BMW implements some of the most advanced technology in the automotive industry but also breaks new ground in marketing

Premium motoring brand BMW was one of the first companies to pull the mobile channel into its marketing mix. Here the firm’s head of digital media, who is personally responsible for many of the firm’s marketing innovations, talks to telecoms.com about why mobile works for BMW and how.

German auto manufacturer BMW has a reputation for developing and implementing some of the most advanced technology in the automotive industry. And just as it has teams dedicated to innovation in motoring, so it strives, according to Marc Mielau, the BMW Group’s head of digital media, to break new ground in its marketing strategy. Chief among the innovations here is the developing use of the mobile channel.

BMW has been using mobile in its marketing mix for more than five years, Mielau says, and it first turned to the medium in a bid to stimulate awareness and extend its reach at the youngest end of its addressable market. In 2004 BMW launched a new small car, the 1 Series, in a bid to gain traction in a new demographic. “It was the ‘youngest’ car in the BMW portfolio,” Mielau says, and it offered his team, “a big chance to conquer young people through the mobile channel.”

In some markets BMW launched a handset in conjunction with Nokia that came with preloaded 1 Series content. In others the firm made available a downloadable racing game featuring the new car, which could be configured in different colours and with different wheels. “It enabled people to get a feeling for the car,” Mielau says. “The 1 Series looked like a BMW from the front but, unusually for a BMW, it had a hatchback. So the game was configured to show the car from behind. It was important that people could see the back of the car. We got 75,000 downloads which—at that time—was an amazing success,” he says.

Over the following five years, BMW has greatly expanded the range of ways in which it is able to exploit the mobile channel. But straight advertising is not one of them. “Our philosophy is that we’re more interested in delivering value to the customer,” Mielau says, “and advertising is not value.” While advertising has progressed inexorably from print, through radio and television to the internet, he says, the migration to mobile is not necessarily a logical one. He talks of the “unique capabilities” of mobile—specifically location-awareness and situational usage—and how these will enable his firm to “show people that we’re serious when we talk about customer orientation.”

So the BMW mobile marketing strategy is based on what Mielau calls the ‘save time/kill time paradigm’. People appreciate objects or applications that save them time when they’re busy, or help them pass it when they have it in surplus, the thinking runs. And if customers perceive content as useful, the marketing is likely to be all the more persuasive.

In this way, BMW can use mobile to a variety of ends; to build loyalty among existing customers, to grow awareness in new market segments or to drive after-sales revenues. The most successful mobile campaign the firm has ever carried out, Mielau reveals, stimulated a sales response—that’s to say a purchase—from more than 30 per cent of recipients.

By German law, everyone who buys a new car between May and September has to have fitted winter tyres by the end of November, when the winter snows usually start to fall. Mielau’s team took a sample of customers for whom they had mobile phone data and sent them an MMS featuring an image of their specific car, remind them that they needed to fit winter tyres. Customers also had the opportunity to download an application that allowed them to configure different tyres and rims with their car model to see which ones they wanted. They could then click to call a dealer to make an order or send an SMS asking the dealer to call them.

“We saved time for our customers there by managing the whole process,” says Mielau. “We sent the MMS out just as the snow started, which is better than a mailing, which is always two weeks too early, or two weeks too late. After the winter season we matched the data and found that 30 per cent of people who got the MMS then purchased the tyre through the message. Most of them would have purchased one anyway but we made it much more convenient. We wanted to roll this out to more of our customers but we didn’t have enough mobile data from customers. So the CRM department is currently working to build that data up.”

BMW targets the mobile handsets most likely owned by its target demographic

On the awareness side a recent campaign was based on a television advert for the BMW Z4 that sees the car being driven round a massive canvas, spreading coloured paint to create an abstract image. While this was a straight advert on television, the BMW marketing philosophy dictated that it could not be given the same treatment in the mobile channel. So it became a game; a game that was downloaded one million times in four weeks, Mielau reveals.

Advancements in handset technology are key to the increased use of mobile as a marketing channel for big brands and—as so often seems to be the case now—the iPhone is credited with opening up a new world of possibility. BMW is a premium brand and so one would expect that its mobile marketing strategy would be directed towards consumers of other premium brands; namely those who own and use higher-end smartphones. Mielau points out that the firm simply cannot deliver its marketing content to all available handsets. Rather it aims to find the 20 per cent of models that are most likely to be owned by its target demographic and optimises its content for those handsets.

Nonetheless, Mielau is adamant that the mobile channel can be useful in the market mix for any brand, regardless of its place on the value scale from budget up to premium. Returning to his core theme he says: “You could be a not-for-profit organisation, you could be a low-cost supermarket or you could be a premium brand. So long as you treat the mobile channel as a service channel rather than an advertising channel, you can add lots of value.”

More to the point the mobile channel is comparatively cheap to use. It is for this reason, he reveals, that the question he is most frequently asked by people interested in his mobile strategy—what proportion of his marketing budget does he allocate to mobile—does not necessarily provide an accurate split of the mix.

“The online channel overall is much cheaper and more efficient than the classic channel,” he says, “because you don’t have the high media spends. You can do more with less. So when you take the portion of the money you spend on the mobile channel, it’s very low—maybe one or two per cent at most. But because of the value that it delivers, it’s absolutely fine when you spend a low amount of money on it,” he says. Taken as a portion of overall marketing format, he says, mobile is increasing due to its efficiency.

The example he gives relates to sales literature for the firm’s cars. Prospective buyers can pick up hard copy brochures in dealerships or be sent them in the post. But if a car in a showroom has a bar code that can be scanned with a mobile, audio visual content can be streamed or downloaded to the handset that gives  a far richer demonstration of the technology that the car contains. And, as he says, “I do not need much money to do that.”

Mielau also doesn’t appear to believe that BMW particularly needs the mobile operators. His reasoning is familiar; working in partnership with an operator may reap certain rewards but reach—one of the fundamentals of established marketing and advertising strategies—is seriously hindered by exclusivity. “The operators are definitely interested in working with us,” Mielau says, “but we don’t want to limit the potential of our applications. So the operator business is not really a focus for us, although it can be interesting when they’re able to deliver more than just demographic data.”

That BMW will continue to innovate in its core business of automotive technology cannot be in question. It will be interesting to see if it continues to apply the same philosophy to its use of mobile marketing.

Check back this week for related features on Lufthansa and the BBC

There was a report on the news in the UK this morning that this autumn will be a bumper season for spiders in this country. This is terrible news for just about everybody, because spiders are horrible. The Informer once spent a month in Costa Rica, a glorious country, and encountered some of the biggest spiders in the world. But that hasn’t helped him overcome the panic he experiences when even the most unprepossessing common-or-garden UK spider scampers into view. And if you think the humans are unhappy over here, imagine how the flies are feeling. The wren community is chuffed to bits, however, because it eats spiders.

Whenever spiders crawl into the Informer’s consciousness he’s reminded of one of the most terrifying pieces of cinema ever created; the end of the original, 1958 version of The Fly, in which a fly with a man’s head and arm is stuck in a spider’s web screaming for help as the owner of that web stalks ever closer to his tasty dinner.

What’s this all got to do with wireless, though? Simply this: it occurred to the Informer this morning on listening to this news that it’s a useful metaphor for explaining the battle for customer ownership that typifies our industry today. Firms are always talking about how important it is that their services are ‘sticky’ and those services are all on the web. End users are like the prey, trapped in the sticky web of services. The more consumers the service providers catch and feed upon, the more nourished they become and the more webs they can build.

The carriers, the handset players, the internet firms, they’re all after customer ownership. And the latest trend is for social network aggregator services that enable users to manage all of their accounts under one umbrella interface. Vodafone became the latest outfit to launch such a proposition, with its Vodafone 360 solution. The new services enable users to pull together all of their content and contacts from Facebook, Windows Live Messenger, Google Talk and will include PC- and Mac-based services, as well as games, mapping solutions and a whole bunch of other stuff. This is the Voda-web, and it wants you stuck bang in the middle, injected with its special serum, that leaves you too weak to try and leave.

The thing is, the Informer thinks, that – just as a number of organisations have launched social networks – so a number will launch social aggregators. And if you’ve got a number of aggregators, that’s just going to require another aggregator to be launched. Like some kind of spiderweb fractal repeating itself into infinity.

At the heart of Vodafone’s 360 solution, the firm said, is “the most personal address book available”. Maybe it’s just the Informer, but that immediately called to mind a phone contacts book where each entry had a nude photograph of the contact. And a piece of intimate information about them. The Informer scrolled through his own contacts. He only had to get to ‘Dad Mobile’ before he went right off the idea. The 360 contacts book also has a feature rather grandly titled the “Vodafone Proximity Algorithm” which simply ranks entries by most recent usage.

Vodafone’s 360 offering also heralds the arrival of the first Release 2 handsets from open source mobile crowd the LiMo Foundation. LiMo – another splinter group chasing the mobile Linux bandwagon – is known to be very accommodating to the operator community, seeing handset customisation as its forte. Other than Vodafone, the operators that intend to bring LiMo-based handsets to market include NTT DoCoMo, Orange, SK Telecom, Telefonica and Verizon Wireless.

Vodafone will use the LiMo R2 software to stock its app store – the Vodafone Shop – with over 1,000 apps available for the LiMo handsets at launch and Vodafone 360 also appearing on Symbian-based Nokia handsets as a pre-install or a downloadable software suite.

Not to be outdone in the social networking stakes, Nokia recalled one of its reconnaissance droids to the mothership this week, through the acquisition of Dopplr, a social network that was launched two years ago by Nokia’s former director of design strategy, Marko Ahtisaari.

Status and intention broadcasting could be used together. For example:

Status: “I am currently on my eighth pint of premium strength lager, it’s only 9pm and I think Susan from logistics might be up for it.”
Intention: “I’m going to phone in sick tomorrow rather than come to work in the same clothes. Lol.”

Nokia is rumoured to be buying Dopplr for a purchase price of between €10m and €15m, which is also thought to be less than Ahtisaari was hoping for. Both Nokia and Dopplr are keeping quiet, but the move fits in with Nokia’s rash of acquisitions in this space. Earlier this month, Nokia bought cloud-based social media sharing and messaging service Plum, and that was in the wake of the acquisitions of Cellity and Bit-Side earlier this year. In 2008 there was the acquisition of Plazes, and prior to that, Twango.

As one comes back another one leaves, though. Could this point towards a future acquisition? Swiss firm Myriad – one of those middleware vendors not many people have heard of but which has software installed on over 1.8 billion handsets – has stolen Nokia’s chief technology guru Benoit Schillings. Schillings joined Nokia after its 2008 acquisition of Scandinavian mobile Linux firm Trolltech and is to take up his new role with Myriad on October 1. The move is likely to leave something of a hole at Nokia, where Schillings was responsible for Nokia’s cross-device technology strategy as advisor to CEO, Olli-Pekka Kallasvuo.

It’s quite an interesting strategy, when staff who are itching to try something new are given a long leash and told to go fetch. UK carrier O2 did something similar this week, when it announced the creation of a new MVNO called GiffGaff. Details are scant, deliberately so judging by the website, but from what the Informer can glean, the idea is that subscribers are rewarded for bringing in new subs, or participating in marketing drives for the firm, even creating its advertising and answering technical queries posted by other users.

The firm’s headed by one Michael Fairman, who has previously been head of broadband, new product development and online sales at O2. The firm’s head of marketing is Kylie Evans, who joined O2 earlier this year (presumably with a view to boarding the spinoff pod) from UK broadcaster ITV.

It’s got more than a whiff of failed ad-funded MVNO Blyk about it, particularly when it comes to relying on a self supporting user base (Blyk was very keen on the idea that its users answer one another’s queries). Perhaps Blyk’s departure, which was painted by the firm as the “plan all along”, created a vacuum in the market for the whacky MVNO that hopes to get its users to pay its bills, without actually paying its bills. We’ll see.

Now, Canadians have a reputation for warmth and generosity, at least that’s what the Informer’s heard. So he was surprised to see them objecting so strongly to Johnny Foreigner trying to carve himself a slice of their mobile market this week. Globalive Communications is the new mobile licensee in Canada, and the fact that it’s backed by Egyptian firm Orascom (Globalive will use Orascom’s Wind brand in the market) has caused a few Canadian kerfuffles. Voting rights apparently remain with Canadian investors and Orascom’s top man, Naguib Sawiris, claims to be unhappy to be such a dominant financial stakeholder in the company. The credit crunch is to blame, he said.

In other news from that vast country, Research In Motion (RIM) said this week that net income for the quarter to the end of August fell slightly to $475.6m from $495.5m in the same period 2008.

The BlackBerry manufacturer reported quarterly revenues of $3.5bn, up 37 per cent from $2.57bn in the same quarter of 2008, broken down as 81 per cent for devices, 14 per cent for service, two per cent for software and three per cent for other revenue.

During the quarter, RIM shipped approximately 8.3 million devices and added around 3.8 million net new BlackBerry subscriber accounts. At the end of the three month period, the total BlackBerry subscriber base was approximately 32 million worldwide. RIM also revealed it had settled litigation with mobile email firm Visto, resulting in a one time payment of $267.5m, from Rim to Visto. Ahhhh, Visto.

And, at risk of making it look like we’ve got some kind of mad Canadian bias going on here at Informer Towers, here’s the news that the Nortel fire sale continued this week with the once flag-carrying vendor announcing the auction of its Carrier Networks Packet Core assets.

The Packet Core Assets consist of software to support the transfer of data over existing wireless networks and the next generation of wireless communications technology, including relevant non-patent intellectual property. The deal will however include a non-exclusive license of relevant patent intellectual property.

Finally this week, two of those firms we were talking about that are driven to own the consumer through services, Apple and Google, have had their dirty linen aired in public over the weekend, as the US regulator gave an insight into the row the two firms are currently having.

The spat started back in July when the FCC began looking into the application approval practices of mobile app stores. The regulatory body sent letters to Apple, AT&T (the exclusive carrier of the iPhone in the US), and Google asking about the rejection of the Google Voice for iPhone app.

The result is something of a ‘he said, he said’ argument, with Google claiming that Apple has outright rejected the Google Voice app, and Apple claiming that it is still reviewing the app.

In Apple’s initial response, which the company published in its entirety online, the company said: “Contrary to published reports, Apple has not rejected the Google Voice application, and continues to study it. The application has not been approved because, as submitted for review, it appears to alter the iPhone’s distinctive user experience by replacing the iPhone’s core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voicemail.”

Apple argues that the Google Voice application replaces native iPhone functionality such as Apple’s Visual Voicemail by routing calls through a separate Google Voice telephone number that stores any voicemail, preventing voicemail from being stored on the iPhone, effectively disabling Apple’s Visual Voicemail. Similarly, SMS text messages are managed through the Google hub, replacing the iPhone’s text messaging feature.

By way of response, Google has asked the FCC to publish its own response in its entirety, which the authority has done. In its letter, Google claims that it was informed that the Google Voice application had been rejected because “Apple believed it replaced the core dialler functionality of the iPhone.” Moreover, Google also claims that it was Phil Schiller, Apple’s senior VP of worldwide product marketing, who informed Google of the rejection in person.

The question now is, which firm is factually correct in its claims? Has the Google Voice app been outright rejected, or is Google able to tweak it so that it falls within Apple’s guidelines? This is likely to be something the FCC wants to find out too.

What a tangled web we weave…

Take care

The Informer

Can mobile banking get off the ground?

The use of mobile technology has been heralded as a potential revolution in the retail banking sector, enabling bank customers to manage their financial affairs regardless of their location. However, a decade after the arrival of the first mobile banking services, actual usage remains modest in many countries, and the industry is littered with the debris of discontinued projects, terminally fractured partnerships and shredded deployment plans, while failed niche technology vendors and service providers lie permanently marooned by the curbside. Is mobile banking an over-hyped gimmick, or is it in fact a credible 21st century banking channel?

Mobile banking is a credible channel, but usage in developed markets will remain low

From a purely operational and technological standpoint mobile banking is a credible channel in 2009. A range of services are commercially available – some simple, others relatively complex – and improvements in device functionality and data network transmission speeds have without doubt enhanced the overall user experience. Alas, credibility does not equal substantial customer adoption. The first mobile banking and payment services emerged in 1999. Fast-forward ten years and usage in many regions remains decidedly low, even within developed markets where mobile devices have become nearly ubiquitous (Western Europe and North America).

There are, of course, some exceptions to this rule. In certain Asian countries – notably the technologically advanced nations of Japan and South Korea – mobile banking and payment services have flourished over the past decade. Whether this equates to genuine maturity is a matter of conjecture. However, the growth of mobile banking in Asia must be viewed firmly in isolation, and it would be dangerous – reckless even – to compare mobile banking development in countries such as South Korea on a pure like-for-like basis with nations in other regions of the world.

So, what is stifling the adoption of mobile banking in Europe and North America? The appeal of mobile banking simply isn’t strong enough to influence the mass migration of bank customers away from existing channels, such as online banking (OLB). If customers have grown comfortable with one low-cost, self-service mechanism, it doesn’t make particular sense for a bank to drive them to use another one.

IT spending on mobile banking is continuing, but it is not the highest-priority channel

Despite modest market growth opportunities (and a track record of extravagant promises and embarrassing underachievement stretching back ten years), mobile banking services still feature in the channel strategies of most retail banks in Europe and North America. Our latest Retail Banking Technology Spending Strategies survey indicates that mobile services are part of banks’ current and future thinking about customer interaction. However, mobile banking is not the highest priority for technology investment in 2009, and IT executives are focused on supporting development activities involving other channels (most notably the branch network and OLB).

Institutions in Europe and North America appear to be treading a cautious path. Mindful of previous fantastic projections of billion-dollar income streams (which turned out to be fantasies, at least so far), and operating in the toughest trading conditions in decades, banks in developed markets appear unwilling to place big bets on future revenue growth delivered via the mobile channel. Under the circumstances, and taking historical events into account, a conservative approach is entirely sensible.

Mobile banking’s greatest market opportunity involves serving the needs of the unbanked

According to the Consultative Group to Assist the Poor (CGAP), an independent policy and research centre dedicated to advancing financial access for the world’s poorest citizens, in 2009 more than one billion people worldwide lack basic bank accounts but own a mobile device. Catering to this ‘unbanked’ segment of global society undoubtedly represents mobile banking’s greatest market opportunity.

A number of mobile banking services have been launched in developing countries, and growth has been both continuous and rapid in several cases. By way of illustration, Safaricom’s M-Pesa mobile money transfer service has attracted more than 5 million Kenyan users after less than two years of operation. Encouraged by the success of M-Pesa, other operators are keen to launch similar services. Rwandatel is scheduled to launch a mobile banking and money transfer service in October 2009, becoming the latest African telco to target the continent’s huge unbanked market.

Unbanked citizens also exist within developed regions and nations. These include the world’s richest countries, where migrant workers operate in both the mainstream (legal) and shadow (illegal) economies. These workers often do not possess bank accounts in their temporary country of residence (either through personal choice or on grounds of ineligibility), but still have financial requirements that need to be met. The ability to send money back to their country of origin – typically to family members – is of particular importance.

During 2009, the World Bank anticipates total remittances flowing to developing countries will decrease from $305 billion to around $290 billion as a direct result of deteriorating global economic conditions. At this lower level, remittances will still outstrip both private capital flows (which are expected to fall 50% in 2009) and official development aid (typically around $100 billion), but there will unquestionably be additional hardships in many poor nations. Nevertheless, $290 billion is a significant amount of money, and providers (and agents) of remittance services are still in line to generate substantial revenues from transaction commissions.

Mobile banking services will replace traditional remittance flow methods

The provision of international remittance services has traditionally been the preserve of long-established firms such as Western Union and MoneyGram. These organisations operate across the world using locally appointed agents – Western Union has 375,000 – and their geographic and demographic reach is therefore more extensive than that of any individual retail bank.

However, the competitive landscape is in a period of change, and the dominant market position of Western Union and MoneyGram is under direct threat. Banks in North America are using remittance services to attract unbanked and underserved customers (estimated by the Center for Financial Services Innovation to total 40 million households). Moreover, the recent expansion of the EU (to include the countries of Central and Eastern Europe) greatly increased the number of migrant workers, and in 2009 banks are catering to this temporary segment of the population by offering remittance services (in the expectation of subsequently converting the status of such customers from unbanked to banked, and then cross-selling additional financial products).

Mobile solutions are destined to play an intrinsic role in the provision of international remittance propositions aimed at migrant workers in developed countries, and there is already evidence of services being launched specifically for this segment of the market (and at a lower cost than Western Union or MoneyGram).

Retail banks and technology vendors must be prepared to play the long game

It is difficult to ignore that banks in Europe and North America are either offering mobile services today or have plans to do so within the next three years. However, it is not a question of implementing a solution based on one of several different technological approaches (such as SMS alerts, mobile browsing or dedicated Java applications) and then simply sitting back to wait for the money to roll in. If banks in developed countries are ever going to generate substantial recurring revenues from their mainstream customers through the mobile banking channel, they must be prepared to play the long game and undergo four distinct phases of development:

•    create awareness

•    stimulate interaction

•    launch fee-based services

•    Achieve full engagement.

The pace of transition between phases will vary case by case, and some institutions will doubtless make faster progress than others.

Alex Kwiatkowski is a financial services technology analyst at Ovum

LTE picking up steam

It’s been a busy summer for the LTE crowd, with the technology gaining some considerable traction among early adopters in Europe, Japan and the US, and all eyes on 2010 as the year Long Term Evolution goes commercial.

US carrier Verizon Wireless was first out of the gates in mid-August, with the announcement that it had completed its first successful LTE data calls in Boston and Seattle using the 3GPP Release 8 standard in 700MHz spectrum. The data calls showcased streaming video, file uploads and downloads, web browsing and VoIP. Verizon, which is shifting its 4G strategy to LTE from a 3G rollout based on 1x EV-DO, has ten LTE cell sites up and running in700MHz spectrum in both Boston and Seattle acting as a test bed to help Verizon understand how to best prepare cell sites and how to add the technology to its network.

To this end, the company could do worse than pay attention to exiting infrastructure vendor Nortel, which recently teamed up with Korean manufacturer and sometime partner LG to demonstrate a 3GPP standards compliant data handover between a LTE network and a CDMA network. The demo, which took place at Nortel’s R&D centre in Ottawa, Canada, showed that user activities like video downloads, web surfing, and VoIP calls can be maintained when a mobile data user moves between LTE and CDMA coverage zones.

Nortel and LG said that initial LTE networks will co-exist with existing CDMA networks for some time, as users migrate over to the 4G networks, so inter-technology handover will allow mobile users to move between LTE and CDMA networks without losing data connectivity. This means that operators can run these networks concurrently without impacting services.

Larry Murat, vice president of LTE R&D, Nortel. “Although CDMA networks will remain the primary networks for many years to come, LTE will become a key piece of the networking puzzle as early as next year.”

Verizon said it expects to commercially launch LTE in up to 30 markets in 2010, covering 100 million people, with an eye to full nationwide coverage in 2013. This vision is shared by second-placed Japanese operator KDDI, which in August tapped Motorola and NEC to build its LTE network, with an eye to launching commercial services in late 2012.

It’s fair to say that the dust settled on the mobile broadband technology wars in 2008, with 3GPPP systems such as HSPA and LTE the clear winners, and 3GPP2 systems such as EV-DO and Ultra Mobile Broadband the clear losers. Mike Roberts, principal analyst at Informa Telecoms & Media, and author of the Future Mobile Broadband: 3rd Edition report, notes that Verizon’s decision to deploy LTE effectively killed off UMB and made LTE the de facto evolution of EV-DO systems.

A case in point is US operator MetroPCS’ recent commitment to roll out LTE in 2010. Verizon may have been thought to have driven the final nail into the coffin of CDMA, but it looks like there are more to come. The fifth biggest mobile operator in the US announced plans to migrate to LTE for its 4G strategy, with the intention of launching commercial services in the second half of 2010.

But while LTE cemented its position as the top next-generation mobile broadband system, WiMAX is still standing, albeit with a more narrow focus on bringing broadband to emerging markets.

KDDI is another 1xEV-DO carrier making the jump to LTE, but it is also hedging its bets on 4G as a major investor in Japanese mobile WiMAX licensee UQ Communications, which has an aggressive WIMAX rollout schedule. UQ has set itself a target of more than 90 per cent population coverage nationwide by the end of its 2012 fiscal year (31 March 2013). By that time, the company says it will have 1,161 cities covered through 38,000 base stations, including 19,000 indoor base stations or femtocells.

KDDI is deploying its LTE network in both the 1.5GHz and 800MHz bands. The company intends to offer commercial LTE services by December 2012 following a series of trials scheduled to begin in mid 2010. The carrier has said it plans to have a national broadband mobile phone service covering 96.5 per cent of Japan by the end of 2014.

Over in Europe, meanwhile, Deutsche Telekom-owned T-Mobile has unveiled what it claims is the world’s first multi-user LTE test network “with mobility” in the Austrian city of Innsbruck. The German incumbent carrier worked with Chinese vendor Huawei to establish the network. Austria is at the leading edge of European mobile data usage, with market leader Mobilkom Austria deriving one third of its revenues from mobile broadband services.

T-Mobile claimed its deployment, which uses the carrier’s 3G network as an infrastructure base, is the largest test network in Europe. It spans 60 cells and has been running since the beginning of July. The company said that the trial network is designed to gather user feedback as well as to test the performance and robustness of the technology, although it did not say how many users are participating in the trial. T-Mobile said it is using new NGMN devices as part of the text network, which are capable of 50Mbps in both up- and downlink. Trial services include high speed file transfer and high quality video on demand.

But Informa’s Roberts warns on the effects of the global downturn, which have boosted HSPA+ but slowed LTE, with virtually all major mobile operators vocal in their support of LTE, but also quietly admitting that the downturn and other factors have delayed their LTE rollout schedules by several years. “WCDMA/HSPA operators are now focusing more on HSPA+ upgrades, which will bring major improvements in capacity and data speeds, at a much lower cost than deploying LTE,” Roberts says.

Informa Telecoms & Media forecasts that by the end of 2013 3GPP systems will account for 72 per cent of global mobile broadband subscribers, 3GPP2 systems for 22 per cent and WiMAX 6 per cent.

Not content with engineering a large scale merger in the UK with French owned carrier Orange, Deutsche Telekom has now set its sites on some monster consolidation in the US. That’s the rumour, anyway, and as any follower of international soccer-ball knows, you can never discount the Germans.

Word on the street early this week was that the German incumbent, whose mobile arm T-Mobile ranks fourth in the US, could be looking to trade up and acquire third-placed Sprint Nextel. The story came from UK broadsheet the Telegraph. The firm’s problems in the US are not dissimilar to those it has faced in the UK, namely it’s been struggling to compete with stronger players. If consolidation could work in the UK, why not in the US?

The obvious barrier is the hotchpotch of standards that such a merger would involve. T-Mo, in the US as elsewhere, is a GSM carrier. Sprint Nextel, meanwhile is best described as non-committal, with a CDMA network, an iDEN network, and a serious interest in WiMAX burden-carrier Clearwire. Described by analysts as not so much a challenge as a nightmare, the integration of such a portfolio could take forever to complete, even if there’s a common goal of LTE.

Vodafone and Verizon have proven that opposing technological standpoints put a rather effective kybosh on full integration, with the US CDMA carrier a lonely outsider in the Vodafone family. Indeed there was speculation with this week that Vodafone’s 45 per cent stake in Verizon Wireless could be sold to the dominant parent, with journalists seizing on comments made by Vodafone CEO Vittoria Colao at a Goldman Sachs press event in New York. The big man confirmed that the company’s presence in the CDMA carrier was a matter of ongoing consideration, which is probably true of all of its businesses. Even if the sale were to happen, and Verizon has more than once made it known that it would be happy to see this come to pass, the two carriers would still be close colleagues, through their Joint Innovation Lab with China Mobile, Softbank and NTT DoCoMo, and their shared LTE projects.

Suggestions have also surfaced regarding a possible merger of regional US carriers MetroPCS Communications and Leap Wireless International, which have both seen their low-end, unlimited, prepaid service plans copied by larger, national operators. Leap rejected an unsolicited offer from MetroPCS back in 2007. Metro confirmed this week that it, too, is moving to LTE, and expects to be launching services on kit supplied by Ericsson in the second half of next year.

One obstacle to major US consolidation noted by analysts, is the Obama administration. Full of crazy notions like free healthcare for those unable to afford to pay for it, the administration has signalled its intent to be stricter than its predecessor on large-scale M&A activities.

Meddling bureaucrats! Aussie carrier Telstra will no doubt be able to hold forth on the stresses and strains of government intervention, with Australian communications minister Stephen Conroy issuing a call for the multi-play operator to be dismantled. Conroy announced fundamental reforms to existing telecommunications regulations that would prevent Telstra from acquiring additional spectrum for advanced wireless broadband, unless it agrees to a functional separation plan. What Luca Brasi might have delivered as “an offer they can’t refuse”. (Mind you, we all know what happened to him.)

Unless Telstra can come up with a plan of its own to satisfy the G, it will be made to separate its business units from the mother ship, offer more favourable wholesale deals to its competitors, and take a long hard look at interests it has in the Foxtel pay TV network and a hybrid fibre coaxial cable network. Either that or Mr Conroy will end up sleeping with the fishes.

Not having his wings clipped this week was Boris Nemsic, the new CEO of Russian carrier Vimpelcom, who presided over the first expansion of his tenure with the announcement of a move into Laos. Vimplecom has dropped $66m on a 78 per cent stake in Millicom Lao which, under the brand name Tigo, provides service to 280,000 Laotians. The Government holds the remaining 22 per cent.

There are four carriers in Laos, where penetration is 27 per cent and the population is just under seven million. Tigo is the market’s third-ranked player and of interest to Vimpelcom as something of a gap-filler, given its properties in neighbouring Vietnam and Cambodia. Nemsic said the move fitted “perfectly with our strategy of building a solid Southeast Asian cluster”.

As one international relationship begins, so another one ends. NTT DoCoMo, the Japanese mobile pioneer that has always struggled to make good on its potential outside of its home market, has announced that it’s doing the off from Malaysia. And it’s familiar disappointment for DoCoMo, which is walking away from local 3G carrier U Mobile, selling its 16.5 per cent stake for $100m. This is the same amount it bought the stake for, so at least DoCoMo didn’t lose money on it. Unless you count missed interest.

The firm invested in the fledgling carrier two years ago, with Korea’s KTF but the Malaysian outfit has managed to amass just 170,000 users since it launched last summer, according to Informa Telecoms & Media’s WCIS. Penetration in the nation is over 100 per cent, meanwhile.

In other Japanese news, struggling handset vendors in the nation have decided to band together in a bid for survival. Casio, Hitachi and NEC announced merger plans early this week and three is clearly a crowd in branding terms, with the new outfit being christened NEC Casio Mobile Communications.

The name reflects the ownership stakes. When the new firm is inaugurated in April next year, NEC will hold 66 per cent, Casio 17.34 per cent and Hitachi 16.66 per cent. Later in 2010 plans call for the stakes to move to 70, 20 and 9.26 per cent respectively. The new entity will focus on developing WCDMA and LTE handsets based on the Linux operating platform and will likely continue servicing the firms’ existing collective customer base, which shows a heavy bias towards the Japanese market, as well as Verizon Wireless in the US and LG Telecom in South Korea.

In other handset news, Palm has reported heavy losses for the quarter ended August 28, 2009, despite claiming strong sales of its flagship Pre device. On Thursday, the US manufacturer said net loss for the three month period hit $164.m, up from a loss of $41.9m in the same period last year. Revenues reached $68m, down from $366.8m in 2008. In mitigation the company said that, taking into account the strong performance of its new portfolio of devices based on the webOS platform, including the Pre and more recently the Pixi, adjusted net loss for the quarter was only $13.6m.

The Google-led Open Handset Alliance, meanwhile, has brought out the next edition of its Android SDK this week. Named to attract any budding Homer Simpsons out there, it’s called Donut. ‘Version 1.6′ as it is otherwise known includes support for CDMA and additional screen sizes like QVGA and WVG, gesture APIs to support finger gestures in apps, a text-to-speech engine, and a quick search box that can integrate Google Search services within any application.

And on Monday LG Electronics became the latest to join the throng with the announcement of its first Android-based device. The LG-GW620 features a three-inch, full touchscreen and slide out QWERTY hardware keypad but other details are scant. Google said the industry can expect to see devices running Android 1.6 as early as October.

As Google goes after the handset space, Nokia’s going after the service space in return. This week Navteq, which Nokia bought last year for $8.2bn, itself snapped up Acuity Mobile, a location based advertising outfit, for an undisclosed sum. You can see where this one’s going, right? If Nokia can go from making welly boots to becoming the world’s largest and successful manufacturer of mobile phones, then it can once again evolve into a services overlord. The Informer’s not sure about that, but we’ll wait and see.

Finally, a story’s been floating around this week that Warren Buffet, the stock market gazillionaire could have stopped the financial crisis if he’d been able to access his voicemail. The head of Barclays Capital had apparently tapped Buffet up, but Buffet asked for the details to be sent to him. Unfortunately, while he wanted a fax, he got a voicemail, which he was unable to access until eight months later, with the help of a younger family member. It’s like some kind of badly scripted sitcom plot twist, except it involves poverty and despair for millions of people. What a palaver!

If only Buffet had had a Spinvox account. More controversy there, though, with one investor late last week claiming the firm is up for sale and that it has written its investment down by 90 per cent? The Spinvox take? No comment.

Make of that what you will.

Take care

The Informer

T-Mobile, Orange UK merger raises more questions than answers

Months of speculation about consolidation in the UK mobile market finally came to an end in early September when European carriers France Telecom and Deutsche Telecom announced a merger of their UK mobile businesses, T-Mobile and Orange.

Expectations about consolidation in the UK carrier market this year have largely revolved around the acquisition of struggling T-Mobile by one of its competitors. But the deal announced last month is to be conducted as a merger of equals, with T-Mobile and Orange folded into a 50:50 joint venture. This move would create a new market leader, with over 33 million subscribers and a 43 per cent share of the UK market. This represents a 50 per cent leap from current leader O2’s 22.44 million strong user base and 29 per cent market share, according to the latest figures from Informa Telecoms & Media’s WCIS. The new player will also benefit from the inclusion of Orange’s fixed broadband subscriber base and the potential to deliver converged services.

The nuts and bolts of the merger will see Deutsche Telekom contribute T-Mobile UK on a cash-free, debt-free basis, including T-Mobile’s 50 per cent holding in its 3G network joint venture with Hutchison (Mobile Broadband Network Ltd) and gross tax losses carried forward of at least £1.5bn. France Telecom would contribute the whole of Orange UK including £1.25bn of intra-group net debt. Deutsche Telekom would then grant a £625m loan to the joint venture, which would be used to simultaneously reimburse £625—or half of the FT debt—to France Telecom. This would leave the joint venture with the same amount of debt, £1.25bn, but with that debt spread evenly between the two parents.

The merger is expected to generate synergies in excess of €4bn, with estimated opex-based synergies reaching an annual run rate of over £445m from 2014 onwards, through saving in network and IT expenditure, marketing and distribution. The joint venture would also be expected to invest £600m to £800m in integration costs over the period from 2010 to 2014, related to the decommissioning of some mobile sites and the streamlining of operations.

The board of the new company will have balanced representation from Deutsche Telekom and France Telecom, with a management team led by Tom Alexander, currently chief executive of Orange UK, as CEO and Richard Moat, currently chief executive of T-Mobile UK, as COO.

The big question now is how the enlarged entity will position itself in the market. The success of an enlarged T-Mobile/Orange is by no means guaranteed, given the strength of the Vodafone and O2 brands and the potentially conflicting strategies France Telecom and Deutsche Telekom may have for the UK operation. The carriers said that the T-Mobile UK and Orange UK brands will be maintained separately for 18 months after completion of the transaction, during which time the companies will mull over a new brand to be introduced in the UK, hinting at a the ultimate introduction of a “powered by” branding strategy.

Abigail Browne, senior analyst at Informa Telecoms & Media, believes that while the scale of the joint venture would give the new entity strong purchasing power, the deal is actually good news for competitors Vodafone and O2, despite their own respective bids for T-Mobile UK being rejected. “Vodafone and O2 will both benefit from a reduction in competition, and be able to assert their own brands over the next 18 months while the joint venture focuses on internal integration,” said Browne.

Any improvement in purchasing power would need to be measured against the buying muscle available to Teléfonica (which owns O2) and Vodafone internationally, though. France Telecom and Deutsche Telekom’s entire mobile portfolios combined would still fail to match the grunt of Vodafone, and Teléfonica sits comfortably ahead of both its French and German rivals.

John Delaney, research director for European consumer mobile at analyst IDC warned that the integration is no mean feat. “A new brand could succeed but is risky and would incur heavy short-term marketing costs. And will the new operator retain Orange’s heavy emphasis on multimedia content/services and handset branding, or will it adopt T-Mobile’s more telecoms-centric marketing approach? What about T-Mobile’s strong focus on wholesale business? These questions, and many more, are doubtless already the subject of vigorous discussion between the two executive teams,” Delaney said.

Meanwhile, the deal could bring the prospect of a single network market closer to reality in the UK. While Orange and T-Mobile will have the opportunity to combine their 23,000 or so 2G base station sites as part of their merger, any attempts to consolidate their 3G networks will bring Hutchison’s 3UK into the equation. Through Mobile Broadband Network Ltd, formed by 3 and T-Mobile UK in 2007, the two firms share their masts and 3G access networks. MBNL was given the aim of making 13,000 combined base station deployments, with around 7,000 currently in operation. According to Richard Moat, the marriage of Orange and T-Mobile would bring another 7,000 3G sites to the table.

Moat said that 3UK is supportive of the proposed merger between T-Mobile and Orange, and is expected to want to share in the synergies afforded by the agreement. It should be noted that Orange UK already hosts 3’s 2G traffic and, in a statement released shortly after the merger announcement, 3UK said: “Our network infrastructure joint venture with T-Mobile inevitably makes us an interested party.”

Any move to bring 3 into the deal could be good news for Swedish kit vendor Ericsson, which dominates the managed service market in the UK mobile sector. MBNL is already operated and maintained by Ericsson and the Swedish firm also provides maintenance and operations for Vodafone UK’s 2G and 3G radio access networks as well as field maintenance services for radio and switch sites to O2. In fact Orange is the odd man out, after tapping Nokia Siemens Networks in March 2009 to manage, plan, expand, optimise and provide maintenance services for the Orange UK 2G/3G mobile network for the next five years. When asked about the NSN contract, an Orange spokesman said, “Many suppliers will be affected by the deal, but it’s early days yet and we will be in discussions with NSN over the coming weeks.”

If successful, the deal could herald further consolidation in the UK. With under five million customers, 3UK will find the going tough in a market where its nearest competitor has 17 million.

Way back in 1993, in a development of which a young the Informer was blissfully unaware, the world’s first GSM1800 network was launched in the UK under the moniker Mercury One2One. Half a year later, it was joined by a new company called Orange. Each was to make its mark.

The two were given the remit of expanding mobile service to the UK’s mass market, and they opted to go about it in very different ways. One2One opted for cheap and cheerful, with what turned out to be something of a misjudged attempt to appeal to the hoi polloi. The firm offered free calls every evening and all weekend. While this did win it the (slightly incredulous) patronage of quite a few Brits, it proved economically unsustainable and the firm tried to snuff the deal out. Famously, original contracts that remained tied to the deal changed hands for thousands of pounds on the black market.

Orange headed in the opposite direction, launching a brand that was genuinely groundbreaking in the mobile industry and beyond. It’s fair to say that many of the leading brands in the mobile carrier space today owe a debt to the spadework put in by Hans Snook and his launch team.

As 2003 gave way to 2004, Orange (now owned by France Telecom) ceded leadership in the UK market to T-Mobile (which had bought One2One) and the mass market remit of the original licensees appeared to have been met. Times change, though, and the two carriers this week announced their plan to merge, ending months of speculation over the future of T-Mobile UK, which had been attracting the interest of all of its domestic competitors.

Today Teléfonica’s O2 dominates the UK mobile market with almost 23 million subscribers in August, according to Informa’s WCIS database. Orange, T-Mobile and Vodafone cluster behind it, all with around 16.5 million users. The merger of the German and French operators would catapult the new firm to an unassailable lead, with more than 33 million subscribers. It’s the kind of boost that Nicolas Sarkozy can only dream about when he’s buying his little shoes.

The deal would require the approval of the competition authorities but, while the new carrier would have a big lead in the market, O2, Vodafone and 3UK might not have cause for complaint. Reducing the number of carriers in the market could ease intense price competition and while the newly merged player ponders its new brand-plans call for the two existing brands to be maintained for 18 months while their respective navels are thoroughly gazed-the rest of the players could exploit their entrenched positions.

Only 3UK might have cause for serious concern, given how far it is off the pace, with just 5.3 million customers. But its JV with T-Mobile, Mobile Broadband Network Ltd (MBNL), which owns and operators the two firms’ shared 3G infrastructure, keeps it in the game with respect to the proposed merger. Orange has an outsourcing deal with Nokia Siemens Networks, while MBNL is effectively run by Ericsson. It wouldn’t make sense for these two deals to be maintained in a new JV and it seems likely that Ericsson would win out. If it did, the Swedish firm would have outsourcing deals with all UK carriers and the prospect of a single network would shuffle a few steps closer. When asked about the NSN contract earlier this week, an Orange spokesman told the Informer, “Many suppliers will be affected by the deal, but it’s early days yet and we will be in discussions with NSN over the coming weeks.”

This would certainly give Ashish Chowdary, who has benefited from the departure of Simon Beresford-Wylie from NSN, something to think about, as he will step up to head the services business when incumbent Rajeev Suri becomes CEO at the beginning of next month.

Back to the carriers, though, and Teléfonica was this week focused on a deal many miles from its UK outpost, as its relationship with China Unicom moved to third base. The two firms have struck a deal that will see each invest $1bn in the other. This will raise the Spanish incumbent’s existing stake in Unicom (a result of its share in China Netcom, which Unicom was instructed to absorb by the Chinese government last year) from 5.4 per cent to eight per cent. Unicom, meanwhile, will become the proud owner of 0.9 per cent of Teléfonica.

Between them the firms have more than half a billion customers across Europe, China and Latin America. They’ve committed to co-operation in a number of areas, including infrastructure and handset procurement, wireless service platform development, enterprise solutions for large multinationals, general R&D, roaming, some unspecified strategic initiatives and an exchange programme for employees.

The move pits Teléfonica against Vodafone, which holds a few per cent of China Mobile, in the global investment wars.

Also pushing into China this week were people at the Symbian Foundation. The OS group has announced a programme with China Mobile that will see the two organisations join forces on a range of projects, including the development of Symbian handsets based on the Chinese 3G variant TD-SCDMA.

The Foundation will also be working to drive application development for the world’s largest carrier’s app store, part of the Joint Innovation Lab project run by China Mobile with Vodafone, NTT DoCoMo and Softbank.

One application developer that is apparently not too bothered about Symbian is music streaming outfit Spotify. The firm unveiled its mobile offering this week, with applications for the iPhone and for the Android operating system. For Symbian S60, though, there was only a demo available. The mobile version of the popular online service will be available only as a premium product, costing £9.99/month. In this format, the audio adverts that enable Spotify to offer the service gratis online are stripped out.

“We still have a fair bit of work to do before we can release it,” Spotify said of the Symbian version. That a firm like Spotify should prioritise Apple and Android over the bigger installed base of Symbian gives an interesting insight into how developers see the OS battle shaping out. But the fact that the firm has been forced to return to its invite only subscription model for free accounts “due to overwhelming demand on mobile” suggests it’s a bet that’s paying off.

We know how Motorola sees the OS battle shaping out, because it has pledged its allegiance to Android. This week it unveiled its first Android phone, not branded as Sholes, as we had been led to expect, but dubbed instead the Cliq in the US and the Dext elsewhere. A clique, of course, is a small group of people. Let’s hope this doesn’t prove to be the market for a phone thus named.

As is the trend among most vendors that have adopted the Android platform, Motorola has encased the OS with its own sheath and developed an interface known as MotoBlur, that supplies a number of functions. The first of these is the integration of social networking and communication, with MotoBlur streaming together posts, messages and photos from different sources including Facebook, Twitter, MySpace, Gmail, and other email. All of this info is pulled onto the homescreen via the magic of widgets and, like Apple and Palm, Motorola is also making use of the cloud to allow backup and syncing of data and contacts over the internet.

The Cliq will be available exclusively via Android fan T-Mobile USA in the US in time for Christmas. Under the name of Dext, the device will also be available with Orange in the UK and France, Telefonica in Spain and America Movil in Latin America. None of the operators have yet revealed pricing or tariffs for the device.

Motorola will be playing catch-up to Android specialist HTC, which revealed its new mass market device on the Google-backed OS, dubbed the Tattoo. In the Informer’s experience lots of people regret getting tattoos, and HTC will be hoping the stigma of a foolish, juvenile purchase that comes back to haunt you when you’ve grown up a bit will not be attached to its new phone.

The Tattoo is the second phone to use HTC’s in house designed Sense interface, the first being the Hero. Buyers of the phone will be able to design and purchase their own unique handset covers to alter its physical appearance as well. The Informer will go for one that has MUM written on the front and DAD written on the back. Or perhaps LOVE and HATE.

Take care

The Informer

It ain’t over ’til the fat lady sings, so they say. And if the ‘it’ in this particular instance is the summertime, then the fat lady is none other than Mama Cass, and she’s crooning that ‘all the leaves are brown and the sky is grey’. It’s autumn. The Informer himself is a seasonal harbinger, of course, and his reappearance, like that of the little robin redbreast, means winter’s on its way.

But hold on, we mustn’t be hemisphere-ist, must we. On the other side of the world they’re gearing up for an actual barbeque season. And, while Australia won’t enjoy an Ashes victory in their summer this year, as we did in ours, they can take heart that the South Africans will probably pummel the Pomms on their behalf.

It’s only the beginning of September, of course, but if you needed any further evidence of the creeping onslaught of the seasonal holidays, you could turn your attention to the swathes of handset announcements that greeted the Informer upon his return to the office this week. It wasn’t until May or June this year that ‘Fairytale of New York’ by the Pogues finally left the Informer’s head, having lingered there from last year’s Christmas music barrage and so it was with heavy heart that the he actually read product marketing spokespeople bigging up the chances of their new shiny things being on people’s yuletide lists this year.

Let’s start, then, with Android and the gathering momentum that Google’s OS is now, erm, gathering. This week saw Chinese vendor Huawei join the throng. Well, it’s not really a throng just yet, is it. More like half a volleyball team. Anyway, Huawei announced a new unit that will go straight to Android evangelist T-Mobile. The new phone, dubbed the Pulse, is billed as the first touchscreen handset for the mass market.

All this really means is that it will be available on prepay tariffs; there’s nothing fundamentally different about the phone’s software or capabilities. In fact T-Mobile UK’s acting head of device marketing, Nicola Shenton, predicted at the launch that segmentation in the future would be more likely to be hardware- rather than software- based. She also said she expects to see 20 Android handsets available worldwide (not just on T-Mobile) by the end of the year and that the German carrier predicts Android handsets will be outperforming devices based on other operating systems in sales terms by 2013.

Shenton could soon have a new boss, according to the FT, which reported Friday that a source had revealed that Vodafone, Telefonica and France Telecom are all still in the running to buy the German incumbent’s UK operation.

Samsung’s first Android handset, the i7500 became available on Telefonica’s O2 this week as well, bringing the number of vendors in the commercial Android space to three (with Samsung and Huawei following in the footsteps of Android pioneer HTC) and the number of phones to five. It’ll be interesting to see if this quadruples before the end of the year, as Shenton believes will be the case.

Word is that Korea’s LG is soon to take the plunge, along with Motorola. The US vendor, which is making the latest in a series of do or die bids for success in the handset market, is understood to be about to unleash a phone called the ‘Sholes’. Motorola has long dabbled in funny names but this one really is hard to fathom.

However, the Informer thinks he’s nailed it with the following sporting link:

Insert a ‘c’ after the first letter and it could be named for the famous ginger-haired Manchester United footballer Paul Scholes. Prefix the phone’s name with ‘as’ and you’ve got the whole team!

There’s no news yet of a Nokia Android handset, although you’d be forgiven for thinking that one might be on the way, what with the Finnish firm’s new-found promiscuity in the software stakes. You’ll have seen it’s going with Windows for its Booklet device (the Informer got rapped for describing this as a netbook. It’s not a netbook, apparently, it’s a mini-laptop. Which is a bit like arguing the distinction between a pedant and a pedagogue.) and that it’s back on the Linux bandwagon with its Maemo platform-based N900.

It’s also mounting something of a fight-back in the smartphone sector where, despite a massive lead in shipments, it has been lagging in innovation and desirability. It’s certainly taking a leaf out of Apple’s book by making the second iteration of its flagship product what the first iteration should have been. Hence the N97 mini, which is like the N97 after some much needed liposuction. Apparently it feels like a completely new person.

There are also some new Windows phones in the offing, with LG nodding towards three upcoming units based on Windows Mobile 6.5. Expect a full touchscreen, a touch-slider and a QWERTY candybar unit. Direction-seeking Sony Ericsson also had its Xperia X2 to shout about.

Sony Ericsson came under new leadership this week, with an Ericsson EVP by the name of Bert Nordberg becoming co-president on September 1^st. He will take full control in the middle of next month, with incumbent CEO Dick Komiyama bowing out at the end of this year. Howard Stringer, chairman, CEO and president of Sony will take over as chairman of the board of Sony Ericsson on October 15, succeeding Carl-Henric Svanberg, president and CEO of Ericsson, who is leaving to head up BP.

And it looks as if the new regime is introducing a certain whimsy to its operations, as it unveiled its new brand values. The firm’s new brand message – in line with other Sony Group companies – is ‘make.believe’. So, perhaps Sony Ericsson is simply going to pretend that it’s not in a worryingly precarious position any more. Safe in this new found knowledge the firm can turn its attention to more important business, such as the “realignment of its external visual identity”.

“Sony Ericsson will expand the appeal of its globally recognised ‘liquid identity’ logo by adding seven new colour variations plus a new a ‘liquid energy’ flowing from the logo to make it more playful and visually appealing for the digital arena,” ran the firm’s announcement. ‘Nuff said.

There were other personnel shifts going on this week, with Nokia Siemens Networks’ CEO Simon Beresford-Wylie announcing that he’s to step down at the end of the month, to be replaced by Rajeev Suri, currently the head of the services business at the vendor. Beresford-Wylie will not be staying on the Nokia group board, and we don’t know yet where he’ll next pop up. Maybe he’ll have a little rest as the JV he’s credited with creating hasn’t had the best of times since birth.

There were top level departures at WiMAX hopeful Clearwire as well, this week, with CFO David Sach off to pursue other opportunities and chief strategy officer Scott Richardson signalling his intent to follow suit. So now Clearwire has nobody in charge of money and nobody in charge of strategy. What it does have now, though, is a good excuse.

In other exit-based news, Spanish carrier Telefonica and Portugal Telecom said this week that they have jointly sold their controlling holding in Moroccan operator Medi Telecom to the other local partners in the company for €800m in cash.

Under the deal, Telefonica and Portugal Telecom will offload a stake of 64.36 per cent – or 32.18 per cent each – to Meditel’s other investors, including FinanceCom, Watanaya and Fipar Holding.

Meditel held second place in the Moroccan mobile market at the end of June, with 8.6 million subscribers, following market leader Ittissalat Al-Maghrib with 14.3 million customers. Both these carriers operate GSM and 3G WCDMA networks, while trailing CDMA player Wana records a subscriber base of just 661,000 users. Mobile penetration in Morocco topped 73 per cent at the end of June.

Finally this week the world’s smallest island nation, Nauru in the South Pacific, found itself with a new national holiday this week, inaugurated to celebrate the arrival of mobile telephony to the island. Thanks to exotic location specialist Digicel, the island, which is one tenth the size of Washington DC, and home to 15,000 people, now has GSM. And the first of September every year will now give those people the opportunity to remember its arrival.

Take care

The Informer

Once mighty Nortel bows out of the telecoms space

The end of July 2009 may also have marked the end of an era in the infrastructure market, as Canadian manufacturer and one time telecoms giant Nortel seems likely to take its final bow.

In late June, Nortel’s fire sale looked like it was drawing to a close as rival Nokia Siemens Networks stepped in with a $650m offer to acquire Nortel’s LTE and CDMA assets. But with Nortel sheltering in Chapter 11 Bankruptcy Protection, the Canadian firm was forced to file for a bidding procedure that invited higher offers in order to comply with the US Bankruptcy Code.

In the end however it was Swedish vendor Ericsson that won out with a $1.13bn bid that has since been approved from the Ontario Superior Court of Justice and the United States Bankruptcy Court for the District of Delaware. The deal includes all of Nortel’s CDMA business and Nortel’s LTE Access assets, although it is understood that this does not include the firm’s LTE patent portfolio.

But the auction was not without controversy. Canadian handset vendor Research In Motion (RIM) came out swinging in late July, alleging that Nortel had obstructed its attempts to purchase the same assets that had caught NSN and Ericsson’s eyes.

Jim Balsillie, RIM’s co-chief executive officer said that the firm would be prepared to pay in the range of $1.1bn for the CDMA and LTE businesses and “certain other Nortel assets”. But he said that in its attempts to be qualified as a bidder in Nortel’s auction bidding process, RIM was told it could be qualified only if it promised not to submit offers for other Nortel assets for a period of one year—something which it had intended to do.

“RIM is extremely disappointed that Nortel’s world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada’s own Export Development Corporation is preparing to help by lending $300 million to another bidder…RIM has found itself blocked at every turn,” said Balsillie.

It seems as if all parties, Canada’s export credit agency included, just wants to get the company broken up and sold off. “This is the end of the line for Nortel,” said Mike Roberts, principal analyst at Informa Telecoms & Media. “This takes the company out of the mobile business, and it looks like the rest of the firm is being sold off piecemeal.”

Indeed, enterprise networking firm Avaya has signed an agreement to purchase Nortel’s enterprise solutions business for $475m. The proposed acquisition includes the Nortel Enterprise Solutions voice, data and government systems businesses, but is subject to a bankruptcy auction process as well. Although it does not look like Ayava will have any competition.

There has also been plenty of speculation that the firm is considering selling its 50 per cent stake in Korean joint venture LG-Nortel, in which it is a partner with local manufacturer LG Electronics, for anything up to $1bn. And it is also thought the company is still considering the sale of its crown jewels—its Metro Ethernet unit, which it took off the market in February. Nortel has only said that it is in advanced discussions with other parties with a view to selling other parts of its business.

In early August, Mike Zafirovski, president and CEO of Nortel announced his resignation from the once mighty firm, effective immediately. After overseeing the break up of much of the business, Zafirovski said he “believes the company has reached a natural transition point”. The company’s board of directors has also been reduced from nine to three, with the business now considered stable.

Second quarter net loss, driven by reorganisation costs, hit $274m, compared to net loss of $113m in the second quarter of 2008. Revenues for the period declined 25 per cent year on year and 14 per cent quarter on quarter to $1.972bn.

Informa’s Roberts said that the writing was effectively on the wall when the company went into Chapter 11, “Customers stopped ordering with them, and the management did too little too late,” he said.

On a related note, Informa’s Roberts said that he had heard of concerns among the carrier community about the lack of competition between vendors. “There is concern that numbers are dwindling quite rapidly,” he said. “The Alcatel Lucents and Ericssons look viable now, but for how long will that continue?”

In a recent interview with telecoms.com Tarek A. Robbiati, the chief executive officer of CSL, Hong Kong’s first-placed mobile carrier, predicted that Chinese vendors will come to dominate the global mobile infrastructure market. “Further consolidation will come in the next three to five years. In the end there will be only three [infrastructure vendors] left, and two of them will be Chinese. The European vendors are just too slow,” he said.

Times are indeed hard. For the second quarter of 2009, NSN reported a 21 per cent year on year decline in net sales to €3.2bn, and the kit vendor said it expects the mobile infrastructure and fixed infrastructure and related services market to decline approximately ten per cent in Euro terms in 2009, from 2008 levels as carriers reign in spending.

Alcatel-Lucent meanwhile has struck a deal with IT giant HP that will see a merger of product offerings pitched at service providers and enterprises. Under a ten-year deal the companies will jointly market IT and communications solutions and managed services designed around convergence and next generation networks. The companies are hoping to pick up on the convergence of telecoms and IT, where many organisations are looking to modernise or outsource their infrastructures, by creating a one-stop shop.

The program will be supported by dedicated business development and sales resources, and is expected to generate billions of Euros in net revenues for HP and Alcatel-Lucent over a ten year period. As part of the agreement, HP will also take over a large part of Alcatel-Lucent’s IT operations, with the French/US vendor seeing its infrastructure upgraded to a more modern and efficient platform. As a result, some 1,000 Alcatel-Lucent staff will be transferred to HP.