Saturday 10 February 2007

Topical as ever.

Continuing my series of totally up-to-the-minute observations on the hot issues of the day, I've just stumbled across this rather interesting piece by Martin Geddes from nearly two years ago. It's ostensibly a review of the marvellous Nokia 770 Internet Tablet, but also has some quite interesting things to say about why Nokia, a phone manufacturer, took the rather surprising step of releasing a beautiful little gadget like the 770, which obviously could have had a built-in mobile phone, with no built-in mobile phone.

The 770 is also significant because it partially separates connectivity from the hardware. Obviously, you need to provide your own Wi-Fi signal. You'll need to use a Bluetooth modem to work on a cellular system. But it springs Nokia free from the design and distribution constraints that the carriers usually impose. Or as El Reg puts it:

It's an open platform, and unlike its phone range, there's no built-in DRM or similar shenanigans to cripple the user experience. ... The 770 will be available through general electronics retailers or direct from Nokia's website.

These two things are not unconnected. The smartphone market is somewhat of a poisoned chalice to handset makers. The more features there are the greater the likelihood some meddlesome operator will want to break or customise them, ruining your already thin volumes and fragmenting your base for developers. The operator urge to make smart networks peppered with toll booths, and use device subsidy to push people towards higher-charging monthly plans, reduces the perceived value of the product to the public and re-allocates the profit pool towards the carrier.

The 770 is an attempt to break this cycle, and recapture the value of the "smarts" that a smartphone would offer, but in an enlarged form factor that is cheaper to make, better to use, and potentially offering high margins. ...

Constrain the handset innovation with a smart network and complex pricing and the innovation goes elsewhere. I look forward to more devices that signal to the market "this is what we can do when the handcuffs are taken off".

How much value will be left in those expensive mobile carrier-owned retail stores if the best devices start being distributed via other channels? How come a hit personal, portable data and media-centric device like an iPod doesn't fit into the distribution network of a mobile carrier? The stores scream "we sell stuff that meets the sales needs of Vodafone and Cingular to pay for their network", rather than "we sell stuff that meets your user needs when you're out and about". Supplier-centric, not user-centric. Not an obvious model for retail success.

I'm struggling to figure out whether Geddes has been proven right or proven wrong by the iPhone. Perhaps a bit of both. He certainly helps to make sense of Nokia's new strategy of building both wi-fi and VoIP into their top-end phones, which shows they feel they have enough clout to ignore the demands of the network providers. My phone, the E70, can be used to make calls via the Internet when I'm at home (and regularly will be, just as soon as I get my shiny new router properly configured), and can even make VoIP calls with reasonable sound quality over a 3G mobile Internet connection, potentially far cheaper than paying the standard network rates. Combine phones like this with the new flat-rate unlimited Net access deals that 3 are offering, and we could see some major changes to the mobile phone market. Perhaps VoIP will be where 3G really comes into its own — perhaps having the networks specialise in handling voice traffic will turn out to have been a mere brief phase: in the future, they'll just connect you to the Net and leave you to it.

Anyway, it looks like both the 770 itself and the ethos behind it were successful enough for Nokia's liking, because they've now come up with the N800, which is the same only even better. It has a built-in phone, but not a cellular phone: it's VoIP only. At the very least, this constitutes a major thumbing of Nokia's nose towards the networks.

They must be doing something right, 'cause I want one.

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