Mobile Travel Lessons from Eye For Travel

A couple of weeks ago I had the honor of chairing the mobile track at Eye For Travel. With over 15 companies presenting and appearing on panels, It is quite clear that the travel industry is starting to realize that now is the time to engage - but the complexity of the environment is daunting. I think we managed to raise a few very relevant points. Read all about it here - Mobile Travel Lessons from Eye For Travel 2010.

The Benefits Of Running Your Mobile Startup In Silicon Valley - Epilogue

Around New Year's, I wrote about our decision to move our HQ to Silicon Valley. That post caused quite a bit of commotion among some of my friends in Israel, e.g. @eyalreshef and was referred to by some other bloggers, e.g. Martin Collings.

Last week, we had a very concrete example. WorldMate for Android is generally ready for release - we're currently running a closed Beta.  So @ianberman and I decided to do a little roadshow amongst companies who can seriously affect it's distribution. So one fine Thursday morning, Ian flies over here from LA. Here's what our schedule for that day looked like:

1 PM:  Lunch

2 PM: Google / Mtg. with Strategic Partner Manager

3 PM: Key Android Licensee (device manufacturer): Mtg. with Partner Manager / Internet Technologies

4 PM: Key Android carrier: Mtg with VP Strategy

5 PM: Key Android competitor (device manufacturer / platform owner): Meeting w/ Platform Director

... All meetings were in person and included a hands-on demo of the product (described by the people we meet as "great product...", "much more complete and polished then what we generally see on Android"). They also invoked some important product feedback, and most importantly commitments to promote it.

Over the course of my career I have launched dozens of mobile products on 8 mobile platforms. Business development efforts usually spanned a combination of multi-city / multi-country hops (with relatively effective meetings) and conference calls (generally less so). Achieving what we have in one afternoon is phenomenal - and unique to Silicon Valley.

How BlackBerry Can Get Fresh Again

 This past week has seen RIM posting mixed quarterly results – 41% increase in earnings, the 100 Millionth BlackBerry sold, still the #1 Smartphone player in North America and now the #4 handset vendor worldwide (in terms of volume), but still at the low range of analyst forecasts. Shares took a 4% hit, completing a 27% nose-dive in the last 6 months, on concerns that the iPhone and Android have stolen BlackBerry’s thunder. Posting the results on the day the iPhone 4 hit the market didn’t help much, but the question in investors and industry players’ minds is fundamental  – will RIM come back, or are Apple and Google on their ways to ruling the sector in the next few years? Clearly the people in Waterloo have their collective hands full.

Every now and then, it’s time for some unabashed advice-giving , even if it is out of your league. When every soccer enthusiast out there can critique national soccer coaches or international referees, I think it might not be too outrageous for me to comment on the dilemmas faced by RIM’s management. Apologies in advance for the long treatise – about something I care about.

1.        Focus On Key Experiences – And Excel At Them

I was having lunch last week with a friend, a pretty well-known VC with very significant smartphone-sector involvement, who’s recently switched his iPhone and Palm Pre for a BlackBerry Tour. It’s simple, he said. In spite of all the advances these guys have made on user experience, neither of these devices gave him the level of e-mail efficiency that the BlackBerry does. “And when you have 5 free minutes to answer some e-mails, being able to squeeze in three instead of one makes the difference” he stated.

This great e-mail user experience got RIM to where it is today. It’s not just about server connectivity, it’s not just push, it’s not just the keyboard – it’s the totally integrated e-mail experience that often makes  users email on their BlackBerry – even when their desktop is right there.  But email alone is clearly not enough anymore – both because other vendors have generally caught up (well - almost), and because there are new domains for Smartphone utility out there which must be exploited to attract new legions to BlackBerry. What it does serve is to demonstrate is that if you can make the BlackBerry indispensable for a key horizontal application, you create real value and a long-term hold on users who care about it. RIM must build and perfect other experiences – not just enable them, but integrate them so seamlessly with the device, network capabilities and the existing tools and processes in use, that the added convenience and saved time generate unique value.

And guess what – there are so many experiences still out there for mobile devices on which to improve. Location-based services for instance are still in their infancy. Add context - e.g. where I intend to be, where other people are, where I was, how fast I’m moving – and you can create so much more value around basic human behaviors like commuting, parking, navigating crowded places and more. BlackBerry Drive sounds like a move in the right direction, by the way.

Another such experience that I won’t go into much detail about (I’m biased) is Travel. A user activity that drives the biggest segment in world GDP, the #2 variable cost for corporations – and an activity that is by nature tied so strongly with mobility. There are other opportunities around personal and corporate finances (from balancing the budget to keeping track of expenses), tying these into retail and connecting all of these to payment services, identity and much more. As merchants, retailers and financial institutions use email to deliver key information, RIM can use an existing strength of its platform in clever ways to build brand new experiences for these applications that aggregate information from several sources and use those, alongside context, to deliver new convenience and efficiencies. The opportunities abound – if you execute on the utility and experience, and if you lead rather than follow. Which brings me to #2.

Note: RIM seems to get this to a degree with the “Super Apps” concept – but that’s too conceptual - it is simply too abstract to be effectively marketed.  

2.       You Can’t out-iPhone the iPhone – It’s Time For Market Segmentation

Yes, sure. BlackBerry needs an equally good browser and similarly cool touch-UI. But in the eyes of the consumer, the battle for these is over, or at least it’s become an iPhone vs. Droid saga. The greatest review on WSJ or BusinessWeek (or Oprah for that matter) would only get you to “well now BlackBerry is as-good-as”, which is just not enough to sway the die-hard iPhone fans perception and make BlackBerry the Cooler device.

So don’t expect that. You need to be decidedly better at some things the iPhone and Android camp have not moved on yet.. And these things must matter to an audience that matters. Some of the examples above are highly suitable for RIM. Killer execution on those experiences requires market segmentation and intense focus (don’t repeat Palm’s mistake to try to target Soccer Moms just because “they too multi-task…”).  With RIM’s historic stronghold in white-collar business professionals there is no need to move away drastically.  Just think about what else these people need (beyond email and PIM) that could be done better. Find four or five of these “horizontals”  to invest in, and innovate. If one or two sticks, you have a market advantage, in a segment that counts. 

With smartphones going to be 50% or more of the market in a couple of years, there's room enough for everyone to grow - but not if they all target the same mindset / customer profile. Let Android and iPhone battle over “who’s coolest” and try to be something else – to some other people.

3.       Protect Your Enterprise Base By Innovating There Too – With Innovation that Appeals to The End User

Corporate customers built the house of RIM. The combination of making employees more effective (through email), always available (through push and the “CrackBerry Syndrome”) and a secure environment, created the initial market adoption – but also some key brand values, including its association with financiers, lawyers and other white-collar workers. However we are seeing more and more that iPhone is infiltrating the  corporate market , driven mostly by employee preferences (the cooler device…) and improved infrastructures from Microsoft, Apple and Google. 

RIM cannot afford to lose its hold on the enterprise. Not only are these highly lucrative customers in themselves, but with RIM’s distribution strategy tied tightly to wireless operator, this is a key reason operators are still very engaged with RIM, even though they see iPhone (and possibly Droid) as a more strategic brand for their consumer customers. As long as these highest-ARPU customers are tied to BlackBerry, the loyalty of operators is still there, at least to a degree.

Now how do you keep enterprises loyal, when it seems like they can get the security and control they need for “free” with Microsoft Exchange and iPhone OS 4.0 and “don’t need BES”? Especially when it is the employees (or the executives really) who are demanding the other brand? The key is to innovate again. Go deeper into horizontal enterprise processes – and make sure what you create matters to the end-user, not just the IT guy or the CFO. Cause it's the grassroots who are now facilitating the advance of competitors into your turf.

Instant messaging through BlackBerry Messenger is a good first step, but it’s easily replaceable unless it ties deeply into some other enterprises systems. Examples which are possibly more resilient are expense reporting,  corporate travel management, and document / process management.  Each of these is an ongoing headache for most corporations and a thorn-in-the-side for most employees. If you can provide a solution that creates a great experience for end-users and a cost-saving / efficiency enhancement for enterprises – you have an edge.

4.       Don’t Repeat Nokia’s Mistake – It’s About Margin, Not Just Revenue

Who is the world’s largest smartphone manufacturer? Clearly it’s still Nokia. After all – they sell the most “open operating system” phones. Don’t they? Well if you look at the profit figures or company valuation – not really.

A few years ago, the top players in mobile decided the game is about volume. The challenge was building the $40 phone to sell billions of into the emerging economies. The winner will sell hundreds of millions of units a year. Well, guess what – Nokia emerged the pyrrhic winner with  staggering market shares in emerging markets -  e.g. 59% in India -  only to see its shareholder value plummet. Last year, I conversed with a Nokia executive who claimed that “50% of the margin in the handset business is generated through the top 10% of phones sold”.  So – you can sell 9 times as much as everyone else – and still trail them in profits generated. 

With Sprint becoming RIM’s strongest partner – and appealing to blue-collars instead of white-collars, and with the buy-one-get-one-free deals with people like Verizon (who prefers Android – as it feels it needs to directly counter the iPhone), the risk of repeating that same mistake is real. NOK is down 71% in 3 years. RIM is on the precipice of a similar slide but it isn’t too late to reverse course. Which ties back to point #2 above - RIM must remain the choice for top-end customers, and not get enamored with mid-market customers unless as followers of that former group.

Observation: RIM and Nokia are actually pretty similar and have some common issues, which brings me to my next point.

5.       Innovation At This Scale Is a Silicon Valley Phenomenon

Both RIM and Nokia are great companies coming out of relatively small nations. Both are tightly managed from a Northern city pretty far removed from global technology centers, and over time both attracted much of the available talent of their nations. And when the local talent pool is depleted and new talent is hard-to-draw to your region – you start settling for less. A few weeks ago I met with an old friend, an extremely talented entrepreneur, who was wooed by both companies last year and ended up preferring a Boston office with Nokia to a Waterloo location with RIM. Location was 90% of that decision for him.

With the need to differentiate and innovate a key to the ability to get back the positive momentum – the old fortress is becoming a liability.

I am actually a fairly recent newcomer to Silicon Valley. Having resisted the move for years and having made crucial business mistakes because of it, I have to say this:  you cannot be serious about technology innovation leadership without having Silicon Valley as a part of your DNA. The technology innovation world is not flat. It’s a sink, and the sinkhole is somewhere between SFO and SJC. Many of the most talented people all over America and the world are sucked there eventually. It’s the land where every man has a plan, a back-up plan, and a few ideas he’s playing around with. I’ve written about it before, and six months later it is just clearer to me. If you’re not in the Valley, or if your Valley presence does not have enough influence in the company, sooner or later you’ll miss out on something big that’s happening. And you’re bound to miss out on some great talent - and that isn't a good competitive move. RIM has to find a way to make its Silicon Valley presence a bigger, stronger influence on what it does, and become a bigger, stronger influence (and attraction) to the rest of Silicon Valley. Winning the hearts and minds of the influencers there is crucial. It’s a key factor in Apple’s appeal and a great helper for Google and Android.

The inertia is currently in one direction – fighting to reverse it from Ontario is  playing with one arm tied behind your back.

6.       Re-think The Carrier Angle

RIM’s credo is “we will live and die with the operators”. Perhaps it’s time for a change in the balance of power – that will ultimately help both RIM and the operators? Were AT&T so poorly served by giving Apple tight control over the iPhone? Isn't Verizon giving Google similar breadth?

In an innovation-driven space, where the relevant innovation is not anymore in infrastructure assets but in services, applications and integration - carriers are handicapped.  They do not excel at innovation at the best of times. Having them regulate yours is ensuring there will be as little of it as they think they can get away with. The problem is – they often underestimate how much of it is needed, and when they make that mistake, they will take you down with them. RIM must be able to determine its rate of innovation on its own.

So there. I hope It wasn't that long. I’d like to thank my great editor, Ian Berman @ianberman . It’s time for your comments.         

...this post has been re-published on crackberry.com - if you want to follow the > 110 comments posted - take a look there...

Travels With My iPad

The iPad And What It Means for Travel Marketers, Amazon, HP And A Bunch of Others

Five weeks ago, I started getting phone calls and notes on my office door from UPS. I was one of the people who pre-ordered the iPad and when it finally shipped the UPS people were absolutely certain I couldn't get through one more day without it. When I called them to say they can just re-deliver it the following Monday, they were aghast.

Five weeks and one million iPads later, my iPad already has about 20,000 frequent flier miles. It's been screened at about 5 airports (where the TSA agents announced it "counts as a laptop - put it in a separate bin") and it's managed to increase Amazon's sales by at least $1,000 (more about that below). Here are a few of my thoughts on the subject.

So What’s so great about the iPad?

Simple:

1.   It is an instant-gratification device. One button click, one screen click – and you’re online

2.   Great multimedia experience. Beautiful screen, intuitive touch interface

3.   The coolest brand on earth. That means a lot for experiences.

As result:

Tablet Computing Is Now COOL

Whether or not Apple will lead this category in the long term, Apple has managed to do to tablets exactly what it's managed to do to smartphones a few years ago - take a product category that the general public thinks is only interesting for geeks - and make it a desirable product. This tide will raise all ships, although by definition Apple will lead initially. Companies ranging from upstarts like OpenPeak to leading PC makers like HP will attempt to ride it. In fact, my personal take on HP's acquisition of Palm (and through it Web OS) is that it has more to do with tablets than smartphones.

Apple's brand carries clout and a halo effect that are unprecedented. At this point in time, I am willing to bet that if apple decided to sell pocket-protectors, iPocket will sell a million units in its first month and will become the must-have accessory for everyone with any bit of real or wanna-have chic in the western hemisphere. Easy.

Tablets are the new Notebooks, Magazines and Remotes.

The iPad takes the always-available philosophy of the smart-phone and couples it with a larger screen and a good browser. This makes it the quickest path between you and any piece of content that’s out there on the web, or stored on your iPad, or pretty soon – stored somewhere else in your home. Way faster than a laptop (which you need to boot / wake-up, enter a password into, open the browser...) and in many cases faster than even your TV. The form factor makes it much better ergonomically designed to move around the house and beyond. Tablets will live anywhere that magazines live today – on coffee tables, on the kitchen counter, in backpacks etc. In fact, a friends’ uncle said of his iPad – “it’s a crappy little device” – and meant that in a good way. 

And with the quality of the user interface that’s already there, the web connectivity and some future short-range connectivity WiFi or maybe something like ZigBee – there’s no limit to what we’d use them for in our homes and offices.

Tablets are the next Growth Driver for Browsing – And a big blow to Netbooks

The ability to sit (or lie, for that matter) in your recliner, reach out to a device that is actually easy to hold and get online within less than a second, coupled with a screen big enough to consume standard websites including rich content, gives iPad-browsing an advantage over most other media. iPad browsing is both immediate and satisfying – it takes a second to start, and the experience is just as good as a PC screen.

From a behavioral perspective - this will shift even more leisure-time to the web, and pull the balance in favor of the web for other activities, e.g. commerce, even further. My personal example – my purchases on Amazon over the last few weeks have increased three-fold. This is simply because where once I’d be reading the newspaper or a magazine, now the web is so accessible to me that I’m browsing so much more – and levitating towards online shopping because it seems like “a good use of time” as it replaces actually driving over to Target, Fry’s etc.

And from a consumer electronics perspective? It’s clear what I need a laptop for, but if I have a tablet – why do I need a Netbook? I expect this category will diminish quickly.

Will Tablets Kill E-Books? I’m not so sure.

The very day I got my iPad, my Kindle’s screen died. Just like that. While this may indicate machines have souls (a topic for another day), it also meant I got to continue reading Stephen King’s “Under The Dome” on the iPad – at least until I got a replacement Kindle a week later. I read in bed. I read on a plane. I read on the couch. And I got through less than half the pages that week than I got the week before (when I had my old Kindle) or the week after (when I got a new one). The iPad Kindle app is more advanced than the Kindle user interface. It looks better. But the screen on the Kindle, I guess, is just a better ergonomic fit with our eyes. And for prolonged reading, that matters, and will do for awhile (that is until we buy the iEye iris implants).

What This Means For Online Marketing

I spent quite a few hours on the iPad booking flights and shopping for electronics. I even tried blogging using TypePad. Don’t let the iPad browser fool you – it is NOT your full-fledged desktop browser and the use of a touch interface makes some widgets unusable. Try moving the slider selectors in Kayak for instance. Try clicking some of the tiny text lines for flights on United.com. Or try typing text into TypePad’s post editor.

At the same time – because the iPad is such a great browsing machine, a lot of shopping / travel research will be done through it. This research will be done online and in a stationary place (I am guessing – most of the time using WiFi), and therefore you do not need a native app – but you do need a website that looks and behaves well on an iPad. That shouldn’t be hard to do and will be worth your while.

Mobile Boarding Passes - Epilogue

Time - Yesterday

Location - MCO's security check-in line, right in front of yours truly whose on his way back to SJC.

The Characters - A middle aged lady and a man in his forties. They are both equipped with iPhones, the man is actually demonstrating the apps on his (some advanced battery meter), and they both talk about the mobile boarding passes they were sent.

The lady reaches the TSA agent. Apparently he has a special contraption on which he places her iPhone to align it correctly with the barcode reader. 2 seconds later, she's off to the X-Ray machines. Now it's the man's turn.

The guy (who had his iPhone in hand and was using it seconds ago) starts looking for the mobile boarding pass. 30 seconds later he turns to me, embarrassed and suggests I go ahead in front of him which I do. So does the guy after me in line, and the lady after him. Three or four passengers later our embarrassed hero manages to locate the message from the airline, click through to get to the boarding pass and is allowed to proceed.

QED.

... and if you still need some context - read my previous post on the subject here.

Mobile Boarding Passes Still Have a Way To Go – But is Apple’s iTravel The Solution?

Coming back from Atlanta last week, I decided to give mobile boarding passes a try. In theory, those have been standardized by IATA a couple of years ago and deployments are aplenty. Is it not time for me to ditch that redundant piece of paper? Of course, there was also a measure of professional curiosity in there. And boy was that timely – with the recent reports of Apple’s iTravel patent.

Getting the mobile boarding pass was easy enough – check the box on Delta’s website and you’re done. As I was doing ATL-SFO I pretty much expected everything to work on the airport side (more about this later). No sooner do I click “Submit” and an email lends in my inbox – a simple two-liner email with a link to my friends’ mobiqa.com website.  Click the link and hey presto – a short form with some flight info and a 2D barcode. So far so good.

22 hrs later I am at the airport. Medium-length line at security. The middle-aged TSA agent is a little surprised but otherwise unfazed by my toting my BlackBerry as my boarding pass. No problem sir, let’s see the boarding pass.

Oops. You see, I’m the kind of guy who gets around 100 emails a day. So it’s pretty far back in the mailbox behind the last day’s correspondence. No problem, we’ll just search for “Delta”. 10-15 clicks later I have 3 emails from Delta and am able to single out the right one. Bingo.

Problem #1: Fishing a boarding pass sent 24 hours earlier from your inbox is, shall we say, not good user experience.

No sooner do I open this and the TSA agent pulls me back. You see, a barcode needs a reader, and yes he has one – or that is, all the TSA agents at the terminal have one – just one. So he takes me out of the line to the barcode, wiggles the phone around a bit – and gets the info. Quick comparison to my driver’s license and I’m in.

Problem #2: Scanners are being deployed – but it’ll take awhile.

So far – OK. 30 minutes later I’m at the gate, and they begin boarding. This time I’m smart. I actually search for that boarding pass email ahead of time. But oops. Do I have data coverage? Cause if I don’t, that email with the link is not going to help me any this time. A few lost heartbeats later, Verizon comes through for me. Got the barcode. Phew.

Problem #3: A system based on browsing to get the content is bound to fail at airports some of the time.

I present the attendant at the gate my BlackBerry. She wiggles it left. Wiggles it right. Wiggles it up, down and sideways. Sorry, the reader can’t recognize the barcode. “You see, sir, it’s too small”.

Time for a confession: entering the terminal, I went up to kiosk. I was meaning to check whether I could get an upgrade (a topic for another post, I guess), but somehow it made me print a boarding pass…  I actually forgot about, but after a few seconds of the attendant and me gazing at each other apologetically with 20 people standing in line behind me, I produced the paper pass and was shuffled onto the plane. Paper one, technology 0.

Problem #2A: Even when the scanners are there – there’s still training and optimizing to do.

… I was mulling over this experience for a few days (and frankly was too busy to write about it), until last Wednesday patentwatcher.com comes out with a story about Apple’s latest move – iTravel. At face value – Apple basically trying to patent a whole suite of services that looks suspiciously familiar (well the diagrams aren’t as pretty as WorldMate’s UI design, but still the idea is clear) – but the real point is this is actually a Near Field Communication (NFC) based boarding pass. And the industry is abuzz. Mobile people are impassioned with Apple’s latest innovative move – attempting to revolutionize another industry. That’s unless of course they are aligned with Apple’s competitors. Travel distribution people are aghast. They have read about how Apple took the music market from the labels, the mobile content market from the wireless operators, and is now after Amazon’s dominance in eBooks. Is it going to eat their lunch too?

For now, I will put aside the strategic implications of a mobile leader getting involved in travel services. What I think about it is clear – why else would I’ve founded WorldMate and pulled it to where it is (and don’t let anyone fool you – founding and managing a start-up for 10 years is one of the hardest things you can do … regardless of how successful you are). Let’s focus back on the boarding pass question.

Given 1 and 3 above – it is clear that using email or SMS + mobile web as the storage and presentation mechanism is bound to create experience issues. The bottom line is that people need their travel info stored on their mobile devices, and a sure-fire way of being able to pull it up at the right time. Apple is dead-on with this concept. My travel information and documents need to be available to me 100% of the time when I’m traveling, and be presented automatically when I need them.

With regards to the use of NFC, allow me to be a little more skeptical. It’s not that there’s anything wrong with the concept. It’s right on. Much better than an optical scanner that requires you to hold the device screen to it just-so. The fact that IATA and its members chose barcodes over it demonstrates how little they understand other, fast moving industries. Yes, all phones have screens that can show barcodes now – but given a compelling use case, all phones will have NFC chips in less than 5 years. Just like color screens. Or Bluetooth. Or cameras. But how long will it take IATA members to deploy infrastructure?

Once the decision to use barcode scanners was made, it’s a 5-10 year process executed by hundreds of airports and airlines. Changing course mid-way is almost impossible. Doing that for a proprietary solution like Apple’s, and one that it also wants to protect the IP for, is plain stupid. Is it a good idea for Apple to patent this? Sure, if it can. Add it to the portfolio. Is this going to be accepted as the industry standard? Unlikely. Not unless Apple acquires SITA… and I don’t think the airlines holding it are particularly in a rush to sell...

Bottom line – a better mobile boarding pass user experience is necessary if the airlines and airports are serious about it. And they should be. 

And Apple’s iTravel? It is definitely the wave of the future. It’s a trend that will change the travel industry and increase the market share and revenue of the mobile players who will implement it well and do it first. Whether it’s Apple or someone else – that remains to be seen.

 

 

Sic Transit Gloria Mundi - MWC 2010 In Retrospect or How The West Has Won

Several people have asked me this week for my "MWC 2010 highlights". While many have covered the obvious trends - "rise of the app", "Android domination" (?) etc., what struck me the most was the total shift in the global wireless balance of power. This was pretty obvious on the MWC stage as well as off it.

Just a few years ago, the wireless world was basically described this way - "America lags, Europe and APAC lead, and Japan is on a plane of its own with sci-fi technology and user adoption."

By 2010 - All the leading platforms are American - iPhone, Android and BlackBerry. MWC 2010 was dominated by the non-participants, and no, I don't mean Nokia... 80% of the show ranged from knock-off to homage for the iPhone - device, operating system and ecosystem. Much of that is being provided by the Silicon Valley neighbor and former partner Google, with everyone with a an electronics assembly line launching an Android handset (Taiwanese PC-compatibles circa 1985 anyone?). And the people with a real smartphone business going on are of course RIM, who have the only other effective, service-based mobile ecosystem rooted in a key Internet application (e-mail).

The contenders? Microsoft is trying to stage a Rocky III-type comeback with Windows Phone (good luck with that!). Nokia hosted its own separate show and managed to anger hundreds of journalists who stood in line for over an hour to be admitted to the MeeGo announcement press conference. They, in turn, reciprocated by simply not writing about it. I watched the media for MeeGo coverage in the 24 hours after the announcement - you'd think Nokia and Intel were two early-stage start-ups trying to scrape a few lines of coverage from second-tier technology bloggers.

What happened? It's probably fairly simple. Once the internet and mobile were finally integrated effectively for the first time by Apple, it is those companies who are immersed in the Internet - understand it, influence it, shape it - who are setting the standard for everyone else to follow. By doing so they get to a leadership position regardless of their actual market standing. Who cares Nokia / Symbian shipped 40 times more phones last year than the entire Android camp combined? The cracks in the wall are visible to all.

One person who seems to understand it is Sanjay Jah, CEO of Motorola's handset unit, who according to the Wall Street Journal is planning to move Motorola's handset business to California. Personally I am not sure he'll be able to bend all interested parties to his will, but his desire is clear and the motives are sound.

Finally - the last fort standing of the world as we knew it is falling. Japan, the mecca of mobile-obsessed consumers holding the glitziest, most advanced internet-capable handsets - has succumbed. Through the iPhone, Softbank has been able to outpace mighty DoCoMo in subscriber additions by launching the iPhone - the #3 player is now the fastest growing one. Oh, and guess which customers they are adding? By definition - the highest ARPU customers, switching away from KDDI and DoCoMo. The response? More of the same. DoCoMo, in turn is putting more and more behind the Android platform, shifting focus from i-Mode to smartphones. But hey - does that mean Japan is now a follower?

So - forget the world as you knew it. It's been Californicated.

My New Year's Resolution: A Home in Silicon Valley

A year ago, we announced that we were moving our headquarters to Atlanta. We hired people and set up an office there - yet here we are now in Silicon Valley. Some of you may wonder: Why have people like myself and my family, Darren Dunn and Ian Berman moved their offices here?

The answer is that once moving became a reality, I realized it couldn’t be any other way. This is the place to be, the place that is critical for our future as a company.

WorldMate is a company with a unique heritage: We began as a bootstrap ten years ago, and were creating the earliest and best mobile apps back when they were still called “PDA Applications.” We recognized the particular needs of business and executive travelers, and the necessity of merging the “fixed” and “mobile” internet.

That is our past and present. Our future is in Silicon Valley, which is special in two important ways.

The first is very simple: When the best people in the industry gather in one place, that place will become the best. When I’m in a café in the Bay Area I see, within minutes, executives from Google, Apple, Yahoo! and others passing by. Even key people who aren’t based here are constantly traveling here, and the result is that Silicon Valley is a hotbed of innovation. The best ideas start here. And the trends are set here. When you're here – you see the waves as they start rising, not when they crash onto the beach.

One example is the iPhone: We had 8 years of experience and we've seen mobile platforms come and go--Palm OS, Windows CE and Windows Mobile, Symbian, J2ME…We've seen them all rise, and sometimes also fall. When the iPhone was released we looked at it from a technological perspective, seeing it as an evolutionary improvement of existing technology. Touch screen? We've seen that. GPRS phone with some music and app capabilities? We know dozens of those – and not from Apple, a company with no track record in the cellular market.

Because we were not in Silicon Valley at the time, we didn’t realize what a marketing phenomenon the iPhone would become. As a result we entered the market late, losing the "top iPhone travel app" space which we held on Palm, Symbian, BlackBerry and Windows Mobile to cheap copycats. Had we been in the Bay Area then, we'd have moved early, an imperative for success given the iTunes App Store dynamics.

Silicon Valley is also special in that the products that come from here are the ones that tend to succeed. This tight-knit community gives preference to its own products and helps them succeed—and as we’ve seen, when you succeed in Silicon Valley, it easily becomes a trend that spreads rapidly to the rest of the world.

One example is the Android operating system, which was conceived as one of the leaders in the market long before it had real commercial traction on actual devices in consumers' hands, while systems from companies who sold hundreds of millions of phones (e.g. Nokia's Symbian) or have at least the same penetration in the OS space as Google (remember Microsoft) were already considered irrelevant – at least by app developers.  Yet there is no clear technological reason to say that one platform is superior to the other, no strong business indicator that one system will succeed while the other will fail—in fact it’s the other way around – unless you consider this "PR momentum". Google's ability to attract the local developer community and the local blogger community and impress upon them that through them Android will be a success, almost by definition caused Android to be a success before it was even available in the market. At the same time it caused the competitors to lose ground and be seen as a thing of the past.

Tripit is another example, and closer to home: A web app that mimics ours and is in many ways inferior caught on because of the influence of local media and bloggers, and the local buzz radiated outward to the national market.

So where do we go from here? We intend to embrace the culture and values, to immerse ourselves in the local dynamism and improve our product and our standing as much as we can. The brand new web app we've just released is an example of our commitment to the web as our next platform for innovation and growth. We are already forging new relationships to enhance the product and distribution, but the most important thing is that now we are part of the vibe, we are listening, and we will move quickly with it.

Nokia Deals Industry A Blow By "Going Android" - A Different Angle

So is Nokia going Android or not? Here's what I hope is a fresh outlook on this story...

It was 11 AM on a Monday morning, as one of my esteemed managers walks into my room with a blank look on his face. You know, one that states "I have a great secret to tell you, but not only is it such a secret... it also validates what I've been arguing for such a long time...". He asks for a moment of my time which I am obliged to give under such circumstances, thinking it's probably the latest and greatest about our product. So then the guy states with the required digerati pomp - "Have you heard that Nokia are switching to Android?"...

"Where have you heard that?" I answer, but I must admit I am a pretty blunt person, and it's pretty clear from my tone that my real reaction is "do you really think we should be wasting time on such nonsense?". The guy names a leading local daily whose writers are all fabled business and technology gurus. I suppress my laugh and dismiss this as rumor. Putting this behind me, I go back to work, and 10 minutes later I get the unavoidable email from one of my executives with the link to the Guardian article. Now that seals it. A "real authority" spilled the beans... Of course that article is a little less firm, stating that Nokia is "understood" to be making such a device and later that there is some "speculation following the Nokia-Intel announcement..."  A-ha.

So someone speculates, the Guardian "understands", and other newspapers are already committing. But it doesn't end there.

30 minutes later, it's all over the social networks and instant messengers, and various friends and colleagues are exchanging opinions. Of course I have to respond to some of them as they're asking me directly and I have to answer - otherwise I am the guy who's too aloof to care. So I get to spend another 15 minutes on this.

Somewhat flabbergasted, I walk over to get myself a cup of coffee, only to witness half of our developers standing in the corridors, exchanging opinions (best case) and libel (worst case), and generally mis-spending time and energies...

Is this over? Has Nokia's denial ended this? Maybe. Probably not.

Bottom line:

I can think of at least 200 small companies, 100 mid-sized and 10 giant ones where such news would be the talk of the day, resulting in dozens of thousands of managers, developers, analysts and any other shape or form of self-styled expert spending considerable time on this "debate". Probably hundreds of thousands of hours, costing dozens of millions, were spent on this.

So never mind that Nokia just acquired Symbian, that Google is an arch-adversary, that building Ovi and then succumbing to Google services (Maps, Calendar etc.) is almost like a public act of Harakiri for some of the executives there.

The real story is about the power of a rumor.

Or maybe not?

P.S: Who am I to talk? I just spent another half hour posting this...

PPS:

This is something I believe in a little more:

Nokia and Symbian: Forget about Android, it’s all about Cutey (Qt)

iPhone Users Are Predictably Irrational

Over the last year or so, I've visited the topic of iPhone Apps and what they're good for several times. I must say I've angered some of my readers who saw my resistance to this great new wave as being purely bull-headed. Now that WorldMate for the iPhone is here, and our commitment to serving users on this platform is clear, we can come back to a discussion that's a little more level-headed. My chief concern was how the AppStore marketing platform - which consists mainly of the best-seller lists, skews the platform towards cheap gizmos. Or basically - my argument is that:

The marketplace that Apple has created does not allow a company like WorldMate to charge a price for its product that is in line with the product's value.

As I've spent some time writing a rather long piece - here are my main themes up front...

• There are dozens of thousands of smartphone users who think WorldMate is worth at least $100 per year
• A rational ROI analysis shows that WorldMate is worth at least $100 per year
• If WorldMate is to make money on the iPhone platform - It can't do that on a few dollars per user.
• Apple's App Store set-up triggered a consumer behavior called "Price Anchoring" which makes iPhone users believe that a price of $1-2 is adequate for apps, without any real rationale
• This makes it very hard to build a scalable business on selling iPhone apps.

Now you know what I think - let me try to explain. This discussion is by nature an economics discussion, so let's start by figuring out the "Right value" or "Right price" for the product. WorldMate for other platforms (e.g. BlackBerry, Windows Mobile) retails for $99/yr. We've done quite a bit of price-testing before settling on this price, and we were considered one of the most successful app developers on these platforms. So you can state as a fact that:

There are dozens of thousands of smartphone users who think WorldMate is worth at least $100 per year

Otherwise they wouldn't have paid, right? But of course you could always argue that these people weren't thinking straight. So - maybe a better way of justifying the price is by calculating the economical value. What WorldMate essentially does is save you time and get you out of trouble while traveling on business. We inform you of things in advance and provide you info quickly - so you won't miss your flight, get lost, etc., and we help you optimize - for instance find another flight when you need to change your schedule, or when your existing flight was delayed / canceled. So basically what we do is save you time. Now our average customer travels over 10 times a year and probably spends around $20,000 on business trips on a yearly basis. He costs his employer around $100 per hour in general, and double that while traveling. So - if we save our customer one hour a year - for instance by telling him he can leave for the airport an hour late cause the flight is delayed, or by giving him a map to his destination which saves him getting lost - the ROI is positive. If ever we manage to get him home a day early or enable an impromptu meeting while traveling (e.g. using our Connections social network) - that's easily a 5-x ROI. Now one may argue that we need to look at the alternative cost - what replacement products are there. Let's assume that there are 2-3 free products or mobile websites out there that could replace WorldMate for free. If it'll take you one hour to find them, or, if these products are not as well integreated as WorldMate such that over the course of a year of usage it'll take you one more hour to get the info from them that WorldMate would have gotten for you automatically - then again, you paid your $100 to get these "Free" products - i.e. you paid more than you'd have paid for WorldMate anyway. So the bottom line is I think I can safely say:

A rational ROI analysis shows that WorldMate is worth at least $100 per year

Yet another way to examine this is how much does it actually cost us - what's our cost per user? The platform we have cost quite a few millions of $ to develop over the last five years. The iPhone app itself cost us ~$150,000 to develop and we're still spending heavily. The content costs per user are meaningful (in the cents to dollars depending on activity). Hosting costs us six figures a year. So we certainly can't be profitable on $0.70 / user unless we serve millions.

If WorldMate is to make money on the iPhone platform - It can't do that on a few dollars per user.

Still - the iPhone customer market sees this differently. We launched a product at a $19.99 introductory price, and while we generally like the sales figures, still we see comments like "how could this be worth $20". Wait a minute - we've just shown how the product is worth 5 times this? So what is it? Are iPhone users less rational? - not likely; Are they underpaid? Is their time not worth as much? Not really - recent surveys from Forrester and Nielsen survey show over 39% have over $100,000 HHI. So why do iPhone users attribute a lower value or price to WorldMate - or for that matter, any app? The answer is as simple as it is perplexing. There's a developing field in economics called Behavioral Economics. Simply put, what it studies is how people actually behave - as consumers, deal-makers etc.. You'd think that what's economics does in general - right? Well, not really - Traditional economics assumes people are rational beings. Empirical studies show they just aren't. And Behavioral Economics tries to understand this conundrum. There's a great book in the field called Predictably Irrational, written by Professor Dan Ariely of MIT, and one of the phenomena it describes is "Price Anchoring" Price Anchoring in simple terms is the fact that the first price you see for something, is what you'll expect it's worth, regardless whether this price makes any rational sense. I especially like the story about the experiment they did where they told people to write the last two digits of their Social Security Number next to the name of a product - as a price. And then asked the same people how much they really think the product is worth. Lo and behold - people whose SSN ended in high numbers, ended up thinking the products are worth more than did the people whose SSN ends in low numbers. Incidentally, we're talking about highly rational MIT MBA students... Further studies show that it's then very hard to change that "anchor" - the initial impression of price, no matter how irrelevant, affects the long term perception of value, or "appropriate price". How does this apply to the App Store? When Apple gave early iPhone developers an incentive to price everything at $0.99, it actually made its customers perceive of iPhone Apps as worth $0.99, $1.99, maybe a few $ - tops. Regardless of the actual value created, the corresponding value of the content / service or any other rational aspect. So for most iPhone users, the equation is simple:

"The adequate price for an iPhone App is $1, maybe $2..."

Oops. How do we make money in such a market? What's the long-term outlook like? Can this change over time? Does Apple care and will it attempt to change it? Frankly, we'll see. We do have some great ideas about how to monetize, but we'll have to live and learn. I'd welcome thoughts and opinions. Some interesting reads:

• FierceWireless: If you're trying to make money, dump your iPhone strategy
• TechCrunch: Report: iPhone Applications Are Getting Cheaper
• Silicon Alley Insider: Apple's Relationship With iPhone Developers: 'Reluctant Tolerance'
• And of course - Predictably Irrational