Mobile Point View by Paul Ruppert

Emirate's Arabian Oryx closing on the Lion?

Etisalat eying South Africa's MTN

The saga surrounding the MTN acquisition continues with today's report that the UAE's Emirates Telecommunications (Etisalat) is the latest operator to be linked to activity surrounding the future of South Africa's MTN.

3 Suitors within a Week

"We are always looking for expansion in Africa," Reuters reports Etisalat chairman Mohammed Omran as telling reporters at the ITU Africa 2008 event in Cairo today. "We are evaluating MTN, among other companies." As we've been following this effort over the last two weeks with "Now the Dragon eyes the Lion" and "Poaching in Africa: Bharti's Hunting MTN"  and the kick off "India Eyes Africa: Bharti target's MTN" there are now 3 potential suitors, Bharti, China Mobile and Etisalat.

Government-owned Etisalat, which operates in 16 countries and has 51 million customers, has been on a four-year, US$5 billion spending spree, setting up mobile operations in Egypt and Saudi Arabia as well as buying a stake in a Pakistani unit. In December last year it said it would buy 16 percent of PT Excelcomindo Pratama Tbk to enter Indonesia, the world's fourth most populous country. It is also started an operator in Nigeria. Clearly this gulf based operation is leveraging it's wealth accrued during this oil and mobile-coms boom.

Meanwhile, Vodafone remains on the side lines and emphasizes it has no plans to make a bid for MTN, despite reports in the UK press over weekend to the contrary.

Arab & State Owned likely in South Africa?

Given the clear state ownership of Etisilat, I'm not sure that one of South Africa's crown economic jewels would be likely to fall into foreign state owned hands. After all MTN happens to be one of the six largest advertising spends in S. Africa, with estimates putting their branding efforts as close to $600 million. It's one thing to have a non-controlling interest, it is another to have outright ownership by a foreign state. Stay tuned. It continues to be interesting.

$17 billion off shore gets no respect in the US

Of course, I haven't seen a peep in any US media outlets mentioning a $17 billion acquisition in the mobile telecommunications space is about to come down. The closest I've seen is "Calling Across the Indian Ocean" a piece in this week's Economist, a British publication.

Mobile Porn is up in Japan

Salarymen mainstream mobile porn

Yes boys and girls, mobile video pornography is running rampant with the infamous Japanese salaryman. 

"Phone Sex" no longer pertains to a lurid voice or text message of "What are you wearing?"  With Japan's 3G networks and robust handset functionality, the business of supplying adult movies for mobile phones is steadily swelling according to Asahi Geino---a male oriented Japanese magazine focusing on sensationalized stories, celebrity gossip, yakuza (Japan's organized crime syndicate), and articles with erotic content or about sex. 90% of the readership are middle aged, married, male salarymen.  Think of it as a bizarre blend of Newsweek, The New Yorker, People, Penthouse, and The National Enquirer.

"Stick Flicks"

For a monthly fee of a few hundred yen, that's about US$ 2.75 boys, they have unlimited access to as many Japanese "stick flicks" as they wish. Less than the cost of one ring tone!

"Mobile phone adult movie channels have all the different genres. Some major adult productions normally on sale in the marketplace have also been reformatted to suit mobile phones," a source well-versed in the mobile phone content market tells Asahi Geino. "These options are becoming really popular, mainly among salarymen who want to be able to watch these movies without their families finding out."

Japan's Lovestyle

A Japanese business called "Lovestyle" is providing the adult movies accessible by mobile phones. "We take old contents like the shijuhate (literally "The 48 Hands," the name given to the traditional Japanese charts of different sex positions), give it a new name like 'Titanic' or something and then provide photo and video footage of each of the positions. We use the video footage to show the insertion angles that achieve the greatest feeling and each position has its own individual explanation,"  said a company spokesman. Let's consider this for a moment--rendering a picture down to at most a 2" x 3" screen (the iPhone isn't available in Japan yet) gives how much detail?

Yet, the service is ringing up attractive profits. But given the "face culture" of Japan, it has become a source for scam artists preying on the pride of some. Many whose identities have been stolen have ended up with large bills from mobile phone adult movie content providers whose services they've never heard nor frequented. But they pay anyway rather than taking up an embarrassing fight that wrongfully exposes them as having a proclivity for "portable porn."  Umm, "portable porn" used to be a hard copy of Playboy. My how things have changed....

The men's weekly says that though the market is limited to Japanese operator au (KDDI), that should also serve as a safety valve for users because they know if they use a service on that carrier it should have been confirmed as a legitimate provider. On the other hand, any adult movies connected with companies like Softbank or NTT DoCoMo should be approached with caution. "That's true, but even so adult movie makers are setting up sites for DoCoMo users one after the other and mobile phone AV is on the verge of becoming an everyday service," a writer on the flesh film industry tells Asahi Geino.

"Some adult movie production companies have mobile phone site links on their official sites. If you check these out, it greatly reduces the risk of getting caught up in a scam."

There you have it. Soon to be arriving in the US...probably 5 years from now.

Now the Dragon eyes the Lion

Is China Mobile in the MTN hunt?

China Mobile has publicly admitted that it is interested in the South African mobile market but has not yet formalized an offer for MTN, the subject of takeover interest by India's Bharti--see my "Poaching in Africa: Bharti's Hunting MTN."

"China Mobile has not joined the MTN bidding, but we are interested in the South African market and we are looking at various opportunities for entering that market," China Mobile CEO Wang Jianzhou stated today after the company's annual meeting. Earlier this week I relayed that Bharti's approach could spark a bidding war for MTN, citing a UBS report that suggested China Mobile, among others, could be interested in bidding for the operator.

Godzilla chasing Bambi?

According to the GSMA's Wireless Intelligence, China Mobile dominates its domestic market with approximately 385 million subscribers as of end first-quarter 2008. This is almost THREE TIMES the  combined customer base of both India's Bharti and MTN's multiple operators. Reuters notes that China Mobile has a mixed track record of acquisitions, stating that it came close to buying emerging-markets operator Millicom International Cellular in 2006 before pulling the plug on the deal. In May 2007 it made its first and only overseas acquisition to date, buying Pakistan’s Paktel Ltd from Millicom for US$460 million.

China Mobile was also rumored last year to be eying MTN, but denied at the time that a deal was being considered. In February, China Mobile opened an EMEA headquarters in London, stating that emerging markets in Africa and the Middle East are priorities for the operator this year. We're now in the deny and chaos stage of takeovers. Given China's presence in throughout Africa and it's growing need for core resources it is a natural strategy to purse. 

There are probably two more iterations in this dance, one feigned interest in MTN by a conglomerate, then either admission or escalation regarding a another bid for MTN by Bharti. Too bad all the action is thousands of miles away from the good ol' USA.

Poaching in Africa: Bharti's hunting MTN

Remember "India Eyes Africa" where I covered a possible takeover of MTN by Bharti?

Well, we've got market action in "the Bush"--both financial and commercial--indicating that MTN is in the cross hairs of Bharti.  Bharti, which operates India's Airtel as well as being a massive conglomerate, has a bid reported at US$19 billion for a 51 percent stake in the Johannesburg SA based MTN.

Shares in MTN surged to a two-and-a-half year high yesterday after both companies confirmed that an offer had been tabled following weeks of speculation. The bid, which reportedly includes US$12 billion in financing from investment banks Goldman Sachs and Standard Chartered, values MTN at US$37 billion.

India: The new source of Global Conglomerates--Is China on Deck?

If Bharti is successful, this would be the high water mark for an overseas acquisition by an Indian company. True to the stages of "M&A dance" Bharti continues to deny, issuing a statement yesterday relaying that "discussions are still at an early stage, are exploratory in nature and may or may not lead to any transaction."  Yea, right.  The champagne is already being chilled in the offices of speculators in London and Jo'burg. Did you buy MTN as a result of my last post? Obviously, we both should have!

Bloomberg is reporting any confirmation from Bharti could spark a bidding battle for MTN, citing a UBS report that suggests Vodafone, India's other industrial conglomerate Reliance and China Mobile, one of the highest market cap companies in the world, could ALL be interested in bidding for the operator--that would be the story of the year in the industry. Bloomberg also notes a report from Citigroup that claims that Singtel, which owns 30.5 percent of Bharti, may be "directly" involved in the MTN bid--I already covered that four days ago, gents...MTN has 68.2 million mobile subscribers covering 21 markets across Africa and the Middle East.  Bharti would be spending US$542.52 per sub in a region where the average ARPU (average revenue per user per month) is less than US$5.

Stay tuned. Only fools think that you can't make money in the low ARPU, high growth areas of Africa, and Bharti is not run by fools.

Speaking of fools, anyone besides me wondering why there are no American operators in this game of global investment and consolidation within the mobile industry? After all ATT's CEO stated earlier this year they wanted to expand internationally including India. Why not Africa? Oh, and don't forget T Mobile--from UberDeutchland--is looking at Sprint. And for that matter what would Verizon do with a GSM operator anywhere anyhow? Right. Don't hold your breath for the American operators.

The tanking dollar prohibits these big plays. Plus, the core American operators are too parochial to have a global vision, with most execs believing that the US market is big enough--of course that begs the question what about share value when the US reaches 100% mobile penetration in the next few years? Reverting back to classique Bell Head mentality. Takes a global vision, awareness of differences, creativity and a propensity for action to claim value around the globe these days. Seems the Indian operators have the fortitude for the fight....Look to see MTN falling into the hands of Bharti before the US Independence Day.

$430 Million into Chinese Facebook--Xiaonei.com

Oak Pacific Interactive (OPI) owner of Xiaonei.com, one of the leading Web 2.0 social networking services in China, announced March 30th that Japanese Softbank Corp. is leading an investment totaling US$430 million for 35% of Xiaonei.com.  The investment funds will be used to further build the leadership and growth needs of Xiaonei.com, one of the leading social networking sites in China.

Xiaonei.com is a full-featured community and social networking destination that provides an "immersive experience" for its users. Features of the site include multi player gaming and wireless value-added services for mobile users. In the college market, Xiaonei.com has a dominating market share. OPI also owns and operates Mop.com, the largest entertainment portal, and Donews.com, one of the leading IT blogging services in China.

Facbeook Rip Off or ChineseWay
Oak Pacific Interactive acquired Xiaonei.com in October 2006. Xionei, positioned like Facebook visually looks like a clone of Facebook and is thought to have a 90% share of the active on line students in China. It was started by Tsinghua university graduate Wang Xing. Much like Facebook's Ivy League heritage Xiaonei focused on China's top schools first, realizing that widespread adoption would follow. They even received angel funding from investors that included an ex-CTO of Amazon.com.

Xiaonei.com’s features include include multi player gaming and wireless services for mobile users. Xiaonei had “22 million registered users and 12.7 million daily users by March,” reports Communication Information. Xiaonei had 280 million page views in March, according to the report.

Mobile, Baseball, Social Networks
As part of the funding conditions Oak Pacific relayed that Masayoshi Son will join its Board of Directors. Masayoshi Son is the President and CEO of SOFTBANK Corp. Softbank is Japan's leading Internet and telecom services company, and Softbank Mobile is Japan's number three mobile phone carrier, after buying Vodafone KK's operations two years ago. SoftBank's revenue doubled this year to $23 billion, thanks to a boost from the new mobile phone unit. SoftBank also runs Yahoo Japan, the country's top Internet site, as well as the baseball team Fukuoka Hawks.

Joseph Chen, Chairman and CEO of Oak Pacific, said, “We are honored to welcome SOFTBANK as an investor and to have Mr. Son join our Board of Directors. SOFTBANK’s commitment reinforces our mission to develop world-class, scalable businesses that leverage the tremendous growth potential of consumer internet market China. We will use this capital to further our aggressive growth strategy for Xiaonei.com and ensure that it sustains its leadership and innovative spirit for many years to come.”

Existing investors of OPI include General Atlantic, DCM, Technology Crossover Ventures, Accel Partners, and Legend Capital. Note: Accel Partners is also an investor in Facebook--as well as Hook Mobile.

As for Facebook entering China, as I relayed in my earlier post "Facebook's Hong Kong Connection vs QQ" I think the western press is getting it wrong on Facebook's Chinese opportunity. Presently it isn't even in China, it just has a BIG Hong Kong investor. Reflecting the Chinese Way, to date most Chinese internet companies are home grown, from Alibaba, to 51Job, Baidu, Ctrip and Sina. I'm absent exceptions but I don't think there's much to worry about a Lao wai, non-Chinese born social networking company taking a big chunk of the Chinese social networking services market at this stage. Just as Haier is making incremental steps in the US market, Facebook should consider the China market a long tail effort. At minimum It needs to get some experienced China hands on board before the opinion beacons of the western press coronate it King of the SNS providers.

India Eyes Africa: Bharti targets MTN

India's Bharti Airtel is considering making a bid to acquire South Africa-based MTN Group, in a move that would be valued at around US$17 billion and make the Indian operator among the largest in the world according to the Financial Times.

Notwithstanding the usual posturing of such acquisitions---deny, announce, rejoice--Bharti's founder and chairman, Sunil Mittal, denied that the operator's board had met to look at making a formal approach for MTN, adding that no decision had been made. "We talk to people all the time and don't preclude anything," Mittal was quoted as saying. "I do not want to be compromised by ruling anything out for months." Akhil Gupta, joint managing director of Bharti added: "There is nothing on the table as of now."  Clearly, we're in deny phase.

Africa is where it's At!
Africa's mobile markets are ripe for international investors thanks to low penetration levels (24% against 30% across Africa), fast-growing population , and regulatory regimes encouraging competition. Analysts at Informa Telecoms and Media forecast that the market will reach 158 million mobile subscriptions by 2012 - a 78% growth.

In this context, international investors are entering the market aggressively, Middle Eastern groups invested in new licenses (Etisalat, Comium, HiTs Telecom, and Warid Telecom), and other operator groups like Bharti are making the region an integral part of the global expansion strategy. This is the case for Orange, which launched new operations in four countries in 2007/2008 (Central African Republic, and the three Guineas), and for Zain, whose Celtel operations in the regions are scheduled to re-brand to Zain by the end of 2008.

MTN has the largest footprint in the region's markets, including the three leading markets (Nigeria, Ghana and Ivory Coast) and an expanding portfolio of ISPs. It is no wonder then that the group is attracting the attention of outside investors looking for a way into one of the world's most promising telecommunications markets.

No Means Yes?
MTN has relayed in the past that it would be open to evaluate an offer from a global player, though it issued a vanilla statement that it "receives tentative approaches from time to time, which are always evaluated." It added that "the board of MTN has not received any specific proposal, and if and when there is anything specific to report, the market will be notified." I'm sure the bankers have been busy in the background especially given the credit crunch for such large transactions. If its in the public press then its on. These things are usually started via a phone call, not a formal offer.

MTN has a solid reputation in the operator community reflecting its ability to grow and profitably prosper in low ARPU markets in across Africa. MTN is an obvious target for major investors looking to increase their presence in high-growth emerging markets. MTN had a total subscription base of 68.2 million at end-1Q08, according to the operator, up from 58.6 million at end-4Q07, while Bharti is known to be eager to pursue an aggressive M&A strategy to spur growth and apply some of the growing capital and power accruing to global Indian brands. Any initial bid for MTN from Bharti would most likely be a partial tender offer for 51% of the group.

MTN by the Numbers
MTN, which has operations in 21 countries, is 76.9% publicly traded on the Johannesburg Stock Exchange, so Bharti or any other would-be buyer would have to make an offer to institutional and private investors to acquire a majority stake in the company. It has a market capitalization of US$33 billion, so a 51% stake in the company would cost US$16.83 billion at current values.

MTN's US$5.5 billion acquisition of Investcom in 2006 expanded its footprint outside South Africa, but many of the markets in which it operates have relatively low penetration rates, making it a prime candidate for an acquisition approach.

Bharti is benefiting from very strong growth. It had the second-highest number of net additions in 4Q07 in Asia Pacific, with 6.28 million, and India remains the world's fastest-growing country in terms of net adds, with 23.9 million in 4Q07, ahead of even China, which had 23.3 million.

To the Bankers Please
Standard and Chartered is reported to be advising Bharti on its options, and SingTel, which owns 35% of Bharti, is thought to be supportive of a bid for MTN.

China's 3G Soft Launch planned for Beijing Olympics

3G in China hits the Olympic Track

According to Xinhua, China's government news service, third-generation (3G) mobile phone service will be available for use at August's Beijing Olympics as the high-speed wireless connection service and related products were presented as SWAG to Olympic VIPS on Monday.

China Mobile and South Korean mobile phone producer Samsung presented 15,000 3G handsets, plus data cards and nearly 3 million yuan (US$ 428,600 ) of calling fees to the VICs (Very Important Chinese) of the Beijing Organizing Committee for the 29th Olympic Games in Beijing on Monday.

With the limited base of staff and volunteers for the Games who can utilize high-speed data transmissions, allowing them to view mobile televised games, play videos, and surf the Internet on cell phones, it signals the Chinese government's intent and interest to issue licenses and finally enter the foray of 3G mobility. CMCC's technology is the Chinese 3G standard, known as TD-SCDMA (Time Division Synchronous Code Division Multiple Access), and has been conducting limited trials of 3G service in China.

China Mobile has building out their TD-SCDMA network in eight cities, five of which are to host events for the Beijing Olympics in August, including Beijing, Shanghai and Tianjin, advised company insiders.  China Mobile is the sole Olympics partner/sponsor for the Beijing Olympics for mobile communications services while Samsung is the only sponsor for mobile terminal supply.

The beginning of the beginning of the 3G wars

With the ITU (International Telecommunication Union) having recognized TD-SCDMA as one of the world's three official 3G standards in 2000 it is inevitable that the next mobile technology wars will be started soon. The other two are Europe's WCDMA and North America's CDMA 2000. With close to 600 million mobile users in the Chinese domestic market, close to twice the US population, as well as the twice the population of the EU, where do you think this market battle will be settled--out of the US, Europe or China?

Facebook's Hong Kong Connection vs QQ

Li Ka-Shing overlooks QQ?

Last month it was reported that Li Ka-Shing, one time plastic flower manufacturer, 11th richest man on  the planet and Hong Kong billionaire upped his stake in Facebook to more than $100 million according to  published reports. Li previously invested a reported US$60 million in Facebook in November 2007.   

That means that he now owns nearly 1 percent of Facebook, assuming the deal was made at the same $15 billion valuation that had been placed on the company since Microsoft's US$240 million of October 2007. If the valuation has dropped, he owns even more!

Li, who is chairman of port conglomerate, real estate speculator and telecom company Hutchinson Whampoa, told reporters on his company's conference call:

"Facebook is doing very well and we could have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones."

Certainly, mobile is the biggest opportunity for social networking in China, with close to 600 million mobile users in the middle kingdom, versus less than 30% of that for China's web uses--172 million users. Facebook may be considering this as a move to enter the China market by thinking it can get "on deck" with the Chinese carriers, resulting in tens of millions of users very quickly. If Facebook thinks this is access to China's mobile silk road, ask yourself how much of CMCC does Li Ka Shing own? Answer: 0%. Such simplistic theories are easily dismissed.

An Investor First

The "Chinese Way" prefers to do business with a local Chinese provider. Better joss with a local who can then go global, than a loa wai company entering China. The cultural reveloution was not that long ago, and just as economic nationalism is expressed with US consumers (Buy American!), the same happens in China. Facebook will not so easily enter the Chinese market on the coat tails of Li, especially since mobile operator Hutch 3 (Li's primary property) in Hong Kong has no formal commercial presence in the mainland. Better to deal directly with the Chinese, something Facebook's new COO, Sheryl Sandberg is likely to be the only one in the building who has ever sat across from a Chinese functionary, from her prior experience at the US Treasury Dept.

Plus there are rumors that Facebook is seeking a revenue return for Facebook subscribers who utilize mobile operator text and mobile messaging through their Facebook account. Whoa--they think they will get operators to pay them for messaging traffic. A very bold commercial position which would be an attempt to realign the mobile messaging business. This is an opportunity that I've surmised in the past and that I think is possible where social networking services could capture messaging traffic if they approach it correctly--not by confrontation with the mobile operators but through co-opting. Perhaps they think China's social silk road runs through Li Kai Shing. Perhaps they think they can leverage CMCC much as Apple has in taming the Dragon? Clearly University Ave is a long way from Tsim Sha Tsui and I don't think the Cuppertino business case is the one to follow in China.

What will QQ will do?

Who is QQ you ask? For the uninitiated or overly  western centric in the audience, QQ is the world's largest social networking service with over 300 million users in China, with revenues exceeding US$523 million. That's almost 4x Facebook's estimated US$150 million in revenues. With an operating profit of US$224 million, and 21% of its total revenues of US$334 million generated from NON ADVERTISING MOBILE revenues of $110 million perhaps Li Kai Shing should have invested in TenCent the owner of QQ.

QQ is still growing. Notably, the ad market is largely untapped - mostly due to the misunderstanding of IM and SNS by ad agencies and brands in China. Lots of work to convince those folks that a service that attracts so many millions is, perhaps, a media in its own right. Probably why Li Ka Shing invested in Facebook in the first place. He gets it that it is an emerging media platform, not a simple application.

 

Interview with Laura Marriott, Mobile Marketing Association

Here's a an audio (scroll down) primer on the Mobile Marketing Association from its President, Laura Marriott. I had the distinct pleasure--and fun--of meeting and interviewing the President of the Mobile Marketing Association at CTIA which you can listen to here.

Laura's s view of CTIA

...not much emerged at the show from the mobile advertising segment. Although there was increased interest and attendance from the agency and advertising arena reflecting a growing understanding and recognition of the importance of mobile in the marketing mix. Meaning: good things to come in mobile marketing.

What is the MMA?

Good question--a laurel which Laura tossed my way twice in the interview. MMA is a global trade association across the entire mobile marketing ecosystem with regional representation in the US, Europe, Asia and Latin America reflected by 600 companies in the business drawn from across the world. The Mobile Marketing Association is the premier trade association that strives to stimulate the growth of mobile marketing and its associated technologies. It's membership is comprised of drawn from the worlds of advertising agencies, advertisers, hand held device manufacturers, carriers and operators, retailers, software providers and service providers, as well as any company focused on the potential of marketing via mobile devices. 

Listen to Laura describe the differentiating aspects of innovation and creativity development across the world.  (1x, 11:51 min)

Is the MMA important?

Yes. As consumers increasingly use their handsets to browse the Web, it's no wonder that advertisers see mobile screens as valuable turf. In the US, cell phones haven't yet proved to be the same kind of advertising bonanza as the Internet, mostly because of the wireless industry's more controlled nature and the slower adoption of text messaging and mobile Web services. But momentum is gradually building, especially behind text-based marketing campaigns, which are more prevalent in Asia and Europe.

According to research firm eMarketer, worldwide spending on mobile advertising totaled $2.7 billion last year and is expected to hit $4.6 billion in 2008, rising to $19.1 billion by 2012. In contrast, eMarketer projects that Internet advertising in the U.S. alone will reach $25.9 billion this year. Global brands drive much of it since the advertising business is driven by global brands, while the types of marketing varies region to region. More text based in other parts of the world than the US, with use of sponsored Peer to Peer messaging for example in places such as India and Africa.

MMA Boards in each region set the regional focus while following global advertising guidelines and policies. Overall goal of the MMA is to provide ease of use of for global brands to enter the market on a global basis, not a carrier to carrier, country to country basis. Part of this is promoted through 8 events across the globe sharing as a best practice identification and inspiration process source. For those who are interested in pursuing the MMA best practices, there are also lots of white papers and other free downloads at their website.

The Elephant's Legs

MMA dances between the legs of two industry elephants, advertising and mobile. Through the deft leadership of Ms. Marriott she's been able to wrangle these beasts and have them cooperate successfully. Challenges exist such as extending reach and fully using the feature rich phones for advertising, but through education of brands as well as consumers on leveraging the technical sophistication of mobile phones the conversation around mobile advertising has made great strides.  As Laura rightly concludes: "Mobile advertising is going to be hot this year!"

GestureTek: CEO Interview

While at CTIA 2008 in Las Vegas I ran into to William R. Leckonby, CEO of GestureTek which you can listen to here (scroll down).

Bill Leckonby doesn't look like your EZ Bake CEO so often seen at fledgling companies. Bill is in his 60s, a silver haired Yale trained engineer and has over 22 years of CEO or President experience. That's reflective of GestureTek's heritage, a going concern launched in 1986 when they invented and shaped the field of ‘applied computer vision’ for computer-human interaction. The company’s multi-patented video gesture control technology (VGC) lets users control multi-media content, access information, manipulate special effects, even immerse themselves in an interactive 3D virtual world – simply by moving their hands or body.  Think either CNN anchors on election night changing screens with the movement of a hand or Tom Cruise in Minority Report--all their handiwork.

Listen to my interview with GestureTek CEO (1click, 5:38 mins)

GestureTek now has jumped to mobile. Through the camera on your mobile phone, any handset device  device can be enabled to control the device through gestures such as shaking, rolling, or banking.  Minimal software embedded on the camera pre-distribution by the operator, and that's it. Alternatively it can be downloaded via a game program which incorporates the GestureTek software. Very low calorie high impact solution. GestureTek already has their software on applications within NTT DoCoMo and Telefonica in Spain.

Watch GestureTek. They are about to become a long term, overnight success story.

China Mobile: It Pays to be a Winner

US$3.4 billion revenues in one quarter

China Mobile (CMCC) the world's largest mobile phone carrier, announced today that its first-quarter profits are up 37%. China has the largest population of mobile users, with around 520 million subscribers. The Chinese government predicts that this number will increase to 600 million by the end of 2008.
China Mobile posted a profit of 24.1 billion yuan (US $3.4 billion) in the first-quarter that ended on March 31. Subscriptions rose 6% for a total of 392 million users. New accounts accelerated by 33% to 7.6 million per month in the quarter, driven mostly by new business in rural China. China's eastern cities are near the saturation point, so the company is targeting the countryside. With everything in China on hold post the Olympics, the closely awaited issuing of third-generation (3G) licenses will probably be announced sometime in October.  Just imagine two years from now how much influence will have in the mobile business. CMCC as a buyer with close to a billion users of handsets, infrastructure, applications and content needs. Wow.

China Mobile's iPhone BATNA

What is CMCC's BATNA point ?

Reports from Beijing indicate that China Mobile is taking a silence is golden approach with Apple over the introduction of the iPhone in China. Of course the phone itself is already there being hacked and  sold in the after market to interested inhabitants of the middle Kingdom willing to shell out about 3400 RMB

"We are keeping in touch with Apple over the iPhone, but details such as business models and commercialization should be settled before we enter into formal negotiations," said Chairman Wang Jianzhou at the 2008 Conference of Boao Forum for Asia on Saturday in South China's Hainan Province. 

Reports in January indicate a breech between CMCC and Apple on the amount of revenue share Apple expects and the cost of the iPhone relative to the Chinese market. Some Chinese mobile observers are claiming that Apple is expecting a 20%-30% share of air time revenue from China Mobile. A potentially staggering sum for such a small slice of the Chinese market. I don't think it is worth it from the Chinese side, and their negotiating gambit is a good one.

Given the extreme costs of roughly $500 for a mobile phone expectations are naturally low from the Chinese side on the number of potential units to be sold relative to the over all market, and the trade off in revenue from a high end user is very high for the "opportunity" to carry the iPhone. No wonder the Chinese rightfully stepped back from the negotiations. Their BATNA, or Best Alternative to a Negotiated Agreement, is to do nothing. They loose nothing in doing nothing.

The after market is small enough that those who really want the phone are being supplied sufficiently with hacked iPhones. Scarcity keeps the black market price high enough that only highly motivated buyers seek one out, for mostly the status of it. For example, in the most mobile messaging dense nation on earth, the iPhone is hardly messaging friendly. So China Mobile looks at this and probably thinks "Much ado about nothing." Meanwhile the mostly internet driven media, especially web based writers, pant and sweat as though it is the second coming.

Like so much else in China right now, the Chinese are waiting the west out, and don't expect anything concrete to happen until after the Beijing Olympics.   

Ring Ring...it's Mt. Qomolangma!

Everest: Ready for the Torch

30 Reporters have reached the  Mt. Qomolangma (Chinese name for Mt. Everest)  media center ready to cover the Olympic flame ascent. Described as the "first media team" in the Chinese press, they are poised to cover the Olympic torch relay as it ascends the tallest mountain in the world.  The media center, built at an altitude of 5,040 meters (16,632 ft), was opened on April 2, Yang Zhanqi, an official with the Everest Olympic Torch media center advised on Monday.  Recall in an earlier post here, "Mt Everest Calling", I covered China Mobile's successful installation of 17 base stations and 22 repeaters on Mt. Everest, the highest being at 22,000 ft.

The first team consists of 19 Chinese and 11 lao wai (foreign) journalists. "It's a little bit tough all through the way here, but it is a high altitude, so I still need to take time to get used to it," said Ariane Reimers, a female reporter from the Beijing Bureau of the German ARD Television.     "It is about five thousand meters high, so I still have headache and sometimes could not sleep well in the past few days. We came a long way to reach this high so I really want to write some stories about the torch relay and the torch bearers. It is a great feat to build such a great media center this high and set up camps on the way to the summit. The mountaineers are wonderful," she added.

China Mobile is on Top of the World

The exact time for making the historic ascent has not been identified, perhaps for security reasons as much as the volatile weather conditions on Mt. Everest, but it is thought that sometime this month the torch relay will ascend Qomolangma. No doubt someone already is making calls from up there, with some great roaming revenue for CMCC.

Given all the coverage of the paid for ascents of Everest, one can only imagine whether the trail of demonstrations will lead to Qomolangma as well. I think not since this is Chinese territory. Look for media coverage of the event soon....

Carnival of the Mobilists # 118 is here!

This week's 118th edition of Carnival of the Mobilists is dealt to Mobile Point View, on the heels of CTIA from Las Vegas. I'm pleased to host this week's gathering of all those--including yours truly--emerging from the haze of a week of playing, partying, partaking, praying for, and prestidigitating mobile deals at CTIA in Las Vegas.

The mobile world divinied inspiration while surviving the neon campfire of the Vegas strip with elements of rankings, checking, betting, calling, folding, flirting, raising, and bluffing all while still on the show floor. So follow the dealer playas,  Live from Vegas baby, it's COM #118!

This was my all in bet to have the best hand of CTIA coverage in the mobile world, and my wager has payed off with no fixed limit raises from those contributors who attended CTIA and those who didn't. Thanks to all who contribute to CoM 118 here at Mobilepointview.

Dealer opens with the door card dealt to Jamie Wells at Mobilestance.com, which presents the CITA winners of "The Swaggies" - their clever homage to those unimportant conference freebies and neglected art form of awareness artistry, which inevitably decorates corporate cubicles and children's bedrooms spanning the globe.  [BTW, my best swag scores at CTIA: an iPod nano from Telcordia and DVD boxed set of Ocean's 11,12, & 13 from Nokia. Mucho gracias!]   Great idea Jamie, score some sponsors and make this a regular event for all the major conferences...Jamie, you recieve my recognition as the The Ace of Diamonds submission for this week's CoM for the most innovative take on the common place at a cellular convention.

Chetan Sharma of Always on Real Time Access AORTA shows a gut shot straight with his "CTIA Roundup" covering Mobile's implied odds against any downturn in the economy and covering practically every facet of the industry at CTIA. And, if you haven't read it, join the crowd and get Chetan's new book, "Mobile Advertising: Supercharge Your Brand in the Exploding Wireless Market." Even for insider readers it is clearly the best overview and most current coverage of the mobile advertising opportunity.

The dealer's choice is at Mobile Messaging 2.0 where there's video from Airwide Solution's media event covering Mobile Advertising. Your's truly, Paul Ruppert leads a round table discussion on mobile social networking with additional contributions from Tuillio Syragusa of M3Mob, Simeon Coney of Adaptive Mobile and John Puterbaugh of Nellymoser.

Nellymoser's same John Puterbaugh flips the flop card at Mobile 2.0 and Emerging Mobile Media  Services in his "Between a place and some location", where he provides a great analysis of what constitutes same same within a mobile context--plus he graciously mentioned me in his post--Tip of the hat thanks, John.

GoMo News submits a video interview of Evryx Technologies VP of Marketing Dan Dato from GoMo's CTIA News on Wheels. Evryx' SnapNow solution was a finalist in the CTIA Emerging Technology competition--it enables your mobile phone's camera to link to the mobile internet via a click of the shutter. I saw the solution in practice: A) it works  B) pretty kewl.

With the river card, in "SMS Globalization & Growth",  (moi) Paul Ruppert interviews Sybase 365 CEO Marty Beard here at Mobile Point View. In this podcast conversation Marty covers the importance of Sybase 365 in the mobile messaging value chain, including routing over 10 billion SMS per month through the Sybase365 network, Sybase365's foray into mobile banking and commerce, plus Sybase365's innovation R&D in text messaging.

From off the casino floor, come the non-CTIA related posts, including Mike Mace at Mobile Opportunity, who covers research out takes from Rubicon's survey of iPhone users like the date bait factor and where people carry the iPhone in "Some other things you didn't know about the iPhone."

Tomi Ahonen from the Communities Dominate Blog, in Mobile advertising evolving: User-distributed ads, User-created ads, User-priced ads, addresses the obstacles, realities and opportunities of user generated, created and priced mobile advertising.

Vero Pepperrell, Community Gal at Taptology, provides "20 Great Resources for Designers & Developers of Websites", providing a laundry list of valuable touch points for developers seeking both the science and the art behind mobile website design.

Andrew Grill of the eponymic Andrewgrill.com in "Location Based Services Applications Round up & Review", throws a scare card in his review of location based social network applications and examines location enabled mobile applications appearing this year - could this be the long awaited start of mainstream location based services?

Barbara Ballard of Little Springs Design, specializes in the tell (user behavior in poker or mobile) with The Future of Content Adaptation regarding mobile sites. Long tail, money and the semantic web all have parts to play in her hand, so check out her contribution to the pot. 

C. Enrique Ortiz raising the eponymic sites to #2, cenriqueortiz.com, in "Phone Program helps break Communication Barriers"--CEO relays the value and power of Edioma's Edigo software, a telephone translator service which targets the needs of Spanish speakers who require instant translator services, available through their mobiles. 

Ajit Jaokar writes how "Personalization is not a substitute for critical Mass" at Opengardensblog. Ajit takes up the contrarian view against the buzz of pesonalization in mobile versus the ease of monitization power in critical mass. Spot on Ajit.

Dennis Bournique of Wapreview.com in "WIND Italy - Great Deal for Travelers" breaks down his experience as a pre-paid SIM user on WIND during his trip to Italy last week (D, sounds like you fell into the right portal at the Venetian in Vegas)

Ray at Money Blue Book, under the category of frugal tech, covers how you can shave your cell phone costs in "Employee & Student Discounts for your Cell Phone Service."  After a week of opulent illusion in Las Vegas, we all need to be a little frugal with our airtime. And at the wire, Alfie Dennen at Alfie's Blog covers 118118's Ask Anything Service posited against Textperts in the UK.

Don't forget to leave a Toke (tip) in the form of a subscription or a link for the dealer as you depart the gaming area.

And...seems like the group Zanex is wearing off, so let's call this a wrap from CTIA in Las Vegas & CoM #118. Thanks for visiting MobilePointView. Debi Jones at Mobilejones.com hosts next week's CoM #119. Send your submissions for next week's CoM to: mobilists at gmail dot com.

Monetizing Never Ending Friending: Hook Mobile

CTIA Innovation Sighting: Hook Mobile

At CTIA I've been examining the Social Networking Services space, sometimes referred to as Social Network media, and came across Hook Mobile, and their CEO Terry Hsiao.

Hook generates additional revenues for social networks and their application developers by offering an open API that delivers a "low calorie" multimedia experience using MMS. They essentially serve as an enabler by sitting at the center of a pyramid formed by the SNS providers such as Facebook and MySpace, operators such as ATT or Vodafone, the application providers that are riding on the open APIs fostered by the SNS portals and the subscribers.

Hook provides an innovative technical solution heightening "interoperability" between SNS and mobile operators.  Technically they simplify the delivery process of mobile multimedia by universally rendering to the handset, providing the back end billing solution, all enabling the capture of incremental revenue opportunities of the volume of rich media user generated content. The expectation is that much of the content consumption will from big branded content to the application level, or UG (user generated) content. So Hook will be well positioned and prepared for that shift. It already has gotten significant industry attention including being selected by IDC as a Top 10 Mobile Company to Watch in 2008.

Listen to my interview with Hook Mobile CEO Terry Hsiao (13 mins)

The company is founded by veteran entrepreneur Terry Hsiao, who co-founded the immensely successful Inphomatch--which grew to Mobile 365--providing SMS messaging interoperability thus feeding the explosion of text messaging, especially in the US. Mobile 365 was sold for $417 million in September 2006, so Terry is a well tested entrepreneur. He's secured funding for the company through Accel Partners and IDG Ventures, both which closely invest in mobile.

Besides the technical solution provided, unlike many Web 2.0 companies Hook pursues as strategy close to the carriers, so they are well positioned with the American operators, as well as in close trials with Facebook, MySpace and others. It is critical to note that Accel also was early (pre-Microsoft) investor in Facebook. So don't be surprised if Hook is soon to be a solution on Facebook.