‘Ad enough

Hooray! Multitasking. Boo! Now the iPhone battery will only last for ten minutes per charge. Last night the Apple faithful were rewarded with a sneak peek of iPhone OS 4, ahead of the software’s release this summer. The big news is multitasking for third party apps which, while beneficial, will in all likelihood lead to shorter battery life and more system crashes as users forget to close their background apps.

April 9, 2010

9 Min Read
‘Ad enough

By The Informer

Hooray! Multitasking. Boo! Now the iPhone battery will only last for ten minutes per charge. Last night the Apple faithful were rewarded with a sneak peek of iPhone OS 4, ahead of the software’s release this summer. The big news is multitasking for third party apps which, while beneficial, will in all likelihood lead to shorter battery life and more system crashes as users forget to close their background apps.

What was of most interest to the Informer however, was the news that Steve Jobs has developed iAds. After cutting the recent deal with Quattro Wireless, the Apple boss unveiled a mobile advertising platform which promises to deliver full screen video and interactive content within the application itself, allowing the user to take up where they left off when they’re done with the ad. The most interesting bit here is that Apple will sell and serve the ads, and will retain 40 per cent of iAd revenues.

This puts Apple in the position of gatekeeper for advertising on the iPhone, so what the Informer wants to know is what happens to all the other companies that currently turn a business by selling and serving ad inventory for the device? Google sweetheart AdMob, it should be noted, is one such company.

Speaking of which there’s a nice little opinion piece up on telecoms.com this week from Appitalism CEO Simon Buckingham, arguing that the Google acquisition of AdMob shouldn’t be allowed. File your responses to Buckingham’s thoughts here and if you’re an iPhone ad pusher under threat from Apple’s new initiative, drop the Informer a tweet @telecoms.

Back to the Apple cart however, where other enhancements to the iPhone OS include application folders, a unified inbox, and APIs for gaming. Apple has sold 50 million iPhones, according to Jobs, and last weekend, after AWIW was put to bed, the “magical” iPad was launched in the US, shifting 300,000 units in the first weekend of launch. Meanwhile, the word on the web is that AdMob is gearing up to show off an iPad focused advertising platform before the month is out. The Informer wonders how that plan will play out in light of this week’s Apple announcements.

Still, the iPad is another game changer, according to the Informer’s chums at Ovum. The research group anticipates that 13 million iPads will be sold by 2011. “The user experience of the iPad, developed further into more capable devices, may indeed change expectations of personal computers (in the same way as the iPhone changed expectations of phones) without itself being the perfect embodiment of a portable computing ideal,” Ovum said. “The iPad’s role is as a showcase device for premium content, not as a high-volume earner.”

Moving over to China now, where another big name in the mobile space, Nokia, is seeking to make a mark with the regional launch of its Comes With Music offering. It’s a bold move from the Finnish handset vendor, given that China’s digital music market is rife with piracy. Around 98 per cent of digital music tracks in the country are bootleg versions, according to some estimates, and that figure doesn’t appear set to change any time soon. Especially since January, when the International Federation of the Phonographic Industry (IFPI) lost a court case against local search giant Baidu, which in the IFPI’s eyes pretty much says piracy is OK. Baidu had been hauled before the authorities because its search results deep link to thousands of illegal music tracks. But because it only provides links and doesn’t host the content itself, the Chinese court ruled that the IFPI had no case.

So what’s Nokia to do? Appeal to the better nature of Chinese consumers, that’s what. Then again, Nokia’s mobile music platform is a DRM-free proposition, which might go down well, although the service is still subscription based. And in order to make headway in the country, Nokia has had to team up with local firm Huadong Feitian to offer unlimited music downloads for 12 months with the purchase of any one of eight devices, including the X6 32GB and 16GB, 5230, 5330, 5800w, 6700s, E52 and E72i. Local prices have not yet been confirmed but entry level devices will start at €140, excluding local taxes and subsidies. The service will be known locally as Yue Sui Xiang.

The Chinese Comes With Music platform will deliver a catalogue of local artists for the Chinese market and will also include catalogues from Universal Music Group, Sony Music Entertainment, Warner Music Group, EMI Music, and a host of local independent labels, including Huayi Brothers Media Group and Taihe Rye.

“Establishing legitimate online music services in emerging markets is imperative for the music industry’s ongoing effort to remake itself,” said Mike McGuire, research vice president for the Media IAS team at Gartner. “By getting the Comes with Music service up and running in China, and with India coming on shortly, Nokia is taking important steps in continuing to expand its Comes With Music ecosystem. It’s also playing an important role in developing compelling alternatives for both artists and labels, and consumers.”

Coincidentally, the Informer will be visiting China next week, on a whistle stop tour of Shanghai, Shenzhen, Hong Kong and possibly Beijing, courtesy of local manufacturer ZTE. Yesterday, ZTE reported a 48 per cent rise in annual profits for 2009 against 2008, turning in $360m for 2009. Revenues climbed 36 per cent over the same period to $8.8bn in 2009. The firm’s handset unit sold 60 million devices in 2009, made up of 40 million handsets and 20 million data cards – a 33 per cent year on year growth, with 70 per cent of the total shipments going to international markets.

Whilst out in China the Informer will also be playing with the Android-based Blade, the firm’s latest handset. More on that in next week’s AWIW. On a related note, Sony Ericsson had the celebs out in London last night to pimp the launch of its first Android baby, the Xperia X10. The Informer received an email from one of the PR ladies who ran the night saying thanks for coming and how lovely it had been to see him. The Informer wasn’t actually at the event, but he appreciates the sentiment.

Mobile applications initiative, the Join Innovation Lab (JIL), comprising China’s biggest operator, China Mobile, as well as Vodafone, Verizon Wireless and Softbank, this week opened its doors to developers looking to publish applications in Europe. Initially catering to Vodafone’s 360 platform, through the JIL.org website, developers can publish apps to selected Vodafone operating companies in Europe. App writers are free to set their price points and will give 30 per cent of revenues to Vodafone. The operator promises to review submitted applications for publication within ten days, and also offers in depth analytics and reporting tools. At present, the Vodafone 360 platform is supported by some 50 mobile devices, with more to come, as it’s actually a widget-based platform using HTML, CSS and JavaScript, rather than catering to native applications.

Getting leverage over applications is a contentious issue in the telecoms space, and more so in the US, where the net neutrality debate continues to rumble on regardless. The naysayers may howl that net neutrality was dealt a serious blow this week as a US federal court ruled that the FCC does not have the authority to force all service providers to treat internet traffic in the same way.

The case, which was decided this week, had been running since 2007, when US communications watchdog, the FCC, took cable network operator Comcast to task for interfering with its customers’ use of peer to peer networking technologies.

Comcast complained to the US Court of Appeals for the District of Columbia, arguing that the FCC failed, “to justify exercising jurisdiction over its network management practices.” That argument was this week upheld by the court, meaning that the FCC cannot force a service provider to treat all traffic travelling over its network with equal weighting.

The main concern here is that such a ruling paves the way for operators to charge a premium to carry services, or relegate them to the ‘slow lane’ of the internet. In reality, however, it probably means that the net neutrality debate will continue down other avenues as the FCC fights back to get its way. FCC commissioner Michael Copps added a bit of drama to the situation by calling the decision, “Not just a blow to the FCC—it’s a blow to all Americans who rely on an open Internet that serves all comers without discrimination…The only way the Commission can make lemonade out of this lemon of a decision is to do now what should have been done years ago: treat broadband as the telecommunications service that it is.”

Meanwhile, someone in the operator community’s left the tap on. Research released by KPMG suggests that telecoms operators across the world collectively leak $40bn in revenue each year. The accountancy firm surveyed 74 fixed and mobile operators for its Global Revenue Assurance Survey. More than half of the respondents (54 per cent) judged leakage to be more than one per cent of total revenues, while 15 per cent reported that it exceeded three per cent of gross income. Some operators in developing markets revealed leakage running as high as ten per cent.

“A typical leakage might arise from incorrect billing or chargeable call records not being passed on to the billing system for rating and charging, or from international destinations being configured as local destinations,” KPMG said. The problem is exacerbated by a lack of reliable data on leakages. Operator revenue assurance units reported problems with identifying leakage, with some 40 per cent of respondents estimating that more than half of all leakages are going unidentified. These revelations mean that annual loss estimate of $40bn could be some way shy of the actual figure, KPMG said. As one of the respondents on telecoms.com noted: “The entire revenue assurance strategy becomes a total balls-up.”

Onto some good news now – the Indian 3G auctions have finally, yes finally, begun. The auction is expected to run for a week or so and expect strong competition between Bharti Airtel, Reliance and Vodafone Essar (which announced it had hit the 100 million subscriber mark this week). And with reference to Bharti, the telecoms.com series Ten Tips for Investing in Africa is running along nicely. Tip eight was published today and there’s an accompanying video of Informa’s own Nick Jotischky discussing Bharti’s first moves in Africa for your perusal.

Finally, another nail in the DVB-H coffin, as Swiss carrier Swisscom binned its DVB-H service, striking a blow for what the EC had labelled as the region’s mobile TV standard. The carrier is discontinuing its DVB-H service for Swiss residents because there are not enough DVB-H compatible devices to make the service a success. Instead, the Swiss operator has launched Swisscom TV Air – a 3G-based mobile TV offering targeted at mobile phone and laptop/notebook users.

And that about wraps it up for this week,

God save the Queen! (RIP Malcolm McLaren)

The Informer

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