Barcelona 3GSM trip report

In case you missed the previous post, I attended the 3GSM Congress in Barcelona last week. This is arguably the biggest show in the world that focuses exclusively on cellular technology. It is a pretty large show and is attended by roughly sixty thousands people, mostly wearing fancy suits and looking stylish ... no golf shirts here. Barcelona is one of the most amazing cities in the entire world. Coming out of the conference center, you are presented with a beautiful plaza with an amazing statue and fountain like you rarely see anywhere. At night, fire comes out of the bowl at the top! I strongly recommend you come to Barcelona whenever you can .. you'll be amazed. Just keep you belongings close at hand or as by magic, they'll disappear.

Besides the setting, the conference itself was extremely busy and packed ... this is a good indication of a very healthy vibrant business environment. Anyone who had the chance to attend some of the more telecom oriented shows like Supercomm a few years ago would be shocked by the excitement and energy in the air at this show instead of the sound of crickets.

I attended the show to reconnect with some key people, make new contacts and especially to get a strong pulse on the world of wireless and cellular. A huge success on all fronts .... very glad I made the trip even though I came back utterly exhausted like I have never been before. I flew the red eye on the way there and took such an early flight back on Thursday, I didn't bother sleeping the night before at all. Keeping in mind these people start eating at about 8:30pm and the night life starts at midnight, it wasn't exactly a restful trip. When I was back home Thursday night, I fell asleep 5 times while my 8 year old daughter was reading her book before bedtime ..... daddy ... wake up!!! My wife tells me I fell asleep before my head hit the pillow.

I have so much to tell about what I learned or reaffirmed, the blog would go on forever so I'll stick to the highlights.

Wireless providers are struggling to figure out what is next

The stock market has a strange way of forcing the value of companies to be dependent on future earnings. Wireless companies are desperately trying to figure out where growth is going to come from and many billions of dollars are at stake. If you ever analyze the various big service providers such as AT&T (SBC, BellSouth & Cingular), Verizon, Sprint, Telus, Rogers and Bell that provide multiple services such as telephony, internet access and wireless services, you note that the wireless division is the strongest. Doesn't everyone review quarterly earnings reports like I do? However, although you could do all sorts of cool things with you cellphone and especially smartphones, most of the revenue still comes from voice services ... i.e. minutes of use, roaming, long distance ... basically boring stuff and the revenues are getting flat.

All wireless providers are extremely motivated to figure how to sell you more services and increase average revenue per user (ARPU). This makes for some pretty cool stuff but much of it hasn't been doing the trick. Most non-voice revenue still comes from silly things like ringtones (roughly $5Billion in 2006!!!) and texting. If you're over 30 years old, like me, you don't get texting. These kids are as crazy about texting as business people are about the crackberry .... must be connected!! As my trainer told me the other day when I asked him how much he texts, he said "huge" ... nearly 2000 in the last month". That can't be quite right ... must have misunderstood ... either way, it was a big number. When people call him on his cell phone, his response is ... "dude, why are you calling me ... text me!"

So voice, ringtone, texting are already huge ... what is next? Video, Music, IM and Bluetooth are just a few things.

Video to your mobile

It appears that video on the cellphone is one of the expected key drivers of growth but the uptake hasn't been as huge as hoped in much of the world. You're thinking ... duh ... who wants to watch t.v. on a cellphone? Well, you would be hugely wrong. The cell phone is becoming the first screen in many countries, especially in ASIA. Some wicked phones were on display at 3GSM ... ultra sharp and clear ... very watchable. But, the services today are just too expensive and complicated.

If it takes more than two or three clicks ... forget it. Cost can also be ridiculous. If you don't have an unlimited data plan, which is the case for most people, data costs can be huge. Bell Mobility for example charges roughly $12/Mbyte for a Pocket PC or Treo plan!!!!*(&((!!!!. A typical song is about 4 Mbytes. So downloading a song from some third party location would cost you $48. Going off-portal can ruin you literally. These stories get out and it scares the crap out of everyone especially since it is very hard to actually figure what it will cost you. This is what is called the walled garden. You can pick flowers from within the garden all you want but stick your arm over the wall and it gets cleaved off clean leaving you bleeding and you don't even notice until you try to reach for your wallet. Ok maybe a bit dramatic but you get the point.

Music

Music on your cellphone is going to be so ridiculously huge. Why do you think Apple decided to build the iPhone? The iPOD is pretty cool with roughly 100 Million shipped so far ... a big number. But this is puny in comparison to the cell phone market which is estimated at 1 Billion units per year!!!! The market for music on cell phones, excluding ringtones, has been pegged at several billion dollars by the end of this decade. If you don't think people are going to listen to audio on their phones, you're once again way out to lunch. Stay with the tour! It is already happening everywhere else.

Instant Messaging

People of all ages are glued to their instant messengers. They chit chat back and forth sending cute emoticons ... lots of fun and useful too actually. IMs are coming to your phone and it will be very popular. I already have it on my pocket PC running windows mobile. I remember my wife MSNing with her mom as we were returning from Nova Scotia this summer and stopping by their cottage in Quebec on the way back. We were in the car and grandma was on the laptop we gave her. We decided Raclette would be a good idea for supper and she had it mostly ready by the time we got there ... it paid for itself right there!

Bluetooth

Bluetooth was actually a old Norse king. For some reason, he inspired a pretty exciting new wireless technology for close range communication. Bluetooth is being embedded in most laptops, many cell phones and even cars these days. It has been years in the making but this is now taking off like absolutely crazy. Many people are now making some pretty neat accessories such as headphones. I tried out a new pair being launched by Motorola at the show which was playing music from one of their music phones. It sounded great. I also checked out a retrofit kit from Motorola that allows you to connect to your existing card stereo over bluetooth ... sounded great from the cell phone. They were also demoing a small GPS puck that communicates with cell phones and PDA over bluetooth. I checked out an ultraportable 20G hard drive Seagate is launching called DAVE. You leave it in your pocket and you can stream music or video from it to your portable and save files and pictures to it. It worked very nicely over bluetooth (though it also has wifi I believe). I would be shocked if we didn't see cameras, portable screens and zillions of other bluetooth gadgets in the coming months and years.

Anyway, I have hockey at 7AM so I best retire to sleepland. More on 3GSM and cool stuff in the next post.

Cheers,

Allan

who needs money anyway

My last post included some tidbits that some experienced individuals shared with a crowd of entrepreneurs recently. I promised I would go back to a few important items and I may as well do so now, especially since a friend of mine just lived through a few of the bullets very recently. Fortunately, it was only a flesh wound but it sucks to see this happen.

I've been slapped over the head by the following realizations enough times to have it finally sink in and I'm compelled to pass on the slap. It stings a bit since I see myself making some of these mistakes and must correct course immediately.

Work multiple investors until the money is in the bank!

Investors will sometimes appear to be very interested which gets the entrepreneur all pumped up thinking they have finally found "the one". They jump through hoops, expend lots of energy and stop chasing other investors thinking this one is so close, you'll be cashing a cheque and popping the champagne anytime. Months and months go by ... you finally start talking numbers and you might even be so lucky to get a decent term sheet thinking .... this is it ... time to polish the dancing shoes. Then you realize the due diligence is just beginning ... many more months might go by and the trail goes cold. What the F&%#!?

Slap, slap, slap!!!

Who needs money anyway!

Although this is not possible in all industries, it is good to be ready to move forward without any significant outside investment. This is especially possible with pure S/W plays, especially in a Web 2.0 environment in the year 2007. Fortunately, this is the space we are in. We are prepared to move forward to develop our product on the slow path if that is what it takes. I'll keep the knee pads on and continue prostituting my brain to the telecom world for a while longer. You go numb after a while ... it isn't so bad ... plus the people are great which makes it much easier.

Go to market strategy!!!

So ... you have a great idea. You know what you are going to build, have a developed a compelling business case that shows you'll be swimming in dollar bills in no time and hopefully making more than you're spending. You know how you are going to build your world changing thingy, how many people it is going to take and where they are going to come from. Awesome ... ready to roll. Now comes the hardest part in my opinion. How do we bring this to market?

Basically, how do we ensure everyone in the entire world knows about our product. This is especially challenging for a start-up since the marketing dollars are simply not there. A huge marketing campaign is definitely out. So we are left with a few options:
-have each of the team members tattoo one of the company letters on their butt and we can start streaking side by side through all the major cities (we'll do Canada in the summer ... nuf said)
-hey ... this might not be half bad ... guys, are you in? I'd better hit the gym a little harder
-work with a big brother/channel partner with a big name
-this is one we are looking into quite a bit. The trick is that you need to prove to them that you can do something for them that no one else can (without giving up your virginity for it).... even though you are absolutely nobody and they could step on you like a bug ... where the hell did they go ... they were just here a minute ago!
-viral. This is a really fun one since it can be super powerful but can be very difficult to predict and control. A bit of luck is required here.

The tattoo thing is sounding pretty good!

If you are into listening to music on the net (if not you will be), I'd like to leave you with a neat service I discovered virally (i.e. someone sent me the link). I'm not quite sure if it is really good yet since I've only used it a few times but it is an interesting take on music streaming. It is very simple and free so give it a shot. Let me know what you think.

http://www.musicovery.com/

Cheers,

Allan Isfan
Founder