Italian-born Bruno Giussani, who now resides in Zurich, is Director of Innovation for a wireless company, 3G Mobile. Formerly a technology journalist for the NY Times and the Industry Standard, he is author of ROAM, Making Sense of the Wireless Internet.
Q: Bruno, when ROAM came out in October 2001, SMS volume was approaching 25 billion per month, telecoms were exposed as having grossly overspent, 3G was delayed, and the US was just discovering ringtones. What has changed in the last 4 or 5 months?
Giussani: And you might add that WAP was sentenced to death even though the technology was pretty effective at its original purpose. But to tackle your question, in Europe we saw two major developments. The first 3G test was launched on the Isle of Man, by Manx Telecom. They’ve had the usual startup problems, including software glitches and cell handoffs.
Second and more interesting, e-plus [Germany’s third largest operator] launched i-mode in mid-March, bringing it over from Japan. This is an important test for the industry. If e-plus fails, it will be seen as proof there is no space for the wireless Internet, no market demand to go beyond voice and SMS.
Q: How do you expect it to turn out?
Giussani: I believe there is a market for paid wireless data services, in both consumer and corporate markets, but we need proof.
Q: What direction are the major telecoms going to take now?
Giussani: Their new strategy is optionality, which means doing nothing except keeping all their options open. It’s more than "wait and see" because you must proactively do things to comply with the minimum requirements of your UMTS license, for example. Do the minimum. Reduce investments, just keep all options open; then if market goes up, you can act on that.
Q: What wireless-enabled device has achieved the best productivity? Laptop, PDA, mobile phone, Blackberry?
Giussani: The Handspring Treo! That is my current preferred, but let me answer this more precisely. Forget voice and SMS, which are commodity, default options of any wireless device. So far, with few exceptions, there is no real differentiation between devices used for personal and for business purposes. A mobile phone used for professional purposes, to make calls and send SMS,primarily addresses the individual, not the needs of the company.
Q: When you leave the company, the device and data in it go with you.
Giussani: Yes. Management of personal data has been the focus in mobile devices so far, in the PDA market. Now we are into the next phase which is e-mail, via Blackberry and similar devices, with some access to files.
For e-mail the Blackberry is best; it does this one thing very well. From here on, you will see a division between devices for individual and those for organization. Wireless CRM has more sophisticated requirements, as an example. Personal devices will primarily support entertainment and the evolution of SMS. By which I mean messaging in all its forms: wireless e-mail, instant messaging, chat, picture messaging, you name it.
Q: The devices market will bifurcate.
Giussani: And you see it already in the form factor. Devices with bigger screens and complete keyboards. Most, at least in Europe, are supposed to work on GPRS, always-on, using IP, which brings a big change in user experience. Many of the new devices released this year will start Java, which gives a different set of possibilities; you can download software and use it locally. Devices are approaching pocket computers but with the limits of tiny user interfaces.
Q: Any interesting new capabilities to expect?
Giussani: In next two years, many devices will incorporate a camera. Picture e-mail will become as big as SMS, if operators don’t screw it up with punitive pricing.
Q: Picture-mail as popular as SMS? Seems unlikely; how many pictures do you take in a business day?
Giussani: How long does it take to write an SMS? A full minute? When resolution gets good enough, it will be easier to just take a photograph of a written sheet of paper, and transmit that picture, instead of sending a fax. Another example, the insurance agent at an accident scene will immediately snap two photos and send them to a main office, where they become part of a record. And imagine that device in a teenager’s hand: look who is here, you should be here and see this.
Q: Is wireless enablement of the corporate workforce delivering a payoff?
Giussani: It is happening hesitantly. Why hesitantly? Because mobilizing the workforce (beyond voice and SMS) requires tailor-made solutions. CRM is the next big opportunity. The further you go up the scale, the more ROI you can demonstrate, but the solutions must be geared to specific people, roles and companies. The solutions that really work, like the Fedex and UPS examples, and the rental car return where the agent holds a wireless device, are tailor-made.
Q: You’ve written about the need for mobile workers to focus on a single device – you gave an example where the Blackberry was so popular that salespeople stopped entering CRM data on their laptops.
Giussani: Actually, with Blackberry as their e-mail device, employees had less incentive to boot up their laptops. The CRM application was on their laptop. This company, a large US investment bank, was losing crucial data. They solved it by putting a CRM interface onto the Blackberry to coax their field people to enter customer data. Software designers must carefully consider the processes within a corporation. Boomerang impacts are possible if you only look at the convenience factor.
Q: Machine-to-machine wireless interaction – where is this happening and mattering?
Giussani: Mainly in monitoring. The number of phone calls is great, but they often contain only a small packets, so the actual volume of data is small, maybe one packet per minute. Monitoring oil containers and vending machines is very low bandwidth. Sensors are a key piece of wireless space, and there’s a convergence happening here with wireless and sensors, including infrared, biometric, and others.
Q: Wi-Fi connectivity is popping up everywhere, but is it a charitable effort? Who pays for it, and how?
Giussani: The prime example is Starbucks, Compaq and Microsoft cooperating to put wireless LANs in all Starbucks shops in the US. Yet Mobilestar, which was providing some of the technology, went bankrupt. Guerilla Wi-Fi LANs are great, and a huge boon for mobile workers, but there is no real business model. Until one comes along, it makes sense for business hotels but little more, and that is too bad. I work in a wireless-equipped office, no wires. I love it.
Q: Will wireless be remembered as the great financial disabler of Europe’s telecom industry?
Giussani: That is not unique to Europe. A few years ago, a licensing auction in the US created a couple of bankruptcies. Deutsche Telekom, France Telecom, and BT each have more than 50 billion euros in debt. It is very difficult for them to pay back, their credit ratings are down. Their stocks are down dramatically, and their capacity to invest is much lower.
Q: What is the most naive assumption made by CEOs of the largest telecom organizations?
Giussani: That they could get expensive UMTS licenses, roll out services, and see significant revenue within 24 months.
Q: What’s your timetable for 3G?
Giussani: There will be no true 3G mass-market service, by which I mean an adoption level of 15 to 20 percent, before 2005. Networks will start to operate in major cities by the end of 2002. But that is just coverage, not a service. In 2003 you will see early adopters, given the limited coverage in most big cities, and the devices available. But before we move to a mass market, devices will need to work on both 2G and 3G, so outside the 3G coverage area you are not crippled. Such devices are not easy to make, because you have to cram a lot of radio technology into a small container.
Q: And the service rollout?
Giussani: Except for SMS and e-mail, services that people will pay for are not yet discovered. Once they are, the billing problem must be solved. And consumer skepticism generated by WAP has to be overcome. We are just beginning this process.
Q: Will independent service or content providers bill independently?
Giussani: No, at least for the foreseeable future, billing will remain with mobile carriers and operators, that is an approach which works. NTT Docomo bills subscribers on behalf of its content providers, keeping 9 percent and returning 91% to them. It is the [successful] Minitel model gone wireless.
Q: In the US carriers generally won’t bill for third parties. Isn’t this walled-garden aproach a crippler?
Giussani: Over time that will not last anywhere, in Europe or the US. Even AOL could not maintain that. Carriers today have the only sophisticated billing systems (except Visa and MasterCard), so everyone should be able to use their billing system. They are losing out, missing a huge opportunity to leverage their billing system. Look at Exxon’s SpeedPass, which can now be used to pay at MacDonalds restaurants [Editor’s Note: and is being tested as an embedded capability in Timex watches]. The telcos are giving their market away. By contrast, Mobilcom in Germany has applied for a banking license. Smart.
Q: Is the aftermarket ringtone business a momentary fad?
Giussani: Operators say m-commerce is big, look at the current market for ringtones and logos. Who cares about that, say the older executives. The fact is that ringtones and logos are important to the business side of wireless, because they involve profits, but also because they bring users along the learning curve in using wireless applications. The market is digesting the use of services other than voice. When we start selling Java applications, people will not download them merely because it’s Java. They’ll download only if there is a perceived value and they understand what download means, and the impact on their phone bill. People will move from ringtones, to logos, to cartoons, to Java games. They have to start small.
Q: Can startups sell mobile applications in Europe and the US?
Giussani: Telecom operators are always difficult to work with. They hold a cultural belief they can do everything by themselves. They may turn to the outside to buy some technology, but they view the vendor as a small supplier instead of a partner. That mode is passé, and it works against them. The wireless Internet requires partnering.
The telecom operator has connectivity, customer knowledge, and billing . But for the rest, they need to partner. That is what they must learn.
Q: Who should they partner up with?
Giussani: Startups, systems integrators, software developers, universities, industry forums. This is absolutely crucial.
Q: Is it a losing game for startups when there are so few telco customers, and most are financially distraught?
Giussani: No, startups have a lot to do. There are many holes in the technology infrastructure to be filled; entrepreneurs must identify them and fill them.
Q: For example?
Giussani: Billing is difficult for the telecoms and needs further development. The operators need services and applications that produce revenue. I do not believe in classical content in wireless, but there is a huge space for entertainment, games, music, gambling, and adult content. Nothing has been offered for professional use yet. Internet applications must be changed in a major way to work effectively over wireless.
And startups can make better devices. Then with Java, there comes a huge space with many possibilities.
Q: When does the second edition of ROAM come out, and who should read it?
Giussani: It is scheduled for September, and aimed at businesspeople in marketing, communications, technology and telecoms without a specific technical background. There is more at www.giussani.com/roam.
(Copyright Brant-Westerberg 2002)
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