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Disclaimer

Note: I work for Ericsson, a manufacturer of mobile systems, so I wish to make the following abundantly clear:

1) this post does not express the beliefs of my company and

2) i do not have any inside information. All facts presented here are based on publicly available information.

Introduction

In this post I will make the argument for why Apple should buy a US-based mobile operator. To get there I will need to explain how Apple has worked with their mobile devices so far and why it makes sense for them to buy an operator.

Source: This was sent to me from the future.

Apple has made it clear that there is no place in the value-chain where they do not operate as long as it gives them a competitive advantage. They started by providing their own OS bundled with services from other service providers (Google and Yahoo). Since the iPhone launch Apple has bought Placecast, (rumored to be replacing Google Maps), Siri, a mobile search assistant  and Quattro Wireless to let Apple in on the quickly growing mobile advertising pie.

But Apple has not only grown upwards by owning more of the services bundled with the iPhone, they have also grown downwards in the value chain by creating their own chipsets. They have bought PA Semi Conductor and Intrinsity, both ARM processor specialists.

This gives them the possibility to have chipsets perfectly adapted to their own devices, and services not available on any other devices.

Apple are relying on third party baseband processors and various other commodity components only when it gives them no competitive advantage, for example chipsets for GPS, Wi-Fi and 3G baseband.

Connectivity through a mobile operator on the other hand is not a commodity. It is expensive and everytime Apple wants to include mobile connectivity they must start negotiating with the mobile operators. In the end, how well AT&T are doing at managing their network affects what price tag Apple can put on the iPhone or iPad.

But above all, Steve Jobs is keen on selling the “Apple experience (TM)”. Ever noticed how Macbooks don’t have any Intel Inside logo or other stickers that comes on other PC machines?

Now imagine Steve Jobs creating the iPhone. There is exactly one part of the iPhone experience that Apple can’t control: the connectivity – the most important part of any mobile device.

I have no inside info on the relationship between Apple and AT&T but I would assume that there is plenty of frustration on both parts. Apple, on one hand is getting a bad reputation when AT&T’s network lack coverage and AT&T is getting a bad reputation when the iPhone is having more dropped calls than other phones. Everything that comes with the iPhone is controlled by Apple up to the point where you select an AT&T subscription.

Being in control of a mobile operator would not only put an end to these issues – it would put Apple in a unique position. Imagine this: being able to come into any Apple store and buy any device bundled with 3G connectivity. You pay an upfront fee to Apple and then a monthly fee to Apple for the connectivity.

Apple can set up the data plan just as they like. How about the iPhone 32 GB coming with 32 GB of data every month? And while they’re at it they could make their own services like maps, App Store, iTunes and MobileMe not count towards your monthly quota.

But Apple can’t manage a mobile network!

I already hear the critisim: But Apple doesn’t know how to run a mobile network! Well, most operators don’t know that either. Last year Sprint as one of many operators outsourced the whole operations of their network.  Key quotes from the press release:

Sprint retains full ownership and control of its network assets, and solely owns network strategy and investment decisions.

[Outsourcing parnter] assumes responsibility for the day-to-day services, provisioning and maintenance for the Sprint-owned CDMA, iDEN and wireline networks.

(To give you full disclosure I should also mention that the outsourcing partner is Ericsson)

And Apple doesn’t even have to care about the messy parts about being a phone operator either. They could remove the voice and SMS services from the device and only sell a device with data connectivity*. Anyone that wants to make phone calls from an Apple device can install Skype or Truphone. The user experience from Skype on iPhone is considerably worse than the user experience from the built-in messaging and voice applications, but remember that OS4.0 is set to give Skype access to the same APIs as the native voice application is using.

With an outsourced network and a phone app managed by someone else, all Apple would have to worry about would be to tell their operations partner where next to expand the mobile data coverage for their devices.

* Except using the cellular network for E112 calls

And there’s more..

As an american you can’t really use your iPhone in Europe in good concusioness. It just costs too much without a local SIM-card. Apple could solve this problem by requiring that all operators that wants to sell Apple devices to sign a roaming agreement that dictates free roaming between the Apple US networks and the other operators network.

The economy

So the only question left to answer now is – which operator should they buy?

If I were Apple I would have the following list of requirements:

• GSM/UMTS/LTE based operator. So far Apple has not created any CDMA devices. Even Verizon is now betting on LTE instead of CDMA. If Apple wants to sign roaming agreements with operators in Europe and Asia they would need to have GSM/UMTS technology as this is what all operators in those regions use.

• Struggling operator. Apple only needs the actual spectrum and mobile phone license. To Apple it doesn’t matter if the operator already have tens of millions of subscribers, it just adds more weight.

• Nationwide coverage. Pretty self explanatory.

If we skip rural operators that leaves us with the following choices: MetroPCS, AT&T, Verizon and T-Mobile.

MetroPCS with a market cap of $3 bn looks like a strong candidate on paper but with no GSM network and an LTE network only in the planning stages they are only semi-interesting.

T-Mobile is wholly owned by T-Mobile Germany and unless Apple can convince the germans to exit the US market they seem like an unlikely candidate.

AT&T has a market capitalization of $143 bn and just seems to big to be broken up (market capitalization is the total value of all the company as judged by the stock market – buying a company would require paying a premium on the market cap).

Verizon then seems more likely but are still only planning to roll out an LTE network. That their stock has not been going all too well lately plays in Apple’s favor, but still, at a market cap of $77 bn you are looking a pretty hefty transaction.

Verizon wireless is roughly 50% of Verizon business and could be worth somewhere around $40 bn so that brings down the figure somewhat. But still, that would assume that Verizon wanted to be split up. Vodafone owns half of Verizon wireless which complicates things as Vodafone just as T-Mobile probably does not want to lose their stake in the US market. But still, Verizon owns 55% of the wireless business so that may not be a problem after all. Who knows, maybe Apple could use Vodafone to their advantage and buy Verizon Wireless together with Vodafone. They could then let Vodafone have all the existing subscribers under the Vodafone brand as Apple would only be looking to get access to the mobile data network.

Apple as a comparsion has a market cap of $200 bn and more than $40 bn in cash. Buying ANY mobile operator would be a huge transaction for Apple, given that their biggest transaction ever was buying NeXT for $0.4 bn. But then again, Steve Jobs was quoted saying “doing something big [with their cash] is not out of the question” and with some venture capital it would be doable. A bit crazy and game changing – yes. But then, isn’t that what Apple is all about?

I have to hand it to you Bob, I write my comments on your book, I mail you and you respond to some random person on the internet. Impressed.

Now, this leads me to an open question about discussions on the internet that I have been pondering. Do I respond? Bear with me while I explain my train of thoughts.

There is an old picture floating around on the net that sums up my thoughts on having arguments over the internet. I won’t include it here since I think it is a bit harsh, so I will just link to it. Go ahead, click the link, I’m waiting. (drums fingers against tabletop). There, back now?

So, what is this picture trying to tell us? Arguments are best made when you can see each other. Just look at how quickly the comments turn into nonsense on sites like Slashdot and TechCrunch. I have to admit that full-on flamewars are starting to become more and more uncommon. Maybe we are slowly starting to learn how to argue over the Internet?

But I digresss. My real concern is this: in many newspapers (except The Economist which I will get to in a minute) I often see this happening:

• Newspaper publishes an editorial on a controversial subject
• Person figuring in the editorial sends in a reply to the editorial
• The newspaper publishes the received reply together with their reply to the reply!

See the problem here? The newspaper always wins! They get the final say. I’ve even see this go on several cycles where the newspaper receives a reply to their reply which they then in turn reply to. The Economist’s staff, as the classy english gentlemen that they are,  handle it much more graciously:

• The Economist publishes an editorial
• Person figuring in the editorial sends in a reply
• The economist publishes the reply and trusts that the reader is intelligent enough to read the original article and the reply and make up their own mind on who is right.

How does this apply to the aforementioned comment on this blog? Well, if I reply I get the feeling that the discussion will go on until I get the final say. Note that I wont necessarily have won the argument, but since this is my blog I obviously have a lot more stamina in writing on it than anyone who comments.

Maybe it would be more gracious of me to let comments stand unanswered and thereby letting readers make up their minds themselves?

What do you think?

Just realized I have an awesome autumn in front of me! If everything goes as planned I’ll be working on a new mobile payments platform that will be trialled by Ericsson in Sweden later this year. Why am I excited about this? Well, I think we finally have nailed what mobile payments should be like.

Source: Flickr

Not that I believe Premium SMS will disappear but I believe we got off to a bad start with mobile payments and nobody has really sat down and thought through what mobile payments really is about with all the changes that have happened in the past years. There is so much more to mobile payments than app stores and music!

So what IS mobile payments all about?

• consumer convenience - allow consumers to pay for things when there is no Point of Sale terminal available or when it is inconvenient to use another payment method.
• operator convenience – allow consumers to use services without causing churn
• credit card convenience – let credit card companies avoid the microtransactions that they are not interested in having
• merchant convenience – make sure that your customers can always pay for themselves and that you get a reasonable (> 95%) payout

I think we finally have found a way to work with payments that makes everyone in the value chain happy: consumers, operators, banks (and ofcourse Ericsson! ).

Looking forward to a great autumn!

Those of us who are into gaming have followed the E3 conference this week closely. I didn’t have time to watch all the keynotes yet but I looked at the important parts of each keynote.

Some quick comments for those of you who haven’t had time to follow it closely:

• Nintendo: New version of Nintendo DS heavily inspired by iPhone gaming (accelerometer et cetera) and more games that people are excited about. Nintendo has found a formula and are sticking with it, everything they announced was expected and they are doing exactly the right things.
  Verdict: 5/5
• Microsoft: heavily focused on the Playstation-generation and trying to reach hardcore gamers (Gears of War, Metal Gear Solid). But also trying to be a more gimmicky kid-focused brand like Nintendo with Kinetic (motion based gaming). Seems to be targeting both groups with one console. Not good!
  Verdict: 3/5
• Sony: oh dear Sony my old friend. What has happened? It’s like Sony takes one step forward and then one step back. They used to be the king of the hill but they are just slipping further down. Let me sum up my emotions for Sony for the past four years:
  2006 PS3 delayed launch, €499 pricepoint: No no… this will not end well. But okay, it is clearly targeted towards hardcore gamers and who knows, maybe they are ready to pay a hefty sum to get the coolest console.
  2007 Lair launches, receives 4.5/10 rating on Gamespot: It’s been a year. If you have a good console you need AAA games. Who on earth let this game through Q&A?
  2008 Playstation Home: Hold on guys. You have an expensive hardcore gaming console and you launch a service for kids? This is not cool. It is wrong on so many levels.
  2009 Playstation Slim: Lower pricepoint. Awesome! This can be a casual gaming console too. AND you have Littlebigplanet. Finally someone has got hold of their senses.
  2010 3D Gaming: Nooo.. You are betting on a really, REALLY, risky horse here. 3D TVs are still uncommon and now you are betting on 3D gaming? It’s definitely not for the casual gamers and the hardcore gamers are not impressed. And at the same time you launch Playstation Move for kids and casual gamers.

  Verdict: 1/5

As you can see I am a Sony fanboy. But now I’m slowly slipping over to the dark side (Microsoft).

Coming from the outside the recipe for the success looks so easy. What I would do if I were Sony:

• Shut down Playstation Home
• Put 3D gaming on hold for two years
• Tie the Playstation brand in with mobile phones, TVs etc
• Make the Playstation network on par with XBox Live
• Bet on two groups: social/cascual gamers (Singstar) and hardcore gamers

But isn’t there anything they are doing right? Yes, actually there is! The marketing department has made some really good commercials. Here is the one announcing Playstation Move, note how it manages to make fun of both Microsoft Kinetic and Nintendo Wii.

(While we’re at it, here are some more of the commercials that really funny)

(thanks @Lena Bolin for inspiration to this post)

Games are fun. You get immediate feedback on what you do and you always know when you are doing the right thing. Even more fun than doing the right thing is letting others know how good you are, which is what Microsoft understood with XBox Live.

Achievements, badges and trophies were of course not invented by Microsoft and Sony. They have been used by the military, the scout movement and as informal prizes in sports tournaments. Certificates have also turned into a sort of virtual achievement among friends. I see lots of people getting more certificates than they have time to actually use. For example: certificates for hunting, scuba diving, sailing, climbing, driving mc, the list goes on.

I’m not saying there is anything wrong with that. Au contrarie! if you learnt scuba diving just to get the certificate – more power to you. The act of getting a certificate actually made you learn something that you hadn’t learned otherwise.

And more websites are starting to realize that you can turn your website into a game by making you collect virtual goods: Facebook friends, notifications, twitter mentions, blog readers, comments.. are they all part of a virtual game?

When you write something on Facebook is this the prize you hope to get?

This is a basic human emotion – we are drawn to things that we understand and that give us immediate feedback. What else that we do can be turned into a game to make it more fun and rewarding? Your work? Your studies?

Those of us who have been in the mobile industry for a (too) long time remember the advent of video calling some five years ago. What a failed launch that was.

But suddenly I am excited again now that Apple is re-launching videocalling.  Maybe that is just because I like technologies that seem like they are from the future and want to be excited by videocalling. Or maybe I am just a big Apple fanboy.

Source: Apple PR. The man in the picture is not related to the text. But he looks like a really nice guy.

But to be fair, videocalling á la Telia and Tre in 2005 had some key differences to the videocalling that Apple is launching.

The first difference is that Apple requires you to be connected over Wi-Fi, 3G is not supported. This might seem like a problem at first but in reality I think it is a fair limitation. There really is no use-case for videocalling someone that is out and about (except special cases like people using sign-language). I use video with Skype alot when I am out travelling. Sitting in a hotel room and using video adds something to the conversation instead of being a distraction. And judging from the Apple promotional videos, this seems to be the use-case they are targeting.

The second important feature of FaceTime is that you can switch to video during a normal call. That also makes sense. I remember trying to do videocalls five years ago, a common use case was that you were talking to someone and they wanted to show you something and suddenly you wanted to have video. But then you had to hang up and make a videocall which cost five times as much as a normal call. Which you were to lazy to do.

The only thing that worries me is that mobile operator may be forced make changes in their network to support the feature, at least it sounds like that in this post. That would delay any launch outside of the US significantly.

So, what do you think, do you see yourself using FaceTime?

One and a half year ago I decided that I wanted to write more as I got fewer and fewer opportunities to do so at work.  Therefore, I created this blog as a way for me to practice my writing.  The only way I could do that while still having fun was to write about things that interested me.  I wrote in English and Swedish and no-one read it except me.

And there was evening and there was morning, a second day.

After writing for almost a year, the urge to tell  people that “you can read more about that on my blog” was so strong that that I couldn’t resist giving out the address every once in a while to people that I met . Then, the strangest thing happened: people started coming back and started giving me feedback (often in person) on posts that I had written and many of them actually liked what I was writing! I discovered something that was even more fun than writing: getting feedback (positive and negative!) on my writing.

And there was evening and there was morning, a third day.

Suddenly, I had created an unexpected problem for myself. I was afraid to disappoint my (five) readers so I carefully started reviewing each post before publishing it which unsurprisingly led me to writing much fewer posts. At the same time I noticed that every time I made a post I got new readers. But since I wasn’t writing, my number of readers wasn’t growing.

That is, until now. I have now come full circle and decided that I want to continue writing And not only that, for people to understand that there is a real live human being behind the blog I am also putting my name on it. I’ve also decided to blog more often and add a new category to the blog: inspirational. But don’t fret, the focus will still be on technology and the odd gaming rant.

You can support me by:

• sharing/likeing on facebook
• commenting
• reshare on Google Buzz
• tweet on twitter

Now, hit that like button below, I know you want to!

Everyone knows that trust is something you earn, but sometimes we forget that. It took Apple 30 years to gain the trust from consumers that made them sell one million iPads in 28 days. Without even having tried the iPad people trusted Apple when they said they had created a magical new product. It took Google ten years to gain the trust of businesses to let Google manage their documents and e-mail.

You can only build trust in small incremental steps over time, and most of the time each step is simple: be there and do what is expected of you. Are you taking the right steps right now?

If you are building trust with a child, you do so by spending time with them every day, week and month. If you want to build trust among your colleagues you do so by delivering results day in and day out, particpating in discussions where you back down when you are wrong and hold on to your views when necessary. If you want to build trust with your customers you are honest about what you are going to deliver even when the truth hurts, you give reasonable timelines for when you can deliver and show how you will avoid further problems when you don’t deliver as promised. There are no shortcuts to trust.

And trust is important. It is what makes your colleagues back you when you suggest a re-organization at work. It is what makes your customers come back to you after your server room has broken down and they lost a week’s worth of work.

Are you trustworthy?

Do you give your customers a reason to trust you?

Who do you trust that you shouldn’t?

Who has lost your trust in the past but has changed and deserves to be trusted again?

Drawing maps is an underrated skill. For thousands of years we have had the luxury of having explorers and engineers creating  better and better maps of the world. Today we have near perfect maps of the whole physical world.

Source: Flickr

While the physical world is now mapped the business world is still largely unmapped. Can you draw a map of the road to success in your next project? A map that you can show to potential customers, new partners or old friends that explains how you expect to go from point a, to b to c?

Replace a,b and c with whatever is relevant for your current project. If you want to become a published writer then a is to write the book, b is to find a publisher and c is to promote your book.  Now you have done the easy part. The real question is, can you draw a map that shows how you get from a, to b and c?

The Apple CEO, Steve Jobs, was recently interview at Allthingsdigital (D8), a conference run by journalist Walt Mossberg from Wall Street Journal. Today I watched the short snippets of video put online from the interview. And I have got to hand it to Steve – he is a really, really nice guy. He is not just a great speaker, but also someone that has put alot of thought into what he says.

Throughtout the interviews he is very honest and open in his answers. How many Fortune 500 CEO:s would be this open to the press with the past and current mistakes of their companies?

But what impresses me the most about Steve is that he seems to be a really, really good guy. The type of person that we need more of.  Steve is trying to create products people love and make the world a better place with the help of technology.  How many CEOs can claim that they have the mantra  “make the world a better place” on top of their agenda?