Outside the Lines

On this week's EIC Squared podcast ZDNet's Larry Dignan and I discuss Dell's ambitions to get into the crowded music player industry, Microsoft's interesting focus group with Vista and how the broadband wars are shaking out.

Dell might make another attempt at bringing a music player to market. With DRM unraveling, Dell doesn't need to beat iTunes, just offer a relatively cool and cost effective listening device that accesses multiple music services via Wi-Fi. Microsoft has a perception problem with it comes to Vista. That is well known, but it may not be because the operating system is lacking. Microsoft conducted focus groups for an operating system called Mojave (which was really Vista) for non-Vista users. Turns out the focus group overwhelmingly liked Mojave, which makes you wonder what caused Vista to have so many detractors at its inception in the market.

Larry offers his take on the battles among Comcast, Verizon and AT&T to win over each others' customers. With three major players, they can compete and divide up the spoils amongst themselves...like the oil companies.

JP Rangaswami, managing director of service design at BT (British Telecommunications plc), has a vision for the future of the telephony industry.

"The telcos have lost control of the device. When you start building genuinely agnostic services, when you don't know the target device, it requires a different form creativity," he said. It's a move from closed networks to more open software platforms, and part of BT's transformation from a telco to a platform-based, software-driven services company. "Everything we do at BT is embeddable as workflow for customers. Voice is a feature embedded in the workflow," he added.

Rangaswami's vision explains why his company plunked down $105 million to acquire Ribbit this week. (see Techmeme). Ribbit's software allows developers to integrate voice features to Web applications, such as Salesforce.com, Facebook, and the iPhone. In the coming weeks, BT will integrate Ribbit with its 21CN network, which is available in more than 120 countries.

Ribbit built a set of voice APIs that only make sense as part of a global network services company like BT. "The market moved from voice as a silo to voice as applications, and is still stuck there. Voice as a feature is our starting point," Rangaswami said.

He is depending on what he called the "magic of the community" to "see things we cannot" and innovate with BT's development platform and network. "We have become background catalysts, building better tools for the channel and developers," he added.

"The value only comes if you have applications that are used in an all-IP environment, and you can deploy services at the touch of a button rather than fiddling around with jumpers and cables. Ribbit is Silicon Valley's first phone company where you fiddle with software, not cables," Rangaswami said. "The story is not about cost reduction per se or telling customers what they must do to change or a backplane move. It's about innovation. The primitives of the network are exposed."

The fact that Ribbit is located in the midst of Silicon Valley, and a hotbed of developers, was also a factor in BT's decision to buy the company.

GigaOm's Om Malik likes the vision, but is skeptical about BT's ability to execute.

The 21CN plan included a platform that allowed developers to embed voice into Internet applications. That platform still exists, but one wonders if anyone is using it. So perhaps they had to go out and buy what is essentially a Class Five switch with a pretty Internet interface.

Ribbit, as an independent company was able to get some--not a lot--of developer interest. I am not sure how BT is going to do that. It is after a telecom operator, who wants to operate like an Internet company. Sure, in a circus you can make a dog walk on two legs as well.

As Malik implies, Rangaswami's next challenge will be getting the developer community to adopt his voice-as-a-feature-at-the-edge-of-the-network approach. It won't be difficult to convince people that voice features, like social networking, should be available to any Web site or application. Competing against Google's forthcoming Android, the iPhone, and other developer platforms will be trickier. As Rangaswami said in a video about the deal, "Execution is the name of the game now."

If you weren't aware, a war--more like a tug-of-war--is happening in the mobile space. The iPhone is quickly rising as the development platform to beat, despite its paltry share of market versus Nokia (Symbian), Java BREW, Blackberry and Microsoft Mobile. In addition, Google's fledgling open-source Android platform is also a challenger to the incumbents.

At a Mobile Web Wars Roundtable held by TechCrunch more than 20 mobile wonks discussed that state of mobile platforms (see the list of participants below). The purpose of the roundtable was to determine which mobile platform is best for developers. The iPhone has set a new standard for smartphones and most importantly developers are fawning over it, and iPhone users appear to be far more active users than those on other phone platforms. In the first few weeks of iPhone 3G more than 30 million applications have been downloaded.

Another iPhone advantage is that it takes the iterative model of Web development and extends it to the mobile client, said Jed Stremel, director of mobile at Facebook.

But the iPhone is not the universal answer from a business perspective. Loopt CEO Sam Altman said his strategy is choose a single platform (the iPhone) and if a feature becomes popular bring it to other platforms.

David Hornik of August Capital said that he is excited about iPhone because thousands of applications were distributed after it launched--living proof of the viability of the platform. Like Facebook applications, VCs see some potential in funding in iPhone developers. Having the iPhone app store and not having to go through the carriers to access applications is a bonus for distribution. Omar Hamoui, CEO of AdMob, said the value of ads on the iPhone served by his company is three times other platforms.

But the iPhone doesn't have a sizable market yet, compared to Facebook or Windows, Hornik said. "It's not venture scale," he said. Venture capitalist Richard Wong of Accel made the case that there aren't any developers creating applications just for the iPhone today. "It's about finding the largest addressable audience," said Walt Doyle, CEO of uLocate. Yahoo supports everything under the mobile sun and reaches 600 million devices with its mobile services, according to Marc Davis, chief scientist for Yahoo's mobile group.

The idea that the iPhone has invented or is reinventing the mobile Web is an overstatement, according to David Rivas, Nokia, vice president of Technology Management for S60 Software, citing Japan and Korea as far ahead of the U.S. in mobile usage. "The idea that there wasn't a mobile before the iPhone is absurd," Rivas said. He also defended Nokia's recently open-sourced S60 platform, saying that it has applications similar to what are available on the iPhone. On the other hand, it doesn't have the buzz or browser of the iPhone, but Nokia produces a phone every 14 seconds, garnering 60 percent of the market. Rivas was asked about a merging of Symbian and Android, and responded that there are no such plans.

Tom Conrad, CTO of music service Pandora, said that the iPhone is fundamentally better for streaming devices and as a multifunction device appeals to consumers in different ways than other phones. Regarding Google's Android platform, Conrad said, "I need Android like I need a hole in the head. The last thing I need from a technology standpoint is a platform that sits on top of buggy firmware, with hundreds of phone manufacturers and different screens."

Loopt's Altman gave Android credit for being more open and capable of running background processes. Jason Devitt of Skydeck gave RIM (Blackberry) props for getting email right and noted that Android has serious challenges ahead. "The biggest challenge for Android is that it is totally dependent on hardware manufacturers and for the carriers to deliver," he said. This is distinct from the iPhone and Blackberry approaches, in which the devices are completely controlled by Apple and RIM, respectively. Developers are taking a wait-and-see approach to Android, which lacks any user base currently.

In summary, developers are enamored of the iPhone and hope that Apple sells hundreds of millions of units, but they will spend their development time and dollars on whatever platforms have volume.

Mobile Platform War participants:

David Rivas, Nokia, Vice President of Technology Management for S60 Software

Walt Doyle, CEO Ulocate

Tom Conrad, CTO Pandora

Greg Yardley, CEO of Pinch Media CEO

Bart Decrem, CEO of Tapulous

David Hornik, partner, August Capital

Jed Stremel, Director of Mobile at Facebook

Guy Ben-Artzi, Founder of Real Dice and CEO of Mytopia

Jason Devitt, CEO of Skydeck

Gannon Hall, CMO of Kyte

Sam Altman, CEO of Loopt

Marc Davis, chief scientist, Yahoo mobile group

Omar Hamoui, CEO of AdMob

Richard Wong, partner at Accel

Andreas Weigend, former chief scientist, Amazon

Tatsuki Tomita, SVP of Consumer Product, Opera

Mike Rowehl, chief architect, SkyFire

Mary Ann Cotter, CEO Cooking Capsules

John Faith , GM and VP of Mobile for MySpace

On this week's EIC Squared podcast, ZDNet's Larry Dignan and I discuss the latest moves in carving up the wireless world as Verizon Wireless announced plans to acquire Alltel for $28.1 billion. It won't be long before the U.S. wireless industry shakes out into AT&T, Verizon, and a Sprint/T-Mobile merger. We also discuss the latest news in the travails of Yahoo as it tries to keep Carl Icahn from taking over the board.

Plus, we speculate about the Steve Jobs' keynote at Apple's Worldwide Developers Conference on Monday.

Rubicon Consulting's survey of 460 iPhone users in the U.S. surfaced the obvious. iPhone users are are young (half under 30), tech savvy and, besides telephony, primarily use the device for e-mail, texting, and Web browsing.

In addition, about one-third of the survey's respondents said they carry a second phone, presumably for some business purpose or a second phone number. Ten percent of those surveyed have a RIM BlackBerry alongside their iPhone. iPhone users also are about 40 percent above the U.S. median in household income.

The iPhone, starting at $399, naturally appeals to an elite, hip, younger crowd with disposable income. In fact, iPhone goes together with BMW, an object of desire for those who can afford it.

Apple's brilliant "Think Different" ad campaign, which ran from around 1997 to 2002 around the Macintosh, was about changing the world, highlighting well-known artists, entrepreneurs, and scientists. The ads for the iPhone are just a model's hands and the object of desire, which is worthy of desire.

Apple CEO Steve Jobs has established himself as the personification of "Think Different." He and his team are changing the world of mobile computing, but they haven't reached beyond the elite. This is typical for new consumer electronics products and Apple.

So far, the secretive Jobs hasn't shown how or whether Apple intends to change the world with the iPhone and follow-on products. The One Laptop Per Child initiative should provide some inspiration.

In the post I wrote about Rich Miner of Google saying that the Android mobile software stack will gain more users than the iPhone, several people commented. The general consensus is that Apple is the BMW of the personal computer industry and is the standard for innovation that its competitors, with far more market share, follow. Android is a non-factor.

The challenge for Apple is to keep coming up with proprietary products that fuel its business model, which is based on innovation and R&D around both hardware and software. Since Steve Jobs returned to Apple, the company has had a series of hit products that don't dominate markets (with the exception of the iPod) but appeal to an elite and influential minority. Even Apple's advertising makes the marketing from competitors look tedious and uninspired.

Apple's tightly bound software and hardware provides unique differentiation in a world of mostly undifferentiated PCs and mobile devices. RIM's Blackberry also has had success by controlling its entire product.

Microsoft has made progress with its Windows Vista operating system, and its OEMs (original equipment manufacturers) have created slicker PCs and laptops to run the software, but the Macintosh is still considered a superior product overall.

Jobs is clearly making the right choice for now not to license the Mac, iPhone, or iTunes software to hardware makers. Getting into a battle for OEMs with Microsoft, Google, Symbian, RIM, and Palm, etc. is a losing strategy at this juncture. The best mobile operating system and user experience doesn't necessarily win the deals, even with Steve Jobs as the chief negotiator. Microsoft is extremely capable in working with OEMs and developers, which is a key factor in building out a platform.

On other hand, it would be interesting to see what developers could do if Apple open sourced the iPhone software. The mobile Web experience is the new center of attention and R&D spending in the tech industry. Google's Android will be a good test case. If Android were to become successful, due to its openness and developer community, Apple would feel the heat. An army of smart developers with Google behind it could create a next-generation mobile Web operating system and application platform that challenges Apple far more than the current set of incumbents.

But Jobs is uniquely talented and a master of total product design. Handset manufacturers come up with dozens of phone designs per year, but haven't been able to duplicate the user experience of the iPhone. You could say the Nokia N95, the HTC Touch, and other smartphones have similar capabilities, but they don't match the slickness, pinching, and other capabilities of the Apple device despite its flaws (no 3G network and inaccessible battery, for example). The iPhone is also part of a family of personal devices that will become even more integrated.

Throwing open-source Android into the mix could give mobile device makers a better platform to take on the iPhone, but they will be mostly competing with each other for market share.

The iPhone will continue to be the BMW or Lexus of mobile devices, with modest share and lots of profit and envy from other mobile device makers. However, Apple could stumble, failing to keep up the rapid pace of innovation, but I wouldn't count on it as long as Jobs is in the house.

My former teammate and now editor in chief of ZDNet, Larry Dignan, and I continue our weekly podcast (formerly called "Between the Lines") covering the top headlines of the week. This week on "EIC Squared," we two square editor in chiefs discuss the iPhone's quest to seduce business users, some of the highlights from Microsoft's Mix '08 conference, and Facebook's new chief operating officer.

When Steve Jobs sneezes, everyone pays attention. On Thursday, he blew out the doors on the iPhone with an array of alliances and applications that make the device less of a phone and more of a powerful computer in the palm of your hand. You can see where the so-called smartphone is heading, and Apple is leading the way in terms of usability. The choice of networks--no 3G as yet--isn't an ideal choice, however.

With more processing power and memory, plus shrinking components and smarter software, you will end up with a supercomputer in your hand. And if Steve Jobs has his way, Apple will have a generous share of the market and lead on the innovation front.

In reality, Apple is late to the smartphone corporate e-mail and applications space, and the iPhone is still a blip in the overall market. But, for those who care about fit and finish, usability and aesthetics, Jobs is unbeatable. You have to wonder what he will pull out of his bag of tricks next, and if he doesn't have another major hit, how Apple will fare.

Check out our comprehensive coverage here. We'll have video from the event, more photos, and ongoing analysis. See also the swarm from the blogosphere on Techmeme.