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24/5/09

Have you ever been stood up? Got all dressed up to go out and then had no-where to go. The mobile phone industry is littered with devices like that. The Nokia 7710, Sony Ericsson Z700, eleven Motorola Symbian phones, and Samsung turns up at every trade show with ten times more models than you’ll ever see in a shop.

But be prepared for a new class of no-shows. Whole companies. At Barcelona the boss of AT&T talked out of turn, but on the stage, about a Dell mobile. Three months on we’ve seen nothing. Word on the street is that the phone wasn’t special enough and they didn’t get enough orders.

Operating system vendors don’t talk openly about their un-announced customers but they can’t help themselves from hinting darkly. It’s the most competitive battle in the industry and with no-one knowing who is doing what there is more paranoia, fear, uncertainty and doubt than anywhere else.

The feedback is that there is a whole slew of companies building smartphones. From those with deep phone experience like Haier, those with shipping products like Acer and many, many more who faced with their native markets shrinking are looking to a mobile future.

Deep down the mobile industry is a good one because there are so many customers. If you make Fire Engines you only have a few customers. You know their names. Lose a contract and it has a massive effect on your business.

While the operators hold (too much) sway the phone market is ultimately driven by the billions of people who spend $20 or more a month on airtime. If you make PCs and only see revenue from customers once every three years, or TV where consumers buy a new one every seven years and throw one out every twenty, a monthly revenue stream looks very good. Particularly in a downturn when everyone can wait another year or two.

So making phones where the revenue is constant and the replacement cycle is every eighteen months looks good if you are a consumer electronics manufacturer with idle factories. The phone market is flat which is a damn sight better than all the others that are plummeting. As Apple has demonstrated 1% of the phone market can be rich pickings.

So the Consumer Electronics companies fire up Excel and make up some figures, pay Gartner, Ovum and others far too much to make inaccurate predictions of what the market will do.

Then they fire up PowerPoint to show how if they get just x% of Y markets they will all be rich.

Then they fire up Outlook to book conference calls (which they call meetings, but you don’t actually meet someone).
Lots of people get to shape the product in true, a camel is a horse designed by a committee fashion, and it then stumbles into production.

Meanwhile their consumer electronics and home computing rivals are doing the same thing. So when they book the meetings with the operators to sell the product they find what they have to offer is no different to what the last people had to show.

It turns into a battle on price. A very one-sided battle and the numbers on margin in the Excel sheet suddenly go red and have little brackets around them.

The phones join the ranks of the dressed up with no place to go.

What is needed is innovation, and you don’t get that from too many people having too many conference calls. You get it from a couple of people with an idea, enthusiasm,  a lot of coffee and a little bit of money. This is just what Vodafone Clicks is about. It’s a competition for start-ups to get together funds to turn their ideas into projects. The prizes are up to 150,000€, if you are working on an idea for the next killer phone application or service it’s perfect. If you are a major home computer manufacturer who wants to get into the mobile market it’s probably not for you. Still you could watch for the winners they might provide the special sauce you need to get your phone into the market.

Finally an appeal. Five countries in three days sounds like par for the course for many people in the mobile business. This normally involves check-in, lemon-soaked paper napkins and fighting for space in overhead lockers. Simon Glassman works for Teleatlas, the mapping company that isn’t Navteq. His tour of the UK to France, Belgium, Netherlands and Germany slightly differently.  He’s cycling. That’s 525km in three days, he is doing it for the National Autistic Society which champions the rights and interests of all people with autism. It would be very embarrassing if he got lost, let’s hope he has a decent Satnav on his bike. I’d like to ask you to sponsor him. Click here to get to his Justgiving page.

Cat Keynes publishes her thoughts on the mobile phone industry every Sunday at www.catkeynes.com you can read the column  the previous Friday by subscribing here. Follow me on Twitter here.
 

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