Tonight I’m traveling to Barcelona for MWC this year, the main annual event of the mobile industry. I have gone to the MWC since 2001, year in and year out, when I was in (cold and rainy) Cannes and had one-tenth the size of – last year there were 85000 people.
The year 2001 was the following at European auction of 3G spectrum, when mobile operators, as well on top of the Internet bubble and mobile, spent €110 billion in a few months. They spent years recovering from the hangover. Much of the justification for those values was the promise of data services to be delivered in this spectrum. But it took until 2005 for the first 3G phones that were not bricks reach the European market and by 2007, of course, for data services delivered by this spectrum become interesting.
Today, it is possible to date the “mobile” in before the iPhone and then the iPhone. But the most interesting, looking back, is that before the iPhone did not seem that desperately needed some catalytic event. As internetages.com told me at the university, “people in the Middle Ages did not know they were living in the Middle Ages.” It seemed to be progressing steadily. It was not clear at all that we were waiting for a new device class, with a new approach that would transform the mobile Internet a segment of telecom revenues in an almost universal experience that would become the main part of the Internet itself.
In particular, it strikes me that the division between “smart” and “basic” was not as clear as we think today. I migrated of “feature phones” (which could generally run apps on J2ME) for “smartphones” (who performed PocketPC or Symbian apps) and I’m back again, but ecosystems were so poorly developed, in retrospect, that I did not have much the feeling that I was missing something when would a smartphone into a feature phone. So this is the sequence of devices I had the early 2000s to the original iPhone (with the unfortunate absence of my Nokia 7110 and Ericsson T68):
You can see the same trend that sales table devices a major European operator. The taxonomy does not differ that some of these are “smart” and others are not – it’s all about the hardware functions. This basically mirrored how people used them in fact:
Meanwhile, apps sales were small, niche and focused on very specific types of apps. The average price was US $20.90:
In parallel, of course, they had the “PDAs”, which eventually merged with phones (for a long time some people had hoped that Apple would do another PDA to succeed Newton). They certainly had a “proper” operating system, at least from the PocketPC, but they belonged to an expensive niche (starting at $500) that few ordinary consumers buy. Only Sony Ericsson in this photo had a cellular antenna (which was just 2G). The HP and the other had Bluetooth, infrared only. Otherwise, you need to spend more than $100 in one of those antenna plates only to connect it to your phone and stay online (GPRS, narrowband speeds). Today gives to buy an Android with 4G good enough for the price of one of these cards.
In retrospect, the PDAs were a classic stopgap solution. That is, they were not the long term answer, but the long-term response still did not work and they were ok for the time, for that small number of people who accepted to live with some heavy commitments.
Meanwhile, the only place that the mobile data services were working really was Japan, powered feature phones completely specified and controlled by operators. I bought all these three devices in 2001. They were all part of the future, but the iPod won:
Japanese phones have color screens and polyphonic ring tones, the J-Phone (Vodafone then, now Softbank) had a camera (120 × 160 pixels); the imode DoCoMo had no camera, but could run apps on J2ME (most, but not all, were games), a downloadable app store with integrated payment and simplified. Yet they pointed to a dead end – control by operators, closed platforms, limited operating system. In fact, they were as good a solution as PDAs: Japanese model was the only way to have mobile Internet in 1999 or 2001, and looked very good, but it was just a point and the right answer was yet to come.
Meanwhile, the iPod, which looked like an expensive toy at the time, indicated the future on a more structural level – a fundamental change in who could make phones and who would control what you could do them. Things that look like expensive toys are often the future.
(Separately, I remember sitting on a yacht 1 in the port of Cannes in 2004, I think, and hear a Motorola senior executive explain how difficult it was to put hard drives in phones, because people accepted the iPod broke the knocked down, but not a phone. Meanwhile, Apple was already moving to flash storage.)
All this is the backdrop for what happened to Nokia and RIM 2007 until, say, 2010. As we all know, the executives of these two (and other companies) laughed at the iPhone, seeing only the parts “minimum” of MVP 2, not realizing that it reflected a fundamental change in the commitments that were possible and that consumers choose.
But the other reason for this failure to see the threat was that their own products “smart” seemed to be going very well. This was much less pronounced in the United States because, for various reasons, Nokia’s products and also most of the best products on the European market (not to mention Japan) were not available there. So, Steve Jobs and his team hated her much more than European cellular – their phones were not as good as theirs.
Again, in hindsight, it is clear that the quality of experience on S60 was in decline and that Nokia did not have the skills or the necessary structure to fix it or deliver Meego/Maemo. But at the time, Nokia and Blackberry seemed to be fine. Sales of handsets with S60 and Blackberries grown steadily for more than two years after the iPhone announcement. That was the time it took for the iPhone to fix the problems in MVP and get wide distribution and for the first Androids begin to appear. And then, within one quarter the sales of both companies fell (only one of them wrote a memorandum on “burning platform”). And of course at that point it was too late.
Michael Mace wrote an excellent article and the time of the collapse of the Blackberry, investigating the problem of faulty indicators. Key metrics tend to be the last to show a slowdown and this tends to happen only when it’s too late. So it may seem that it is going well and the people who three years ago said there was a major strategic issue were wrong. We call this “Road Runner Effect” – you have left the cliff road, but you’re not falling down and everything looks fine, but when you start to fall is too late.
That is, use metrics that point to a good direction and the right to refute a suggestion that there is a major strategic problem can be very satisfying, but unless you are very careful, you could be making the wrong argument. Changing the metaphor, Nokia and Blackberry were skating toward where the hockey puck would be and it looked good and fast and under control, while Apple and Google were melting the ice rink and turning the game into waterskiing.
Going back to 2001, when I was a sales analyst securities market of European mobile operators, managed to correctly predict a few things – I spoke of operating systems and property of clients and showed people my iPod, pointing out that it was not necessary to be a GSM standard co-inventor to make a cell phone (though I did not buy Apple stock). But what could I have said to predict all the future? The question that every investor living doing was “what is the killer use for 3G?” In the end, the killer use to have Internet in your pocket was … well, have the Internet in your pocket. That was the wrong question.
I could have said this, however:
- It will take a decade to devices that do all of these things become a mass market.
- But then all the ideas in video concept, mock-ups, crazy imaginative engineering and futurology happen. All of them. For billions of people.
- But to the camera manufacturers will not make much money in any way except by Samsung, one player from the second row, and a company that has manufactured Apple computers called (remember her?), which has just launched …. An expensive MP3 player, and has no assets, experience or intellectual property in Mobile.
- Everything will be software and open Internet, and these devices will be true of computers, fast, with hundreds of times the computing power of the PC on your desktop today. And it will not matter that the battery lasts only one day.
- And although everyone go do all this, the telecom will not do any of that because the portal model and the Aol model will fall apart, though not many people expect it even to the portals and the Aol. The telecom spent all this money, all this built infrastructure, hired all these smart people, imagined and planned, looked to have all the power in this market and still not have any power.
How many people I would have convinced in 2001?
It’s always fun to laugh at the people who said that the future would never happen. But it is more useful to look at people who have done things right, but not entirely certain. It happened in mobile. When we look today to emerging industries such as virtual reality and augmented reality, or autonomous cars, we can see many of the same problems. The outlook in 20 years is actually the easy part, but the details are the difference between Nokia and DoCoMo dominating the world and the world as it actually happened. We will have a lot of things happening in 2025 that we would find it equally strange.
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