Mobile phones with Wi-Fi capabilities

I was talking to a Motorola person last week (and describing the mobile search system that my company is building) and he pointed out that it will be useful to explore whether the trend of bundling Wi-Fi with mobile phones can be exploited to promote enterprise mobile search systems.

Though I have not been following the evolution of Wi-Fi mobile phones, Wi-Fi phones have been talked about for the last 3-4 years (see this article written in 2002). In fact, Motorola and HP/T-Mobile had launched Motorola CN620 and iPaq 6315, respectively, around the middle of last year. An eWeek article from July 2004 points out:

Motorola Inc.'s CN620 phone supports both voice and data services over wireless LANs and GSM cellular networks. The device automatically selects the least expensive network for calls, a feature that will help businesses cut costs, said Motorola officials in Schaumburg, Ill.

While in the enterprise network, callers are connected via voice over IP. When out of range of the enterprise network, mobile workers can still access enterprise corporate data and applications through a Web connection over the GSM network, officials said.

HP and T-Mobile had launched iPaq 6315 earlier in July 2004:

For data services, HP's iPaq h6315 Pocket PC handheld automatically connects to the fastest-available network or switches networks if a connection is lost. When connectivity changes, users are alerted by an icon on the handheld's display.

Phones with Wi-Fi capabilities will eliminate the time-based and downloaded data-based pricing models used by the mobile operators. Elimination of mobile usage charges will offer an interesting opportunity to enterprise mobile search companies.

3G mobile network speed

It is well known that the 2G networks don't offer the speed and latency that are needed for building applications that require high-volume data transfer. It is also often assumed that 3G networks will take care of this problem.

Guy Kewney points out that 3G networks might not provide a satisfactory solution either! He quotes a presentation (by Yair Shapira) at UMTS show in London (Oct 2004).

Shapira pointed out, the underlying problem is the huge latency in the network and the number of items that have to be fetched. "The horrible truth is something I've seen in laboratory reports from inside a big European 3G operator," he said. "It is that WAP2 over 3G is not better than WAP1 over GPRS. This big operator invested hugely in 3G in the hope of making WAP [Wireless Application Protocol] go faster; but in the lab, it's not faster."

The problem is that the round-trip time of a 3G message and response is closer to a second than a fraction of a second. Shapira estimates that the typical time lapse between asking a Web server for a data item, such as a logo, and being able to render it on-screen is about 800 milliseconds.

Nobody who's used 3G data would contradict him, although some might say: "Oh, it's not quite that bad!" and then settle for 400 milliseconds.

But a Web page may have a dozen to two dozen items on it. Each is fetched separately by HTML browsers. On broadband, with latencies in the 50 to 100 millisecond range, the cumulative delay isn't crippling. On 3G, a delay of two seconds turns, as if by having a spell cast on it by a wicked fairy, into a half-minute pause.

Mega SIM cards

Rediff.com carried an article (via Business Standard) regarding "mega SIM cards" that will increase the available memory from 32KB/64KB to 64MB/128MB! Gemplus, one of the suppliers of these mega SIM cards, has started trials of mega SIM cards with some operators globally. It hopes to introduce one GB cards later.

Says Gemplus India managing director Vijay Parthasarathy: "Many of the multi-media applications like gaming and video require Java-enabled phones which are high priced, in the range of Rs 30,000. The SIM card offers a much cheaper alternative as it is already Java enabled. So you can use a normal phone.

Rediff's article mentions that "increased memory will enable users to store high resolution photos and large MP3 files, enable live video streaming and advanced gaming applications, etc. These applications expand the role of mobile phones beyond voice services, making mobile handsets a personalised infotainment hand device."

Does a market for the high memory products exist in India?

With gaming and photophones and video becoming popular, one may develop faster than most people expect. Says Mohit Bhatnagar, head of new products at Bharti Televentures: "If what they are promising can be delivered, it is surely an attractive and cheaper way to grow the market in India. But our concern is whether the SIM cards will work across all handsets to enable these multi media services."

I had not paid attention to this evolving technology so far. More importantly, I had not realized that the new generation of SIM cards will be Java enabled and, therefore, have the potential to make mobile applications available at a much lower cost.

Since I am new to this technology, I don't understand how "normal phones" with Java-enabled mega SIM cards will be different from the current crop of "smartphones". And, why will they be cheaper?

I have started reading about this to understand this better. MobileIN.com provides the following definitions:

A SIM card belongs to the family of "smart cards". Originally, SIM cards were deployed in GSM networks as a security module and provided the facility for challenge/response authentication of the subscribers.

SIM hardware consists of a microprocessor, ROM, persistent EEPROM memory, volatile RAM, and a serial I/O interface. SIM software usually consists of an operating system, file system, and application programs. As with all smart cards, the SIM relies on the card terminal – the GSM handset – for battery and clock.

The corresponding card for CDMA phones is called UIM:

Introduced by the CDMA Development Group and the 3GPP2, the Removable User Identity Module (R-UIM) card represents a smart card for use with CDMA based mobile phones.

Strictly speaking, neither SIM cards not UIM cards are Java enabled. There is another category of cards called "Java cards" that provide embedded JVM:

The Java card sits on top of the smart card OS, allowing application programmers access for deployment of services independent of the hardware and OS of the smart card. Executable code is platform independent, meaning that any card incorporating a Java Card interpreter can run the same application.

OK, so this clarifies some of the technical issues. But, why will the phones with Java-enabled SIM cards be any cheaper than the "smartphones"? They must lack something or must have some restrictions. Smartphones are called "smart" because they enable users to extend their phone's capabilities by downloading new applications. Perhaps, mega-SIM-card phones will not allow users to download new applications? But, no, that doesn't seem to be the case. Sun's site re: "Java Card Technology" clarifies that:

Multiple applications can be deployed on a single card, and new ones can be added to it even after it has been issued to the end user. Applications written in the Java programming language can be executed securely on cards from different vendors.

To cut the long story short: I don't have the answer yet. However, since lower-cost Java-enabled mega-SIM-card phones will be extremely important to cost-conscious Indian consumers, I will continue to investigate and post my findings at a later date.

Steve Jobs: Follow your heart and intuition

I read the commencement address given by Steve Jobs at the Stanford University recently (June 2005). Steve Jobs narrates three stories to communicate his message. It is a beautiful address that is worth reading.

I have taken some excerpts from his address and have presented them below. However, one must read the whole address to hear his stories and to understand the context.

First excerpt is related to Steve Job's firing from Apple:

I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.

Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.

Second excerpt is related to the use of "death" as the "life change agent":

Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything – all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.

Mobile Linux

I have written before about the increasing use of Linux OS in mobile devices. A recent article in TheFeature provides some useful details regarding the increasing adoption of Linux.

Motorola has confirmed it will move from its 30+ different operating systems to one proprietary, one on PocketPC and one on MontaVista Linux.

The MontaVista product, Mobilinux, is being pushed to handset vendors on scalability, cost and flexibility. It is not just a question of the Motorola support but its sphere of influence -- Motorola is now pushing partners hard to support Linux.

The Linux-powered Nokia 770 Internet tablet is interesting in that, except for the hardware adaptation layer, certain user interface elements, and third-party software, the device is based entirely on open-source software, which can be downloaded from Maemo.org as a complete filesystem.

Behind much of the interest in mobile Linux lies China. PalmSource claims that the Linux OS from China MobileSoft is already shipping on 30 phone models in China.

Trolltech, an embedded Linux specialist, believes that six design houses in China are building phones based on Trolltech's Qtopia software.

Motorola itself has stated that over 10% of its Chinese sales are comprised of smartphones running Linux.

It is good to see Linux evolving to capture some market share from Symbian and Microsoft. Hopefully, this will help reduce prices and, therefore, the customers will benefit directly from wider adoption of mobile Linux OS.

Startups in India

I attended a talk by Promod Haque yesterday (organized by TiE, Bangalore). Promod mentioned that a number of Norwest Venture companies (such as Open Silicon, veveo.tv, etc.) are doing substantial amount of development work in Bangalore. Overall it was a good presentation with some interesting data; for example: average ARPU in the US is $40 while that in India and China is $8. In the current economic scenario, consumers/customers are driving the businesses -- therefore, in order to make profits, the companies must ensure that they use their capital and resources effectively. He mentioned that the companies end up getting valuation in $150 - 200 million range; therefore, it was important for the startups to keep the investments below $30 million. (He mentioned that Airspace with $70 million revenue was acquired for $450 million by Cisco recently; therefore, companies seem to get 6x valuation now (w.r.t. revenue).)

However, he mentioned two issues that I think need to be debated.

First, he echoed the "common VC wisdom" regarding startups: he asserted that India will provide the engineering talent while the "customer facing functions" (such as CXO, sales, marketing, etc.) will be based in the US. To substantiate his claim, he mentioned that the annual IT spending in the US is approx. $450 billion (while India and China spend approx. $15 billion and $27 billion, respectively). Since the markets are mostly in the US, he claimed that it was imperative that the top management be close to the customers.

Though I agree with his assertion, I am not sure that he realized that this was fairly a ironic statement to make in front of "entrepreneurs". In essence, he was telling the gathered entrepreneurs that the VC community values Indian engineers (and Indian engineering managers) but not the Indian entrepreneurs! Entrepreneurs are passionate not only about the technology but, more importantly, are driven by the passion to make direct and visible impact (on customers, business scenario, market landscape, society, etc.). Therefore, it is contradictory to claim that the value Norwest provides to Indian entrepreneurs is to "pair them up with CEO and senior management team in the US"!

As I mentioned before, I am not disputing that it is good for the senior management team to be close to the customers. Since US is the largest enterprise software market (close to 60% of revenue is generated in the US), it just means that it does not make sense for the Indian entrepreneurs to build enterprise software companies (for example) out of India.

If so, the next question, obviously, is: what segments/sectors will provide opportunity for building world-class and world-scale product development companies out of India? I had discussed this question with Ranjan Chak (Venture Partner, Oak Investment Partners). He suggested that the industries in which India/Asia has world-class infrastructure will be more appropriate for building world-class companies. What are those industries? Wireless devices (whole of Asia), mobile services (Japan , China, India, etc.) , broadband (Korea, Japan), etc. are some of the areas where Asia is leading the technology wave. Further, India, China, Japan, etc. provide the necessary scale (size of markets) in these areas. Therefore, I claim that Indian entrepreneurs will derive satisfaction, generate wealth, and will be able to make an impact if they were to focus their energies on these segments.

Second, Promod mentioned that if the salaries of IT people in India continue to climb, India will lose it's appeal to the VC community. He explained that the current salary levels allow 3:1 cost arbitrage (as opposed to Israel that offers 2:1 cost advantage) w.r.t. US salary levels. He suggested that VC community will prefer eastern Europe, China, etc. unless they can benefit from the current level of cost arbitrage.

I, however, am not worried about increasing salaries of the India IT community. Higher salaries are good for India; not only for the people who benefit directly but also the rest of the society that benefits from the percolation effect. But even if I were worried about escalating salaries (like Promod and, I am sure, many others), what can we do about it? Isn't this a simple demand/supply problem? Indian IT folks are as responsible for the salary escalation as the software companies who need people and are willing to offer higher salaries. I guess we will have to let market forces and economics settle this issue -- salaries will stagnate when the Indian IT community and IT companies realize that an equilibrium has been reached.

Other concerns raised by Promod were: high churn rate in India and the lack of value associated with stock options.

These issues are close to my heart. I started my own company recently and want to find people who will not quit my company for a 10-15% hike in salary offered by someone else. Further, I have struggled to find good technical people who are willing to share risks (by sharing equity). Since "cash flow is the king" for startups, both of these concerns are extremely important.

However, there are monetary and cultural issues that need to be tackled to bring about this change. First of all, unlike the US, there is a substantial salary difference between college freshers and people with 4-5 years of experience. Starting salaries are Rs. 4-5 lakhs and they double in the next 3-4 years! The only way to get that kind of hike, however, is via job hopping. Therefore, it is not surprising that there is a huge churn of the junior employees. It will be interesting to find out how the attrition rate at mid- and senior-levels compares with other comparable economies.

The other problem -- related to stock options -- is even more difficult to address. Though only stock options can generate "wealth" and help people upgrade their life style, people don't appreciate this. This is partly because Indian engineers have not yet been exposed to wide-scale wealth generation (though Infosys, etc. are supposed to have created many millionaires in Bangalore). The other reason is historical: given the long history of stagnant or slowly growing economy (with highly-manipulated and moribund capital markets), Indian society is (quite naturally) risk averse. People prefer to work in "big, well-known, and established companies" and get cash in hand. This is not very surprising -- this is how the San Francisco area was before it became the "Valley". Of course, it will be helpful if entrepreneurs (and associated organizations such as TiE, NASSCOM, etc.) are able to highlight the success stories (what are they?) and inform people about the benefits of stock options.

In the time being, however, isn't it possible to come up with creative solutions? One example: if employees don't care about stock options, it can help entrepreneur and VC avoid dilution. Higher ownership -- though increases risks -- also increase rewards. Therefore, as far as ROI is concerned, it should be possible to ensure that the deals are managed such that the target ROI are achieved. Further, the need to keep positive cash-flow will end up forcing the startups to explore customer engagement much earlier in the cycle. Though this can cause distraction and slow down the development cycle, it is not always a bad thing. Early customer inputs and validation can help utilize resources more effectively and help build useful products.

Linux and the mobile platform

I have been following the growth of mobile platform over the last one year (or so). More recently, I started developing some applications for mobile platform. One of the first questions that I had to answer was: what platform should I target? Should I choose the OS (Symbian or Windows Mobile or Linux) or the development environment (Linux or BREW or vendor-specific environment (e.g., Nokia's Series 60 platform))? Have the platforms become robust and efficient enough so that the developers can move higher the stack? Or, is it better to work at the OS-level?

Given the current state of rapid evolution of the mobile platforms, these are not easy questions to answer.

It is easier to choose between J2ME, BREW, and other development environments. J2ME seems to be more popular and more widely adopted by various handset manufacturers. So, unless one is developing a device-specific software (or an application that has stringent performance requirements -- such as the advanced mobile games), it is better to utilize the J2ME platform.

The problem, of course, is that except for the basic J2ME functionality, mobile phones don't support "more advanced" features. However, packages such as JSR 75 (PIM and file connection APIs) are beginning to see better availability. So, these should supercede the lower-level APIs providing similar functionality (such as Nokia's PIM APIs).

That was about the platform. The OS decision, however, is much tougher. The matters are made worse by the fact that the market is fairly "evenly" fragmented. As per a recent article "Linux storms mobile SW industry" (Feb 2005):

Symbian had around 50 percent of the smartphone market in the second half of 2004, with Microsoft and PalmSource each taking 20 percent, according to market research group, Canalys.

In other words, Linux is not yet a popular mobile OS platform. However, the same article mentioned that 20 handset vendors are developing Linux-based handsets. Further, Motorola -- which was the first company to release a Linux-based phone -- seems to be working on 8 to 10 models that are due to be released in 2005.

Linux got a major boost when NEC and Panasonic announced that they would use Linux to develop their 3G phones in November 2004. As per an article in Infoconomy:

Even though another major phone maker Motorola had announced in 2003 that it was abandoning the Symbian operating system in favour of Linux-based handsets, it was only with NEC and Panasonic's decision that they would be making devices for the hugely popular Japanese NTT DoCoMo service that observers concurred that mobile Linux was now likely to reach critical mass.

But, how can Linux succeed in grabbing market share from Symbian, Windows Mobile, and PalmSource? As per the CIOL article mentioned above:

The claim to fame for Linux is that it gives handset makers much greater freedom to tweak the software, because it is not owned by any one company. It is also much cheaper, going below $1 per phone if used in large volumes. Symbian charges $5 per handset if more than 2 million phones are shipped.

If a range of necessary software applications is added to the phone, such as a calendar, email, games and media players, the software bill per phone is $3 to $5 per Linux phone and $10 to $15 for smartphones running on Symbian or Microsoft, Nord said. [Haavard Nord is the CEO of TrollTech. Trolltech and MontaVista Software are the two main players in Linux for mobile devices.]

Will $7 - $10 savings offered by Linux have any impact? It should -- because $25 is considered an important price point by industry experts. If the phone prices were to drop from $40 (being attempted by vendors such as Motorola) to $25, it will help broaden the user base much more. [As per a PC World article, Sunil Mittal (CEO, Bharti Televentures -- promoters of Airtel mobile service in India) has been quoted to have said that $40 phone will get "50 to 100 million more customers". Further, eight operators have undertaken to purchase the $30 phones, including Bharti (India), Globe Telecom (Philippines), Maxis Communications (Malaysia), Orascom Telecom (Egypt) and Singapore Telecom.]

Linux has other reasons in it's favour: mobile operator's desire to uniquely brand their offerings. Windows Mobile and Symbian don't favour customized features and have strict rules that govern interface design. As per the Infoconomy article, once again:

Networks such as DoCoMo have long insisted on customers taking proprietary handsets with customised features. And Linux, by offering access to the platform source code, is one way in which manufacturers are able to meet this need, in both the look and feel and the functionality of their smartphones or other portable devices.

That is not the situation with Microsoft's Windows Mobile and Symbian. As a result, phones running the Microsoft operating system always have to bear the hallmark of Windows, no matter how much an operator might want to customise the interface to reflect a different brand.

Slightly more flexible than Windows, Symbian has two main interface options - known as Nokia Series 60 and UIQ - that allow greater customisation. For example, Vodafone's recently launched 3G handset from SonyEricsson encompasses much more of a Vodafone identity than a Symbian look and feel to it.

It is not that everybody is convinced about Linux's rise as mobile platform. Outside of phones, Linux-based devices have failed to make inroads into the PDA market. Infoconomy article quotes Gartner's mobile computing analyst Ken Delaney:

"You have Microsoft and Palm as PDA platforms, and maybe RIM [the company behind the BlackBerry]. People want to be in one of those communities, because of the software." And without software, neither PDAs or smartphones will thrive.

Though Nokia claims that development on Linux is expensive, I am not yet convinced. Monta Vista's development environment (called DevRocket) is based on Eclipse -- but does not support any specific mobile features (such as a mobile emulator, obfuscator, over-the-air provisioning, etc.). These are, however, provided by the J2ME wireless toolkit itself. Trolltech does provide tools such as Qtopia, which is application and UI framework for mobile phones and PDAs. (Qtopia, unfortunately, requires C++ programming.)

The Infoconomy article lists three other hurdles for the Linux in the mobile space:

1. The desktop PC and server markets have relatively few hardware platform choices, whereas there are dozens, if not hundreds, in the mobile phone market. This means that developers planning to write software for Linux would have to test their programs on literally thousands of different hardware combinations.
2. The open nature of Linux - cited as a key advantage in the server space - is not so useful when it comes to devices such as smartphones.
   
3. The rapid turnover in handset models, with manufacturers typically releasing new phones every six months, gives operating systems with tightly-defined interface guidelines and a good set of APIs an advantage over looser, albeit more flexible alternatives.

I need to think to about these points and will comments on these at a later time.

In any case, the cost advantage and the ability to allow mobile operators to provide customized features are strongly in favour of the Linux mobile platform. Further, based on the support from Motorola, NEC, Panasonic, Sharp (ships Linux-based Zaurus PDA series), and Samsung (targeting Chinese market with Linux phones), we can expect to see substantial increase of the Linux mobile phones over the next few years. As per the CIOL article:

Smartphones are just 4 percent of the total market today, but that is expected to grow to 16 percent in 2009 according to ARC research. Linux is really the only independent standard software alternative that can replace the bulk of proprietary and archaic software currently used in cheaper phones.

Further, consultants at research firm Strategy Analytics expect worldwide sales of Linux smartphones to reach around 1.1 million units worldwide this year (in contrast to the 14 million that use Symbian).

Mobile phones for the "Bottom of the Pyramid"

Dailg 3G News carried an article from TheStar online that Motorola is introducing US$40 phones in the emerging markets such as India. The article mentions that Motorola was selected by the GSM Association (GSMA) to supply the first budget handset to emerging markets in South East Asia, the Middle East, and Turkey, beating 17 other mobile makers in a competitive tender. The target date for the introduction of these devices is second quarter of 2004. Further, Motorola intends to develop sub-$30 phones in collaboration with the GSMA members.

GSMA chief executive officer Rob Conway said Motorola had a vision and strategy for this market segment that was in tandem with the association’s goals.

“By directly addressing the cost of handset ownership issue, we believe, can provide benefits of communication and trade opportunities to an entirely new set of users,” he said, adding that the budget handset programme was critical to the social and economic development of many emerging markets.

He expects over 100 million budget handsets to be sold to emerging markets by 2007.

As per the estimates of an acknowledged industry expert, $25 -- $30 phones will go a long way towards stimulating much wider demand for wireless phones in countries such as India. In fact, as per the estimates, the numbers of phones at this price range might out-strip the higher-end phones by 2:1. Of course, price points are not the only factor for the growth of a new market. Other factors -- such as social desirability -- also play an important role. For example, I was informed that the Chinese market has shown the inclination for higher-end phones. (I don't know the reason(s) why the Chinese customers seem to prefer higher-end phones.) We will have to wait and see how customers in India and other parts of Asia will react to these new phones.

Mobile search and advertising

Success of Google, Yahoo! (Overture), etc. has highlighted the effectiveness of using advertisements and paid listings for making money from search engines. The web-focused business model, though, might not work for mobile devices. Why? Because different parameters and constraints rule the mobile world. TheFeature has an article by Carlo Longino that describes the paid search being rolled out by O2 and MotionBridge:

Mobile advertising is still looking to strike a balance between intrusiveness and profitability, and it's much more difficult than on the wired Web, not least because users are typically paying for the ads to be delivered to them. The key is to make advertising that benefits the user in some way. It's increasingly obvious in today's world and media landscape that so-called interruption marketing doesn't work. It's not any different on mobile, in fact, it's even more true. All interrupting a mobile user's experience with a useless, meaningless ad does is destroy the user experience -- doubly so if they're paying for it.

Another article in TheFeature by Mike Masnick points out the diferences between mobile search and "online" (what I call: "web") search:

Too many of the efforts to turn search into mobile search forget the most basic difference between searching online and searching while mobile. When searching online, it's perfectly fine to return a list of links and let the user do the work to find what they're looking for. When mobile, users are usually doing something -- and thus are searching for immediate answers, not pointers on where to continue to research. Simply building a mobile search engine that requires more research is less interesting than one that gives answers immediately. Unfortunately, giving answers immediately would get in the way of plastering search results with paid search advertisements. Alternatively, simply pushing sponsored answers rather than the best answers will make users go elsewhere. The real breakthrough in mobile search is going to be in providing mobile users with results that fit within the framework of what they're doing and what they're searching for. That means, if a user is searching for a local restaurant, give them the information needed for local restaurants, but within that format also offer them the ability to request one-time coupons for that location, or let them know that they'll be able to use their cameraphones to automatically bring up coupons for the restaurant.

Therefore, not only is there a need to build/evolve a mobile search engine specifically for mobile devices but also for evolving an effective business model for supporting mobile search engines. Interesting challenge, isn't it?