Home is where the phone is

February 20, 2011
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment 

The skies over Barcelona have been grey for much of the past week but the rain didn’t dampen the spirit of delegates to the annual Mobile World Congress 2011. The annual gathering is an opportunity for those who seek signposts to the future of smartphones to hear industry leaders outline their strategies.

There were mobile phones galore from simplified “bricks” for senior citizens to Sony Ericsson’s PlayStation Xperia aimed at mobile gamers, and even a glasses-free 3D handset from LG Electronics. One statistic that stands out is that 60% of mobile phones in use today support video, whether they are smartphones or not, and even more have a web browser.

Market research firm Deloitte released data this week to show that consumers visit retail shops to browse physical products before they buy online. Thanks to widespread internet access on mobile phones, shoppers can choose the item they like, compare prices and even place their order with the cheapest etailer before they leave the store.

Larger retailers can direct customers to their own websites for in-store collection or home delivery and so mitigate the potential loss of revenue, but landlords are concerned that this unrecorded sales turnover results in reduced rental income. A solution that might please most people involved in bricks-and-mortar retail are “touchless payments” that use Near Field Communication (NFC) phones.

Among others, Samsung and Blackberry users might soon be able to make instant purchases in store with the transaction authorised (and recorded) simply by holding the phone close to the receiving terminal. Orange France Mobile Services EVP Anne Bouverot told a panel session in Barcelona that Orange and other carriers tested an NFC system in Nice last year, using Samsung smartphones to buy food, train tickets and bicycle rentals. She said, “It is just a plastic card in a mobile phone. Users won’t have to worry they left a card in another pocket.”

There are rumours that iPhone 5 will incorporate NFC technology. Delegates were told that 2011 will be “the year of NFC” although Nokia has promoted similar technology for several years past.

One of the challenges mobile phone companies face is the variety of technologies and handsets on offer. Smartphone manufacturers have set their sights at the multimedia market for a while now, aware of the potential revenues from entertainment content. The lack of agreed standards for video, however, makes the expense of multiple platform support a barrier for many rights owners.

The Google approach with Android is to give away the operating system (OS) and the video technology. As a result, the Android logo was everywhere at the Barcelona show and outgoing CEO Erich Schmidt told the conference that there are “one third of a million new Android activations every day.”

The merit of competing operating systems is usually the preserve of the “über geeks” who inhabit the darkened rooms of IT departments. The smartphone war that is under way in the high street has increased consumer awareness that the OS is the fundamental difference between Apple and Android, Blackberry RIM and Windows Phone 7. Not to mention Symbian, which most people don’t these days even though it has the largest share of the global market thanks to Nokia and Japan’s NTT DoCoMo.

A survey released this month by research firm Gartner reveals that a smartphone is the most-wanted consumer electronics product in countries around the world, including the UK, followed by desktop and laptop computers and then conventional mobile phones.

Gartner principal analyst Hugues de la Vergne says, “First-time smartphone buyers may not be familiar with the range of operating systems. It is important that handset producers offer devices that will appeal to the less technologically advanced consumer.”

The choice of OS is bound inextricably to the features available, and marketing departments will inevitably push the things that work best. The buyer’s disillusionment with unmentioned technical limitations, including the inability to play some types of video content, only increases when they realise they have a 24-month contract.

Nokia shocked many observers when it announced that it will adopt Windows Phone 7 for its new smartphones. Despite the fact that it owns the Symbian OS used until now, this change of horses to an unproven system will cost the company millions and threaten jobs in its native Finland. Microsoft will invest billions to ensure the decision proves worthwhile but Nokia shares fell on the news.

Choosing the “right” operating system is clearly important, but how will the consumer decide when there are at least five on offer?

While packaged media shoot-outs have usually involved just two main adversaries – think VHS/Betamax and HD-DVD/Blu-ray – the telecoms industry seems determined to enter a multi-sided fight to the death between competing smartphones. A quick look at the size of the market helps to explain why.

Last year, sales of smartphones from all sources topped 300 million. In 2011, smartphones and the slightly less intelligent “feature phones” will together outsell DVD/BD players, TVs (connected or not) and personal computers combined. The average household can survive with a single home entertainment centre; it probably needs at least 2.4 smartphones.

Gartner’s de la Vergne says, “Continued low retail pricing and widespread adoption of applications like Web browsing, e-mail, Twitter, Facebook, GPS and games will continue to stimulate consumer demand. As more consumers adopt smartphones, the market will shift from the technically astute tech savants toward less tech-savvy comfortable conformists. Issues such as ease of use will become even more important in 2011.”

Gartner analysts point to the growth potential for lower priced, prepaid smartphones that require no subsidy. A low cost pay-as-you-go data plan would expand the market for such devices and consumers will upgrade to higher-priced data plans over time once they get hooked, according to de la Vergne.

That, unfortunately, is where the problems really begin. Many operators throw up their hands in horror at the idea that owners should actually want to use their smartphones to access data-intensive services such as streaming video. Most solutions involve the use of additional frequencies including the UHF TV channels that will freed when the Digital Switchover is completed, but this option is expensive and at least two years away.

Mobile phone operators have woken up to the potential of WiFi as an additional channel of communication for the smartphone alongside 3G and the new long-term evolution (LTE) services.

Adding and upgrading coverage inside buildings, shopping malls and restaurants is an expensive business. In Barcelona, the technology company Ruckus Wireless won the award for “Best Mobile Broadband Technology” for a box that integrates WiFi and 3G to deliver increased bandwidth and wider coverage in urban areas at a much lower cost than alternative solutions.

Ruckus President and CEO Selina Lo said, “Smart phone users want faster, reliable connectivity while operators are looking to squeeze every last bit of capacity from their cellular networks. Ultimately, users simply want the fastest and most reliable wireless connection they can get. Now operators can give it to them.”

Refugees from the rain in Barcelona could seek shelter in the “Embedded Mobile House”, a showcase for all that is wonderful in smartphone technology. 

02 UK CEO Ronan Dunne summed it up rather more succinctly, when he told TelecomTV: “The mobile phone is the remote control by which you manage your life.”