Mobile web polarizes as duellists pick their seconds
Verizon/Google vs AppleT&T
The two largest US cellcos went on the warpath this week with contrasting statements about their web strategies.
Verizon Wireless formed a far reaching partnership with Google, echoing the search giant's existing alliance with Sprint and pointing to Android dominance of the CDMA carriers' own-branded web services platforms, which will be vital to differentiation in the open access world, and will take shape from 2010.
AT&T is exploring its own options to create an AT&T mobile web experience that will compensate for falling data rates and the loss of the usual carrier lock-in weapons – exclusives, subsidies and closed network/software platforms. It increasingly seems to be distancing itself from Google and turning to a range of partners usually more associated with European operators, from Opera to Nokia.
The three mobile web models
The mobile web world is likely to break into three distinct battlefields from next year, and major carriers will have to take account of all three. First, the conventional smartphone approach, where the phonemaker and carrier engage in a tug-of-war over brand visibility and commercial relationship, but the handset itself is the key to customer choice.
This choice increasingly rests on the availability of downloadable apps and the overall software environment of the phone, not just hardware features. Of course, the premier example of this in the US has been the AT&T-iPhone relationship, which Verizon Wireless has failed to match for impact with a branded smartphone range that relies heavily on BlackBerry and Windows Mobile.
It is likely to ally with Android manufacturers such as Motorola and HTC to redress this balance, but its initial Android announcements, made with Google this week ahead of the CTIA Wireless and Entertainment show in San Diego, fall into the second mobile internet category. This is the creation of an operator branded platform, with a distinctive set of user interfaces, applications (with the mandatory store) and mass market webphones.
In this model, the carrier tries to keep customers loyal by offering a cost effective, usable and attractive web experience from which users, especially those below the smartphone uplands, will feel comfortable, even when not tied in by a long contract or closed network. To make this model work at all, operators need to move well beyond their conventional and limited portals and attract large bases of developers and device partners - as Vodafone has epitomized with its transition from old-style Live! to its new Vodafone 360 (see separate item on Telco 2.0).
They also need to harness the differentiation they can derive from their networks, opening proprietary features such as address books and location to third party programmers. The operator branded 'smart pipe' approach is much discussed, but actual offerings are only just emerging – Orange Partner, China Mobile oFone, Vodafone 360, and now Verizon and AT&T are trying to create their own offerings.
The third mobile web model could disrupt the other two in time, but only when wireless networks have the capacity and robustness to support vast amounts of data traffic and still generate profit for their operators. This means WiMAX and LTE, probably both in their next iterations, plus plentiful spectrum and advanced new networks and devices geared to maximum efficiency.
Current networks do not support this however, as highlighted by Google itself in its eagerness to work closely with the carriers it eventually seeks to sideline, pushing Android even as it develops Chrome as the browser/OS of the future. This raises the ironic prospect of Palm webOS being closer to the open web dream than Google itself (see inset).
Verizon teams with Google
As long as this 'third way' remains over the horizon, vendors, software and web players, and carriers will continue to tussle with one another for the top spot in the mobile web value chain, and to agonise over choices of OS and apps partners. This week saw the US top two deepening their stand-off, not just over their flagship smartphones, but also their emerging own-brand web platforms.
As Verizon Wireless CEO Lowell McAdam took the stage with his Google counterpart Eric Schmidt, the key announcement was an agreement to co-develop Android devices that would carry the operator's brand and software portfolio, sitting separately from branded Android phones that Verizon is expected to launch soon (most likely, the Motorola Tao/Sholes and at least one product from HTC).
So far so predictable, given similar relationships that Google already has with Verizon development partner China Mobile and with CDMA rival Sprint. But the message was far broader and more aggressive than that - with footnotes like support for Google Voice and side-swipes at Apple, this was all about taking on AT&T, setting the new partners up as champions of openness against the closed iPhone world.
Details were scarce – the multiyear roadmap for the Verizon-Google collaborations include phones and netbooks, and potentially other formats in future, and two devices will be announced “shortly”. As well as PR value, both companies should gain in terms of choice of devices and apps, and speed to market. Google's weight will help Verizon Wireless in its ongoing campaign to woo open developers, after years when it did not need to look beyond its own platforms and partners. And the support of the major carrier should increase the confidence of developers and handset vendors in Android, encouraging them to create more products for the OS and to move existing projects up the agenda.
Verizon Wireless has been playing a will-they won't-they game with Android all year, though it has been embellishing its open developer initiative, as it faces the prospect of opening one of the most tightly controlled networks and software platforms in the world to open access (mandatory on its 700MHz spectrum). Android would logically form part of that initiative, though like the other US majors (except T-Mobile), Verizon Wireless has been cautious about committing itself too quickly to an untried platform with few handset choices. Instead, its first open steps have focused on Java, which it embraced firmly in June, its own app store plans, and some interest in LiMO; while its applications response to the AT&T iPhone has relied heavily on RIM. A year ago, CEO Lowell McAdam said: "We're planning on using Android. Android is an enabler of what we do” – but few concrete moves followed, until now.
Android's positioning gets clearer
The bare bones statements have various wider implications too. One, Android will not just find its way into branded smartphones at Verizon, but also into the devices that the operator brands and helps to design – typically in the midrange, and increasingly as the basis of its own web services platforms and stores. This will accomplish an important goal for Android: to get into all levels of handset and web usage, and ironically, the US CDMA carriers – traditionally those with the most closed and controlled networks – are offering it the most open door (Google already has a close development partnership with Sprint Nextel).
Symbian is also chasing the mass market and strategic carrier partnerships, and in the US has hopes of AT&T; originally, Windows Mobile was the first of the full operating systems to seek market share through the carrier branded approach, but may find its importance to US cellcos like Verizon reduced by the new Android initiatives.
Second – and another irony – Google knows, for all its protestations about the mobile web just operating through generic browsers and invisible carriers like the PC internet, that Android is dependent on the operators to make an impact on the cellular world, at least in the short to medium term. So it is working hard to give Verizon a more open platform than its usual centrepieces – BlackBerry and WinMo – to support its next generation open developer initiative, and at the same time to steal thunder from the iPhone. In return it gets versions of its key applications, like Voice and Maps, optimized for the carrier networks and preloaded on their devices – a far cry from the dream of doing everything in the cloud rather than via carrier controlled downloads.
The co-developed devices, which presumably will come from a range of hardware vendors and carry dual Verizon-Google branding, will come “pre-loaded with innovative applications from both parties as well as third party developers”, said the firms. Does this really sound a world away from the AT&T iPhone? Apple could take on Google Maps with PlaceBase: Apple has acquired PlaceBase, a mapping company that could help the iPhone maker challenge Google Maps and Latitude.
Now that the old alliance between Apple and Google is clearly over, with the latter's CEO Eric Schmidt departing Apple's board, the gloves are off, and the iPhone maker looks set to challenge its former friend in as many key areas of web apps as possible. Already, the war is raging over Voice, and now Apple could move into one of the most hotly contested internet markets - especially in the mobile world, where Google Maps and Nokia Navteq are seeking to harness the revenue potential of location awareness and ubiquitous GPS.
PlaceBase produces a maps API called Pushpin and a mapping service comparable to Google's. The secretive acquisition was first unearthed by Computerworld in July, and although it is still not officially confirmed, most sources say it has happened and are talking of a 'hyperlocal iPhone'.
Coincidentally or not, shortly after the purchase reportedly occurred, Google released an iPhone version of its Latitude mobile location 'friend finder' app, which became the subject of yet another dispute with Apple. Unlike Google Voice, it was not kept out of the App Store, but Apple insisted it was classed as a web-based app, to be used only via the Safari browser, not a native phone app as on BlackBerry, Symbian, Android and WinMo. The official reason given was to avoid confusion with Google Maps.
Now it seems likely that Apple will announce a similar app of its own via PlaceBase, and then could go on to expand into the full mapping market. PlaceBase adds layers of public and private data (such as home sales or consumer purchases) to existing maps with an easy-to-use API. Its technology could allow Apple to reduce its reliance on Google Maps and replace that functionality in the iPhone and iPod Touch.
How open is 'open'?
Verizon and Google certainly want to make it sound that way, even if Palm was actually demonstrating more open credentials than either of them, providing a browser-based distribution for webOS developers, if they wish to bypass the approval process of the Palm store. The pointed mentions of Google Voice – still the focus of disputes with Apple and AT&T, and of FCC probes – were designed to emphasize the contrast with the iPhone model starkly.
Voice would be one of the Google products tightly integrated into Verizon's Android platform, said CEO Lowell McAdam - saying, in a clear swipe at AT&T, “the device is either open or it's not”. In fact, there is a huge grey area between “open” and “not” on phones. Preloaded and optimized apps, chosen by the carrier, may deliver a simple and efficient experience to users, and avoid destruction of the carrier's network through uncontrolled usage, but they are hardly the stuff of the open web dream or of unfettered consumer choice.
And it remains to be seen how carrier-specific Verizon's Android-based platform turns out to be, and at which points it manages to lock users in. China Mobile, the cellco's close software and LTE partner, has always waxed lyrical about Android, not so much for its open source benefits but because it is easily harnessed to create a very specific operator experience.
Verizon and Motorola
As well as the joint devices with Google, expected early next year, Verizon Wireless confirmed that it will introduce other Android products within the next few weeks. These are widely expected to be the Tao/Sholes from Motorola and one or more smartphones from HTC. More details of Sholes are leaking, too. As well as likely being called Verizon Tao in real life, it will feature a processor running on a 500MHz ARM Cortex (probably from Qualcomm), a 3.7-inch, 854 × 480 WVGA capacitive touchscreen display, 5-megapixel camera with autofocus and flash, and facial recognition capability with Google image search integrated.
Most interestingly, it is rumoured to carry a new user interface – not the socially oriented Motoblur seen on Cliq/Dext, nor Verizon's own web UI (which will be changed soon anyway). This suggests Motorola is working hard on an area where it has failed in the past – an effective web UI and apps platform, something that is now vital to smartphone success. It will collaborate closely with carriers to support their particular business models and brands.
AT&T‟s slower progress to open web
So AT&T remains the agnostic about Android, among the US big four. In an attempt to pull some of the string of the Verizon/Google comments hurled at the iPhone deal, AT&T chose the same day to allow iPhone users to run VoIP over its 3G connection, rather than just Wi-Fi. It will hope this move will divert FCC attention as well as placating angry customers. "Today's decision was made after evaluating our customers' expectations and use of the device compared to dozens of others we offer," explained Ralph de la Vega, president and CEO of AT&T Mobility and Consumer Markets, in a statement.
More important than bickering over an Apple platform it may lose as an exclusive will be AT&T's own web platform, as that evolves. Symbian may derive hope of a strategic position in AT&T's strategy, from Schmidt's unabashed championing of the Verizon network. The Google chief said: “It‟s an absolute fact that Verizon's network is the best by far. We had known about that reach. We didn't know that they'd take a lead in openness. This is a network engineering company that makes it work and makes it scale. This is a major milestone in the Android platform.”
Perhaps his comments might have been more tempered had he retained hopes of a similarly strategic alliance with AT&T as well? AT&T is unlikely to make a Verizon-style major announcement about its web platform until next year, partly because it does not have such tight deadlines for LTE or open access as its rival. But it is putting some of the building blocks in place, notably expanding its range of web optimized, co-branded handsets, and launching key software elements, such as its new full web browser. It is also slowly but surely getting closer to Symbian and Nokia, with the Ovi Store set to launch next month on various phones, and the Nokia 6350 midrange handset joining the AT&T line-up. This signals a partnership that could develop to provide a counterweight to Verizon-Android, and a consolation prize for the potential loss of sole rights to the iPhone.
New webphones and 'real' browsers
AT&T is launching the first four webphones that sport its new 'real' browser, based on Opera but carrying the carrier's brand. This aims to help create a mass market, easy-to-use experience that will increase mobile web usage beyond the high end smartphone niche, and will bind subscribers more closely to AT&T. Such efforts, centred on the cellco's own brand and platform, will be even more important should the carrier lose its iPhone exclusive next year, as O2 has in the UK.
Opera is the star among multi-platform mobile browsers, rendering HTML more accurately (still rare on smartphones, even those with integrated browsers), and using compression to reduce overhead on the 3G network (vital to AT&T). It also provides location awareness and short cuts to relevant maps and content. The four phones leading the AT&T browser-phone charge are the Samsung Mythic and Flight, and the Reveal and Impact from Korea's Pantech. All feature quick messaging and touchscreens and will launch at midrange pricing (yet to be detailed) in time for the holiday buying rush. As well as the new browser, they will come preloaded with the att.net service, which allows for personalization and widgets.
The carrier is also building up its software arsenal as it evolves its web services platform, as last week's acquisition of start-up Plusmo highlighted. This indicated AT&T's seriousness about creating a differentiated software platform that will include its own unique applications and widgets. In particular, Plusmo will help it build widgets and apps that span cellphones, PCs and TV, a capability that fixed/mobile and quad play operators believe will help them to preserve differentiation and customer loyalty in future. Orange is particularly aggressive in this respect, even planning a three-screen app store soon.
Plusmo has focused on mobile widgets, but its use of standard web development tools will make its products easy to port to other devices. It says its service currently delivers more than 20,000 mobile widgets to consumers, with a strong focus on sports, and it has relationships with several phonemakers, content owners and carriers. Once the acquisition is complete, Plusmo will become part of AT&T Interactive, the telco said in its statement, though no terms were revealed. AT&T has been fairly active in creating its own apps, including several for the iPhone App Store, such as a Yellow Pages product.
But as long as the iPhone exclusive lasts, Apple is still by far the most significant device partner for AT&T, and is now allied more closely than ever with the carrier in the developing industry battle over the future face of the mobile web. The increasingly polarized strategies of the top two cellcos may start to converge again as exclusives end and flat open networks get built out. For now they are engaged in a stand-off, facing one another from entirely different stances on mobile internet models - one that will help define how US consumers and enterprises experience the mobile web in future.
Copyright © 2009, Wireless Watch 
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