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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

September 10, 2013 at 3:04 PM

Mobile Future: Digital Starbucks, Nokiasoft, Windows watches and more

Top brass from all the major phone companies are gathered in Newcastle today to hash over where they’ll make their next trillion dollars.

Most seemed to agree with host Chetan Sharma’s assessment that connected services — built on top of mobile broadband networks — are the next big opportunity now that growth rates of voice, messaging and data are slowing.

Sharma, an Issaquah-based analyst and consultant, said this “connected intelligence era” will run from 2012 to 2050, as the encore to the “golden age” of telecom over the last 40 years.

The next phase isn’t just about connecting people and devices “but the intelligence layer that sits on top of the connection,” Sharma said in opening comments at his annual Mobile Future Forward conference, held at The Golf Club at Newcastle.

mobshift

This transformation will affect not just carriers and phone makers but all sorts of businesses that pounce on the new opportunities.

“It’s very clear in my mind that the next 10 years will be just phenomenal in terms of what mobile does to every vertical,” Sharma said.

In retail, Exhibit A was Starbucks. Senior Vice President Marianne Marck told the group that 10 percent of her company’s North American commerce transactions are now done with mobile devices.

Marck said the system is designed to be simple for customers to make it useful and keep store lines moving quickly. But it’s complex on the back end, connecting to a range of services such as the company’s loyalty card, payment handlers, location services and Apple for song and app “pick of the week” offerings.

“I’m pretty obsessed — making sure that experience is seamless,” she said.

Within the stores, data is streaming from the point of sale systems, Wi-Fi networks, security systems and even “smart” devices connected to coffee and refrigeration equipment.

“They’re touch points and they’re assets the rest of the company can use,” Marck said. “They become the building blocks of great ideas and customer experiences.”

Some other companies, including major retailers, are struggling to move as quickly, said Stephen David, former chief information officer of Procter & Gamble.

“I think we’ve got a cultural issue, we’ve got a leadership issue, on why some of these things are not being adopted as fast,” he said.

Failing to move with the times can be perilous, said Ralph de la Vega, president and chief executive of AT&T Mobility.

He related how Nokia was the top supplier of phones to AT&T back in 2004, but lost all the carrier’s business by fumbling the evolution from second-generation to third-generation devices in the U.S. and missing the window of opportunity that opened at the time.

“When you miss those opportunities you really risk the company,” he said.

A key decision de la Vega made was to push the company to develop an HSPA network, in addition to the Edge network the combined Cingular and AT&T Wireless were pursuing. He was inspired by a network demo — of a Madonna video — that he saw in Venezuela when running BellSouth’s business in the region.

Having HSPA eventually helped AT&T become the exclusive launch carrier for the iPhone in 2007, because Apple’s device performed well on HSPA, he said.

Speaking just before today’s unveiling of Apple’s phones, de la Vega didn’t say much else about Apple. But he heaped praise on Nokia’s latest model, the Lumia 1020 with a 41 megapixel camera.

On a recent trip to Paris de le Vega used a Lumia 1020 and drew raves for his pictures, he said, giving a pitch for a device that’s currently an AT&T exclusive.

“That is a perfect example of a great operating system, a great hardware innovation,” he said of the 1020.

AT&T saw prototypes that initially had a huge hump for the lens and was concerned about selling the phone, but Nokia “worked and worked and worked and it’s a really slick product.”

Microsoft’s purchase of Nokia’s phone business led to a 4 a.m. call interrupting that Paris vacation, but de la Vega still thinks highly of the deal and the potential of Windows Phone.

“I think over time it will be a very strong ecosystem,” he said.

Meanwhile, AT&T is making large and small bets to position itself for the “fourth wave” of wireless growth. The company is spending $14 billion to accelerate the Internet-protocol capabilities of its network. It’s also setting up incubation facilities in tech hubs such as Silicon Valley and Tel Aviv and looking for opportunities that could become $1 billion businesses over the next five to 10 years.

Among the current targets are cars connected to 4G networks, in-home healthcare services and home automation and security services through the company’s Digital Life initiative.

AT&T also sees opportunities for commercial services combining large-scale data analysis (big data) with mobile networks. The information produced will be irresistible to merchants, he said.

For example, AT&T may be able to tell a merchant that eight out of 10 cars passing their store every day are heading to a competitor down the road.  “Would you like to know who those customers are?” he said.

Sprint is also chasing services such as mobile commerce and expects the could become 4 to 5 percent of its business over the next few years, according to Steve Elfman, president of Sprint network operations.

Elfman predicted that by 2018 Sprint will still be the third largest U.S. carrier “and we’ll be trying to be No. 1 in 2018.” But he added that its market share should have doubled by then, to 30 to 35 percent.

Elfman said the Microsoft-Nokia combination serves a particular demographic, and Sprint is hoping that it gets to critical mass with 10 percent or more of the market. “Because personally I think many in our industry think that’s necessary.”

Microsoft’s Thom Gruhler, chief marketing officer for operating systems, declined to predict the platform’s growth. But he said Microsoft’s going to benefit from the “scale and innovation” that Nokia brings to the company and noted that Nokia will build and ship more than 200 million devices next year.

“What this really means for us is we have a chance to get the ecosystem going with innovation, with share around the world, with scale,” Gruhler said.

Most of those devices will be entry-level devices and not Lumia smartphones. But those devices are “a great ramp — an excellent starting point for customers looking to experience their first Windows device around the world,” Gruhler said.

Gruhler didn’t confirm rumors that Microsoft is also developing “smart’ watches again but twice during his presentation he listed watches in the lineup of consumer products coming from the Redmond company.

“Think of Windows across PCs, tablets, phones, watches, Xboxes and on down the line,” he said.

Next up was a panel including Kevin Packingham, senior vice president of product innovation at Samsung, which just announced its Galaxy Gear smartwatch.

Packingham said the goal with the watch was to create an “experience complementary to what you already expect out of your smartphone.” For instance, “it really is a natural experience to look down and see what your message is” on the watch.

Asked about buzz around the category, he said technology has advanced to the point where a “fashionable” smartwatch can be produced.

“Part of the fascination with wearables is that we can do it now,” he said.

Packingham declined to comment directly on the new phones from Samsung arch rival Apple, but he did get in a few digs. When companies “start to say things like ‘we’re not doing technology for technology’s sake’ … that just means you’re running out of ideas,” he said.

Phone innovations coming in the next few years include new screens and processors “to deliver a benefit that is real and tangible to consumers,” giving them reasons to upgrade their phones and data plans, he said.

“It’s not just something as simple as a new color,” he said.

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