As a proud and delighted owner of a 2G iPhone, I was sitting on the fence last month when Steve Jobs presented the new 3G version at the WWDC in San Francisco. Getting an unlocked version in the UK (I would not go for an O2 subscription obviously ;)...) had a cost, and seeing my investment become obsolete so quickly was quite frustrating. On the other hand, the iPhone is by far THE best gadget I ever had, so anything even better would be too attractive to resist.

So the 3G iPhone was announced and now launched. In terms of hardware, it is more an evolution than a revolution vs the previous version, with HSDPA and A-GPS as the main upgrades. HSDPA will be nice and should offer a browsing experience closer to WiFi. A-GPS is interesting, but still waiting for the apps to make it worthwile on a mobile. However, these two improvements do not hide the fact that the iPhone is now playing catch up with the specs sheet of the flagship devices of players such as Nokia or Samsung:
- 2 MP camera ? Please... The benchmark now is 5 MP with flash and at least digital zoom
- No video support ? Are we in 2008 or 2002 ?
- No MMS ? OK email is great, but some people still like to send pics (or videos by the way...) via MMS for the immediacy and all. Why not giving users the choice ?
- Haptics and some tactile feedback (quite standard now on Motorola, LG and Samsung) would have been nice to improve the user experience of the virtual keyboard
- Memory: why cap it to 16 GB ? The only reason I see is not to cannibalise too much the iPod sales, but still, 32 GB would have been nice....

Even with these shortcomings, the iPhone launch in 21 markets worlwide was a huge success with people lining up for hours from Auckland to New York via Tokyo and London and the demand proving to be too strong for the iTunes activation systems.

There is one basic reason behind it: price and affordability. When Apple launched the first iPhone, they were too greedy and tried to kill too many birds with one stone, so convinced were they of the iPhone uniqueness:
- They did not want to cannibalise iPod sales and therefore forced the mobile operators to sell them unsubsidized
- They required a revenue share from the operators to maximise the value per device
Don't get me wrong, and let me repeat it, it is true that the iPhone is THE best gadget ever. However, when as a customer, you are used to get a new phone for free every 12-18 months, you are not that ready to spend $400/£270/€400 for an iPhone, especially if you can get a top-of-the-range Nokia, Samsung or Sony Ericsson for free. For Apple to have "sold" 6m 2G iPhone under this model is quite impressive and clearly demonstrates how good the device is.

To become mainstream and mass market, Apple had to review its model, hence the success of the 3G iPhone launch:
- Accept the subsidised model, sell to the operators for a guaranteed revenue, get lower margins per device, but achieve major gains in volumes
- Take some lessons from Andy Grove and proactively cannibalise iPod sales

I also think two new developments will support the sales numbers:
- Exchange support opening the gates to the enterprise segment
- 3rd party apps support expanding the range of user experience on the device

As my personal contribution, I took a pic of the line in front of the O2 shop in my neighborhood in London. This is no flagship store, and the line was solid all day long on Friday. As a comparison, there was no line at all when the 2G version got released. On Sunday, it was far quieter, as the store had sold out as almost any other 3G iPhone outlet....

So I am ready to bet the 3G iPhone will become the 2008 bestselling smartphone, far ahead of Nokia, RIM and Windows Mobile. The key question is whether I will upgrade my 2G version or not...

Media/video applications acount for almost 60% of the traffic (traffic, not users or time spent). It puts things into perspective and explains why the debate around net neutrality is so important. Just imagine the amount of required investments Verizon, Comcast or BT would have to finance to ensure their networks can support a 100% penetration of video/applications. The issue being that in today's world they can't charge more depending on the traffic type, a byte is a byte...

Also interesting was the relatively high level of VPN usage (more travel? more flexibility?) and the low number for online games. Online games are extremely bandwidth-efficient (most of the processing is done locally and only a limited amount of data is shared with the servers) at the opposite end of P2P applications.

Nielsen just released a report with mobile search stats for Q1 08, which shows that users end up relying on the same brands they are used to on their PC. Google leads with 61% share, following by Yahoo! at 18% and MSN at 5%. Looks very similar to how these portals rank on the PC, even though usage patterns might differ a bit.

It is still somehow surprising. Yahoo! is indeed far more involved in the mobile field, having launched mobile specific services ahead of its competitors and having achieved quite a successful business development track record, both with operators and handset manufacturers. It basically means that when users decide to light up their mobile browser and go through the motions of doing a search, entering the web address of the highly trusted Google brand is not really that demanding as an added step.

As the mobile internet user experience improves - better devices, higher network speeds,... - it is only logical that users first replicate the internet usage they have on their PC and rely on trusted brand names to do so. I still think though that as they grow confident with the medium, we will start to see new and differentiated applications, and potentially brand names...

QR codes are now on everything in Japan, from business cards (rather than the company website address) to catalogues. Advertising and e-commerce are part of the applications supported but the main point really is to simplify the mobile internet experience.

QR codes have now appeared in Europe and the US, mainly pushed by advertisers, e.g. Umbro pictured below, with companies such as Boots or HSBC also adding QR codes to their products or print materials in the UK.

The issue with QR codes at this stage is that not that many phones have a reader pre-installed. The swiss army knife that is the N95 obviously has one, but it is well hidden in a sub-sub-sub menu. To favour uptake, clients can be downloaded for the main OSes - Symbian, Windows Mobile,... It will however take time to create critical mass in the installed base, but I hope this is something mobile operators (not advertisers) will further push. It is indeed a great enabler to increase mobile internet traffic, just look at Japan! 

GigaOM has an interesting post with a list of mobile VoIP applications, the underlining message being that VoIP is now ready to change the mobile industry and push prices down in the same way as it did in the fixed world, with the wider availability of smartphones, WiFi and 3G mobile broadband serving as a basis to help the market develop to 250m users by 2012.

In a previous post, I already gave my views on VoIP: this is a technology, not a service. I already mentioned that mobile VoIP services such as Skype or Truphone are interesting only for some niche segments doing a lot of long distances or international calls, and it is interesting to see how Om and his team fit well this customer profile:
- They are advanced geeks not afraid to install apps on their phones and change settings. Believe me, this is not mainstream ! They are also happy to accept technical issues and lack of stability of some of these solutions
- They have smartphones that are WiFi enabled and use it for VoIP calls, hence limiting the mobility side of things. And using 3G mobile internet is not free...
- They are a SME with employees/bloggers spread out across the US so they need to do a lot of long distance calls without the luxury of large bundles

I am not against VoIP. As a technology, it will be key in the development of mobile next generation services. As a service though, I am still struggling to see how it can become mass market when you can get unlimited bundles in the US for $80-100 (or family plans with unlimited on-net calls for far less) and very large bundles (we are getting 5 hours and unlimited internet for £30 ($60) now...) in most European countries.

The only trade-off is for long distance/international calls, so seems GigaOM's team fits well the interested niche segment. Who gets cannibalized there, mobile operators or providers of LD/international calling cards? LD cards already almost disappeared in Europe as broadband providers (Carphone, Free,...) use the VoIP technology to offer unlimited national and international calls on their network...

The hype better be good, the 3G iPhone is indeed due in only two weeks...

It offers two interesting takeaways:
- The most successful applications are still related to communications, i.e. multimedia messaging and emailing, followed by internet browsing, music and gaming
- The US are now a mature mobile market, and Europeans can't assume anymore they are at the leading edge when considering mobile content and applications. Sure there are still some discrepancies (still trying to understand why music is not big other there) but usage data are fairly aligned. Worth noting is that the US have a lead over Europe when considering the most advanced applications such as internet browsing, emailing or social networking. Seems the American mobile users went straight from the old clunky basic cellphones to the advanced smartphones such as the iPhone or the Blackberry Pearl/Curve, while other here in Europe, users still tend to value fashion - less advanced - phones that can only offer a limited internet user experience

Social networking and sites such as myspace, facebook and webjam revolutionised our interactions with the web over the last five years and it is now likely that this is moving to the mobile area.

It should not come as a surprise for anyone following market dynamics and consumer behavior in Japan and Korea (and China....). After all Mobage-town is Japan's 2nd largest website (per page views) while being mobile only, and a large chunk of CyWorld subscribers in Korea pay an additional fee to access it from their mobile.

A recent study by Nielsen shows that this is now developing in the US and Europe with 1.6-1.7% of mobile users in the US and the UK accessing social networking sites from their mobile, while numbers are lower for Continental Europe (0.5%). If you think this is negligible, think again. If you apply this penetration to the installed 3G base and to users subscribing to a data plan, you end up with quite a sizable penetration! Even more interesting, if you look at the numbers starting from people using social networks, it appears that a quarter were also accessing their profile/sites from their mobiles in the UK.

Using social networks can be as addictive as a Blackberry so it should not be too surprising. As MySpace and Facebook also lead the pack in terms of mobile usage, the key question becomes whether there is some room for some mobile driven social networks or if the "incumbents" will simply also succeed on the mobile.

One key output though is that mobile access will become more and more important. So Webjam, when do we get one ? ;)

The new webjam platform went live early this week. Congrats to the team that worked hard on it to make sure the migration would be as painless as possible. This is a great upgrade with some interesting new features, formats and options and a major improvement in SPEED !

After months of speculation about a G-Phone, Google came out last week - full event script here - with its mobile plans in the form of Android, a mobile Linux OS. It did not go alone though, as the big guys of Deutsche Telekom, HTC, China Mobile, Qualcomm and Motorola joined in for the press conference. They are all part of a new 34 strong industry group called the Open Handset Alliance, also including companies like Telefonica, NTT DoCoMO, Sprint, Samsung or LG.

To sum up, Android is a "software stack" consisting of an OS and middleware - developed by Google - on which customised UIs and applications - developed by Google (Maps...) or others - can be added. It will be made available under an open-source license (i.e. free?) giving handset manufacturers and MNOs the freedom to customise the user experience for their users. In a perfect world it should still enable Motorola to differentiate from say Samsung on the phone UI and Telefonica to customise the user experience and key services offered differently than say T-Mobile. Quite the opposite from the one-size-fits-all approach Microsoft has with Windows Mobile - though it is changing a bit, just look at the customised UI available on Windows-powered phones offered by Vodafone and the Palm 500 in particular...;). In terms of business model, money won't be made on the OS, so Google expects to create value in two ways, directly via some revenue sharing deals and indirectly via increased mobile advertising revenue. Indeed the mobile internet experience is expected to become far better, so more traffic will lead to more clicks on Google ads. Earlier this week, Google also released the SDK with a full YouTube profile and walkthrough.

I have to admit I still sit on the fence on that  - sharing the views of most in the sector - for three main reasons:
1. The OHA might not be such a show of industry support as one might think. It is actually fairly easy to join and remain in the loop though not dedicating resources, especially actors such as Motorola (already involved with Windows Mobile, Symbian and its own Linux OS) which are clearly not fully committed. Were it not led by Google, I would already have discarded the whole initiative.
2. First walkthroughs were quite underwhelming, nothing here revolutionary compared to your average Phone OS, definitely not the WOW factor the iPhone delivered when introduced. OK this is still just an SDK, so there is room for progress
3. First handsets are only expected - from HTC - by Q3 2008, almost one year down the road. By that time, tough to say how Android will fare versus latest releases from Nokia S60, Sony Ericsson UIQ or a potential second version of the iPhone...

On paper, Android is definitely on the right track and its willingness to offer a great experience to all users while still enabling differentiation is great. I can only root for any initiative looking to further develop the mobile internet, so I will look with great interest on how the platform develops over the coming months.

I am a bit late on that one, but eBay announced a month ago that it was taking a $1.4bn impairment charge on Skype. At the same time Niklas Zennstrom - and a bit later Skype's COO Michael Jackson - also left the company. It is a significant writedown for what was supposed in 2005 to be an industry changing acquisition. VoIP had come of age and players such as Skype would kill the good old telcos, hence a $4bn tansaction value (including potential earnouts). The transaction is now "only" worth $1.9bn post impairment and $530m payment to settle all potential earnout obligations, and Skype big men are out of the game, with Niklas Zennstrom even admitting that the company had never been worth that much.

With Vonage struggling to avoid going bankrupt, would be easy now to announce the failure of VoIP. We would be wrong. VoIP is here to stay and is actually already a mass market solution. The key thing is that VoIP is not a service, it is a technology that ensures a better a more efficient transport of voice over a network or the internet using the IP technology. Anybody can offer it,... including existing telcos ! This is what happened and how the industry changed. VoIP enabled broadband providers to bundle voice with their internet subscription to compete with the fixed incumbent. Such players as Free in France or Carphone Warehouse in the UK also included unlimited calls to fixed and even international numbers. Incumbents had to respond - why not use a new technology if it is cheaper ? - so players such as France Telecom or BT also started to offer VoIP voice bundles. So much that now, more than 40% of fixed line calls in France are through VoIP, and a quarter of BT Broadband subscribers use their VoIP number.

What's the point of using Skype then when you can already do unlimited calls within the price of your telephone/broadband subscription? Skype and Vonage are parasitic players, i.e. they do not have any infrastructure and can only service users with an existing line, so the opportunity for them disappears if unlimited calls are already included in the price of that line. There is also an ever decreasing quality of voice communications on Skype - as it can't ensure a guarateed QoS without any infrastructure - and users are becoming vocal to request radical - and costly - fixes. Not to say that Skype is useless, it has its value but only for some niche segments (international small enterprises, migrant workers from remote countries), but difficult to see how it will add many paying users to sustain a profitable business model for its owners (at least not close to a $4bn PV).

And on the mobile, now that "almost" unlimited data bundles become available ? Well, it is even trickier as (a) calls can be free only if you call other Skype users (otherwise interconnection costs kill any potential value) and (b) operators and consumers are used to bundles of minutes when under a contract subscription. The Skypephone might just be a clever marketing campaign to convince users to get a cheap ODM (i.e. white label) phone reducing handset subsidy costs for 3. If you add to that that all postpaid 3 subscribers have unlimited on-net calls (why bother with the Skype client then?), it becomes an even more niche product. If you're say Italian and live in London and call your mother everyday, sure it offers great benefits... but even London is not that cosmopolitan a city to make it really impactful and have loads of customers churn to join 3.

It was pretty fun to play with Aquos and Bravia branded phones. The OneSeg broadcast quality on the Bravia phone was also very high and you could totally imagine watching TV on it for a fair amount of time.

The Economist has this week a great leader and briefing on Google, its exponential growth, business model, culture and future challenges as it becomes more and more a monopoly on its own right.

Google's business model is assumed to be based on servicing as much of its customer needs as possible, to store the information, datamine it and generate healthy profits through advertising. Incremental cost is close to zero thanks to the "cloud" architecture, though one could argue YouTune or DoubleClick were not free. Hence the need to expand into new services such as email, payments, navigations, office applications, etc... The more your customers remain in this "virtual" walled garden, the more you know about them and can monetize them.

Issues arise when people - and politicians - get wary about privacy, and that the need to expand means conflicting with even more industries/companies, e.g. media companies, Microsoft in software, banks in payments, telecom operators in internet connectivity, etc...

I am really looking forward to seeing how things unfold for Google. They did benefit so far from a perfect storm - smart people, weak competition, booming advertising market - and were impressive in executing their strategy and achieve a $160bn market cap. Curious to see how they would face some downturns - e.g. bearish advertising market, brain exodus, antitrust reviews, copyright lawsuits....

It will be interesting to see how this change of user demographics will impact the internet, its format, content and language - fair to say that so far it is a mainly Western English thing.

Is it wake up call for Palm ? Engadget had done an amazing piece - "Dear Palm: it's time for an intervention" - highlighting key issues and potential solutions. I particularly loved the device design evolution - below - showing that basically, it was more of the same for the last 3 years !

Let's hope Ed and al deliver on turning Palm round!

I hesitated a bit before sharing my views on that but, as Palm announced some layoffs this week while almost everybody is getting absolutely crazy about the launch next week of the most awaited (smart-)phone of all times, fair to say that things look rather grim for Palm. Palm had for a long time been the symbol of innovation and almost single-handedly invented the markets for PDAs and smartphones - of course I am biased as a former owner of the Palm V and Treo 650 - but several management mistakes, the loss of their design flair and obviously the emergence of strong competitors are slowly bringing the company into oblivion.

It is now easy to see some of the wrong strategic decisions such as:
(a) not immediately embracing the smartphone market - and still producing PDAs nowadays....
(b) spinning off the OS side (Palm Source) and hence the core comparative advantage so that the Palm OS has not really evolved over the last 4 years and Palm had even to get Windows Mobile on board to remain in line with market expectations
(c) missing to understand the value of Push Email before (and even after for a while) RIM made it its bread-and-butter business
(d) not adjusting to the competitive pressure of the mobile market where players such as Nokia or Samsung release at least a dozen phones each year, so that the Treo's design and functionalities quickly became outdated
As things went south, rumour has it that the company was up for sale and that several potential bidders (Nokia and al) had a look but preferred not to act....

Then the first big blow was the release of the Foleo at the D-Conference, a kind of low-specs $500 ultraportable. Fair to say that people did not really get it, even Palm's enthusiasts!

Let's see how the last attempt to save the company by bringing in a PE shop - almost paying them actually to get 25% share via a complex financial structure where Palm pays other shareholders close to $1bn - and innovation talent via the former iPod's guy Rubinstein. I fear it is however too late...

Q2 2007 data for handset shipments are now available. Overall, more than 250m devices were sold during the quarter, so that the billion mark should easily be reached for the whole year. This slow but steady growth is ensured by a strong replacement market in mature countries and the boom of emerging markets such as India or China.

Nokia is the clear winner with 39% market share. The tough years where the Finnish OEM lost its design flair and went down to a 30% market share are now over. Amazingly, margins remain best-in-class even though Nokia pushed sales in emerging markets.

Building on the attractive design of its Ultra collection, Samsung grabbed the second spot with 15% share. Motorola went down to third place with 14% share, still not able to recover from the RAZR hangover. Fair to say though that it might just be the trough, as the new portfolio announced a couple of months ago - RIZR, Q9, RAZR 2 - have still not launched in all markets.

Sony Ericsson is the second clear winner with the fastest growth - +50% y-o-y - and 10% market share. The Swedish-Japanese JV is still building on its Walkman and Cybershot branded devices. A new trend last quarter was the availability under these brands of more affordable, "low-end" handsets. Rumour has it that Bravia - for Mobile TV - and Playstation - for gaming - branded devices are on the roadmap.

Closing the Top 5, LG kept on strengthening its position with 7% market share, with the Shine and Prada handsets following the success of the Chocolate. This highlights how the OEM market is becoming more and more concentrated with 5 players having 85% of the total market.

We won't know if NewsCorp decision to bid $5bn for Dow Jones was the result of the Group strategy retreat, but the sing and dance with the owners of the Wall Street Journal has been going on for 3 weeks now, maybe even accelerating the transaction between Reuters and Thomson. The Bancroft family - majority shareholders in Dow Jones - are not so far inclined to sell and the deal might take sometime to close or even fall through.

What is interesting though is how some observers quickly discounted this transaction as hubris and the desire of an old school press baron to own a global business newspaper. I think this is clearly underestimating Rupert Murdoch, its strategic insight and ability to execute value creating transactions. There is indeed a lot of value in the Journal, as the quality of its content is not fully leveraged through its current circulation. NewsCorp offers the ability to multiply the distribution outlets in other press magazines, the net and on TV (FoxNewsBusiness anyone?).

Let's not forget that NewsCorp also acquired assets such as MySpace or Jamba. If you are still not convinced that they get it in terms of new media, Web 2.0 and mobile broadband, just check what Rupert Murdoch himself has to say about the media paradigm shift.

I am a big fan of the Long Tail theory developed by Chris Anderson and summarised in the book of the same name. Basically, it states that the Internet and digital distribution eliminate the constraints of shelf space, which allows online services to carry unlimited inventory, leading to theoretically infinite consumer choice and an optimal matching of supply and demand.

Last Fall, Bear Stearns media analysts already had a further look at how the long tail theory would impact the video content business model, mainly on TV, and with a focus on audience and adveritsing fragmentation, resulting in a potential restructuring of competitive forces on the media value chain. They recently updated their analysis - the report can be accessed here, it also includes key takeaways from the first iteration.

Key messages are:
- User Generated Content is not a fad and can actually be monetised
- Paradox of too much choice can be managed by content aggregators, gaining a strong position on the content value chain
- Content is not king, great - and actually randomely created - content is