The BBC iPlayer website viewed on an iPhone. Photograph: Jonathan Hordle/Rex Features

London is to become the centre of a fightback by the world’s biggest mobile phone networks, which together serve more than four billion customers, against the growing power of Apple and Google.

The capital will be the location for the headquarters of a new business that will create a single global market for downloadable mobile phone applications, allowing the mobile phone companies to cash in on the growing craze for “apps”.

By the end of the year, the mobile phone companies could be in a position to present application developers with a single standard that will operate across everything from BlackBerry devices to mass market Samsung and LG handsets.

Mobile phone apps have proved a huge hit with consumers, with more than 3bn downloaded by iPhone users in just 18 months. But while they are creating a dramatic increase in traffic for mobile phone networks, they are not bringing any significant increase in revenues.

Apple splits revenues from paid-for apps with the programme’s developer, not the network. The situation is likely to get worse as Apple updates the iPhone in the summer so that more than one app can run at a time, further increasing its appetite for network capacity.

While the iPhone is likely to remain an expensive gadget aimed at high-end users, making it a niche product – albeit a very lucrative one for Apple – there is the potentially much larger threat from the growing adoption of Google’s Android platform. Later this year handsets from the likes of HTC and ZTE, which use the Google software and are aimed at the mass market, will start appearing. Already in the UK, according to recent research, almost one in every five smartphones now sold uses Android and some carriers reckon there will be more Android devices than iPhones within a year.

Google has made it plain it wants to co-operate with the networks on Android but while it is understood to be sharing a portion of mobile advertising revenues generated through the phones with mobile operators, Google does not share revenue generated by apps.

The mobile phone companies were galvanised into action by the appearance of Google’s own-branded mobile phone, the Nexus One, at the start of the year. It is the first in what the search engine giant hopes will be a portfolio of mobile phones over which it has complete control.

At the Mobile World Congress in Barcelona in February a group of more than a dozen mobile phone companies including O2, Vodafone and Orange announced their intention to form the Wholesale Applications Community, which would work on a single platform for downloadable apps that would work across all their networks and across a wide range of phones.

Since then, WAC has attracted 40 members and this week the operators will announce that it is to be based in London, where it will merge with another industry body called the Open Mobile Terminal Platform (OMTP). Backed by nine operators including AT&T, Orange and Telecom Italia, Nokia and Ericsson, OMTP developed the nascent Bondi open apps standard, which is used in the recently announced Samsung Wave handset.A chairman is currently being sought for WAC, whose interim chief executive is head of the OMTP Tim Raby, and the first board meeting of the new organisation is expected in July.

Its first task will be to pick a technology platform from the numerous competing open standards, including Bondi. It is understood to have chosen to use the open platform currently under construction by the Joint Innovation Lab (JIL) partnership between Vodafone, Verizon Wireless of the US, Softbank in Japan and China Mobile, the world’s largest mobile phone network.

It is also supported by LG, Samsung, Sharp and most crucially Research In Motion, maker of the Blackberry email device and bitter rival of both Apple and Android. Also involved in the process is the LiMo Foundation, which has been creating an open source mobile phone operating system based on Linux with the backing of partners including Motorola, NEC and NTT DoCoMo. Its software is inside Samsung’s H1 and M1 handsets which Vodafone has used as the flagship devices for its 360 suite of social networking services. There is speculation that Vodafone 360 could be rolled into the wider WAC effort.

Unity at last. But will it last and what are the terms for the developers? The entire reason for WAC is to get a slice of the pie that Apple has locked the MNOs our from in its model with the AppStore. All I can say is: “I want 70%!”. If WAC leaves that share to the developer community they might have a chance. And that is of course if they can deliver a develop-once-deploy-everywhere solution on this side of Christmas.

HP’s acquisition of Palm – Did they buy a Donkey that they want to market as a Race horse?

Much has been said and written about HP’s purchase of Palm. On the other hand we believe that this is one purchase that actually raises more questions than answers. Strand Consult has been following this market for the past 15 years, and we can see that many of the articles that have been written about this purchase are based on the American market viewpoint – a market which only accounts for approximately 7% of the global mobile market. Very few people are viewing HP’s purchase from a global perspective.

We have compiled a list that summarises our thoughts regarding this acquisition. We sincerely believe that financial analysts around the world should view HP’s purchase in the light of these issues listed below. A 1.2 billion USD purchase is a big deal – especially when you consider what HP is getting. We would like to draw your attention to the following points:

1.  Palm is only a brand name in the USA. Outside the USA Palm is totally unknown as a phone manufacturer.
2.  Palm has no distribution in the mobile world and few and limited relationships with operators around the world.
3.  Palm has limited mobile experience – they have been trying to enter the industry since 2002.
4.  HP also has limited experience in the mobile industry – they have been trying without success.
5.  HP has limited distribution in the mobile world and limited experience in the mobile value chain – they have tried several times but without success.
6.  Even Compaq’s iPAQ was not a Compaq product, but a product created by a reference design company in Seattle and a then unknown company in Taiwan, which we now know as HTC. The iPAQ was a Microsoft brainchild that they got Compaq to market and sell, because Microsoft wanted to enter the PDA market. This was the turning point for HTC – a close collaboration with Microsoft, resulting in HTC becoming the worldwide brand it is today.
7.  Perhaps HP has purchased an OS, but the value of an OS is rather limited in itself, the important issue is distribution of your OS and how many devices you can get your OS running on. There are a great many OSs in the mobile world – in fact there are far more smartphone OSs than most people realise.
8.  Take for example Apple, they can only put their OS into the phones they sell themselves – giving Apple limited distribution.
9.  Apple’s sales have grown far less than the growth of their distribution power (operator agreements).
10.  Both Google Android and Microsoft have to approach mobile phone manufacturers the whole time to convince them to use their OS on each new device.
11.  If you look at who is most successful in terms of getting their OS onto as many devices from the most manufacturers, it is actually currently Microsoft. Measured on the number of different models running their OS, Microsoft has clearly achieved better results than Google Android.
12.  Being on as many devices as possible is very important, helping to increase the likelihood of being on a successful model that ships enormous numbers of units.
13.  When we examine how devices subsequently sell, we can see that Nokia are selling the most. Nokia has a higher Smartphone market share than their overall mobile phone market share and Nokia’s Smartphone sales are growing significantly more than Apple’s.
14.  Both Nokia with 550 million phones sold and Samsung with 220 million sold phones can decide themselves which OS they want in their devices. This means that both Nokia (Symbian) and Samsung (Bada) can replace their old OS (Series 30, 40, EMP, etc.) and put Symbian and Bada in their phones. A good example of this is Nokia’s C5, which two years ago would have been a Series 40 phone for 120 Euros, but is now a Symbian phone for 120 Euros.
15.  The R&D costs of developing an OS decreases, as the sales volume of the OS increases.
16.  In a world where volume is important HP has not much to offer – their PC volume does not give HP any significant advantage regarding manufacturing mobile phones.
17.  There is no doubt that Palms WebOS is a good OS. But why should developers develop services for the US market alone, and where are the tools and access to different API’s to make it attractive to develop for the OS?
18.  The big question is whether HP has plans to take Palms developer support on board and how they plan to drive it forward?
19.  HP is strong in the enterprise market, but do they have a size that enables them to tell their customers that they must rely on the Palm platform, rather than on Microsoft’s WM? We believe that HP will inevitably have to support Microsoft WM in the Enterprise market.
20.  WEB OS is and will remain a niche OS, and what HP is buying is a hardware brand that is known in the US. On the other hand it appears it will cost a lot of money to further develop WEB OS. So maybe HP will use the hardware brand and then choose to go the Android and/or Microsoft way? If that is their plan, then 1.2 billion USD is a high price.

The biggest question is whether HP in the short term can create a growth in their share value, so that they can justify the investment in Palm? In the long term, the investment must create revenue and profit. We believe that it will be tough for HP to create enough revenue and profit to justify their purchase of Palm.

We could easily make the above list much longer. From where I’m sitting it looks to me as if HP has looked at the value that iPhone has created for Apple’s shareholders and said “hey, we need a product like that too”. If you look at what they got for their 1.2billion USD, it appears as if HP purchased a donkey, and is hoping that they can pass it off as a racehorse to their shareholders.

If you take two minutes to look at what we wrote about Palm & Handspring back in 2002: http://www.strandreports.com/sw482.asp, Nokia´s N-Gage launch: http://www.strandreports.com/sw566.asp,    what we wrote about Android in 2007: http://www.strandreports.com/sw2916.asp and what we wrote about the iPhone in 2009:  http://www.strandreports.com/sw3501.asp – you will agree that everything we predicted so far has been pretty much spot-on. Then again, we are by no means newcomers in the mobile industry.

Reading Strand Consult’s thoughts on the fairly expensive purchase of Palm. It is, as we are used to, a frank and bold analysis where Strand is not fishing for popularity points. They speak their mind. Loud and clear. Basically they declare the HP purchase of Palm a disaster, maybe not exactly in those words, but you do not have to be a mind reader to see that message.

I do think the HP deal smells of “me too” logic, which is not logic. The “I want an iPhone success as well”-argument is not strong enough. Many contenders for Apple’s current sweet spot seem to forget that Apple had gathered 100 million loyal customers and their credit cards via music sales before launching the iPhone. What they have done over a large number of years is to build an entire eco-system around digital entertainment and communication. Unless you buy Apple it is hard to find a quick fix for that. It takes hard work, luck and serious distribution power.

Unfortunately it has little to do with how good your stuff is. Palm’s WebOS might be the best OS out there. But it is not out there on every phone. Beyond the US few consumers would even know what Palm is. Except for the tree with the nut then.

This is and old post from November last year, but still to the point. The key take away is as great as it is simple. Location is the bridge from social networking to real social activity. With location added in a smart way social networks, games and other apps will reach their full potential. When we can float over to real social interaction from the social network of choice the value of that social network will multiply. That is if you prefer interaction with real humans over screens. Most of us do.