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A not so perfect Storm

The Verizon Storm may be heading for failure in more than one way. A raft of reviewers, led by David Pogue of the New York Times are trashing its usability. This means that even with the marketing might of Verizon behind it it may not fulfill its goal of being a bulwark against the iPhone in the enterprise.

But the Storm was an experiment in another way by Verizon. The other three major American mobile network operators have capitulated to Wi-Fi in smartphones. Against the new conventional wisdom, Verizon decided to launch a new flagship smartphone without Wi-Fi. The Storm looks like a trial balloon to see whether Wi-Fi is optional in modern smartphones. If the Storm is a success, it will demonstrate that it is possible to have credible business smartphones without Wi-Fi. But if it turns out to be a flop because of other factors, it will not be a proof point for Wi-Fi either way.

But Wi-Fi is a closed issue by now for all the network operators, perhaps even including Verizon. Phones have lead times of the order of a year or so, and controversies active back then may now be resolved. Verizon covered its bets by launching three other smartphones around the same time as the Storm, all with Wi-Fi (HTC Touch Pro, Samsung Omnia, Samsung Saga).

Before its launch, AT&T hoped that the iPhone would stimulate use of the cellular data network. It succeeded in this, so far beyond AT&T’s hopes that it revealed a potential problem with the concept of 3G (and 4G) data. The network slows to a crawl if enough subscribers use data intensively in small areas like airports and conferences. Mobile network operators used to fear that if phones had Wi-Fi subscribers would use it instead of the cellular data network, causing a revenue leak. AT&T solved that problem with the iPhone by making a subscription to the data service obligatory. T-Mobile followed suit with the Google phone. So no revenue leak. With the data subscription in hand, Wi-Fi is a good thing for the network operators because it offloads the 3G network. In residences and businesses all the data that goes through Wi-Fi is a reduction in the potential load on the network. In other words, a savings in infrastructure investment, which translates to profit. This may be some of the thinking behind AT&T’s recent acquisition of Wayport. The bandwidth acquired with Wayport offloads the AT&T network relatively cheaply. AT&T’s enthusiasm for Wi-Fi is such that it is selling some new Wi-Fi phones without requiring a data subscription.

The enterprise market is one that mobile network operators have long neglected. It is small relative to the consumer market, and harder to fit into a one-size-fits-all model. Even so, in these times of scraping for revenue in every corner, and with the steady rise of the Blackberry, the network operators are taking a serious look at the enterprise market.

The device manufacturers are way ahead of the network operators on this issue: the iPhone now comes with a lot of enterprise readiness Kool-Aid; Windows Mobile makes manageability representations, as does Nokia with its Eseries handsets. RIM, the current king of the enterprise smartphone vendors also pitches its IT-friendliness.

Wi-Fi in smartphones has benefits and drawbacks for enterprises. One benefit is that you have another smart device on the corporate LAN to enhance productivity. A drawback is that you have another smart device on the corporate LAN ripe for viruses and other security breaches. But that issue is mitigated to some extent if smartphones don’t have Wi-Fi. So it’s arguable that the Storm may be more enterprise-friendly as a result of its lack of Wi-Fi. Again, if the Storm becomes a hit in enterprises that argument will turn out to hold water. If the Storm is a flop for other reasons, we still won’t know, and it will have failed as a trial balloon for Wi-Fi-less enterprise smartphones.

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Land Line Decline

There’s a good article in Slate giving numbers on Fixed-Mobile Substitution in the US, and suggesting that a recent acceleration is due to the ailing economy:

…this year, the rate of decline of land lines has accelerated sharply. AT&T, which provides wired service in 22 states, just reported its second-quarter results. The wireless sector (72.9 million subscribers) continued to grow, adding 1.3 million net subscribers in the quarter. But revenues in the land-line voice services were down 7.8 percent from the first quarter of 2007. The number of retail consumer lines fell from 37.12 million in 2006 to 35.05 million in 2007, off 5.6 percent. In the first quarter of 2008, the company lost another 870,000 consumer land-line subscribers, or another 2.5 percent.

Verizon is suffering similar land-line declines. By the 2008 first quarter, its wireless unit had added 1.5 million customers since the 2007 first quarter. But the number of residential lines fell from 27.06 million to 24.11 million, a 10.9 percent decrease.

Qwest has seen its number of primary and additional consumer lines fall from 8.63 million in March 2006 to 7.17 million in March 2008, a decline of 17 percent.

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Open wireless handsets and networks for America?

I have previously written about OpenMoko. It seems now that it was the drop before the deluge. Google’s Android appears to have gained good traction with Sprint and T-Mobile joining the Open Handset Alliance, with Dell rumored (update) to be planning an Android-based phone, and with Verizon expressing lukewarm support. Nokia has for some time sponsored open source handset software through Maemo.org, but this week it upped the ante with its acquisition of TrollTech. Trolltech is responsible for Qtopia, a semi-open source platform used in Linux-based phones. That makes four credible Linux-based mobile phone software platforms. Update: Make that five – the LiMo Foundation is a consortium of carriers (including NTT DoCoMo and Vodafone), phone makers (including Samsung, Motorola and LG) and others “dedicated to creating the first truly open, hardware-independent, Linux-based operating system for mobile devices.”

But a phone doesn’t have to be open-source to be an open application platform, and this category is just as vigorous, but better established. Nokia’s Symbian phones have always been open to an extent – there are over 2 million developers registered in Nokia’s developer organization, Forum Nokia. Then we have Microsoft. Microsoft claims that sales of Windows Mobile phones are set to double year-on-year, to 20 million units. Windows Mobile provides a sufficiently open application environment that applications like Skype run on it. The iPhone is not yet officially an open application environment, but there is still a healthy slate of applications from third parties for those with the stomach to take the unofficial route. This is scheduled to change in February when the open-ness goes official with the release of Apple’s SDK for the iPhone. So that’s three major open application environments for smart phones.

2008 is also the year that Wi-Fi phones will come into their own. The dam broke with the iPhone. Wi-Fi on the iPhone raises the bar for all the other smart phones, making Wi-Fi a baseline checklist item for the next generation of smart phones. Previously mobile network operators were fearful that Wi-Fi in a phone would divert traffic from their data networks. This fear led, for example, to AT&T’s removal of Wi-Fi from their version of the Nokia E61. But there is now new evidence. At last week’s IT Expo East I heard an unsubstantiated report that 60% of wireless data usage in December was by 2% of the phones: iPhones. If this is even partly true, it would demonstrate that a web-friendly phone will drive traffic on the cellular data network even when it has Wi-Fi.

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SDK for iPhone

In a message signed by Steve Jobs, Apple announced that it will release an SDK for the iPhone in February.

This means that Adrian Cockroft was right when he said that Apple simply hadn’t had time to create an SDK for the initial release of the product. This was reported in an interesting Wired post.

How open will the iPhone be with the SDK? There are two kinds of open-ness associated with the iPhone, first the ability to load applications into the phone’s execution environment and run them, and second the ability for the phone to work on any GSM network (network unlocking).

The announcement says:

We want native third party applications on the iPhone, and we plan to have an SDK in developers’ hands in February. We are excited about creating a vibrant third party developer community around the iPhone and enabling hundreds of new applications for our users.

To reduce the risk of malware, Apple plans to require digital signing of some kind for the applications; this is a great idea provided that the process to get the signature isn’t too arduous.

It will be interesting to see how much of the system is exposed through the SDK. Nokia’s Symbian environment lets third parties take control of the telephone UI, so that they can implement handset clients for FMC. If the iPhone SDK provides the hooks to do this the iPhone would become useful in a dual-mode enterprise environment. But it is unlikely that the iPhone will soon be as enterprise-friendly as the Nokia ESeries phones, which have OMA-DM, and just-announced “Freeway” connection mangement.

As for the network unlocking, Apple is rumored to share in the service revenue stream that AT&T gleans from the iPhone, and is also rumored to have similar arrangements with its European network partners. If you could buy an iPhone and activate it on any network, Apple would miss some of this revenue. This means Apple is motivated to make sure that every iPhone sold is tied to a service plan from which it gets revenue. But once that activation has occurred, and the customer has committed to a long term service agreement, both AT&T and Apple will get monthly service revenues whether the phone is used on that network or not. On the other hand, Apple will be shipping an unlocked phone in France, since French law limits locking of phones to networks. Whether this will have any effect on unlocking policy in other countries is to be seen. Unlocked French iPhones will presumably flood eBay as soon as they are released, and class action suits in the USA may force AT&T to unlock iPhones on demand, or within 90 days of purchase (as they do other phones) or at the end of the service agreement (two years).

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iPhone activation experience

I sat down with my iPhone and my MacBook, turned on the iPhone and tapped on the screen where it said “Activate iPhone.” The screen went black. Not a good sign.
Then I remembered that the iPhone needs to be plugged in to the PC physically to activate it. This is weird, because one of the things I like best about my MacBook is the way I can just put my Mororola Razr on the desk near it and download photos without any fuss.
So I plugged in the iPhone to the USB and fired up iTunes to do the activation.
Some of the questions were intrusive. It forced me to enter my social security number, also a credit card number for iTunes. I would have preferred to wait until I was ready to buy something from iTunes before giving it credit card info.
The minimum billing I could find was $59.99 a month plus a $36 activation fee for an obligatory 2 years.
This is a $1,536 commitment; add in the $600 for the phone and this toy costs over $2,000.
iTunes showed me my new phone number, and the phone screen said:
“Waiting for AT&T activation. This may take some time.”
This sounded ominous, but within a minute the phone said it was activated.
I made a phone call. Sounded OK.

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AT&T saddles iPhone customers with useless data plan

David Pogue of the New York Times, reviewing the iPod said:

When you’re in a Wi-Fi hot spot, going online is fast and satisfying.

But otherwise, you have to use AT&T’s ancient EDGE cellular network, which is excruciatingly slow. The New York Times’s home page takes 55 seconds to appear; Amazon.com, 100 seconds; Yahoo. two minutes. You almost ache for a dial-up modem.

After reading that, I decided that since I would never use the EDGE service (too frustrating). I would forego the data plan on my prospective iPhone, and just use Wi-Fi at home and at work. But then I discovered that AT&T won’t let me do that. The data plan is an obligatory expense if you buy an iPhone.

Adding insult to injury, Randall Stephenson, the new CEO of AT&T, said in an interview in the Wall Street Journal:

With this particular device, to not have an inclusive data package with a voice package would be almost irrelevant, right? This is a data and a voice product. It’s nonsensical to sell a rate plan separate.

It’s as though he is unaware that the type of person that buys an iPhone almost invariably already has Wi-Fi. He must know that nobody is going to wait two minutes for a page to load; if David Pogue’s experience is the usual one, nobody is going to use the EDGE network. Customers will use the Wi-Fi connections they are already paying their ISP (maybe AT&T) for.

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Apple to let outsiders create programs for iPhone???

Reuters carried a story yesterday from the Apple World-Wide Developer Conference in San Francisco. The headline is “Apple to let outsiders create programs for iPhone,” and the story says “Apple Inc. will allow independent developers to write applications for its upcoming iPhone by tapping into the device’s built-in Web browser.” The story was presumably based on Apple’s press release on the topic.

This sounds exciting, so why did Apple stock lose $4.30 on the day? Well, the market focused on the glass-half-empty. Apple didn’t open the iPhone up to third party developers in the way that most developers want. The comment that squelched the crowd was “there’s no SDK!” The official version, what Jobs, Forstall and the press release said beyond that, is too scant and ambiguous to draw a clear idea of how well developers will be able to exploit the iPhone as a platform. Here’s a link to the video of the Jobs keynote. The iPhone developer part starts at time index 1:14. Ryan Block of Engadget was there live-blogging the Jobs keynote. His transcription and commentary:

Jobs: “We have been trying to come up with a solution to expand the capabilities of the iPhone so developers can write great apps for it, but keep the iPhone secure. And we’ve come up with a very. Sweet. Solution. Let me tell you about it. An innovative new way to create applications for mobile devices… it’s all based on the fact that we have the full Safari engine in the iPhone. And so you can write amazing Web 2.0 and AJAX apps that look and behave exactly like apps on the iPhone, and these apps can integrate perfectly with iPhone services. They can make a call, check email, look up a location on Gmaps… don’t worry about distribution, just put ’em on an internet server. They’re easy to update, just update it on your server. They’re secure, and they run securely sandboxed on the iPhone. And guess what, there’s no SDK you need! You’ve got everything you need if you can write modern web apps…”
Block: “Weeeeeaaaak.”
Scott Forstall, VP of iPhone software: “Your applications can take advantage of the built-in native services.”
Block: “He’s in the iPhone — no new apps up on screen, the same 11 as before — sorry iPhone fans!”
Forstall: “We built a custom corporate address book app to use our internal LDAP… it actually took less than one person-month to do this. It’s under 600 lines of code to do the whole thing.”
Block: “Shows up the vCards as they look in the built-in contact app. Not too shabby!”

The Web 2.0/AJAX model is great for AT&T, because this model requires continuous interaction with the server, so you will be burning up your data minutes. Except, I hope, when you are at home or at work and can use the Wi-Fi connection.

This is, as Block says, weak compared to loading real OSX applications on the phone. How weak depends on what Steve Jobs means by “the full Safari engine.” Apple’s Safari FAQ page says “All versions of Safari support Netscape-style plug-ins.” This undoubtedly applies to the iPhone version of Safari, since Steve Jobs has been toying with the idea of including Flash. The published Safari plugin SDK isn’t any use to iPhone developers, since the CPU is an ARM. So if Apple doesn’t publish an iPhone SDK, even the Safari plugin support is moot to third parties, except those working closely with Apple, like Google. One obvious Google plugin that would reduce the sting of no SDK would be Google Gears, which lets you run server-based applications off-line. The usual example is Google’s complete suite of Office applications.

From the overall context it appears that there is a JavaScript API to control some elements of the iPhone subsystem. That could be cool, depending how capable the API is. As for documentation of the API, a check of the Apple Developer website doesn’t reveal anything of that nature yet. There was a session at WWDC called “Developing Web Sites for iPhone,” which may have had some related information.

Blog reaction has been hysterical (but when has it ever not been?) Jesus Diaz of Gizmodo says No iPhone SDK Means No Killer iPhone Apps. One interesting tidbit in his piece concerns the degree of integration with the the iPhone’s services. Here’s what he says about clicking on a phone number in the browser to place a call:

This is nothing new, however. We knew this from the very beginning because iPhone’s Safari was already doing it. It’s called auto-detection of phone numbers and addresses: you click on a phone or address in your web page and it gets passed by Safari to the operating system, which calls the number or shows the address in the Google Maps app.

I certainly hope this isn’t the extent of it. If so, this guy is right. Nothing special here at all.

We live in hope, though. Steve Jobs was accurate in saying that Web 2.0/AJAX programming is the hot new thing, and that highly capable applications (especially enterprise applications) are being built like this. Users don’t care how software is written, they just want it to perform a useful function in a responsive and considerate way. If the API is rich enough, popular opinion will follow the trail that Ryan Block blazed, from “Weeeeeaaaak” to “Not too shabby!”