Case in point: Nokia’s “Open to Anything” ad campaign featuring people who have created software for Nokia N95 smartphones (link).

It features, swear to God, a guy who created a self-hypnosis application for the N95, someone who created a bad breath detector, a man in the Witness Protection Program who created a location-aware app to track the hit men chasing him, a ditzy woman who uses the phone to track fertilizer schedules for her plants, a jealous wife who created a lie detector, and a flake Jewish photographer who glued together two n95s to create a 3D camera.

“You’ve never really seen a bris until you’ve seen a bris in 3D.” –Nokia’s website

They’re all fantasy applications from obviously fake people, but beautifully animated in an elaborate Flash-driven site.

From time to time, I’ve talked with Nokia employees who were confused about why people don’t buy more application software for their Nokia S60 smartphones. There are a lot of reasons — lack of awareness that they can do it, lack of a built-in software store on the device, incompatibility between various versions of S60, etc. But one huge reason is because no one has ever made a compelling case to most users on why they should care about smartphone software.

The triumph of creativity over business sense

The Open to Anything campaign is a great example of how Nokia’s hurting itself in the applications business, and in the US market in general. I’m sure Nokia’s intent was to do something light-hearted to draw attention to the N95, and if you view the ads as standalone short films they are moderately witty. You see this a lot in online marketing lately — a creative agency will create humorous websites (often with video) designed to draw traffic from bored web surfers. But unless the ads also align with your strategy, they don’t drive sales. In Nokia’s case, they actually do harm:

–Once again, Nokia is communicating that its users are freaks and morons, which in the US is not the way to build a loyal following. Nokia has a long habit in the US of positioning itself as the preferred phone of people who lack social skills. At least this time there aren’t any sluts in the ad (link).

–The benefit of an open phone is not that you can write your own apps, it’s that you can buy applications created by others. Almost no one wants to create their own apps. So we’re being told that N95 users are not only freaks and morons, but they are freaks and morons who have programming skills — an even narrower demographic.

–Since the argument for why users should care about applications has not been made, showing a bunch of nonsensical applications actually makes people less likely to take an interest in mobile apps at all. It trivializes the whole idea of mobile software, at a time when Nokia claims it is trying to make itself into a computing company that can compete with Apple and Google.

Meanwhile, Apple’s ads depict its users as smart and hip, it puts its CEO on stage with real developers showing lustworthy iPhone applications, and it plans a built-in software store for the iPhone. Care to guess which platform is going to get more user and developer loyalty?

I’m tempted to start taking bets on when the iPhone application base will be larger than S60’s. Unless Nokia wises up quickly, it won’t take long.

The announcement was both interesting and supremely frustrating. The interesting part was that Sprint has brought several promising investors into WiMax, including Google. That’s right, Google is launching a wireless network, if only as a minority investor. (And it got a sweet deal, which I’ll explain below.) The unbelievably frustrating part is that Sprint has pretty much slipped the deployment plan for WiMax by another two years. It’s hard to get excited about a new technology, no matter how great the investors, when I have zero confidence in the companies’ ability to deliver.

Here’s what was announced:

Sprint and several companies have banded together to buy Clearwire, the other wireless company that had been building a WiMax network in the US. Clearwire will be merged with Sprint’s WiMax division, the company will be managed by a mix of Clearwire and Sprint executives, and will be headquartered at Clearwire’s site in Washington state.

Investors in the merged company, to be called Clearwire, include Google, Comcast, Intel, TimeWarner Cable, Bright House Networks, and Trilogy Equity Partners. Intel and Comcast are investing about $1 billion each, TimeWarner and Google about $500 million, Bright House $100 million, and Trilogy $10 million.

Google gets to be the preferred search provider for both Sprint and Clearwire, will provide apps (including Gmail, YouTube, and Maps) for bundling with devices, and Clearwire will sell devices running Google Android. Google and Clearwire will also partner to develop advertising, applications, and create the operating principles for the network (link). Google said it will work with Clearwire to create:

An open Internet protocol to work with mobile broadband devices…and implementing other open network practices and policies….The network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.

Intel will provide WiMax chips (which it was doing anyway), and Sprint, TimeWarner, Comcast, and Bright House will all become Clearwire resellers.

The new company will be 51% owned by Sprint, and its governance structure is so nuanced that I won’t even try to explain it here.

As part of the announcement, Sprint slipped in an estimate that the new Clearwire network will reach 120 million to 140 million people by the end of 2010 (link).

What it means

Death to the Xohm. On a personal basis, the most exciting part of the announcement is that Sprint is apparently dropping the brand name Xohm, which it was using for its WiMax services. I am very sympathetic to the troubles that companies have finding brand names that aren’t already trademarked. But even by my lowered standards, I thought Xohm was a bizarre name. To me, it sounded like something you’d read in a bad science fiction novel. The Xohm would be a race of homicidal crustaceans bent on destroying humanity.

“Captain, the Xohm have deployed a quantum weak force destabilizer!”

“Good God! That could rupture the very fabric of space-time!”

Google gets a wireless network. The company that made out like The Xohm in this deal is Google. For just $500 million (little more than gas money for the corporate jet in Google terms), the company gets preferred placement for its services on both Clearwire and Sprint; a showcase for its apps, advertising, and OS; and the opportunity to design the business model for a national wireless network. No wonder Google didn’t bother to bid seriously in the recent US wireless spectrum auction — why build a network when you can play with one for a tenth the price?

Comcast, Time Warner, and Bright House all get quadruple play options. They can pair Clearwire services with their current cable businesses to deliver advanced bundles of wireless services, Internet access, telephony, and television.

Will it succeed?

The reaction to the deal on some prominent tech blogs seems to range from lukewarm (link) to intensely negative (link). But I think there’s a lot to like about it. The involvement of Google means we’re very likely to get a pretty much open ecosystem on a major wireless network, which Silicon Valley has been collectively screaming about for years. The size of the investments mean there is a lot of money available to build out the network. People ought to be dancing in the streets here, but instead most of them appear to be either yawning or throwing spitwads.

I’d be out there dancing myself if it weren’t for the slip in the schedule. A year and a half ago Sprint announced that its WiMax network would reach 100 million people by the end of 2008 (link). Now Sprint says that by the end of 2010 the network will reach 120-140 million people. So in the last 18 months, the schedule has basically slipped by 24 months. It’s going backwards. At this rate we’ll have passenger rockets to Pluto before we have WiMax service.

Hopefully the management of the new Clearwire will be dominated by people from outside Sprint. I want to believe that they can build out this network; we need it both for the service itself and as an example of how to grow an open mobile ecosystem. But it’s very hard to trust people who have missed their targets as badly as these guys have.

Some other interesting commentary on the deal:

Muni Wireless on the cable companies’ motives for investing (link).
Fierce Wireless explains the ownership structure (link).
Sprint’s amazingly complex press release (link).

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Thanks to Xellular Identity for including last week’s post on Adobe in the latest Carnival of the Mobilists (link).

–The next version of the mobile Flash runtime will be free of license fees. Adobe also confirmed that the mobile version of the Air runtime will be free.

–Adobe changed its licensing terms and released additional technical information that will make it easier for companies to create their own Flash-compatible products.

–The company announced a new consortium called Open Screen supporting the more open versions of Flash and Air. Members of the new group include the five leading handset companies, three mobile operators (including NTT DoCoMo and Verizon), technology vendors (including Intel, Cisco, and Qualcomm), and content companies (BBC, MTV, and NBC Universal). Google, Apple, and Microsoft are not members. It’s not clear to me what the consortium members have actually agreed to do. My guess is it’s mostly a political group.

Adobe said that the idea behind the announcements is to create a single consistent platform that lets developers create an application or piece of content once and run it across various types of devices and operating systems. That idea is very appealing to developers and content companies today. It was equally appealing two years ago, when then-CEO of Adobe Bruce Chizen made the exact same promise (link):

If we execute appropriately we will be the engagement platform, or the layer, on top of anything that has an LCD display, any computing device — everything from a refrigerator to an automobile to a video game to a computer to a mobile phone.

If Adobe had made the Open Screen announcement two years ago, I think it could have caught Microsoft completely flat-footed, and Adobe might have been in a very powerful position by now. But by waiting two years, Adobe gave Microsoft advance warning and plenty of runway room to react — so much so that ArsTechnica today called Adobe’s announcement a reaction to Microsoft Silverlight (link).

Also, the most important changes appear to apply to the next version of mobile Flash and the upcoming mobile version of Air — meaning this was in part a vaporware announcement. Even when the new runtime software ships, it will take a long time to get it integrated into mobile phones. So once again, Microsoft has a long runway to maneuver on.

Still, the changes Adobe made are very useful. There’s no way Flash could have become ubiquitous in the mobile world while Adobe was still charging fees for it. The changes to the Flash license terms remove one of the biggest objections I’ve seen to Flash from open source advocates (link). The Flash community seems excited (link, link). And the list of supporters is impressive. Looking through the obligatory quotes attached to the Adobe release, two things stand out:

–Adobe got direct mentions of Air from ARM, Intel, SonyEricsson, Verizon, and Nokia (although Nokia promised only to explore Air, while it’s on the record promising to bundle Silverlight mobile).

–The inclusion of NBC Universal in the announcement will have Adobe people chuckling because Microsoft signed up NBC to stream the Olympics online using Silverlight. So NBC is warning Microsoft not to take it for granted, and Adobe gets to stick its tongue out.

What does it all mean?

Nothing much in the short term. As I mentioned earlier, this is mostly a vaporware announcement (other than the license changes). Some people are speculating that this will put pressure on Apple to make Flash available on the iPhone (link). That’s possible, if Apple’s real concern was that they didn’t like Flash Lite. Now they can port full Flash, or someone else can do it. But if Apple is in reality unwilling to let anyone else’s platform run on the iPhone then we’ll see other objections to Flash emerge.

The marketing competition to control the future of web apps is continuing to heat up. Microsoft is trying to take the whole thing proprietary by creating a comprehensive architecture, Adobe is trying to drive its own platform, Sun is trying to re-energize Java, Google is making its own moves, and so on (link). Plus, of course, most web app developers today are happy with what they’re using now and have little interest in switching to any of the new architectures (check out the dandy commentary by Joel Spolsky here).

It’s an enormously complex situation, and it’s going to take months, if not years, before we can start to see who’s winning and who is losing. Rubicon is working on a white paper that will try to clarify the situation a bit. I’ll let you know when it’s published.

In the meantime, enjoy the marketing fireworks. The intense competition is forcing companies to innovate faster and open up their products, as Adobe did today. I think that process is good for just about everyone in the industry.

The trouble with predicting the future is that it’s always easy to do in retrospect. Looking back, it’s obvious that Microsoft’s Spot products were a dumb idea. The concept was that Microsoft would send small bits of wireless data — weather forecasts, stock prices, etc — to specially-equipped watches and other small devices like refrigerator magnets, which would display the information. On the face of that, it sounds kind of appealing. There are definitely people who want information like that when they’re on the go, and Microsoft had a clever plan to use some unused FM radio bandwidth to deliver the information to the devices. You’d use your PC to pick which data feeds you wanted, and Microsoft would take care of blasting it onto your watch or other device.

The problem, of course, is mobile phones. Five years ago, when Spot was announced, the handset vendors and operators were already getting hot on delivering small bits of data to mobile phones. The market for Spot, rather than being everyone who wanted data on the go, turned out to be everyone who wanted data on the go who didn’t carry a mobile phone.

In other words, almost no one.

Like I said, it’s easy to point out that problem in retrospect. But Spot was probably in development for a couple of years before it was announced, meaning it was probably started in about 2001 — before the real rise of wireless data in the US. I think someone who was paying close attention to the mobile market could have predicted Spot’s troubles. But it was much less obvious then than it is now.

Once you as a manager put people on a project and spent some money on it, it’s very easy to talk yourself into ignoring emerging signs that the product might fail. You want the thing to succeed, so you have an incentive to rationalize away any concerns. Besides, business history is full of stories about products that succeeded despite adversity and critics. How can you tell the difference between a “normal” pothole in the road, and an impassable rift?

Lessons from Spot’s demise

In the early 1990s, a number of companies developed specialized wireless modems and private wireless services for delivering data to personal computers. Internet connectivity at the time meant slow dial-up connections for most people, which could not be left active at all times. The idea of blasting data to PCs in real time seemed very attractive, and indeed the products sold well for a few years — until Internet connections became faster and didn’t require dialing out on a phone. Spot ran into the same basic process in the mobile space.

So one lesson is that when you’re potentially competing with other sorts of networks is to look very carefully at where they’ll be in three or four years.

How to manage convergence. It’s very hard to predict how “convergence” will affect a product category. Fifteen years ago many people thought it was obvious that printers would soon be built into every PC, but it never happened. Convergence seems to happen only when there is absolutely no downside to it. So you can combine a printer and scanner — or a mobile phone and a Spot watch — because there is no loss of functionality in the resulting product. But put a printer in a PC and you have to sacrifice too many things (or the PC gets too darned big).

Because a mobile phone has a larger screen than a watch, it’s actually a better data device than a watch. That should have alerted Microsoft to the danger.

Solve real problems. I’ve mentioned this before, but it’s worth repeating: Products have a much better chance of succeeding when they solve major problems for customers. Spot was cool and convenient, not life-changing. That made it much easier to absorb into some other product.

Microsoft often gets criticized by people in the tech industry for failing to innovate. According to this perspective, all Microsoft does is copy things that others have already proven. But initiatives like Spot are an exception to that rule. I wish Microsoft had chosen its battle a bit more carefully, but I respect that fact that it tried. I wish it would take more chances like this, rather than just focusing on ways to imitate the iPod and copy Google’s advertising business.

Some other commentary on Spot:
An early discussion of the technology, from InfoWorld (link)
Engadget’s article (link)
Watches vs. mobile phones (link)
Enthusiastic review in 2004 of the Tissot $750(!) Spot watch (link)
An obituary in 2006 for the discontinued Tissot Spot watch (link)

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By the way, I apologize for being away from the blog for so long. Family and work issues have to be my top priority, and the blog is in line after that.

I thought you might be interested in seeing the outtakes. So, here are some other interesting factoids about iPhone users…

How do you carry your iPhone?

To me, one of the most interesting findings of the study was that half of iPhone users are under age 30. I had expected them to be older, because PDA and smartphone users have traditionally been in their 30s and 40s.

With the younger age of iPhone users comes some other differences, including how they choose to carry their iPhones…

“How do you carry your iPhone?”

What was your primary motivation for buying an iPhone?

People usually have multiple reasons for buying a product, some of which they won’t even admit to themselves. But when we asked iPhone users why they bought the product, I found their answers to be refreshingly candid…

“When you obtained your iPhone, what was your number one motivation?”

The iPhone is a babe (or guy) magnet

One of the benefits of a popular new technology product is its ability to attract members of the opposite sex when displayed at a party or bar. We assumed that the iPhone would have such an effect, and more almost 70% of iPhone users agreed.

“Does the iPhone help you meet members of the opposite sex?”

Which websites do iPhone users visit?

In our whitepaper on the survey, we reported that most iPhone users say they browse on the iPhone a lot more than they did on their previous mobile device. But we didn’t have enough space to report which websites they visit on the iPhone most often…

“Which websites do you visit on your iPhone, and how often?”

I was very surprised that the new social communication service Spitr (link) didn’t make the list.

What other devices did the iPhone replace?

About a quarter of iPhone users said it is replacing use of a notebook computer. But given the enthusiasm of iPhone users, it’s not surprising that they are also using it to replace some other technology products:

“What else did the iPhone replace?”

What other features do you want in the iPhone?

In the whitepaper, we listed some of the most desired iPhone features. We didn’t have room to list other features that people also asked for. Here they are…

“What other features would you like to see added to the iPhone?”

Eight point scale: Strongly interested = 7 or 8, mildly interested = 5 or 6,
mildly disinterested = 3 or 4, strongly disinterested = 1 or 2.

Personally, I was disappointed that Strategic Conquest (link) wasn’t listed higher.

When and where do you use the iPhone?

An advantage of a mobile device is that it can go with you anywhere. This leads to some unusual usage patterns that the industry doesn’t like to acknowledge. I think it’s important to report them.

“When and where do you use your iPhone?”

So now you have the full picture of iPhone users. As you can imagine, these usage patterns are having a profound effect on the thinking and behavior of companies in the mobile industry. I think they probably had a lot to do with Google’s decision to buy Sprint (link).

I should add one other piece of information — as I said in my earlier post on the iPhone user study, the study is definitely not an April Fools joke. However, I can’t make that same assurance about the post you’re reading now.

At Rubicon, we set out to fix that by conducting a quantitative study of US iPhone users last month. We released the results today at CTIA. You can read the full results on the Rubicon website (link). Here are a few highlights:

–iPhone users we surveyed are very satisfied overall with the product, and report that they’re making heavy use of features like e-mail and browsing. This is driving higher mobile phone bills, producing about $2 billion a year in additional revenue for AT&T.

–Users are not universally satisfied with everything about the device — about 40% report that it can’t display all the websites they want to visit, and many also said they would like to see physical changes to the product, such as the addition of a bigger screen or a thumb keyboard.

–Users are young Apple veterans. Half of US iPhone users are under 30, and 75% are prior Apple customers.

–The iPhone is expanding the smartphone market. About 50% of iPhone users replaced conventional mobile phones, while 40% replaced other smartphones. The Motorola Razr was the conventional phone most often replaced, while Microsoft Windows Mobile devices and the RIM Blackberry were the smartphones most often replaced.

–Email is the #1 function. The most used data function on the iPhone is reading (but not writing) email, with about 70% of users doing that at least once a day. About 60% said they browse the web on the iPhone daily.

–The iPhone increases mobile browsing. Over 75% of iPhone users say they do a lot more mobile browsing on it than they did with their previous mobile phone.

–The iPhone drives carrier switching. About half of iPhone users switched carriers to AT&T when they obtained the iPhone.

Please note that although I usually post an April Fool’s message today, this ain’t it. The timing at CTIA made today the best day to release the study. It’s completely genuine.

By the time I was growing up, it was universally accepted that rigorous scheduling was one of the hallmarks of an advanced economy. We scheduled everything well in advance — classes in school, meetings at work, even social events like parties and dates. How many movies and television shows have you seen where a character says, “pick you up at eight”? And don’t be late.

A lack of rigorous time discipline, we were told, was one of the factors holding back economic growth in the developing world. That belief was so well accepted in the US that I don’t think anyone even debated it.

So it’s very interesting to see what electronic communication — on PCs, but especially on mobiles — is doing to time management in the world’s most advanced economies. Where my generation pre-arranged its social calendar, I watch my kids make it up on the fly. They’ll decide on IM that they all want to get together in an hour, or they’ll agree via SMS that they’re all going to hang out downtown that evening, where they then call or text each other to link up on the fly.

I have seen this developing for years, but I didn’t have a gut feel for its power until earlier this year, when I took my family to Disneyland. Touring the Magic Kingdom with two kids was once an exercise in controlled paranoia. The place is so complicated and crowded that you lived in constant fear of losing one or more members of the family. If you did, it might take hours, and a long trip to the lost child center, to find them again.

Anytime we separated — mom going with one child to one ride, and dad with another child to a different one — we had to carefully agree on when and where we would meet up. Inevitably someone would be 15 or 20 minutes late, and you’d spend the whole time worrying that the vacation might fall apart.

It wasn’t the walking that wore you out at Disneyland, it was the fear.

But the last time we went was the first time when everyone in the family was old enough to have a mobile phone. Suddenly, as we walked through the park on one of the busiest days of the year, we realized that we didn’t have to worry any more. If a child got lost, they could call us. If two people wanted to go off in a different direction, that was no problem at all; we could just use the phone to find each other later.

In other words, we could stay together without staying in sight of each other.

That may not sound like a big difference, but it completely transformed the Disneyland experience. The food was still overpriced, and the lines way too long, but the whole thing was much less stressful. It was almost, dare I say it, relaxing.

It made me realize that a similar transition is happening throughout our society. Ubiquitous personal communication makes it much less important to rigorously schedule many elements of your day; you can just make it up as you go along.

As smartphones arose, we thought they were going to absorb the calendaring function of the PDA. They have somewhat, but I think mobile phones are also making the personal calendar less important.

The first time I went with Palm to China, our employees in Beijing cautioned me that I shouldn’t talk about the great calendaring built into Palm handhelds, because people in China just didn’t care about it. They didn’t schedule meetings, I was told. If they wanted to talk to you, they would just give you a call. At the time I assumed that was just a transitional thing, that over time as their economy grew they would learn to do more and more scheduling. But now I’m starting to think that maybe they were ahead of the rest of us all along.

In the tournament, which includes 65 teams, there are often four games underway at the same time, and they start at around 9 am on the west coast. It’s an orgy of basketball, but often a painful and frustrating orgy because inevitably your team ends up playing during work hours, or its game isn’t even carried on local TV.

Enter CBS, which for the last two years has streamed video of the games over the web. I was furious last year when one of my team’s games was blacked out on the web stream. CBS cut off access to it online because it was also being broadcast on local TV; contract problems between the local stations and the network prohibited streaming a local game. As I pointed out in my post, the time you most want to watch the web stream is when you can’t access a TV. So CBS was preventing the most important use of its web coverage.

I was pretty steamed. I wrote at the time:

This mess is typical of the foolishness that often happens when old line media companies try to deal with the Internet. They spend millions setting up an elaborate technological tour de force but neglect to take care of the basics, like letting fans actually watch the games they want to see, and making sure all the features work. The lesson: The product you deliver through a website isn’t a bunch of HTML and Java code, it’s a solution to the problem of a user. Unless all of the elements of that solution line up properly, your product is a failure.

Okay, fast forward a year. Now it’s March Madness season again, and this time I have to give CBS credit. They have lined up all the elements of the solution, and they’ve created a terrific product for their users.

Every game is being streamed live, with no blackouts and no exceptions. The video is a little grainy, but very acceptable when you see it in motion.

Look at the live feed of scores below the video window. You can switch instantly to any game where the score looks interesting. Plus, after the game is over you can go back and watch highlights, or even re-stream the whole game if you want to.

One of the annoying things about watching the tournament on TV is that the network cuts away from one game to give updates on others. So if your team gets a good-sized lead, the announcers will say “let’s go to New York” and all of a sudden you’re watching Gonzaga play Cornell. When you’re watching the web stream, the announcers still say, “let’s go to New York,” but then they don’t go anywhere.

It all gives wonderful empowerment to the viewer. Tonight I could watch USC choke like a dog with a bad hunk of meat in its game with Kansas State, and then pop out to catch Belmont almost upset Duke. CBS showed me the score and time remaining for each game, and I could decide what I wanted to watch.

There’s also the obligatory boss button, which displays an amusing fake spreadsheet.

Not that I’d ever need it. Nope, no watching games during work for me. Unh-uh, we’re far too busy.

Did I mention that the CEO of Rubicon reads my blog? Hi, Nilofer.

The business side of me admires what CBS has done with its advertising in its tournament coverage. Take a look:

This is what happens whenever there’s a timeout in the game. The ad panel on the right is coordinated with the ads that you see in the video stream at left. So companies can make click-through offers or give more details on the things they’re advertising. In this case there’s a free sample offer.

The whole coverage of the tournament is free; apparently the ads are paying for everything. I hope CBS is making a bundle, because the feed on the web isn’t just convenient — due to the extra control it gives me, watching the tournament on the web is better than watching it live on TV. This is the first time I’ve ever said that about the web version of a broadcast television show. I feel like I’ve gotten a little glimpse of the future of video, and I really like it.

So the process was quite a bit easier for Apple. But still, criminey, 100k is a lot of SDK downloads in just four days. Apple has clearly struck a nerve.

In addition to the 100k statistic, the Apple press release included new endorsements from companies like Intuit, Namco, PopCap (Bejeweled, baby), and SixApart. It’s a very interesting variety of companies.

Which raises an interesting question: How in the world will all those developers find an audience? Based on the current iPhone installed base, Apple already has one developer for about every 40 iPhone users. Let’s be optimistic and say every user will spend an average of $20 a year on applications (a figure much higher than we’ve seen on any other mobile platform). Apple keeps 30%, so there will be a total of $560 in revenue per year available to each iPhone developer (not to each app, to each developer). The iPod Touch will increase that number a bit, but not enough to change the math. Either Apple has to grow the installed base enormously, or there are going to be a lot of iPhone developers going hungry.