason for customers not to buy tablets today is that they are too expensive. That will be a significant growth driver for next year and our challenge is to make sure we have the right propositions and retail set up to capitalise on that.

Are you not concerned that tablets may be used principally over wifi connections, threatening the data revenue model?

That trend varies greatly across markets. I see that in the UK, but in other markets like Spain, Italy and Germany, we see almost the opposite distribution of wifi and 3G usage. Across the board in Europe it’s about 50-50. The operators are becoming more educated in how customers really want to use their tablets and are creating offers that are tailor-made to support these use cases. I would forecast that the share of 3G-enabled tablets is going up rather than down for the next year.

That said, there will always be a substantial share of people who want a “couch tablet” that they just use on their domestic wifi connection. We have offers for these too, with mifi and tethering options with smartphones. It’s not a problem, it’s a matter of offering the right way for people to connect regardless of which kind of product they have.

As I said, it’s not just tablets; look at our announcement on the Sony game player. We’ll see significant growth in the next two years for sure.

And what’s the other trend?

The second thing is that, whichever company can create a really smooth integration with the home environment—whoever gets that right first—will be able to command a premium on their products in the smartphone space. Devices will be very neatly bundled with whatever happens on TV, media centres, on home stereo and tablets etc.

I still need to find a product which really neatly works with everything I have at home. If you look at Apple or other suppliers, they are halfway there—I don’t think these guys have really cracked it yet. If they do then there will be a business model occur where someone would offer a quad-play including all the devices and all the services for a flat fee per month. That’s quite a disruptive business model for the device manufacturers. It could be good fro Samsung, Sony and Apple. But it would be harsh for other vendors. It would be hard for the likes of HTC, for example, which doesn’t have a play outside the mobile phone space.

So the vendors will be pushing to get users onto a single brand for all these devices, mobile and domestic?

I think so, because the ones that have the best potential to win in this space are the ones that already have a play in every element. So there’s a lot of sense in trying to drive people towards a single-brand home.

But what is happening on the horizon, and we just need to see how it gets commercialised, is that there are more and more standards like DLNA (Digital Living Network Alliance) and all sorts of streaming standards in the network and cloud storage. So there is the chance to actually offer something which is open. If someone works that out and finds a way to offer it across devices from multiple platforms, that could be a disruptive event for the entire industry.

Let’s return to the present competitive situation now. Nokia and Microsoft have made a high profile return to the smartphone space. Is Vodafone pleased to see them back with Windows Phone?

The duopoly of iOS and Android feels uncomfortable and, if you look below the surface, iOS makes it difficult for us to push our services and differentiation agenda. So competition is always good. But Android is actually much more helpful than WP at the moment if you look at the high level requirements from an operator perspective in terms of commercial flexibility, attractiveness to lots of vendors, the ability to pre-embed things and deeply root things into the OS.

Android does that quite neatly. The only problem is that if Google had a bad day and changed all its policies then there’s relatively little that the industry could do about it. That’s where a lot of the discomfort is coming from. So we need more competition in the smartphone OS space.

Windows Phone is not there yet. They are making genuine efforts for Windows Phone 8 but in Window Phone 7 there is still a lot to be wished for, especially  when it comes to offering all those things we need on the enterprise side and the overall flexibility of the OS. Having said that there is benefit in having competition and more players on the market and that’s why we welcome Nokia and Microsoft back into that space.

In the past Microsoft has been criticised for taking too PC-centric a view of the world, and struggling in the smartphone space as a result. Do you think this fair, and has it changed?

I would have said that was true for a while but if you look at what they’re doing now, the Windows Phone 8 kernel is completely changing from Windows Phone 7 to be the same as they have for Windows 8 on the PC. Just look at it technically, two or three years into the future, what exactly will be the difference between a PC which happens to be quite flat and has a touch screen compared to a tablet compared to a smaller version of that which is a smartphone?

I would agree that, architecturally,  Microsoft took a PC-centric view two or three years ago. But not now.

So do you think that Microsoft has a strong play in the smartphone space now?

Well, I continue to be confused with Microsoft’s stance. On the one hand they want to provide a fairly rigid, streamlined experience, saying they don’t want to confuse the customer. They want to have a brand recognition for their experience—they don’t want to be like Android where, in some cases, you can’t distinguish what’s underneath the skin that the vendors put on top of the OS. But in itself this is of no value for anyone in the ecosystem except for Microsoft.

On the other hand they want to appeal to as many OEMs as possible. But if they want to be restrictive with their experience and at the same time appeal to the OEMs, you just can’t square that. Why would an OEM be interested in taking the platform if they can’t differentiate on top of it?

My long term expectation is that at some point Nokia and Microsoft will become one. Not necessarily from a financial and corporate entity perspective but simply because it’s hard for the likes of Samsung and HTC to really justify any investments into Windows Phone if Nokia is benefiting from much tighter integration with Microsoft and the much bigger bet the company has made on Windows Phone.

Do you have a positive outlook on Nokia’s chances for success with its new offering?

I’m tentatively optimistic. I don’t believe that success is guaranteed but nor is it all doom and gloom which, you sometimes see in the analyst opinion pieces. Nokia stlll has one of the strongest and largest supply chains in the world. Their economies of scale are still significant. Unlike some of their competitors they do have a quite substantial presence, in all of the markets that we operate in, at least. It’s really important, if you’re a vendor, that you know how to work the channels and you’ve got enough sales structure in place.

And they do still have brand value, for sure—and a lot of brand recognition. This is a dormant asset because, if they manage to underpin that with more attractive products—and you could say the Lumia800 is an attractive product compared to what came before—then I can see how a lot of these things can be leveraged again, compared to where they were last year. There could be quite a good growth curve for Nokia in the smartphone segment in 2012. Is that going to happen for sure? I don’t know—but they have a fighting chance and therefore I’m tentatively optimistic.

Ok, so let’s go from a leader-turned-challenger to the company that effectively created the smartphone sector as we know it today; Apple. The firm lost Steve Jobs this year, and was overtaken by Samsung as the highest volume smartphone vendor, although Samsung has a far broader product range. Is Apple still a leader, and can the firm succeed without Jobs?

If we refer back to the industry paradigm about innovation cycles, then Apple were the ones that benefitted most from the latest one—and they have a lot of clout at the end of it. If the tablet is the next big thing then Apple have done a great job of also meeting that need from the start. It’s very rare in the tech industry that someone would be able to do that back to back.

So we just have to give them a lot of credit for what they’ve built. In doing so I think they did leverage their capacity for innovation. But looking into the company from my discussions with Tim Cook before he took his new role, and some of the guys that are running the iPhone and iPad business there, the whole company is completely built to execute from the top. They are so rigid on their processes—of going to market, of production, of everything you could imagine. It’s no wonder they are the most valuable tech company in the world right now because they have the best products delivered through the best processes.

The question is whether or not they will have the best product going forward. And you could argue that the iPhone 4s was a disappointment to many people. If  you forget about brand value and all these kind of things, and just genuinely compare a Galaxy Nexus, SII or HTC sensation with an iPhone you find many reasons why the iPhone wouldn’t be rated as high as the others.

So the big question will be whether they can replace the genius at the top with enough empowerment in the system and at the same time maintain the rigour in their processes. If they can’t, then you can imagine that all their marketing guidelines, which are very strict and are quite clear on what the different channels can do and cannot do, will be impossible to enforce. And you can already see that in some markets at the edge of Europe or outside [the core markets] they are starting to really struggle to maintain the level of control they used to have.

If you have processes which are not built with flexibility and your content is not absolutely dominant any more, then you can’t just instruct people to act the way you want them to and that could be very disruptive to the business model that they have built.

Finally, I’d like to hear your thoughts about Research in Motion. That firm is having a tough time. Do you expect them to come out the other side ok?

RIM reminds me right now of Nokia around the point when Nokia was selling the N97, maybe a bit later. If you have strong leaders who take credit for taking  company to where it is now, they really struggle to see that they shouldn’t be the ones who take it further forward. We’ve seen the same thing with Motorola, we’ve seen it with Nokia  and now we’re seeing it with RIM.

I’m not sure whether RIM entirely understand the magnitude of the problem that they have. I don’t think it has completely sunk in. Look at their options; should they license another OS? I think it’s quite difficult because what makes your Blackberry really valuable is not the user experience of being able to write emails and integration and all of that. It is the unbeaten ability to have push email with very decent battery life; a service that is super stable, super robust. They’ve taken a lot of flack for the outage they had but they ran so many accounts for so many years when nothing happened. That’s their strength.

The magic sauce of this thing is just about where the silicon hits the software. It’s very far down  in the software development. So it’s not easy for them to put some standard software on top of their hardware and then somehow use all the things they’ve been developing. It will be a massive effort but I think they will go for an open OS which they don’t control—which is why they made the QNX purchase.

The Samsung Galaxy Nexus smartphone is the first to run on Android 4.0

Telefónica’s UK operation O2 has told Telecoms.com that it is not fulfilling orders for the Samsung Galaxy Nexus smartphone until Google and Samsung have fixed a bug that sees the phone spontaneously lose audio, affecting voice calls and audio alerts. The Galaxy Nexus is the first commercially available handset to sport version 4.0 of the Android smartphone OS, which Google has dubbed Ice Cream Sandwich.

An O2 spokesman told Telecoms.com on Monday that: “There is currently an issue with the phone’s volume that Samsung and Google are fixing. We’re currently holding back on sending new Nexus’ until this issue has been resolved. Hopefully this should be in the next few days.”

The problem came to light towards the end of last week, with both Samsung and Google releasing statements that acknowledged the problem, and claiming that a software update would fix it. Samsung’s UK operation posted the following tweet: “Regarding the Galaxy Nexus, we are aware of the volume issue and have developed a fix. We will update devices as soon as possible.”

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