Jan Linden and I had the privilege of hosting a group of students looking to learn about entrepreneurship at the GIPS office last Friday. One of the key lessons I hoped they would take away was that you should always be trying to design products which meet a real customer need. It sounds simple, but it is so easy for a company, especially one lead by super smart engineers, to launch products which sound great in theory, but which have little practical value.

I was reminded of my lesson the following night when I witnessed the most ridiculous infomercial since the Snuggie was unleashed upon an unsuspecting public. The ShoeDini- it’s a shoehorn…on a stick!

Not only did this commercial completely mesmerize all the patrons of bar I was in at the time, but it made me reconsider my statement from the day before. Sometimes products fit into a second category in which limitations are overcome when good (or just outrageous) marketing creates a need where none exists. I had no idea I was endangering my back every time I put on or removed my shoes! For my whole life I have been bending over like a sucker. But no longer!

Sunday night, the lesson was taken one step further. Since I refuse to support any endeavor which recognizes the acting accomplishments of Sandra Bullock, I did not have the privilege of seeing the new iPad commercial during the Academy Awards ceremony.

As I see it, the iPad fits into a third or fourth possible category. Category 3, as I have discussed before, is when a product doesn’t pretend to solve a problem, nor create one that never existed. Sometimes it can get by just because it is “cool”. When I ask people what I would do with the iPad, and they tell me I would be doing things I already do, just on a neater device, I start to believe the iPad fits in this “ain’t it cool” category. However, it is possible the iPad will attain a status rarely achieved by a consumer product. Once in a while, a product totally transcends market boundaries and definitions by making us reconsider our very habits and assumptions. Like prisoners emerging from the Platonic cave, we are confronted with a new reality in which the old way of doing things is completely obsolete, and we are presented with seemingly endless possibilities. I am willing to admit there is a small chance the iPad will fit into this fourth category. There is a chance that I am incredibly shortsighted, and Apple is not just trying to ram an oversized iPod Touch down consumers’ throats. For now, though, I am willing to stick to my belief that we are expected to buy it just because it is cool.

I think the larger lesson here is that reaching for the fourth category takes guts, and is what every business or entrepreneur should strive for. However, it is probably a wise bet to focus on the first option. Category 2 might work, but you run the risk of being a late night infomercial joke. And only once you have built up enough cache with the right kind of audience (café sitting, fixed-gear bike owners, I am looking at you) can you even hope to be included in Category 3.

Hello again from Barcelona. Today has been quite busy. I have had lots of great conversations with people stopping by the GIPS booth, as well as with other exhibitors. I also got a chance to see what all the handset providers are doing, and was frankly unimpressed.  Here are a few observations, as well as today’s highlights (and lowlights):

-          Yesterday, Microsoft announced Windows Phone 7, which from what I can tell is just the next generation, rebranded Window’s Mobile OS. The demo I saw today made the platform look much slicker and user-friendly than previous iterations of Windows Mobile, and the closer relationship between Microsoft and handset manufacturers should lead to better designed products. However, I don’t think there is anything earth-shattering about this news. I also couldn’t help but laugh when the person giving the demonstration proudly announced the first Windows Phones will be available this upcoming holiday season. Only James Cameron films create more hype longer before a launch date. All in all, the announcement looks like a desperate attempt by Microsoft to catch up to the rest of the smartphone market.

-          Speaking of trying to catch up, I saw a demo of the Samsung Wave, running the Bada OS. The phone looked pretty neat, but just seemed like it was trying to copy iPhone and especially Android. For instance, the location services app doesn’t appear to have anything already not offered by Google Maps.

-          The observation I made yesterday about the importance of apps was reinforced when I visited the App Planet pavilion- an entire exhibit hall which, as the name suggests, is dedicated to application developers and related technology. There were probably dozens of companies offering some sort of platform or tool that enables application development, which leads me to believe the entire market is oversaturated.

-          I saw the back of the Queen of Jordan’s head as she was whisked into an exhibition hall to promote a global education initiative. It is nice to hear that more is going on here than pure commerce.

-          No one at the Motorola booth was able to tell me if the company will offer a version of Droid that supports a GSM SIM card. As a Droid owner, it has been incredibly frustrating being without cell service while attending the largest mobile communications show in the world. I would be curious to know the thinking behind offering a phone that only utilizes CDMA. Is Verizon concerned that users will violate their exclusive agreement and take their phones to another provider? Does it cost more to include an additional radio than the revenue generated from international roaming charges? Whatever the reason, I hope they give customers the ability to actually communicate when they are outside the US.

-          Spaniards appear to be more afraid of water than cats are.  There was a light drizzle this morning, and people were huddled under building overhangs, presumably waiting for clear sky to make the short 2 minute walk between buildings. This jibes with the behavior I have witnessed at Spanish beaches, in which hundreds of people will stand just at the water’s edge, but go no deeper than their ankles, despite overwhelming heat.

-          The most entertaining booth at the show has to belong to Mobile King. I will let you guess why.

The last couple days have reinforced the golden rule of tradeshows- That Which Can Go Wrong, Will Go Wrong. After a series of delayed flights, missed connections, and lost bags, an exhausted GIPS team arrived in Barcelona for the world’s largest mobile communications conference, the  GSMA Mobile World Congress. Despite the difficulties, everyone is in good spirits (though we have not yet had the entertainment of last year’s show, which included collapsing booths, a Russian Danny McBride lookalike, and a near fist fight between show organizers and the exhibitors across the aisle from us).

I haven’t had much opportunity to walk around and talk to other exhibitors yet, but a few themes seem to have emerged from my current vantage point. My first impression of the show is that there is a greater focus on applications than in the past. The popularity of the iPhone and Android seems to be fueling an explosion in mobile apps, and any product that is associated with them is trying to cash in. Who knows how many of these companies will be around next year, but right now they seem to be everywhere.

Speaking of Android, it definitely looks like this year’s hot topic. I think there is a lot of excitement around the platform, as well as quite a few questions about its potential. Tomorrow I should hopefully have a chance to check out the Google booth and see firsthand what is going on.

We will be here all week, bringing this year’s coolest (and maybe lamest) technology, so stay tuned.

If two recent reports are any indication, video is quickly becoming crucial to enterprise communications. According to a report by Dell’Oro Group, annual revenues for the Unified Communications market will outpace the enterprise voice market through 2014. While there are many important features included in a UC solution (including voice), video is a prominent component that helps differentiate a UC product from one that only includes voice.

In addition, GIPS released a survey last week of 1,200 business professionals in the US and Asia regarding their use of video conferencing, and discovered some surprising results. Among the findings:

-          In three of the four countries surveyed, a majority of respondents had participated in a video conference or video chat.

-          79% of those who use video conferencing technology rely on consumer applications.

-          The most common reason that participants gave for using video conferencing was to communicate and understand others more clearly and effectively.

-          Video delay and freezing continue to be technical concerns for many users.

If you are interested in reading the entire report, you can find it here.

For the last 2 hours, I have been asking people to sell me on the iPad, the tablet computer Apple launched this morning a couple blocks away from the GIPS office. No one has succeeded. I had to ask people to do this because Steve Jobs sure as heck didn’t. When I first heard about the iPad, I didn’t really know what it did, and I am still not entirely sure why someone would want it. According to Jobs, the iPad “is so much more intimate than a laptop, and it’s so much more capable than a smartphone with its gorgeous screen”. More “intimate”? What does that even mean? The only thing that quote tells me is that Jobs wants to make out with the iPad. I know what it isn’t (a smartphone or laptop) but don’t know what it is. Put simply, what problem that I currently have does the iPad solve? I asked my dad what he thought, and he put it very nicely; “My sense is it’s a solution looking for a problem.”  

Let’s back up and try to figure this out. I asked my coworker, Larry, to sell me. He started with the same approach as Jobs. “It’s more than a smartphone,” he said.  “All right,” I said, “so you can make calls from it? Is it supposed to replace my phone?” “No, it’s too big. It would be silly to make calls with it. It wouldn’t replace your phone” he said.

Ok, stop right there. If the iPad will not replace my smartphone, and the only features it shares with a phone are ones a smartphone also shares with a PC, stop comparing it to a smartphone. I am sure the iPad is also more capable than a USB memory stick, but since the iPad does not compete directly, or even indirectly, with a USB stick, a comparison between the two is irrelevant. Comparing the iPad to a smartphone confuses things.

So, now that we know we can ignore any comparison to a smartphone, and I still don’t know what unique need it fills, let’s focus on why the iPad is a better alternative to a laptop. This is the only approach that will convince me the iPad is worth its $500-$800 price tag. Since no one else has done this yet, let me try to convince myself. Here we go.

The iPad makes a great alternative to a laptop. First, it is smaller and more portable than a laptop. Yes, that is nice. Second, has a larger screen than a netbook, which means it is great for watching movies and browsing the web. Good, I like that. Third, just like your laptop, it runs word processing, spreadsheet and presentation programs with Apple’s iWork suite. Excellent! I need those. Wow, I am really selling myself on this. So, since the iPad is great for multimedia entertainment, it must have a pretty large hard drive to hold all those movies I will watch, and all the music I want to listen to. Well, kind of. The cheapest model has 16GB of Flash memory, but the $699 model has 64GB. Ok. That’s a little pricey, but I am sure I can store all those files on an external drive and just take what I need with me. Maybe, but you would probably need a PC to do that, since the iPad doesn’t have a USB port. Oh. I thought I was trying to replace my PC. All right. I guess I can figure out how to get by with that much storage. Well, I bet the iPad is great at all the basic productivity tasks if I need to take work home or on the road with me. I can easily work on all those spreadsheets and presentations when I am on the go. Maybe. But the touch screen and lack of a keyboard and mouse might make that difficult. Oh, yeah. It might be hard to get work done without those things. You can get a separate keyboard and mouse. Right, though that kind of kills the idea of portability. Ok, well I bet it will be great for sharing photos. Yeah, except you need a PC for that. Oh, right. No USB port. Or memory card reader. Oh. Hmmm. So, what would I use this for? It is great for surfing the web! Right. Tell me again how it is better than a smartphone.

I spent a good 4 hours yesterday watching my favorite football team, the Minnesota Vikings, self destruct as only they can. During the frequent commercial breaks, I noticed the over abundance of ads for mobile carriers. There were the usual pudgy Owen Wilson AT&T ads dueling with the Verizon map commercials, along with a few Sprint and Metro PCS spots mixed in. This flurry of activity sparked me to wonder aloud, “How competitive is this market?”

The perception given by all the commercials is that the market is very competitive. Each firm is making its case for why it is the best choice- largest 3G network, fastest downloads, widest selection of phones, least restrictive calling plans, etc- and furiously trying to attract as many customers away from the other providers. Yet, I couldn’t help but think that, while they have offered more services, each successive cell phone plan I have purchased over the last 8 years has only been more expensive than the previous. If this market is that competitive, shouldn’t prices be falling?

If you believe the commercials, it appears as if they are. Verizon and AT&T announced reduced rates for their voice plans. Interestingly enough, they both settled at $69.99 a month, behavior which seems remarkably coordinated. However, as Marguerite Reardon pointed out for CNET, these new plans may actually be more expensive for many users, as they impose higher fees for web and data usage for owners of mid-range phones. 

This is an incredibly complex topic, which we have touched on in the past, but it seems like, at least until now, most carriers have tried to use subsidized phones as their main differentiator. By signing exclusive deals with manufacturers, and then offering phones for reduced upfront fees, operators are able to lure customers based on those phones’ features.  What many consumers may not realize, however, is that they are probably paying more in the long run than users of the same phones in other countries. Telecommunications tends to be a naturally oligopolistic market, and the U.S. mobile market is no exception. The high barrier to entry associated with owning large networks leads to only a small number of firms owning virtually the whole market. But what is most important (and what the FCC will probably be looking into) is if this arrangement is beneficial to consumers. I don’t have an answer to this question, but I do have a nagging feeling that I should be getting more for less.

Magic Jack has announced  a new version of its USB phone/computer connector that allows customers to make cheap phone calls with their cell phones. But hold on. For those who are saying “Yes, another mobile VoIP application”, this one is different. Instead of an application that uses a phone’s WiFi connection to make VoIP calls, the Magic Jack device is a femtocell that will connect a mobile phone to a user’s home broadband connection using the phone’s cellular radio.

Two questions instantly came to mind when I read this news. 1) Why is this better than a smartphone app that uses WiFi, and 2) why is this a cool “mobile” product if users are tied to their home networks?

The answer to both probably has something to do with Magic Jack’s target audience- your grandmother. Magic Jack is going after the substantial portion of American consumers who don’t know a lot about technology. Despite the popularity of the iPhone, Blackberry and Android devices, there are still a lot of people out there who don’t even know what a smartphone is. They don’t care about the latest apps, and they certainly don’t want to figure out how to make VoIP calls over random WiFi networks. They are just looking for a way to cut their phone bills, and maybe even replace their landline, but want something more reliable than just a mobile phone. And they probably buy products off TV infomercials.

2010 hadn’t even arrived before two carriers announced plans that made the last decade seem like it happened 20 years ago. AT&T asked the FCC to drop the requirement that the provider maintain a legacy landline infrastructure, signaling a move to an all VoIP system. A day later, France Telecom’s mobile unit, Orange, launched its HD voice service for UK subscribers. All you have to do to realize how quickly technology is changing is imagine reading that sentence in the year 2000 (or even 2008).

The AT&T request has all kinds of interesting angles that I am sure we will touch on as the week progresses (is AT&T trying to skirt FCC regulation? what happens to the 20% of consumers who rely exclusively on the PSTN? what does this mean for other service providers?) but what I am most interested in is the supposed death of the landline. I am not sure how others define the term, but a VoIP line is still a “landline” in my book. AT&T is still interested in providing home phone service; it will just be over IP instead of PSTN. I have written before that I think home phone service is going to eventually fall by the wayside unless service providers can actually offer innovative features or services (e.g. video calling) instead of treating it like an ugly stepchild and bundling it with Internet and TV. Don’t get me wrong, I am not complaining about an all IP infrastructure. I think there are definite benefits (HD voice) to home VoIP service. It is just up to the provider to offer these benefits to justify the home phone’s existence.

Speaking of HD voice, Orange’s service should be a huge step forward for voice quality and consumer satisfaction. I read one blog post that claimed, “For most of the European languages, current scenario call quality is good enough”. I have to disagree. Maybe it’s because I have been to too many loud concerts, but most of the time I find cell phone conversations unbearable and have a difficult time understanding the other party. In ideal situations, cell phone technology typically yields a Mean Opinion Score (MOS) of about 3.8, with most users hanging up when the quality drops below 3.5. When you factor in the background noise and echo that come with mobile conversations, I can’t be alone in my disdain for mobile quality. By expanding the audio frequency to 7 kHz, mobile users in the UK should be able to hear each other a lot more clearly.

Last week I wrote that, since the inception of Voice over IP, the arrival of December gives pundits the opportunity to proclaim the upcoming year as a break out year for mobile VoIP.  It seems my assessment wasn’t too far off. But despite my skepticism about how far reaching mobile VoIP will truly be, it has certainly seen a lot of activity this year.

The most recent example is Vonage’s announcement of an application for iPhone and Blackberry. The application’s most interesting feature is that it will be able to make VoIP calls over 3G for both devices. Until recently, the only way to make VoIP calls on a mobile device has been to do it over WiFi. However, by allowing VoIP calls over their data networks, mobile carriers appear to be getting more comfortable with the idea of users forgoing the cellular network to make free calls. This is obviously be something to watch for 2010, but it will be interesting if we start to see carriers restructure their plans by lowering their rates for voice minutes while raising the price of their data services to compensate for the change in demand.

And with that, everyone have a happy and safe New Year!

As a frequent consumer of pop culture criticism, I am well aware that it is almost 2010 thanks to all the “Best of 2009” (or now “Best of Decade”) lists. While sometimes predictable and cliché, I look forward to reading about the albums, books, movies and band names  that unite or divide critics. It’s a good way to discover music or movies that I had previously overlooked (this year’s winner: the Dirty Projectors) and it’s nice to take a look back at the year that was.

So, in that spirit, here are some of the most relevant stories in the telecom/VoIP/tech industry in 2009:

Net Neutrality Picks up Steam

With the new administration in Washington, the regulatory climate was noticeably different than the previous 8 years. The FCC began to look into possible monopolistic behavior in the mobile telecom market and the exclusive agreements between handset manufacturers and carriers. In addition, Congress offered proposals which would set actual rules around the regulation of the Internet. Major companies like Google, Apple and AT&T were all in the mix, and should be for the foreseeable future.

Android Offers iPhone Alternative

For all of us who were searching for a smartphone with iPhone-like functionality, but with a physical keyboard, a better network and an open platform, the Droid was the answer to our prayers. Perhaps that’s why Time Magazine named the Droid the “Device of the Year”. Subsequent news of a Google branded phone only fanned the competitive flames between Google and Apple.

Mobile VoIP Makes Waves

For years, pundits have been speculating about the arrival of mobile VoIP (I am sure at least blog or article in the next 14 days will proclaim that 2010 is the year). While I wouldn’t argue that mobile VoIP is here, or that it will soon be, it was a major component of the previous 2 storylines. One of the motivating factors behind the FCC looking into mobile operator behavior is carriers’ ability to block certain types of traffic (e.g. VoIP). In addition, Google Voice, while not technically a VoIP service, drew the ire of the FCC under allegations that it was blocking calls to rural areas. Also, the recent rumors surrounding the Google Phone indicate it may be an unlocked phone that will be sold without carrier subsidy, and configured to offer free VoIP calls. While mobile VoIP may not be mainstream, it sure is having an impact on the industry.

HD Voice Goes Mainstream

GIPS has been trumpeting the cause of wideband speech since the company’s inception. While the technology saw a great deal of adoption with the launch of PC-based calling services, it wasn’t until the marketing-friendly name “HD Voice” came along that it really took off. The number of companies announcing HD voice solutions, combined with industry organizations pushing for adoption of the technology, point to a potential for mass acceptance of a new standard of voice quality.