I never thought I would hear it, but the buzz on the streets of Essex, that trend-setting county just east of London, is that Research in Motion (RIM)’s BlackBerry handsets have now replaced Apple’s iPhone as the gadget of choice. I should immediately qualify this “finding” as purely anecdotal research, based on a conversation with my 13-year-old niece this past weekend regarding her latest phone, acquired because, as all parents will recognise, “all her friends have got one”. It doesn’t seem five minutes since she was demanding the latest iPhone, hence my surprise that the BlackBerry has risen so rapidly in the teenage desirability league table, at the expense of the apparently unstoppable iPhone. My colleague, Andy Brown, our resident RIM expert, assures me that the Canadian company has been promoting the BlackBerry as a consumer device for some years, largely by advertising it in the hands of celebrities. In spite of those efforts I would argue that it is still commonly perceived as a business-centric device. Nevertheless, consumer sales of BlackBerrys have been rising rapidly, contributing to RIM’s impressive overall performance in the mobile phone market. I was obviously keen to learn why today’s younger teenagers are apparently bucking the accepted trend towards using touchscreen, button-free devices. The QWERTY keyboard, according to my niece, is in fact one of the appealing features of the BlackBerry, since typing messages is so much easier. And it turns out that messaging appears to lie at the heart of RIM’s success in this segment: the ability for young friends to send each other messages using RIM’s BlackBerry Messenger (BBM) service, completely free of charge, has huge appeal to the device’s owners as well as their parents, concerned at rising monthly bills. So the obvious question is, what happened to the apparently eternal appeal of an unlimited choice of apps, as well as 4” touchscreen displays? At least for this small sample, it seems they are now considered of secondary importance. For my niece and her group of friends, the ability to stay in touch via near-constant, rapid messaging, and at zero additional cost, is what matters most. Whether that will be the case as they get older remains to be seen, but it’s a reminder that one device format is unlikely to suit the needs of all segments, however successful a particular product may appear. “With iPhone, every handset works the same,” said Apple’s Steve Jobs during yesterday’s results call. Yes, Steve, they do: and it seems, amazingly enough, that some people really don’t need it that way. Client Reading: RIM Announces PlayBook Tablet and Multiplatform Strategy

Lack of ambition would presumably not be the most obvious failing of a new company which styles itself under the label “Everything Everywhere” (EE for sake of brevity). The name was chosen to represent the combined UK operations of both Orange (France Telecom) and T-Mobile (Deutsche Telekom), which now form a 50-50 joint venture and which announced their first results at an investors meeting in London yesterday. It would be a tad unfair, given the company’s core network technology assets, to assume that EE would be branching out into home pizza delivery any time soon, even though casual observers might assume “everything everywhere” might encompass all manner of exciting goods and services. Nevertheless, it was perhaps a little disappointing to discover from EE’s tagline – “Creating a new mobile champion” - that the network will apparently only serve network-based communications and applications to customers who happen to be moving around at any given time. Taglines are tough to get right, of course, and inevitably cannot please everyone. As the management presentations progressed, it became clear that mobility was not after all an absolute requirement for any future products and services which EE may choose to emphasise. Indeed, although they remain well hidden beneath the inevitable deluge of mobile phone and wireless network-centric commentary, fixed broadband and IPTV (for big screens) are very much alive and kicking as key elements in EE’s strategy. Executives even went as far as to designate IPTV as a “key part of a converged play” and that fixed broadband was “strategically hugely important”. This should come as a relief, perhaps even a surprise, given that fixed networks have played no part in T-Mobile’s UK business to date, and have been losing money (£80m in 2009) from the few customers Orange alone had managed to acquire. Given this performance the new venture might have been forgiven for abandoning fixed network businesses altogether as a lost cause. Instead we were assured that Orange’s broadband profitability was “already improving”, and that the recently announced deal to outsource network, IT and customer service to BT will have the desired impact of returning “Home” EBITDA to positive territory by 2012. Specifically EE will increase targeting of home broadband to its existing Orange mobile customers initially, and also introduce it to T-Home customers during 2011. Marketing will also encourage take-up of fixed voice by Orange and T-Home customers, since EE claims that the BT deal means that acquiring fixed voice customers would no longer have a negative margin impact on overall performance as was previously the case. The company is planning for 80% of new broadband customers to include fixed voice as part of their package. Potentially even more significant will be EE’s plans for IPTV, once they are finally confirmed. The company announced that it is looking at IPTV opportunities, including Canvas, the BBC-led over-the-top initiative. It would not join Canvas as a shareholder, but is considering affiliate membership. Whatever decision is eventually made on IPTV, EE will not become a major content player, which will come as a relief to shareholders and a disappointment to content rights holders looking for new competitors in the distribution market in order to boost values. EE even has the UK’s long-awaited fibre rollout on its radar. Its agreement with BT allows for access to the new fiber network by EE, although no specific plans have been agreed. Other emerging opportunities on EE’s radar include M2M (machine-to-machine), in which the company includes connected home devices and home automation as specific “high growth” verticals. M2M is a broad concept which may certainly one day lead to services and applications which approach “everything everywhere” capability. In the meantime, EE has probably has enough on its plate just to meet its growth and profitability targets in its core mobile and broadband businesses. Client Reading: Global Broadband Forecast 1H2010

Embarrassing Apology of the Week Award goes to Sky for the following email just received by its UK customers: “In our recent newsletter - 'This week on Sky Player' - we did not make it clear that in order to watch live Sky Sports for free on Sky Player until 31/12/2010, you need to subscribe to Sky Sports 1 & 2 on Sky TV. We apologise and hope that this did not cause too much confusion.” The company presumably has received complaints from confused customers who do not currently pay for Sky Sports on TV and assumed, naturally enough, that when Sky told them they could watch Sky Sports for free on Sky Player, they could watch Sky Sports for free on Sky Player. In fact, the email should clearly only have been sent to customers who already pay for Sky Sports on TV, or worded very differently for all customers. No doubt the company’s apology is also intended to ward off any possibility of a regulatory wrist-slap. It’s a little unfair, if rather easy on this occasion, to pick on Sky for its misleading communications over bundled service offers. But this episode does highlight the age-old question of when “free” really means “free”. My own father, who was fond of repeating the well-worn cliché “there’s no such thing as a free lunch”, would probably say “never”. And perhaps consumers in the 21st Century have been bombarded by so many unlikely offers that they are simply inured to misleading advice. The details, after all, are usually in the fine print, if anyone can be bothered to check. What’s the difference, after all, between Sky offering “free” Sky Sports to its paying customers, and mobile phone customers offering “free” texts to its paying customers? Or “free” mobile phones to customers who have to pay money to use them every month? To quote Orange’s current Monkey offer: “Get free music, texts and a free daily internet pass, just for topping up £5 on Monkey”. So, spend money to get something free. These “offers” are such an established feature of bundled service marketing (and commercial life in general) if anything it's surprising that Sky felt the need to respond. A liberal deployment of asterisked fine print should help Sky avoid similar problems in future. Client Reading: Apple TV: Still Just a Hobby? Or Another Nail in Pay Television's Coffin?

It’s no surprise that a majority of early iPad buyers had already bought into the Apple ecosystem, but the fact that fully 90% of people who say they will buy an iPad during the next 12 months already own an Apple device is perhaps surprising. It might have been reasonable to assume that the novelty of the tablet form factor would open up a whole new wave of potential customers attracted by its innovative design, regardless of how familiar they were with the benefits of Apple’s user interface and design. It seems, however, that in the early days at least demand for the iPad will be met almost entirely by existing Apple owners. Our survey of 2000 US consumers also suggests that a third or more of existing iPhone and Macbook owners have already gained access to an iPad (at least they say they have used one at home). And nearly a half of the early iPad adopters say they are somewhat or very likely to buy another iPad during the coming year – an indication of strong customer satisfaction if ever there was one. So how should Apple respond to this news? On the one hand the company should relax in the knowledge that so many of its core and loyal customers are saving up to buy the company’s latest device. On the other hand, there may be just the slightest concern that the iPad has so far failed to win new hearts and minds amongst the half of US homes which do not already own at least one Apple product. That may change as the tablet category becomes more widely recognised. New entrants will shortly be flooding the market with iPad alternatives which will help raise general awareness of this new category. As Apple struggles to meet demand from its existing customers, the opportunity is there for competitors to target the remaining market segments with iPad alternatives. Client Reading: Apple's iPad: Identifying Early Adopters and Intentions to Buy Meet Our Analysts: 3DTV Analyst Forum at IBC 2010

Nokia today introduced its new smartphone, the N8, the first based on the Symbian 3 operating system. It’s got a great 12Mp Carl Zeiss camera, social messaging widgets and Ovi Maps. Symbian 3 allows for user-selected home screens, multi-touch and gesture support and improved UI, graphics and speed through its Broadcom graphics and 680MHz processor. So far, so good. But what we really want to know is, how does it handle video? As we’ve mentioned previously, Nokia has promoted TV out capability on its N series smartphones for several years, and has talked about one day delivering DVD quality video from handsets to TV screens. Previous smartphones have fallen short but it seems as though the N8 may finally be reaching this goal (although we look forward to seeing this demonstrated in person rather than on a conference call). The N8 captures HD video (720p) at 25fps. It supports H.264, MPEG-4, VC-1, H.263, Real Video 10, ON2 VP6 and Flash video file formats. Most importantly it features HDMI for output to digital HDTV displays, therefore potentially taking on the role of “set-top box” to the TV screen. Nokia emphasises the ability to play back user-generated video on the TV, but the phone can clearly potentially also serve as a video player for much HD content, rights issues permitting. To emphasise this point, the N8 will come pre-shipped, depending on region, with appropriate “web TV” applications, such as the BBC’s iPlayer in the UK (although it is not clear if these will support HD rather than just SD). Functionally there is still some way to go. The N8 can push HD video to a 40” LCD over an HDMI cable, but it’s not likely to be a long cable, so to control what’s happening on the big screen the user must keep returning from the sofa to the handset. We mentioned the need for a remote control to Jo Harlow, Nokia’s head of Symbian Devices, who told us it was an interesting idea which she would recommend to her team for consideration. For reference, while we welcome the opportunity to support Nokia’s product development activities, this blog has highlighted this problem previously. Third party vendors will no doubt step into this gap until Nokia brings out its own solution. In any case there is a genuine question as to whether users will accept the mobile phone functioning as a “set-top box” when it is, after all, their main gateway to personal communications and the handheld web. Even if the N8 can play a 2 hour HD movie on the big screen, will owners be happy to let go of it for that length of time as they relax in the armchair? The answer to that problem will have to be wireless HD connectivity, another subject we have covered extensively.We are sure that this is also on the roadmap of Nokia and other handset vendors over the next couple of years. David Mercer Client Reading: Global Audiovisual Market Forecast

Cisco built up yesterday’s big news announcement as something “that will forever change the Internet and its impact on consumers, businesses and governments”. The chances are slim that more than a tiny fraction of consumers, businesses and governments will ever actually encounter the catalyst for this revolution, namely the new CRS-3 router, which will help service providers deliver the vast quantities of video that people will expect to consume over the internet in the coming years. So in that sense, the announcement was a slight disappointment, if none the less significant. Shortly beforehand, the news arrived that Cisco had also became a strategic investor in SiBeam, Inc. Also currently unknown to most consumers, perhaps, but SiBeam’s wireless video technology could become ubiquitous over the coming decade. We’ve covered it many times, most recently here. For some years SiBeam has been in a race with various other technology developers, and primarily Amimon, to bring wireless distribution of high-definition video to the digital home. While early consumer products have reached the market in limited numbers using both SiBeam and Amimon solutions, sales performance has been restricted by high prices. We are also hearing that Amimon’s technology has not proved as reliable as it needs to be, and as we predicted before, we believe the momentum is in the direction of WirelessHD, if there is indeed going to be a single de facto standard. Cisco joins other major consumer technology investors Samsung, Panasonic and others in backing the WirelessHD 60 GHz technology. So as well as investing in the future of internet video distribution, Cisco is counting on tomorrow’s in-home video networking technologies to build its vision of a world of networked video. David Mercer Client Reading: Wireless High Definition Appearing Soon at a Home Cinema Near You

Apple cynics seem to have taken the initiative following the announcement of Apple’s iPad internet tablet. I tend to shy away from anything as hyped as this product has been. Surely the most hyped Apple device ever... And for that reason alone I am feeling underwhelmed. Is the iPad really what this was all building up to? Let's think about the applications: Books - ok, I get this. if you want e-books this seems like a reasonable way to carry and read them. A nice way to read newspapers as well – I’m not sure the publishers will make money from it though. Web browsing and applications - I suppose the brower must work well. This is definitely the primary set of apps in my view. Consumers need an easy and fast way to get to websites quickly when they’re at home and don’t want to boot up the laptop. Music - ok, but who would rather listen to their music through a 1.5 pound portable device with (presumably) tinny speakers rather than either a) a small iPhone/Pod plus headphones, or b) plus docking device? Photos - yes of course – iPad could be a very nice digital photo frame. Games - could eventually become a killer app but control and input functions will need to be adapted to a larger screen device and iPhone app developers need to get to work to match the screen's HD resolution. Productivity applications - I'm struggling here. is this really how the iPad is going to get used? The virtual keyboard may be good, although early reports are not promising. But think about how are people going to hold or rest this device: sitting down in a chair - it would have to rest on the flat table, so you are leaning over it to use it properly. Sitting in an armchair - so it's on your lap, but again you have trouble positioning the screen at the right angle; or standing, so you hold it resting in one arm and only have one arm free to touch the screen. Or you use a stand and add-on keyboard, and it becomes... a laptop! OK, maybe the iPad could be used occasionally for productivity applications, but I just don't see this device as a breakthrough for work-based devices. and finally... Video. Video playback is reported as stunning - I can believe this. But where are the extra video content applications or TV deals? The specialised video apps like TV-transfer? No HDMI for TV connection? Apple seems to be struggling more than ever to break into the home video market in a big way. And no multi-tasking… this is crazy. I can't play music while I surf?! Form factor: maybe I was expecting too much from Apple, but really the iPad is hardly a revelation. Have they done what we expected? ie take all previous tablet-type implementations, improved on them and added innovative style and usability and content integration to create a unique package? I don't see this from what I've read and seen. And it's too heavy to be held in one hand, much heavier than some e-readers. Wireless: So the key question - how often would this device be used in truly mobile situations, and of those situations, how often would a user need to have cellular data service? The cellular service can be bought ad hoc - and I think it will be primarily. Not much new recurring revenue for carriers there then... The iPad is surely primarily a “free data” wifi device. It doesn’t need always-on connectivity for messages and voice - I'm always going to carry a phone for those. I can get online for websites and apps via hotspots when needed, and primarily use my home broadband to load it up with content. Having said all this, of course the lower than expected price points mean they will sell millions to Apple fans who won't blink at spending another $500 on the latest Jobs gizmo. (And did anyone at Apple really not investigate the unfortunate connotations of the device name for the female market? - one wonders if Jobs has really lost his touch.) Client Reading: Consumer Imperatives for Digital TV Media Browsers

Nokia’s annual development showcase is taking place this week in Stuttgart, conveniently placed, for the 2000+ international visitors, adjacent to Stuttgart airport, which is not nearly as bad as it sounds. After a day of analyst meetings we spent today listening to senior executives outline the company’s future plans and examining its latest device and service offerings. A major highlight was the unveiling of the recently announced Booklet 3G, Nokia’s first foray into non-handheld devices. Actually that’s not quite true, but you have to be an industry veteran of at least 20 years’ standing to remember when Nokia last manufactured PCs, or indeed the myriad of other products it used to be known for. It abandoned most of its traditional businesses as part of its rationalisation response to the Russian economic crisis of the early 1990s, and after it identifed mobile phones as the next technology wave the company has never looked back. Nokia’s explanation for (re)entering the PC space is that convergence is happening and is here to stay. In other words, it sees computing competitors (read Apple, Google) eating into its phone business, as phone handsets take on more and more of the capabilities associated with the PC. The logic is that Nokia can counter these threats by bringing its communications expertise to the PC space. The Booklet 3G is Nokia’s first response. I hope it is not their last. We could waste many hours discussing the finer points of English vocabulary, but this is indeed a “netbook”, at least as far as anyone can point to a clear definition of that word, and that may not be very far. It could also be a “laptop”, which is how John Hwang, who heads this new Nokia business, described it yesterday. Or to be precise, “a high end mini laptop”. So take your pick. It is, without doubt, a computer. From the various videos and demonstrations it seems that Nokia is trying to position the Booklet as a handheld device aimed clearly at portable applications. Promotional videos featured young, attractive (inevitably) people holding their Booklets in one hand while walking along streets, chatting idly with friends and surfing the web in attractive (inevitably) locations like ski resorts and wine bars. Actually I made that up, but you get the picture. For the record, the key features are Windows 7, 1.6GHz Intel Atom Z530 processor, 1GB RAM, 120GB HDD, claimed 12 hours battery life, 10.1” display, HDMI, GPS, accelerometer, Bluetooth, webcam. You may have spotted a couple of items which mark the device out from the usual netbook crowd. With GPS, accelerometer and 3G the Booklet is clearly designed to further strengthen Nokia’s position in the navigation and mobility applications segment. Retail price will be €575 plus tax. Nokia is confident (you can assume the deals are more or less done) that the Booklet will be heavily subsidised by mobile operators in return for the user’s long-term commitment to big fat monthly mobile data fees. The booklet is a nice-looking, well designed and high quality device. The to-ing and fro-ing around its categorisation is not coincidental, since its specification probably comes close to some low end notebooks/laptops. But prices for those start at €300 or less, while top end netbooks struggle to reach Nokia’s price point. As with Nokia’s phone business, it seems that close cooperation with operators will be necessary to ensure that Nokia’s return to the PC business is not a short-lived affair. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report

We’ve just completed the latest phase (in the US) in our user surveys looking at multiplay services like broadband, digital TV and voice. A key question at the moment is of course how householders will make economies as incomes contract. Before the results were in we heard many suggestions that mobile services were the last thing people would cut, and that if anything had to go it would be broadband or digital TV. After all, can’t people watch TV on the Internet for nothing these days? So we were somewhat surprised to see more or less the opposite results. When asked how they would reduce spending, out of five alternative services (broadband, digital TV, fixed voice, mobile voice and mobile data) 48% of US respondents said they would drop mobile data completely, compared to 21% opting for fixed voice and 19% saying they would drop mobile voice. 21% said they would drop digital TV altogether, and only 10% said they would drop broadband. To be fair, we also asked whether people would scale back to a lower tier, and on this question digital TV looks likely to suffer most, with 41% saying they would choose this option. Clearly many people feel they are paying too much for pay TV services they don’t get value from. But overall, two thirds of people say they would leave their current broadband deal unchanged. So poor old, unsexy broadband, without the appeal of all those fancy handheld iDevices, turns out to be the one service people would be least likely to do without. Broadband it seems really has become an essential utility. Twitter: twitter.com/DavidMercer_SA Further Reading: 48% of Americans Would Drop Mobile Data Service Completely