22 Comments

Summary:

How do you know when phone companies are in panic mode? You see them hastily organize summits and build consortiums to compete with a hot technology and ride a popular trend. They’re doing it again: this time with plans to build an operating system.

500px-Train_wreck_at_Montparnasse_1895

How do you know when phone companies are in panic mode? You see them hastily organize summits and build consortiums to compete with a hot technology and ride a popular trend. That means they almost always fail at their attempts at whatever they are doing.

The growing grip of Apple’s iOS/iPhone and its glimmer twin, Google Android has the entire carrier ecosystem spooked. That’s why Orange (formerly France Telecom) CEO Stephane Richard is reaching out to the chiefs of Deutsche Telekom, Telefonica and Vodafone to discuss the creation of yet another platform — aka operating system — for the mobile world. A report in French newspaper Le Figaro suggests that talks are going to happen on Oct. 8 in Paris.

What could they do? Build a special Google-less Android (like China Mobile)? Develop a custom version of Symbian OS? Bring Nokia into the fold? Their logic seems to suggest they believe, since they have a huge customer base, a common platform could bring vendors to the table. Then they can take the mobile Internet back from those California hippies!

Good luck with that. I have two words for this so-called attempt: LiMo Foundation. Yeah, even I thought it had chances of being a success, but man, was I wrong. The chances of the Wholesale Applications Community (WAC), another industry-wide effort, succeeding range from zero to oh, I don’t know… ZERO!

Let’s face it: the mobile game is all about the developers. Developers maketh and developers taketh away. The carriers and their OS efforts are only going to be good if they gain traction with developers, and that’s hard considering the efforts already invested in iOS, Android, BlackBerry and Symbian.

The phone companies are suddenly realizing, “Oops, we’re losing grip on our customers.” The customers who use iPhones use Apple’s billing systems. Android users will make money for Google via its mobile ad systems, and eventually through Google’s other mobile services like Google Checkout. Mobile app developers — who in the pre-iPhone era paid millions of dollars in baksheesh to get on the carrier decks — no longer have to deal with the draconian bureaucrats at these mobile operators.

Sure they try to re-create carrier decks by launching their own mobile stores on smartphones — T-Mobile has done it, and so has Verizon with its VCast Store — but the fact remains:Nnone of these have the same money-gouging potential as the carrier deck.

These attempts are like seeing a middle-aged uncle, who upon finding that his wife left him, gets back into the dating game. He tries to feel hip by wearing Ben Sherman shirts and skinny jeans. The only person who doesn’t quite grok how ridiculous he looks is him!

Related Research from GigaOM Pro: Why Carriers Still Hold the Key to Handset Sales This content requires a paid GigaOM Pro subscription

Photo: Train wreck at Montparnasse 1895 via Wikipedia

  1. Between open OS’s like Android and handset BOM costs dropping (making high-end phones, successfully selling w/o subsidy possible in the next couple of years), the carriers are likely to be even harder pressed to figure out where they might still actually add value.

    If operators used the same amount of software development resources to instead build their own apps (i.e. build UMA-like functions as a carrier-branded VoIP app), they might actually be able to find a place to add some value.

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  2. We need ISP’s to start selling mobile data plans either by building a Wimax infrastructure or even a LTE one. ISP’s need to enter this game.

    They are already dumb pipes for PC’s so they won’t mind being dumb pipes for smartphones and tablets. While carriers are going to keep opposing this trend of turning them into dumb pipes.

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  3. The one segment of stodgy corporate dominance that absolutely doesn’t get it. The Korporate Killer Klowns who haven’t moved beyond analog, rotary-dial technology.

    If they didn’t own Kongress – and peers in other lands – they’d have disappeared down the crapper long ago.

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  4. There has been zero carrier driven innovation since T1 in the mid 60s when the carrier and the supplier were one (T).

    Dumb pipes are now dumber pipes. No changing this fact now. Carriers, deal with this reality vs. launching just another lame attempt at relevance.

    This is no midlife crisis, this is end of life death throes.

    My ‘carriers’ 10 years from now should be Google, Facebook, Twitter,… I will have no ‘land line’ throttling me and feeding mono/duopolies.

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    1. There is one barrier to entry carriers have: they have massive army of lawyers and lobbyists who can do end run around innovation and it is the only thing I worry about.

      If there is death, it is still a long time coming.

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      1. It’s not just the remaining time that’s a problem; think of how effectively said legions of lawyers and lobbyists can delay, distort and disrupt progress towards a new economic order in the industry. And since everything else in the new “new” economy depends on effective communication, they’ll severely hamper US and select other countries’ efforts to remain relevant in that new economy.

        I keep waiting for a brave President to declare that “monopolization of essential infrastructure for private profit poses a clear and present danger to the national security of the United States.” Though inarguably true, politics at that level is too heavily subsidized by T and its confrères to make such a truth politically survivable.

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    2. The larger issue here is that there is an insatiable desire to turn a telco into a *sexy* media company, perhaps like MTV used to be or into a *cool* Saatchi&Saatchi (note both are heading towards extinction). Nokia has been also trying that for years-a software services company.

      All of this creates an eco-system where brilliant new innovation from external developers is shunned in the fear of cannibalizing their own junk (NIH syndrome).

      Ultimately the day telco see themselves as infrastructure companies with 2 primary objectives: 1) best network; 2) customer sat
      that’s when we will see the market flourishing for all, esp consumers.

      And I doubt that’s ever going to happen in the same way, we will ever see a day when dropped calls were the thing of the past.

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  5. The carriers are finally getting their comeuppance. They screwed mobile app developers for so long that they could build the best mobile ecosystem on the planet at this point and, still, no developers would come. This is all karma for raping and bankrupting developers in the past.

    They can’t become big, fat, dumb bit pipes quickly enough, IMO.

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  6. “The growing grip of Apple’s iOS/iPhone and its glimmer twin, Google Android has the entire carrier ecosystem spooked.”

    Hyperbole much? ;-)

    The part about a custom OS is part of a much larger interview where CEO Stéphane Richard is talking about France Telecom’s problems and the summit on Oct. 8 is only mentioned in passing.

    Still, you’re right about mobile app developers who in the pre-iPhone era paid millions of dollars to get on carriers’s decks — especially about the dollar part, as this was a US only anomaly and the situation was (and still is) quite different in Europe.

    That said, I really don’t get the “loosing grip on customers” part: last time I checked our devices are still using some carrier’s network, aren’t they? If anything else, it seems to me we’re relying on carriers’ infrastructures and services more than ever.

    RT.

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    1. RT

      Sure you will pay a certain amount of $$$s for getting data and voice but they are thinking about more than just that and which is where things diverge from the market reality.

      How much money do you spend on your apps every month? And how much of that goes to the carriers. I think that is what this is all about.

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  7. @Om,

    I got tears in my eyes from laughing as I read this article.

    Best.

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    1. Glad you enjoyed it!

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  8. I think the view is rather simplistic. Yes, the carriers are losing their ability to make money off the subscribers because of the mobile OS leading the subs elsewhere. Of course the carriers will try to add more value in order to get more revenue, that they feel they are losing. They will never become fat pipes, and free, like everybody seems to wish. Instead, they will start charing more and more for the rights to use that pipe, if they can’t find other revenue streams. If it’s a matter of choosing a customer OS from them or them charging me more, I’d go for the OS. It’s simply naive to think that he operators will not try to make money. Jeez.

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    1. No one is saying that carriers shouldn’t make money. The problem is that they are trying to close the door on the barn after the horse had bolted. It was something they needed to do a long time ago and not after the smartphone guys had started to come between them and the customers.

      PS: I think other comments do good job of responding to your comment in detail.

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  9. Right OM.
    Agree almost on everything…and by the way, that is natural disruption watching. Its painfull.
    There is really zero innovation from carriers since they are “only” carriers. There was a time where France Telecom embedded its own pure telco R&D and most others ( BT) as well…since, these Equipment suppliers trend came and Carriers found it too easy”Just operate” equipement and solutions developped by others …and make money. They never saw Apple coming…who would bet on a device vendor…not even mobile device at that time.
    i think you are missing two points though:
    1) main point carriers are missing is “humility”. Google and app providrs make money from the offline millions third parties,merchants, publishers…not really from the subscriber who spends really a tiny part of the monthly expenses on airtime bills. Carriers havent found away to get to such…and still feel tey just need to charge more the subs. typically now that everyone has a mobile

    2) another rising difficulty is Support. When you cant access your app or having issue with it, who do you call? Appe/Google ? the tiny App provider with simply two developpers? or the carrier that you know and has free customer service?
    I think Carriers could still play a serious role just providing greater access to all these app stores and supporting them.Support is the key and missed point for even apple and google…

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  10. Every once in a while these guys drink Peyote together and have these hallucinogenic visions that they are still in 2006.

    I believe this was tried before twice, once with the Symbian initiative and later LIMO. Where are those efforts today or what happened? Nothing, except another meeting to drink some more Peyote and announce the new hallucinogenic visions.

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    1. Luiss

      What is Peyote?

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