BT Readies for a Custom World

It's easy to be critical of large scale corporate reorganizations. Not many seem to produce measurable results. So BT's new reorganization into two primary business units, BT Design and BT Operate, might not ultimately provide all BT now hopes it will. But you can't fault the company for pushing really hard to create a more unified way of creating new services. Because of the old "silo" or "bucket" form of organization, many telcos and software firms find they have warring business units fighting solve customer problems in different ways. BT would like to avoid that.

The point is that development of new services in many cases requires interworking of applications and features across networks and devices, especially the networks and devices any single provider operates. So the new organization aims to coordinate IP product development and deployment across BT's four businesses: retail, wholesale, global services, and Openreach.

The expectation is that it will be much easier and quicker to create and launch new products. It also is expected to generate significant cost savings, which BT will outline alongside next month's financial results.

BT Openreach's position as a provider of highly regulated broadband and phone products to BT's rivals remains unchanged. But the other three BT divisions - retail, wholesale and its global services IT unit - will become focused sales and marketing units. When the units want to create new products they will call on BT Design and the installation will be run by BT Operate.

The changes acknowledge the firm's increasing reliance on software and IP services by creating a new strategy unit to oversee the existing retail, global services, wholesale, and Openreach divisions as well. As CEO of group strategy and operations, Andy Green will be responsible for better coordinating new products and services across the divisions through two new business units.

In part, the new organizational architecture might have drawn inspiration from the success of BT's Global Services unit, which has been operating more as a system integrator of late, with the need to customize solutions for virtually every customer. So the expectation seems to be that a similar organization will benefit development of products aimed at mass markets, small business customers, other carriers and wholesale customers as well.

At the same time, the older organization wasn't so successful at creating and marketing new services, and BT isn't the only tier one carrier to find this a recent problem. Deutsche Telekom, to cite just one example, had to shut down its fixed mobile convergence service for lack of demand.

In fact, despite rather massive publicity, three flagship BT products—BT Fusion, BT Movio and BT Vision—have scant customer penetration to show for their efforts. BT Fusion, the fixed wireless convergence product, had just 40,000 customers 15 months after launch.

Similarly, BT Movio, the company's flagship mobile TV product has failed to make an impact in the market. Virgin Mobile, the sole licensee

of the product, disclosed in January 2007 that customer numbers remained painfully low. Limited choice of handsets seems to be an issue. Also, there is a standards issue. The European mobile industry might adopt a rival digital video broadcasting handheld (DVB-H), means other U.K. mobile operators are reluctant to embrace the service.

BT Vision, the company's IPTV service, hasn't done better. BT says it signed up just 2,400 non-BT-employee customers in four months.

Recent experience in the U.S. market reinforces the notion that it will be devilishly hard to create new services with the particular

attributes buyers want. Just about everybody in the VoIP business who has really pushed hard at bringing new features to market reports weak adoption of really new services. About the only thing that consistently works, in the mass market or small business segment, is POTS replacement. In some cases, it appears that something as elemental as "handset choice" is enough to doom a service.

Is it not abundantly clear already that the handset business requires lots of choice, rapid replenishing of models and features, and other attributes more commonly thought essential in the fashion business, where product lines are renewed every quarter? In other words, carriers cannot bring an "industrial" model to a mass market which already has shifted to the "fashion" model.

BT hopes its new focus will bring some of that needed speed and creativity to its product development efforts.

Call Your Mom, It's Free

Skype users can call their mothers, or anybody with a telephone number, all day on Mother's Day, May 13. So call your mom.

Google: Mobile, Mobile, Mobile

Nobody outside Google seems to know precisely what Google is up to in the wireless domain, aside from deals to preload Google on mobile handsets. Maybe it has developed a Google phone, as a proof of concept, but has to plans to bring it to market. It certainly is working on software that allows users without PC access to use Google applications.

Google clearly is up to something. When Eric Schmidt, Google Chief Executive, was asked about intriguing technologies, he answered, "mobile, mobile, mobile."

Another Run at Yahoo?

It looks like Microsoft is pondering another run at acquiring Yahoo! It would rank as the largest acquisition Microsoft ever has made, at about $50 billion, and observers question how easy it might be to meld the two cultures. Still, the speculation points out how important it is for Microsoft to catch up with Google in the advertising-supported business model arena. There's a clear logic, despite the difficulties. Microsoft admits it was late to "get" the Internet. It hasn't punched through to the top in the portal space. It is an also ran in search.

For those of you who follow technology industry history, you know the leaders in any era of computing have not lead the next era. The mainframe leaders did not lead during the minicomputer era and those leaders fell as the PC era took shape. The issue is who leads when the next era, for which we don't have a universally accepted name, but might be called the "network" era of computing.

History is against Microsoft and Cisco, though both are striving mightily to cross the chasm of era leadership. Cisco tells the better story, in that regard.

3G Data is About Moving Photos

The single most important 3G mobile data application is sending photos from one mobile to other users.

U.K. Mobile Calls Drop for the First Time

U.K.mobile phone call volumes have dropped for the first time in 10 years, according to the annual JD Power survey. The survey, of nearly 3,000 U.K. mobile phone users, found that prepaid customers are making an average of 10 calls a week, falling from 14 last year, for example.

Contract customers average 27, down from 35 in 2006, but those customers are now sending 46 text messages every week, up from 32.
Wider adoption of text messaging for communications now is having the same effect on mobile call volumes as email has had on voice communications. Worse, from a mobile provider perspective, is that as text replaces voice, revenues are dropping.

Prepaid customers now spend an average of £12.35 per month, down from £19.29 last year, and even contract customers have seen a 20 per cent drop in their bill (from £40.44 to £32.45).

It's All About the Handset

Features and form factor are the primary motivators of American consumer phone purchases, with flip-phones continuing as a favored phone type, says The NPD Group. But brand was the third most important reason.

“With few exceptions, buyers have ranked these two criteria highest (roughly 40 percent) over the past seven quarters,” says Ross Rubin, director of industry analysis for The NPD Group.

Age can play a role as well in the purchase of a handset. Buyers 18 to 24 chose “it’s a cool phone” as their top motivator for buying a handset during the past year. Those 25 to 44 most often chose “had the capabilities I wanted.” And consumers 45 and older, chose “flip phone / can be closed” as their top criterion for purchase.

The youngest buyers seek a device that reeks of “cool” (design is key, but the phone has to deliver on functionality, too). Young to middle-aged buyers want a wide range of capabilities. Getting just the right combination is the trick.

For people just past middle age and the older crowd, a solid flip phone with basic capabilities will do, though the brand is still important, says NPD. Judging by those responses, Apple's iPhone has a shot at serious traction, as it seems to hit on all the key criteria for buyers below age 45.

Harris Interactive recently took found that 47 percent of respondents were aware of the product and a full 17 percent expressed interest in purchasing it, which makes for a pretty loud buzz from consumers for a product that isn’t yet available.

Perhaps a more interesting question to ask is when U.S. adults would buy this product. Of those expressing interest to purchase, nine percent say they would buy at product launch and another eight percent would buy before their current wireless service contract expired. About 17 percent say they would wait for their current wireless contract to expire before purchasing and 25 percent would purchase it - when their existing wireless carrier offers the iPhone. Finally, a full 40 percent of buyers intend to wait for the price to come down.

Survey results show the hottest iPhone feature was its large storage capacity (37%). This is followed by iPhone quad band worldwide capabilities (36%) and its easy to use/drop dead cool user interface (31%). Overall, high powered multi-functional mobile devices like the iPhone have strong appeal (or Apple-al) to about 31 percent of the marketplace.