Rich communications in the cloud ?

Informa ‘s rich communications conference was held in November 2009. I joined a panel there, and participated to follow-on meetings of GSMA RCS initiative and developer challenge. My findings :

• Standard-based integration is becoming a nice-to have feature as the cloud provides better ways to reach critical mass and ROI.
• Several solutions deliver innovation beyond industry standards, to offer the best of both worlds.
• New devices such as net-book, internet appliances and social network behavior will drive the evolution of next generation communications.

Standards are only nice-to-have features
No one disputes that interoperability made SMS successful and enabled MMS modest penetration (Graham Trickey of GSMA gave an example : "MMS had 50% growth in USA since interoperability agreements in 2008". The challenge is that since the iPhone launch, and Web.20 web solutions, there is not much demand for applications with limited feature set, coming late. Even in emerging markets, users are impatient and tech-savy. So what is the status of telecom industry standard initiatives :

• GSMA has been promoting applications through RCS pilots, and enabling technologies such as OneAPI for networks and OMTP BONDI in handsets.
  Why did RCS take 2 years before doing pilots ? The investigation was done in 2007, release 1 published at the end of 2008, release 2 adding the support of net books was published for the market trials in 2009. Trials were done in 6 countries : Italy (TIM ; only 50 internal users although TIM has 30’000 of its mobile community bundle Tribu) , Spain (Telefonica), Portugal (Optimus) , Korea (SKT with Pajama5 ) , France (Bouygues Telecom, Orange, SFR ; with 2 handset manufacturers). RCS release 2 offers content sharing (videos, images during a voice call), messaging (chat) and network address book. But only the release 3 will include social network integration. GSMA is currently chaired by Aude Pichelin and in order to get wider adoption of its approach it has launched the RCS developer challenge , supported by GSMA officers including John Darnbrough.
  The technology competition from the Web is huge and many are skeptical about the chances of success of telecom industry standards . Paolo Simoes, from TMN Portugal says bluntly : "RCS delivers the lowest common denominator and lacks any Wow! effect, like previous attempts : Mobile IM, push to talk, ...". Providing another comparion, Roberto Minerva suggested : " developers would prefer the Skype API". My view is that despite rumors of Open source , this is focused on 3rd party scripts and applications to control Skype UI. Alan Quayle provides a summary of challenges in recruiting web developers in his blogs and reports on network APIs. To be fair to RCS, we note that web communication applications are still equally fragmented or often undocumented. And note that web apps still refer to the dial-tone paradigm to describe presence management Twitter, Google Lattitude.
• Operators have recognized that cloud-based or “over the top” solutions will dominate operator-led solutions.
  Traditional revenue models of operators don’t seem to be valid for new communication services ? Traditional models were based on managed services with subscription and usage fees. Cloud computing, voice services such as GTalk and Skype or social applications like Twitter, Facebook and web social networks have changed the economics. Commenting on this for TMN Portugal, Paolo Simoes commented “SMS and MMS rates are decreasing by 2 digit percentage annually and therefore no business model based on communication usage increase is sustainable; flat rates are going down from 90$ to 20$ and no additional market stimulation is necessary; lastly no monetization of presence is possible when Facebook and MSN status are free”. His advice : “if you cannot beat them [Facebook, Yahoo!, Google,…] join them”. And he sums up his prediction : “ it took 14 years to deploy 3G, 7 years for 3G, it will take less than 4 years for LTE and the move for an all IP application infrastructure – in 2015 China Mobile will acquire Vodafone and the dominant application will be some kind of FaceTube from China ;-)”.
  
  Vodafone appears to have done a similar analysis, promoting Facebook and other cloud social network but adding value added in the form of service aggregation in the Vodafone 360 application. But again, to be fair, the monetization of Twitter and Facebook is equally challenging, and we have witnessed the 75% valuation drop of Skype, despite their phenomenal growth.

Cool applications : innovation and standards
What makes me optimistic is that the applications coming out are nice. There after all may be a smoother transition from telecom 1.0 industry standards to meet mobile Web 2.0 . Here are some examples :

• Cross-device social communicator :
  Movial Communicator was deployed by Optimus as part of a youth community services branded TAG, a mobile subscription at a flat rate of 10 Euros . Nuno Lopes Gama from Optimus reported that TAG has 100’000 users in the 15-25 years age group and reports good usage of the PC Webphone for voice and SMS . However there has been little demand for VoIP or messaging from the Enterprise sector, as they already have low prices for voice calls and more advanced professional messaging (from Microsoft). Movial has deployed applications with 15 operators on multiple handsets (Symbian, Maemo, Android) and provides integration with music services, social networks (Facebook), UGC sharing ( Flickr, Daily motion) and participated to RCS French trial (with Bouygues). It also offers a hosted services with Haloya .
  
• Smart phone idle screen communications:
  SKT Telecom Pajama 5 was launched after SK Telecom measured that 62 % of calls were to less than five numbers ( 29 % of these to one person and 51% to top 3 called parties). The service let’s you designate 4 buddies and adds : expression with wallpapers, animated messages , A-GPS friend finder , feed from SNS sites (Cyworld, Facebook). The service attracted 350,000 youth subscribers in 3 months and is being extended to more participants in 2010 . For the general market, SKT has launched mobile IM interoperability with other operators, growing usage 20X in 2009 ( 60% of subscribers have mobile IM-enabled handsets but 200’000 use it). This project was part of HP’s open innovation programs and included partners like Eluon .
  
• Ambient communications “ :
  HP Labs team submitted Friendlee to the RCS innovation challenge as a concept to demonstrate the automatic generation of a social network. Phone contacts are dynamically weighted by user’s mobile communication frequency, duration and location records. It leverages the mobile network intelligence to shows your friends and preferred businesses on a map, highlighting your closest friends or implicit recommendations. The more the user calls or sends SMS to a friend, the higher up he or she will be on the user’s list. And obviously, this can be linked to Facebook and other SNS.

Usage of devices and social applications
What trends will influence the evolution of these services ?

• Net books adoption : it is clear that net-books, tablets, photo frames are starting to bring new ideas into the mobile communications space. An estimated 5 million net books were shipped in 2009, a 30% growth rate from 2008. Major manufacturers include Acer, Asus, HP and Samsung ( (the last two entrants growing over 30%). Subsidized prices start around 200$ for models like HP mini 311. This is not yet a big adoption compared to smart phones but net-books are a market catalyst in terms of mobile rich communications functionality.
• Mobile social networks : Christine Perey authored two editions of Informa’s mobile social network comprehensive worldwide analysis. They forecast that the users of mobile social networking will grow from 8% at the end of 2008 to 25% by 2013, generating over 6 billion $ by that date (from subscriptions, advertising and transactions) . Another trend is that all web communities are mobilizing and that the functionality is “creeping” in every other application category. Perey research is now researching mobile augmented reality, a particular category that also provides a direction for very elaborate form of group interactions using advanced device capabilities together with cloud computing resources.
• Youth market trends : in recent months I have been working with C:Insight on segmentation and ethnographic analysis of emerging mobile markets like India, Africa and South-East markets which could prove market-changers in the domain of rich communications. Some data on mobile youth users :

300 million in China, Taiwan and Hong Kong

219 million in South-East Asia

124 million in Western Europe

146 million users in Latin America

60 million in Central and Southern Africa

Youth users in the US, UK and NL use thier mobile 1.5 hours / day ,


Asian Youth use it 3.5 hours / day.

34% of youth bought their mobile phones only to send SMS.

Teens are sending/receiving 100 SMS messages 3,000 / month.

16 % of youth subscribers have smartphones.

57% of youth in India browsed on their mobile phones

• It is interesting to note that even in rural India, users are tech-savy and interested in loading applications. Market-education and communication will be essential to achieve viral marketing . For example campaigns for Vodafone value-added services “ZooZoo” could be as important as the service itself.
• Network driven innovation : Diane Meyers authored Infonetics research on RCS market in 2009. She estimates there will be over 1 million subscribers in 2010, 5 M in 2011 and M by 2013, deployed over 3G networks with an IMS core. It is clear that there has been some delays and these estimates are quite tentative. In addition one could question whether IMS or cloud services will become core to RCS, perhaps a mix of the two as my discussions seemed to indicate. Infonetics rightly indicated early on that the operators challenges were not only service interoperability but capability to innovate to grow the market.

Innovations at ITU Telecom World 09

ITU's Telecom World 2009, Geneva, October 9
Popular debates at ITU events tend to be policies, regulation, economy. This year the event attracted 18,000 visitors, a modest number due in part to the economy but probably also competition with other telecom trade shows in Europe. Visitors flocked to the Swiss stand, which proved to be one of the show’s most popular, covering 700 m2 on two levels and promoting the region’s excellence by highlighting thirty innovative companies and organizations based there. I went instead to meet friends at start-ups such as :

• Axelprod machine to machine mobile communication
• AxSionics ID management
  
• Adeya secure mobile communications
  
• id Quantique layer 2 communication encryption
• Klewel video content management
  
• Les alchimistes call center interconnection software
  
• Netguardians network and system event management
• Sensometrix : biometric security access
  
• Sensorscope mobile weather and environmental monitoring
  
• Osmosys secure mobile messaging and applications
• Ozwe interactive multimedia user interfaces
  
• Wisekey information and communications security

Frederic Kaplan co-founder of Ozwe invited me to play with his QB1 machine. I experienced the easy interaction with music with gesture-based interfaces and touch. I proved a poor user of the ball games. Later, with Sid Arora of Mobile Monday Switzerland I participated to a short web cast with our friend Tanguy de Lestré from Mobile Monday Brussels :

Incubating innovation at MIT, 23 September 2009

Lab to market workshop at MIT
The session was led by Wim Sweldens, Vice President Alcatel-Lucent Ventures (ALV). He is also inventor of wavelet compression that led to JPEG2000. ALV is a corporate venture-capital fund for scientists within the Bell Labs. Sven told us the story behind Alcatel's OmniAccess 3500 . It started when an inventor (Dimitrios Stiliadis) submitted the idea to ALV incubation project nicknamed Evros within 2007. The initial idea was a laptop card with a VPN, single-sign-on and WLAN/3G capabilities. But the improvement came from an IT staff who understood how to make it a remote laptop control by adding : battery and OS, remote wipe/lock as well as remote application management. As another example of a "hobby" that turned into a "big" idea he quoted Linus Torvalds posting

Aug 25, 1991 usenet : comp.os.minix
“What would you like to see most in minix?“:
Hello everybody out there using minix — I’m doing a (free) operating system (just a hobby, won’t be big and professional like gnu) ....

Responding to his questions, the audience suggested 10 key points for innovation :

1. Culture (of innovation)
   
2. Failures (entrepreneurship is about risk, failure is a temporary state)
3. Prototyping (permanent beta : Linus Torwald turned to users to get feedback ),
4. Customer relevance (unmet needs, as with Kindle launch with Sprint or the whole net neutrality debate : consumers want it)
   
5. Scalability (cloud, fast market adoption),
6. Collaboration (about teams Swelden quoted "who 1st, then what" from Jim Collins, co-author of Built To Last, a study of companies that exceed their industry [success factors include : persistence over many years, right people on board and the wrong people off board before strategy, CEOs from within their own ranks and not from the outside]he says that small teams of A-players is the secret of venture investment).
   
7. Marketing (targeting, creating an ecosystem value-chain, no linear go to market process is possible in a Web 2.0 world, you need innovation at every single step including in marketing value chains)
8. Ideas (protection with patents or better by fast execution),
9. Strategy (technology + business innovation, Robert Reich in the Future of Success writes "the geek needs a shrink" to understand and opportunity),
10. Governance and regulation (pay attention to government incentives, regulation particularly in health care or in P2P "over the top" content management)
    

Commenting this audience list Wim distilled it down to one single element :

People
People have the culture, include customers of innovation, define strategy, ensure collaboration. "If you focus on the people, you will innovate"

Video of Wim Sweldens at Emtech09.

"Innovation = Invention + Commercialization", MIT Entrepreneurship Center
The workshop was kept lively by Kenneth (Ken) Morse, founder of MIT Entrepreneurship Center who made frequent "cold calls" with the audience. Participants contributes the following keywords on innovation : "the guts to try something new and tenacity to stay on ", "passion, relentless listening to customers", "cheaper and better ways to meet needs", "new ways of doing things...and that somebody will pay money for ".

Ken had listed his own success factors for innovation and yes he agreed " they sum up to People"

1. Attitudes
2. Passionate behavior
3. Management talent
4. Flexibility in small organizations
5. Product quality and speed to market
6. Patents and sustainable advantage
7. Quality investors
8. Location clusters of excellence

Here are some comments that were exchanged :

Attitude, passion, management (points 1-3)

• Regulation is enemy of innovation. He challenged financial controllers with Howard Stevenson's definition of innovation : pursuing an opportunity beyond the resources available today "we'll worry about the money later..."
• Be willing to be Unusual/Unconventional, "break the harmony"
• As key factor for attitude : parent(s) who are entrepreneurs - "Violate labours laws and get your 8-year old kids involved in your company" and practical, real world experience before, during and after university studies.
• You need an “A” Team –“3K” experience (know the market, know people, be known in the market) . But "be ready with equity to give, if they don't want equity, you don't want them".
• "Recruit, Support, and Celebrate “Weird” people who are results-oriented, relish change, and have very fast clock speeds".
  

Organizations (point 4)

• Closely held (family owned) businesses are outperforming public companies (that was also the case of IBM and HP as long as founder's families were involved).
  
• Corporate business units are outstanding at incremental improvement (HP laser printer and ink-jet businesses had 20% / year improvement for 20 years).
• "Open innovation" is important as described by Henry Chesbrough of UC Berkeley . But Ken"OI is not the only game in town".

About product, speed, patents (points 5-6 )

• Our world has the ability to adopt and deploy faster and faster. He showed the technology adoption curves.

• You have to decide if your product is going to compete on price (Wallmart )or on innovation (Apple, HP for many years, Goolge) or customer intimacy (IBM, Mc Kinsey,... hotels HP these days)
• If you are in a big company do not despair "big pockets but short arms". But you have to challenge your company policy : "Can it embrace high risk ventures?" 6 out of 10 startups projects are shut down ; 1-2 are tremendous successes". Be prepared to change adverse reactions, this is the reason people join big companies.
  
• Ken gave the example of HP who as a corporation invested 1B$ in laser printers and one month later another 1B$ into the competing inkjet. That started as a bet on radical innovation but from then on it was an incremental game. "Continue relentlessly recruit A-players and invest, you will continue to dominate".

Investment and location (points 7-8)

• How to get funding ? "The best source of funding is the customer. Don't ask VCs, rather go and meet them to tell them that you are cash positive and growing".
  
• This is also valid if you operate inside a corporation : " the best stage gate is a purchase order. - don't ask the committee, contaminate the process with the voice of the customer".
• Clusters of innovation and locations have been analyzed by the Monitor Group.
  

Overall, the workshop was a teaser for MIT's course on corporate venturing and for the entrepreneurship course Ken teaches in Europe at Delft University of Technology, in Europe. The Center acting Director, Bill Aulet Managing Director, participated in another panel session.