It must be frustrating to sketch out a long-term technology roadmap in great depth, and see it come to fruition… only to goof on your own execution. But to do so repeatedly – as Nokia has – points to something seriously wrong.

Nokia spent more than a decade preparing for Tuesday this week, when it finally launched its own worldwide, all-phones application store. It correctly anticipated a software market for smartphones back in the mid-1990s, when it was choosing the technology to fulfill this vision.

That was just one of the bets that came good. Leafing through old copies of WiReD magazine from the dot.com era, filled with gushing praise for Enron, Global Crossing, and er, Zippies, I was struck by the quality of the foresight in a cover feature about Nokia. (Have a look for yourself.) WAP didn’t work out, but I was struck by particularly Leningrad Cowboy Mato Valtonen’s assessment that “mobile is the Internet with billing built in”.

And so Nokia has been encouraging users to download applications for users. My ancient 6310i wants me to download applications. Every Nokia since has wanted me to, too. Seven years ago, the first Series 60 phone (the 7650) put the Apps client on the top level menu, next to Contacts and Messaging.

The problem is today, it’s Apple and BlackBerry who have the thriving third party smartphone software markets. For six months, punters have been bombarded with iPhone ads showing what you can do with third-party apps. And yes, it’s like Palm all over again, but they’re very effective. So if Apple’s store is the model, then what on earth is Ovi?

The launch was “an utter disaster” according to one blogger, or in a more measured assessment (from Ewan at All About Symbian), “rushed, early and not fit for public consumption”. Nokia accepts second-best from Ovi, which apart from Maps is second-best in every category, the company all but admitted recently. But the Ovi application store deserves a Z-grade.

Web services or bust

It’s now clear that it was simply too ambitious to roll out a store to so many territories and in particular, to so many device categories, in one Big Bang. The number of devices supported goes back six years – encompassing eight versions of Series 40 and three versions of S60.

We waited a couple of days until the server load eased up, and Bill Ray kicked the tyres. On older devices it was mostly a miss. The mobile clients I’ve tried are painfully slow, don’t have previews and can’t distinguish between trialware and zero-priced applications. They either bill you in a foreign currency or simply drop you down a dead end.

The web version is even worse: try navigating through pages in Firefox, or try changing your default device in the preferences. The result is that every attempt to actually get applications is thwarted. Still, the pages fade in and out, in a very Web 2.0-style fashion. And maybe that’s the clue.

Apple’s App Store requires iTunes or the native client. iTunes is a familiar place for anyone who’s shopped for songs, audiobooks or movies there. It’s fast and slick, there’s a preview for everything, and pricing is quite clear. You’re only asked for personal details when you reach the acquisition stage. You get the same experience on the iPhone/Touch native client.

There’s really no need for a web-based version of the Ovi store at all, and piping everything through the Nokia PC suite (or some Mac equivalent) would at least encourage people to try the exciting Nokia PC Suite add-ons, such as Nokia Map Manager and er… Nokia PC Suite Cleaner. Apparently that cleans up after earlier Nokia incompatibility cock-ups.

(This is an ominous sign of trouble ahead: like Palm designing its stylus dual-purpose, one of which is to make rebooting easier after a crash. It’s not something the user should ever see.)

But Nokia has arguably far more at stake here than Apple or RIM. Once you’ve spunked $8.1bn on a mapping software company – shouldn’t you want people to use the maps – and the potential upselling opportunity? Or are the maps just a hippy giveaway?

‘Strategy’ is stretching it a bit

We all know in hindsight Nokia that should have focussed on making the mobile and PC clients perfect, and limiting the number of devices at launch to a subset of those supported. Anything before S60 3rd edition didn’t really need to be there, and there’s a case for limiting to devices launched in the past 18 months, even though there are a lot of N73s and E61s out there.

Separating the excellent applications from chaff such as movie trailers and wallpaper might have helped. There are still a handful of good applications out there, despite diminishing interest in Symbian, the pick of which is the best mobile email client in the world, Profimail. (Measured in ease of use, features, and the fewest seconds it takes to achieve a given task – a formidable combo.)

But again that goes against the Web 2.0 ethos of “stick any old crap up there – and let the Hive Mind sort it out”. No thanks, I don’t want MOSH 2.0.

And as for games – it would be flattering Nokia to call the six year N-Gage adventure a “strategy”. Again, it saw the market early, but didn’t follow through. Every now and again the multi-billion dollar investment veers back into view, only to disappear again. Is it N-Gage or Ovi Gaming? The few titles that are out there aren’t too bad, but again Nokia’s delivery strategy makes them hard to obtain. Meanwhile you can’t escape people playing games on their iPhones, or iPod Touches.
Operation Rescue Nokia

The market could benefit from a healthy Nokia software market, so here are some suggestions. There’s a valuable lesson to be learned. In business as in war, you make the most of your assets while trying to minimise your weaknesses. Nokia’s Ovi Store does the opposite: it emphasises the complexity and lack of focus at the company, and its disorganisation. If your first and only experience of Nokia was Ovi, you would never believe the company could ship 50 products into 120 markets with military efficiency.

Firstly, Nokia should focus on people’s needs – and applications that make the phone useful and fun – and not building up a “a portfolio of web services”. It’s already invested heavily in Maps and games – just make them easy to try and buy.

Ovi means “door” in Finnish

Secondly, the Ovi brand has made no impact on phone users at all. There’s no shame in abandoning confusing or invisible brands. Confine Ovi to mean boring, management services like backups, or data transfer, or services discovery. These shouldn’t be underestimated; they should give users security and peace of mind.

Thirdly, the vast majority of users want to do a few tasks simply – take note of the Magners TV ad which now singles out flash smartphones that are impossible to use. Nokia has inched towards better usability with the E71 and the 5800, but this needs to be a company-wide goal. Showing photos on the family TV, sharing photos with a small group – all much more useful than the 2.0 guff.

And finally, the managers responsible for putting together the Ovi Store should be put on Nokia’s naughty step – and left there for the Finnish winter.

So Apple now finds itself where everyone else in the mobile handset business wanted to be 15 years ago. Large companies full of clever people devoted years of planning and expenditure to fail to get here. If the iPhone continues to flourish (see below for the many obstacles en route) – then both rival manufacturers and the networks have to tear up some long established strategies.

For the established handset competition, if Apple takes the lucrative high end, that leaves them scrambling around for gimmicks in a cutthroat market that’s increasingly low margin. For the networks, they’ll need to find devices that people actually want – or pray that Apple drops its carrier exclusivity policy and partners with any network that wants to sell its gear.

So how did someone with no track record in a notoriously difficult business find itself walking away with the laurels? What can explain this paradox?

For Apple, coming late to the phone business has actually been a huge advantage. The success of the iPhone is down not just to great engineering, but profiting from several years of desperate and outright stupid behaviour by the mobile phone networks, who set the terms for the manufacturers. The received wisdom of the industry – that you had to know the wiles of the mobile networks to succeed – turned out to be completely mistaken. And to explain this we find another paradox, which looks like this.

The mobile phone business is actually the most “customer friendly” or “customer responsive” in the world. This might seem a strange thing to say. Have a read of Brendon McLean’s splendid rant from two years ago – Why we hate the modern mobile phone, for a summary of customer unfriendly business. But it’s true.

That’s because the customer isn’t you or me, or the billion and a half other phone users in the world. Phone manufacturers have only 800 customers, of which only around 200 really matter: these are the gentlemen from the networks.

And one of these stroppy customers can demand changes that cost the manufacturer millions, or cause the cancellation of product lines in which tens of millions have been invested.

For example, it’s these gents who in their wisdom decided that we’re too stupid to use the “butterfly” design Nokia introduced with the 6800. Networks killed the third phone in this line, the E70, leaving Nokia probably just one iteration away from making a classic. The reason? The fold-out keyboard would confuse us. In their wisdom networks have done all kind of similar things over the years – disabling Wi-Fi, for example, or blocking ports. But most of all in their pricing policies for data.

Apple simply ignored all this. Such was its confidence in its own product, and its own steamroller marketing, that it was able to capitalise on the networks desperation. But being late to the party also had another advantage.

Large Tier 1 phone manufacturers such as Nokia and Samsung pursue a strategy of market segmentation, where differences between products are reduced to tickboxes on a spreadsheet. Analysts weight the relative strength of the “portfolio” on the play in a “segment”. This means that the care and attention paid to the final product (and remember who the customer really is) are minimal. It’s better to be mediocre in different areas than strong in one but weak in another. And it shows in the quality of the end user experience.

As soon as the iPhone arrived it was clearly different. While the original iPhone was slow, and lacking in features, it had clearly been nurtured with thought, care and attention. The hype didn’t initially enamour a sceptical British public (recall the tumbleweed that blew through empty stores when O2 and Carphone first launched the iPhone in the UK), but it deservedly became a word of mouth hit. You can’t keep a good product down.

As a indicator of the iPhone steamroller, today, you can now pick up an iPhone on pre-pay and for a tenner a month you’ll get 500 minutes, unlimited 3G data (the Comes With Asterisks version of “unlimited”) and unlimited Wi-Fi for a year. The catch is that you plunk down a large amount of money to get this deal. But unlike an investment in a regular smartphone, the iPhone keeps its value very well. So while the sticker price tops £400 for the 16GB version, in a year’s time you’ll probably be able to recoup $250 to £300 for it on eBay. It’s better than any deal on postpay.

Rivals would love this kind of deal for their smartphones, just as they’d love to have instant eBay, Facebook and PayPal apps available. (They’d love to have more than a handful of users downloading the inevitable bugfixes, too.) But they only have themselves to blame for years of neglecting the right customer – us – in favour of the networks.

So is Apple home and dry? Not quite by a long shot, as we’ll see.

A few phones short of a masterplan

Market segmentation still has enormous strength for a manufacturer. Traditional economies of scale also benefit the established players. Look how quickly Nokia could turn the innards of its premium flagship N96 into the budget 6220 classic.

Marketing one phone doesn’t satisfy all kinds of people. Old crusties like your reporter (alternating between a seven-year-old design and a five-year-old design as the main voice device) like simplicity, big buttons and a long-lasting battery. The iPhone only checks one of those boxes. The poor camera and lack of 30fps video are a bit embarrassing on a high end device. It also takes too long to switch between tasks – something Palm noticed, and designed around with its Pre.

So the classic technique for a successful manufacturer is to differentiate, so that it looks like you are the entire market. Apple should be thinking about an “iPhone Photo”, an iPhone Pro (with extended battery and a QWERTY, or at very least, a good alphanumeric keypad) and a budget iPhone Nano. It needs to ramp up speed and usability (particularly task-switching), and it should drop its hostility to run times such as Java, Flash and scripting engines. If you’re going to be the market, you can afford to tolerate development environments you don’t completely control.

This week shows Apple as a kind of mirror image to Nokia. The Finns still have arguably the best hardware engineers in the business, but are chained to a user interface that should have been canned a long time ago. It’s lost the mindshare of enthusiasts and developers. “Pretty much the only community around S60 is the community we pay to be there,” Nokia admitted last year. As the demise of EMCC and others shows, Symbian stalwarts have gone elsewhere. One former staffer describes it as more of “picosystem” than an ecosystem these days.

Maybe Nokia really should concentrate on its key strengths, and license the iPhone OS?

In the end the only thing standing between Apple and ruling the phone business may be not making enough phones people actually want.

The success of the venture, from British start-up Omnifone, will tell us a lot about whether punters are prepared to pay for digital music, rather than scoop it up for free. MusicStation is a Rhapsody-like service customised for mobiles: there are no extra data charges over the £1.99 weekly subscription, which goes on your mobile bill, and “file sharing” is encouraged – at least with other MusicStation users.

Omnifone has signed up the big four labels, made inroads into the indie sector, and has 30 carriers around the world. Today sees Norwegian-based Telenor, with 80 million subscribers, push MusicStation out first.

Founder and CEO Rob Lewis said the aim was simply giving people a service they can’t do legitimately today:

“Customers are forced to do this illegally now. We’re trying to give very easy access that’s intuitive, doesn’t need credit cards or wires, so they can discover and recommend music among themselves,” he said. “And artists get paid.”

Lewis said he’d agreed on main menu direct access to the player with all the major manufacturers – Nokia, Samsung, LG, and Sony Ericsson.

He also crowed that he’d beaten Apple to the stores: “We’ve beaten them to market globally, and by many months in Europe – unless you count very dodgy eBay purchases,” he said, referring to the iPhone.

The hard work was getting global licensing deals in place; music services have had to strike deals territory by territory. “It’s the first time over-the-air mobile price points have been made available from such a wide range of labels, globally,” he said.

MusicStation will give curious punters a week’s free service, and then subscriptions are £1.99 a week for the basic service, or £2.99 for a premium service with a PC or Mac based player.
Radio or virtual music collection?

But will it fly?

There’s little doubt that Lewis has looked at the current mobile services and correctly concluded that they’re “crap” – and he’s not flinched from the much tougher job of trying to build something better.

The service is offered on most mid-range phones, not just a select few smartphones; there are no hidden data charges; it’s really easy to use; sharing songs and playlists is easy, too. And if you lose your phone, MusicStation just loads up the replacement with all your tracks and playlists. The player also caches tunes you’ve downloaded so you can play them offline. Amazingly, rivals have neglected one or more of these fundamentals.

But subscription services that lose your music when you unsubscribe are a hard sell. Wasn’t this an obstacle?

“Our view is a bold view: the reason music is sold at all is that the music industry could ONLY monetise music by selling a piece of vinyl, a tape, or a CD. Consumers are increasingly fickle – their trends and listening habits change on a very regular basis. So I don’t think a small weekly fee for unrestricted access to music is much to ask,” he told us.

Lewis argues that with Omnifone being a global service, you can even emigrate and pick up your music where you left off. He wants to make MusicStation a kind of “dial tone” for music, and has been trying to persuade the network operators to think the same way.

“Airlines once saw their key differentiator as building their own airplanes. They didn’t think of flying as a global service. Once they did, the business took off,” he told us.

A store it isn’t, but if Omnifone can persuade people that it’s an on-demand radio service with extra features, rather than a store, it’s well-placed to succeed. With the backing of the operators and the handset guys, it might become the “Symbian” of mobile music.

Brendon McLean wrote to me with such a succinct summary of mobile phone angst, I invited him to elaborate. Read the result, How the mobile phone biz lost the plot, here.

The theme at STL’s twice-yearly Telco 2.0 Brainstorm is familiar: “How to making money in an IP-based world”. But it has an added piquancy now.

And there’s plenty at stake. The part of AT&T formerly known as Cingular, the cellular division, makes more revenue than Google and Intel combined each quarter. But as with all mobile network operators, it’s been made from a large, vertically integrated operation, and a fiercely-protected, closed network. The rise of the Internet Protocol stack (IP) changes all that.

IP evangelists can be pretty scathing: IP will destroy the Soviet model; their “Net heads” will triumph over “Bell heads”. At stake, they say, is a battle which pits innovation versus atrophy. Unlike the open internet, telecomms provide a barrier to fledgling service providers or application developers. There’s no common API, and the service companies need to beg permission.

But there are other ways of looking at it.

Mobile telephony – at least in Europe and Asia – is the most successful application of technology since the combustion engine. It’s affordable to the poorest, but it feeds the id of the wealthiest fashion victims. Take up is almost 100 per cent – while internet adoption is stubbornly stalled at around 60 to 70 per cent of the Western population, and is seen as little more than a platform for games in much of the world. While mobile operators take a tax from almost all of us, very few of us (outside the US, at least) seem to resent this. And it’s perceived as reliable. Rich or poor, drunk or sober – when you push a button, the call gets through. When you send a message, you know it gets delivered. Imagine if that simplicity and efficiency was applied to your local tax rebate bureaucracy – or the financial services industry. And mobile telephony gets cheaper and better every year.

Yet this success story is under direct attack from a very American model of how business should work. This is a model which values abstractions over outcome.

To give you an example of what I mean, this week, I heard more than one person seriously endorse the idea that mobile phones should have two ’send buttons’ (that’s the green button ‘call’ on every handset) so we could engage in “dynamic differential pricing”. This would delight American economists, but I found myself thinking how I could explain this innovation to a new user down the pub.

Choice is a wonderful thing. But do we need this kind of choice?

Managing away a business from a vertically-integrated command and control model is notoriously difficult. WIth Perestroika, Gorbachev attempted a program of managed liberalization, because he didn’t want to throw the baby out with the bath-water – but Gorby was ultimately swept away. Will telcos meet the same fate? Or like IBM, another vertically-integrated, proprietary business once earmarked for death, will they successfully transition?

Broadband is bust

What added the extra dimension to this week’s debate is that the Promised Land doesn’t looks particularly promising. Operators have feared for years that embracing the IP world would result in them becoming “commoditised bit pipes”. Once the access business is open, operators can do little more than compete on price. It’s a race to the bottom, and ISPs are feeling the crunch.

Fixed line broadband is in a crisis, as usage is ramping but revenues are flat or declining. HD video represents a steep rise in costs. Last year, the IP Network estimated it costs £2.10 to deliver a full 1080-pixel, HD-quality video (9GB) over the local loop network (read the report, a 128kb PDF and a recent follow-up).

That’s before we’ve seen the likes of the newly-legal Bittorrent and other newcomers like Joost and Babelgum ramp up yet. (And it’s going to get a lot worse when internet porn goes High-Def). In Korea, four per cent of users account for 75 per cent of all traffic, yet users stubbornly resist anything other more complicated than flat rate plan pricing. Who but a fool would want to invest in new fibre capacity, when the returns are so poor?

Broadband is kaput, then, and there’s no white knight, in the form of public subsidy, riding over the horizon. Western governments are far keener to take money out of the sector, than follow the examples of Korea and Malaysia, and put public money into building infrastructure.

So if there’s no pot of gold at the end of the IP rainbow, why even go there?

Here are some notes from the event, which understandably has some reporting restrictions. I wasn’t able to quote people directly, nor relay direct quotes conveyed anonymously. Nevertheless, I got a truer and deeper picture of the chemistry of the carrier world, and I’d like to share it with you.
Shock therapy?

STL’s super smart chief analyst Martin Geddes, kicked off proceedings. STL has an interesting approach to brainstorming: once the incumbent operators are seated, shock tactics are applied.

At the previous brainstorm last October, the mobile network operators were greeted with “Ten Things I Hate About You”. As a counterpart, the net people were confronted with “Ten Things I Hate About Internet Culture”. There was much merit to both arguments.

This generates plenty of feedback – and the audience chimes in with real-time anonymized feedback and questions.

As Day One progressed, the confrontational theme was developed with Geddes’s choice of statistics.

IM messaging, he said, threatens to wipe out operator revenue from text messaging. Geddes showed how easy it is to bypass SMS using Vyke, which reroutes the text via IP protocols. (It actually isn’t that easy to use; it needs a smartphone, starting a third party program, switching contexts back and forth, and praying the message is delivered: but it’s worth doing if you’re abroad).

You’ll notice that this tactic has much in common with cults. Break them down, so you can build them up psychologically later.

However the operators present at Telco 2.0 didn’t need their illusions shattered.

“As an industry,” said a strategist at one global mobile operator, “we now need to compete with other industries – there are better and less risky ways (for markets) to make money, such as biotech”.

Operators didn’t flinch from specifics.

“MMS was a classic example of how we got it wrong,” a marketing chief at another mobile operator explained.

“We were seduced by a new technology, cameraphones, and fell for the argument that ‘richer experience’ is more valuable. We accepted it at a time blip… we now know people don’t want to send videos.”

(Ironically, it’s a mistake the web evangelists are now repeating, with their irrational expectations for “user generated content”, you’ll note. Home grown videos are proving a niche interest for experimental operators, but hardly a big revenue driver.)

In fact, the operators don’t seem believe that change can be prevented. An audience poll (sample size: 300) revealed that most expect to see Wi-Fi in the majority phones by 2010, and mobile VoIP to become mainstream at about the same time. In fact, operators peg the 2009 to 2010 time frame as the period of biggest upheaval, and the most popular choice of word for this was “traumatic”.

While change is inevitable, more operators are pessimistic than optimistic that they’ll prosper from the IP switch, and successfully shift away from being vertically-integrated monolithic companies to more nimble and open operators. They’re certainly more optimistic about their prospects than the fixed-line carriers, who are nervous that IP-TV will be ready and working, and an attractive advertising platform.

The pessimism was tempered by some unusual findings. When researchers canvas opinion outside the industry, they get a more optimistic response. Service companies and content providers are itching for a crack at partnering with operators who can boast a user base of 60m in each of several countries, despite setbacks with the many attempts at ‘Walled Gardens’.

The Web or TV simply can’t match audiences like that. Advertising companies also think the operators are seriously undervaluing their assets: operators sit on what a gold-mine of personal user data they fail to exploit.

(Whether this is as exploitable as advertisers think is another question. One operator explained that only rarely can you assume that the person holding the handset is either traceable, or the name on the bill. Prepay customers don’t leave a fixed address with the operator; commercial customers don’t divulge the employee details; and in family plans, you have to guess who’s got which number.)

But Geddes made a telling point. If voice revenues are squeezed by VoIP, there are plenty of other opportunities.

Operators make money on the voice call today, said Geddes, but many of these calls are calls the network would rather we didn’t make. Instead, they should make money before and after the call. How many of us, he asked, have to write down a phone number on a piece of paper during a call? Why isn’t there a simpler way of sending a number during a call?

When asked, users want lots more information that carriers are either failing to provide, and better services. Topping STL’s poll was presence “metadata” about the recipient. Were they busy? Users also wanted better directory services from their operators, which means “better address books”.

Even in the IP world, which after 15 years of web innovation, such services don’t appear by magic. The internet doesn’t have credible (i.e., spam proof) identity services or address books, and isn’t likely to in the near future. (The flavour of the week, OpenID, is a spammer’s delight).

At least one participant was aware of another tool in the the telco’s favour. “How long before Google has to partner with telcos to deliver an acceptable end user quality of experience?” one attendee asked the Adzilla speaker, who was sadly absent through illness.

Do androids dream of near-field shopping coupons?

Telco 2.0’s emphasis on shock tactic does have its downsides, however.

Near field electronics was hardly mentioned, but this technology in every phone will make many transactions, of various kinds, much easier. Not just shopping, but something as simple as exchanging business cards, can be achieved with a simple tap (or swipe). With today’s Bluetooth, it’s so tedious hardly anyone bothers.

Nor is there much awareness of the potential of legal P2P. I didn’t hear a blanket license mentioned once – which is astonishing, considering that France nearly voted to legalize P2P file sharing with a compulsory tariff on ISPs (and mobile operators) last year.

This potentially represents a huge opportunity for incumbents. A flat fee would encourage, not penalize media consumption, but in itself it wouldn’t solve any of the problems we have finding and sharing music or video. Therefore, there are countless services, from radio to music discovery, that have yet to be tried.

So things aren’t as bad as they seem.

But in managing their own Perestroika, telcos will have to open up to services on mutually agreeable terms. They’ll need to simplify APIs, and speed up the access process for bright new service companies.

It’s demanding that the US regulator extend a 1968 legal decision, which permitted any device to be attached to the AT&T network, to apply to mobile operators. It also wants a new industry body to decide the standards for the networks, and ensure they comply: effectively bypassing the 3GPP (http://www.3gpp.org/), 3GPP2 (http://www.3gpp2.org/) and IETF standards bodies.

“After you”, the operators may well say.

For Skype is a closed system itself, using a proprietary signalling protocol, in contrast to the open SIP (Session Initiation Protocol) family of industry standards. In addition, the Skype client is closed proprietary software – in contrast to the software libre WengoPhone (http://www.openwengo.org/) project, and in contrast to much of the core infrastructure used by VoIP service providers, which is often based on Asterisk (http://www.asterisk.org/), which is available under GPL.

But is the claim justified?

In practice, operators in Europe and the USA permit devices to be attached to the cellular networks, but fastidiously block any services they don’t like. Operators regard Skype as piggy-backing onto infrastructure which required billions of dollars of investment. If they open their networks to all-comers, the operators face becoming commoditized “bit pipes”. And yet Skype is in a similar position: if open SIP standards continue to gain adoption, it becomes little more than an expensively-acquired, non-standard brand name.

As a piece of grandstanding, then, Skype’s submission measures up to Steve Jobs’ recent essay where he lamented DRM incompatibilities – as he justified his refusal to license his DRM to anybody else.

The Pot Meets Kettle Awards are certainly going to be busy this year.

The service gives mobile phone users access to the big four labels’ music catalogs on-demand for £1.99 (€2.99) a week, using a player that runs on mid-range feature phones and GPRS or EDGE networks, as well as high-end 3G phones – which Omnifone reckons gives it access to 70 per cent of the world’s phone users. Indie content will follow, it’s expected, as the indies are in the process of setting up their one-stop licensing arm Merlin, announced earlier this month.

As well as signing up the major four labels – UMG, Sony-BMG, Warner Music and EMI – Omnifone has inked deals with 23 network operators across the globe for MusicStation. The first of these rollouts – Telenor in Scandinavia and Vodafone’s Vodacom in South Africa – are confirmed for launch in Q2, with many of the others following in Q3.

In addition to the mobile-only service, a PC and Mac version of the MusicStation client will be available as part of a premium service costing £2.99 (€3.99) a week. With each plan, there will be no data charges.

Users will be able to receive share playlists, create personalized charts, and receive information about artists, concerts and promotions in the MusicStation player.

Omnifone, then offers a full-on challenge not only to Apple’s iTunes, but quite probably to MySpace too.

“Selling music is a legacy business,” CEO Rob Lewis told us. Lewis believes per-unit pricing is dead and the winners will be companies who offer the best subscription services.

He also believes MusicStation’s willingness to partner with carriers casts the Apple’s iPhone announce in a new light. Cingular agreed to Apple’s terms and disabled over-the-air music downloads to the iPhone – granting Apple exclusivity over acquiring content for the device, which must either be ripped from a CD or else be purchased through Apple’s own iTunes store. Verizon had balked at similar terms.

“iPhone is not good for operators,” Lewis said. “MusicStation is an all you can eat iTunes you can access from the bus, or anywhere.”

Partnering with the operators also gives Omnifone a global roll-out that PC-based companies can only envy, another contrast with Apple’s country-by-country exclusive world tour. Apple launched the US version of the iTunes store in spring 2003, with the UK following in summer of 2004, and Japan more than two years after the original launch. Lewis notes that in each market, 50 per cent of the catalog is local, something ignored by rivals.

So you can see why networks are keen on the start-up: all the music is sent over the networks directly to the phone. But what does it do for us?

Using MusicFone

Despite spending only a limited time in pre-launch briefings with MusicStation, it’s evident to us that Omnifone has delivered its promise to create a fast, simple and attractive music player. The service uses parallel downloading to speed up the process, so it downloads material in the background. It looks and feels the same even if you’re using a basic feature phone.

Another attractive feature is that if your phone is stolen, you retrieve all your state information – the music as well as metadata like playlists and news feeds – as soon as you’re up and running with the replacement.

However, Omnifone faces a challenge in a market turned off digital music by DRM. Lewis didn’t disagree that DRM was a hindrance – he described it as “a poo experience for customers” and a sign of a market that hadn’t grown up.

It isn’t clear yet to us whether MusicStation music expires with your subscription, but time-bombed subscription services, despite some clever marketing, have met with only much success on the PC. Will they on mobile?

In truth, no one knows yet. For the past century, radio has been the traditional vehicle for music discovery and physical product has been the primary means by which recording companies monetize their assets. Now things are blurring in lots of interesting ways.

For example, we don’t think of MySpace as an on-demand radio station, but that’s really what it is.

The challenge for Omnifone is persuading us that rather taking something away we already had, it’s giving us something we didn’t have before – that being “everything” and “everywhere”.

(People deeply resent a technological restriction when it raises obstacles, but ignore it completely when the value is tangible).

So much depends on how well Omnifone fulfills that ambitious promise. The “everywhere” part is pretty much solved in Europe, where ubiquitous 3G networks have all but snuffed out the business case for Wi-Fi. The “everything” part of the proposition, however, needs quite a bit more work.

The indies provide as much as 40 per cent of the world’s music, and Omnifone not only needs to get this repertory signed up fast, but it also needs to build up the kind of rich discovery service that eMusic provides today. This is something that isn’t top-down (big label A&R chart-driven) nor bottom up (fan lists) but depends on something in between, something that hinges on editorial expertise. Clever, but not too clever.

Viewed as a method of music acquisition, Omnifone may well prove to struggle like Napster. But as an on-demand radio service, then £1.99 may prove to be an attractive price point for music discovery – particularly with punters who think nothing of spending £5 to acquire a tribal emblem, in the form of a DRMed, 30-second ringtone. And the ringtone market generates more revenue every few months than Apple’s iTunes has managed in four years.

Alas, one unfortunate aspect about subscription services is that once you’ve “got” something, everyone else has got it too. On the other hand, even the dimmest bulbs at the world’s mobile network operators realize the £5 ringtone party is drawing to a close.

It had a bit of your Dad at the Disco about it, and even Symbian’s no-nonsense research VP, David Wood, had been caught up in the excitement.

In his briefing notes, David posited that “in Web 2.0, the network itself has intelligence, rather than just being a bit-pipe for pre-cooked information”. When previously rational people start to attribute agency and purpose to inanimate objects, it’s a warning sign – as my lampshade reminded me this morning.

In the end, we didn’t get the culture clash we expected, and by the end of the afternoon it seemed apparent that the mobile world needed “Web 2.0″ quite a lot less than the Californian web cultists needed to go mobile.

And as the clock-ticked towards 5pm – hometime! – a rare consensus appeared to emerge: network integrity and security should not be compromised by script kiddies who’d just discovered the CPAN Perl archive; most ‘user generated content’ wasn’t going to interest anyone; a blanket of pervasive HSDPA-speed 3G beats looking for an insecure Wi-Fi hotspot; and PCs were dumb, because you didn’t have them with you, and they didn’t know where they were.

That’s more commonsense than you expect to hear in a lifetime of “Web 2.0″ gatherings. In fact, even expressing such heresy is enough to get one excommunicated and sent to purgatory – for the web utopians are nothing if not a cult.

But to reach terra firma we had to negotiate a rocky terrain. Beginning with the buzzwords.

You know when something is labelled “social media” you’ve already arrived at a leaky abstraction that’s going to sink at any moment. Add in an insulting, eye-rolling piece of nonsense like “democratisation of creativity” and you know you’ve really reached the technology world’s Remedial Class.

We’ll digress for a moment simply to point out the bleeding obvious. When someone uses a witless phrase like “social media”, they’re informing you that they’re unable to distinguish the act of bearing witness from the business of being surveilled. Surveillance is big business these days, and technology can record everything we do or say. But that doesn’t mean when we say something that we want it to be heard, or transferred out of context, or remembered. Or in the words of Google’s ominous mission statement, “organised and made useful”. Useful to, er…who?

All art is social and created as an act of testimony, but most speech isn’t, it’s designed to be forgotten – and the web cultists either, through ignorance or cynicism, willfully blur this distinction.

So it was refreshing to hear Orange’s Mark Watts-Jones, in concluding his presentation, remind the audience that most electronically-recorded “content” wasn’t of interest to anyone else. Orange seemed to be approaching the explosion of recording technology not as a gateway to a cybernetic all-recording uber-mind, but simply sharing your photos with your friends (or family).

Sling Media also disappointed the cult of the web wingnuts by pointing out that more practical matters were at hand. It was slightly ridiculous that in this “always-on”, always-connected” world we couldn’t access our own stuff – like TV channels we’d already subscribed to, music we’d already bought, or photographs we’d already taken – on our gadgets. They might as well be never-on, and never-connected – at least we could take a hard copy round to show the folks.

By contrast, and at such events you can spot the losers because of the vast gap between their rhetoric and their achievements, was Ajit Jaokar. Like someone frantically banging a shoe against a gerkin in the hope of making a goulash, Ajit is determined to bring the utopian nonsense of Web 2.0 to mobile phones. He runs a Mobile Web 2.0 blog – and he’s written a book about it all, he reminded us. (“Bang, bang! Shoe – make stew!”)

But recent evidence – a blog entry dated from only this month entitled “The Dawn of the Widget Widget Web” – suggests much of the collateral damage has unfortunately fallen on Ajit himself, with regard to his cognitive and linguistic faculties.

Asked to sum up the biggest promise/challenge of Web 2.0, Anjit Anjit could see no downside – but the upside was the “…change in the balance of power – the empowerment of the user”.

Presumably through Widget Widgets.

I was reminded of Charles Eicher’s description of the chasm between Google’s promise, as the utopians really wanted it to be, and Google’s reality as it is today:

“Many people have waxed lyrical about how Google was ‘God’s Brain’ and contained some sort of magical Gestalt of all of mankind’s knowledge. But now it’s like an autistic brain that can’t say anything except advertising jingles”

On we went.

Someone who should know better – Cognima’s Andy Tiller – professed himself smitten with a similarly autistic outburst by another presenter – “capturing intelligence at point of inspiration”. A cold bath for you, Andy.

While the most curious demonstration of the afternoon came from two faces we recognised from years ago in Silicon Valley, Greg Simon and Manu Chatterjee. Now at a start-up called Lampdesk, they’d created a “Web 2.0″ runtime that bundled an XML interpreter, SQL database, and a SOAP stack. This was WebVM.

It’s an unwitting homage to 1060’s NetKernel, but as you might guess, a lot less useful because unlike NetKernel, it isn’t built on a sound architectural (and philosophical) basis.

And this was reflected in its demo: which showed an AJAX clone of Microsoft Word – complete with formatting ribbon – running on the 320×240 display of a smartphone. I could almost see half of that formatting ribbon. Marvellous.

It was only as the afternoon concluded that collective sanity broke out. One member of the audience said he’d been offered a job by a German company, only for it to be mysteriously withdrawn. He remembered that five years earlier, he’d made disparaging comments about that company’s entire product line in a semi-private forum, but this was readily findable on Google. It was as an eloquent rebuttal as one might find to the “empowerment of users” rhetoric coming from the web cult.

In their resilient, secure, universally affordable, and universally accessible technology, the phone people already have what the web people hanker after, but will never have.

And in SMS, they have the only interface most people will ever want to use on the go. Let the web “evolve” into a crummy open-access cable channel – you could hear them thinking. Which it very nearly is already.

Expectations were sky high.

A few years ago an American business consultant and author published a very silly book called ‘Smart Mobs‘ – which even predicted that phone-toting nerds would be at the vanguard of social upheaval.

But something funny happened on the way to this digital nirvana. Perhaps the signs were there from the start: ‘Smart Mobs‘ couldn’t find a UK publisher. A website of the same name continues, however, apparently staffed by volunteers, and making its ghostly way across the web like a latter day Marie Celeste. Alas the site still has a category called “How To Recognize The Future When It Lands On You.”

And earlier this year the best known smartphone blogger hung up his pen.

So what went wrong?

You can argue that the smartphone category hasn’t really failed to find a market – it’s just taken much longer than anyone expected. But that’s a generous argument. In early 2000, Symbian’s CEO Colly Myers suggested that by 2003, 15 per cent of the handset business would be smartphones. It’s taken three years to reach a cumulative total of 100 million Symbian smartphones.

Few of us would mind having our handiwork in 100 million devices, of course. But what’s changed subtly, but surely, is the perception that you have to have a piece of smartphone if you want to be part of the future.

The justification for an all-singing, all-dancing converged device seems as distant as ever. Today ‘dumbphones’, say for example Nokia’s 6230i, or Sony Ericsson’s V630i are more capable than we once imagined they would be.

It’s easy to explain the success of the dumbphone by arguing they add most of the features people wanted. Of course that’s true, but it’s also tautological, and we have to look beyond that, to see what features people either didn’t want, or haven’t used. The phone manufacturers would much rather the smartphone had become an overnight smash, because they command higher margins, and carriers make more money from services smartphones can handle than the dumbphones. Something, clearly, didn’t go according to plan.

But what was it?

Excuse No.1: The networks were late

This is the most popular excuse with the smartphone vendors themselves – they’re still in denial about several of the others.

Everyone remembers the WAP fiasco. In the summer of 2000, new mobile phones delivered the “mobile internet”. Which meant blocky, monochrome text on a 128×128 screen, arriving in twenty words splats, with thirty seconds delay between each splat, costing you 10 pence per splat. Very quickly everyone agreed that this was terrible, but suggested that “the mobile internet” would be rescued by 144kbit/s GPRS.

That’s 144kbit/s is theoretical of course, and while GPRS made downloading ringtones easier, the web still sucked. We must wait for 3G, at 2mbit/s.

3G’s 2mbit/s is also theoretical, and while ringtones bounded along, we were told to wait for HSDPA, the go-faster 3G. Each of these network enhancements has arrived in a usable form two or three years than predicted. And you still don’t need a smartphone to download a ringtone.

Excuse No.2: Mobile Data sucks at any speed

But it isn’t just about bandwidth, it’s about quality. The quality of the experience, and the quality of the data.

Let’s take the second first. While millions of people are happy to reference, say, Wikipedia for their trivia needs, one can often easily shrug off duff data with the excuse, “… everyone knows you can’t believe what you read on the internet!” By contrast, mobile information has to be much more accurate. A Wikipedia-style mistake means taking the wrong turning, going to the wrong shop, or being punched in the face by an angry Catalan. All have an immediate, material impact on your day.

Then there’s the user experience, which is typically slow, with huge latencies, simply to get to a catalog listing or a web page. I shudder when I hear the phrase “web on your phone” – because as well as “all the world’s newspapers in your hand” the phrase also means “largely useless Google results”.

In five years of using mobile data, it’s failed the ‘Real Life’ test every time. I’ve never found a situation where mobile browsing could get the information I wanted faster than by asking someone – usually a stranger – nearby. So much for ‘Smart Mobs’. Someone relying on mobile data through their phone is, for the forseeable future, going to be considerably ‘dumber’ than the people around them.

No wonder text-based services such as AQA and Google Answers have the most promise – they employ humans, and use SMS. And you don’t need a smartphone to receive a text message.

Excuse No.3: Why pay more for a slower performance, and worse battery life

Lacking a killer application, smartphones have succeeded more because they’re a status symbol, than for practical reasons. Even for the most reliable smartphones, there are serious disadvantages – such as a time taken to open a text message, and having only a half to a quarter of the battery life of a dumbphone. That’s for the good ones. In markets where Palm and Microsoft models are popular, they don’t even have the reputation for reliability.

The US market has paid dearly. European operators subsidize models heavily, so with a new contract people are offered a top of the range smartphone for next to no cost. In the US, the price is $350 to $700, with most offered at around $500.

Excuse No.4: And then came the iPod

The popular media had been talking about ‘convergence’ for so long, it took Apple to remind everyone that converged devices frequently combined the worst of all possible worlds. To the consumer, the iPod did one thing very well – media playback. The iPod has grown more ambitious since its launch, but its place in your life remains the same: media is acquired on a PC, transferred painlessly, and then becomes portable.

Can they do the same with all the parts of the puzzle that make acquiring and playing music as seamless?

The suitability of dedicated devices wasn’t a secret to business users in the United States, who were accustomed to carrying two devices – a phone and a pager – around with them. Then, just as SMS looked set to kill the pager, along came RIM, to give enterprise users an iPod lesson. The Blackberry does one thing very, very well – and still sets the benchmark for usability. This had the effect of putting the phone manufacturers pretensions into an unforgiving light, and they’ve responded by bundling service from Blackberry, or one of its clones, into their business range.

And against all expectations, the PDA is still with us. The trend is unmistakable, but despite nine successive quarters in which sales have slumped, between five and six million handhelds will be sold this year. Again, it’s not hard to see why. For example, Palm’s ancient OS, dubbed “Frankengarnet”, still provides superior to-do management (with priorities and categories) than most smartphones – and it gives the user a desktop PIM suite right out of the box, rather than obliging them to sync with Outlook or Notes.

The advantages of convergence remain exactly as they were: one need only carry one device, and one charger. But it remains to be seen how well the phone manufacturers can rise to the challenge.

Excuse No.5: Microsoft reset everyone’s expectations to zero

While Microsoft’s numbers rarely meet its boasts, there’s some evidence Redmond may have succeeded in tilting the expectations in its favour. The European market is currently awash with PDA-style devices, many of which are operator branded, running Windows Mobile.

It’s amazingly rare to see anyone using one as their sole device. But then subsidies are generous, and Microsoft offers very generous licensing terms for new models – which explains why they enter and leave the market so quickly. So operators are happy to dangle them as a bait to lure people into experimenting with data services. I’ve met a few users who have one, and they tend to be professionals, but not technology geeks. Because these Windows PDAs are regarded as a bit of extra bling, and a bonus, this tends to temper criticism. So long as Microsoft can afford to keep flinging these anonymous gadgets at the market, people will become more accustomed to their data being in one device, and phone calls being in another. All of which suggests a long and healthy future for the dumbphone.

What’s missing from this list? Are these criticisms too harsh?

In the coming days we’ll review two of the most ambitious smartphones to see how well they fare – from Sony Ericsson and Nokia.

What has been surprising to this reporter this summer, has been getting acquainted (or reacquainted) with some of the most senior smartphone designers of the past decade, and discovering they too have returned to the dumbphone. Maybe one had found the secret when he told me:

“Old technology works best.”

As you’d be, too, if your waters had broken, and your husband had only one hand on the steering wheel.

He was as proud of this act of obsessive recording as I, a total stranger, was embarrassed.

The man then enthused at length about “emerging technology”. Shortly afterwards, I was not surprised to hear that he’d decided to start a new life in California.

The fellow was Christian Lindholm, and the irony of this review is that while he was at Nokia, Christian helped make a hostile technology usable for ordinary people. Mobile phones are indisputably the one technology success story over the last decade, and Lindholm’s team developed the Navi-key user interface, which I believe has never been surpassed in terms of grace and simplicity.

Now’s he’s at Yahoo!, Christian is helping make technology hostile again – something he’d already begun to do with at Nokia, with his work on the Series 60 user interface for Symbian smartphones.

I’ve been testing Yahoo!’s Go! software for mobile phones for six weeks now, and it’s the most presumptuous and irritating piece of software I’ve ever used. I value some of Yahoo!’s services, and I’m more forgiving of my phone’s idiosyncrasies than most people. But Yahoo! Go is a poster child for what happens when scientists or technologists lose sight of the needs of ordinary people. Judged purely on some narrow technical parameters, it’s amazing. Judged by how well it fits into a corporate Yahoo! marketing strategy, it fills all the tick boxes. Someone’s even created a Yahoo! theme and bundled it in the package.

The problem is much deeper than that, and as a result, everything that made Navi-key a success has been forgotten, or thrown away, in Y!Go.

I don’t mean to pick on Christian personally, he’s a super fellow. The Y!Go project was underway before he joined Yahoo! as its VP of Global Mobile Products in September. It’s much more about what misinforms corporate technology decisions.

There’s something about people who, once they get smitten by the idea of a “Hive Mind”, often lose their own (usually it’s temporary, but sometimes it’s not). When the basic philosophical assumptions are misguided, then the plumbing is wrong, and that takes a lot of fixing.

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