Cellphones

Jake Burton

When he first started, Jake Burton figured that all he needed to do was make and sell 50 snowboards a day, reports Bruce Horovitz in USA Today (2/8/10). The problem was, he sold just 350 for the year, which was 1977. He did manage to double that the following year, and was doing fine until his bank cut off his financing in 1984 "when its executive decided snowboarding was a passing fad." So, Jake became a "one-man cheerleading squad for the sport. He visited hundreds of ski hills that had banned snowboarding," and persuaded them to allow it at their resorts.

This wasn't part of Jake's original vision. "When I started Burton Snowboards, I had no idea snowboarding was going to be done at resorts," says Jake. "I thought people would do it in their backyards. I wish I could take credit for having the vision that it would become this big." But it did, and so did his company, which today commands "40 percent of the world's snowboard market. Sales ... are believed to reach almost $700 million." The business has now diversified into surfing as well as skateboarding gear, and has also opened "several brand stores."

The reality is that Burton "now makes more money selling apparel, often to folks who have never been on a board," but it's possible that Burton could become a billion dollar company within five years. Jake says he doesn't think about that, but his success "surprises no one more" than himself. "I was a punk," says Jake. "I got kicked out of boarding school at 15." Now 55, Jake still doesn't comb his graying hair, and says his brand keeps it cool because decisions "are made by a guy and his family who snowboard 100 days a year," and not by Wall Street.

Apps Craps

There may be 140,000 or more apps, but the average person uses only five or ten, reports Katie Hafner in the New York Times (1/31/10). That stat is according to a research firm called Flurry, and applies to iPhone and iPod Touch users. But it is supported anecdotally by iPhone user Caroline Cua, 27, who says she has downloaded exactly five apps, of which she regularly uses just four. She's joined by Julie Graham, 50, who comments, "I think I'm supposed to want more of them than I have."

Even among those who do want more apps than they have, few ever actually see more than a small percentage of those offered on the iTunes store, for example, where most "people gravitate to the most popular" offerings. "The top apps featured at the store do change out," says Stewart Putney of Moblyng, an app developer. "But most users will never see more than one percent of the total offered." And, according to Pinch Media, "most people stop using their applications pretty quickly, particularly if those apps are free."

However, count Phil Minasian, 18, among the "app-happy." Phil says his iPhone is loaded with apps, most of them free games. But he does pay about $15 a month for other apps and thinks people are indeed missing out on apps "that help with everyday life." He says he uses an app to find apps, to find his apps. Simon Sinek, 36, makes his choices based on the most popular apps that are also highly rated by at least 60 percent of at least 5,000 users. In any case, analysts say that "Apple and its developers receive $1 billion a year in revenue from selling applications (Apple itself won't say).

Is Google Still Relevant?

Is the algorithm and ad model that has made Google so successful on the desktop relevant on mobile devices? (more)

Virgin Quirks

Now that its teenage customer base it getting older, Virgin Mobile is angling to disrupt the market with more sophisticated cellphone services, reports Leslie Cauley in USA Today (8/16/08). As most everybody knows, Virgin made its mark by taking the "negative" of kids with cellphones (i.e., no credit history) and turning that into a "positive" (i.e., a contract-free, pay-as-you-go plan). Granted, it's a relatively small market -- only "about 5.1 million customers -- a fraction of the 140 million-plus controlled by AT&T and Verizon."

But it has worked out for Virgin, in no small part because, unlike others who have ventured into contract-free offerings, it bothered to take ownership of operations, as opposed to simply leasing and re-branding someone else's. "If you're trying to differentiate yourself by focusing on the customer, you don't want to be beholden," says Virgin Mobile ceo Dan Schulman. While Dan won't say exactly how he intends to maintain relevance as his youthful customers age, there's a big clue in Virgin Mobile's recent $39 million acquisition of Helio, a high-end wireless carrier.

Helio only has 170,000 subscribers, but they pay a premium -- "around $80 a month, about a third more than the $55 spent by the average user." So, yes, Helio is a departure from Virgin's "contract" heritage. At a minimum it involves a service called "Ocean," which enables users to interact "easily, in real time, with social networking sites." But the most important thing, says Dan, will continue to be "good value on basic stuff," and of course a dose of "Virgin's high-style, renegade attitude and customer-centric focus." As Dan says, "Virgin classically tries to challenge industry convention." ~ Tim Manners, editor

New Tech, New Ties

new tech new ties

In "New Tech, New Ties," scholar Rich Ling explores "the social effects of the mobile telephone and ends up finding more to praise than to blame," writes Christine Rosen in a Wall Street Journal book review (4/21/08). Rich's central question about the mobile phone is this: "Does it contribute to our sense of social cohesion ... or does it detract from it?" Drawing "on the work of Emile Durkheim, Erving Goffman and other eminent sociologists," Rich says: "The balance seems to be tipping ... in the direction of mobile communication's supporting the development of cohesion in small groups."

Rich sees this balance as a 21st century manifestation of Durkheim's view "that everyday rituals help to hold society together," and Goffman's observation "that even seemingly mundane acts -- shaking hands or nodding to passersby on the street -- have social meaning, signaling membership in a group, for instance, or implying trustworthiness." In some ways Christine Rosen agrees, noting that text messaging and "I've arrived!" calls from airports and train stations "clearly bring people together, metaphorically as well as literally." But she thinks this has its limits, specifically when the ritual is carried out in public spaces, within easy earshot of others.

She also criticizes Rich for not fully addressing the "mass incivility" created by such intrusions. And she thinks Rich gets it wrong by accepting those who sometimes give priority to their mobile phone versus face to face conversations. Rich gives the example of greeting a plumber at his door who is too engrossed in his cellphone conversation to say hello to him. Rich thought it was okay because he was "just another job" and that he "was put into (his) proper place." However, Christine recalls Jane Austen's "Pride and Prejudice," where Mr. Collins "is most pleased when his patron ... reminds him of his lowly place," and concludes: "Some of us would prefer to keep our pride -- and civility too." ~ Tim Manners, editor

Nokia Remade

"We have the ability to clarify the needs of real people," says Rhys Newman, Nokia's insights chief, in a New York Times piece by Laura M. Holson (2/29/08). That ability is largely driven by the reality that Nokia's business -- cellphones -- is "in a fierce battle to please finicky consumers." And so Rhys leads a team of "14 designers and researchers" tasked with figuring out "not only what consumers will want next year, but 3 to 15 years from now." In other words, Nokia -- like its competitors -- needs to know what consumers will want before the consumers themselves know what they want.

Nokia has been at this for quite some time, for sure: "A few years ago, one of Nokia's designers visited China and noticed that people there used the light from their mobile phone screens to illuminate dark hallways." So, Nokia came out with a model with a penlight built into it. Last year, one of Nokia's designers, Andrew Gartrell, came across a Nokia phone he had helped design -- the Nokia 1100 -- crushed and "discarded in the middle of a dusty road" in Ghana. Ouch. This got Andrew, and Nokia, thinking about "how to make more environmentally sound products." The result is a phone called Nokia Remade.

It's still in prototype, but Nokia Remade "made entirely out of recycled aluminum cans, old tires and plastic soda bottles." The idea is to arrive at a keener sense of what it is consumers really want, versus what brands want them to want, and Nokia is not alone. "There is more relevance in what other consumers say than what the company is saying," says Motorola's Jeremy Dale, adding: "The strongest marketing tool is the first 20,000 people who buy the device ... If they like it, they will tell their friends." But Nokia designer Jan Chipchase says it's not just about selling more phones: "Are you innovating something gimmicky just to sell a product?," he asks rhetorically. "Or is it saving the planet you are after?" ~ Tim Manners, editor

Mobile Gold

"In five years, the wireless internet will be bigger than the desktop internet," says wireless analyst Rajeev Chand in a USA Today article by Leslie Cauley (1/10/08). This presents fresh challenges for Google, in particular, because both the algorithm and the ad model it uses may not work as well on mobile devices as it does on the desktop. Dan Olschwang, ceo of JumpTap. says Google must "seriously overhaul" its approach. Specifically, says Dan, "If somebody asks, 'Where is the closest gas station? they need that information now, and they don't need 20,000 results." In addition, mobile devices "have historically been off-limits" to the kind of banner ads that are a staple of the desktop experience.

This is a key reason why Google announced Android -- a consortium of 33 companies whose goal is "to create 'consumer choice' by making it easier for customers to use any wireless application they want." According to wireless industry analyst Jane Zweig: "This is about extending Google's presence in people's lives under the guise that the wireless industry isn't providing an open environment (for applications)." Google meanwhile enjoys a certain level of cover in this scenario, because its ads are being served to someone else's customers -- those of the wireless carriers.

Any customer complaints about ads on their mobile devices would likely be directed at the likes of T-Mobile, for example, whose Cole Brodman, is none too eager to put hard-won customer relationships at risk. But T-Mobile is playing along with Google anyway. "For us, the choice was to be part of it or watch it happen," he says. "We chose to be part of it." Small wonder: Online retail sales totalled some $116 billion in 2007, says JupiterResearch, and some 38 wireless devices are sold every second, according to International Data Base: "At that rate, within 24 months another billion devices will be added to the 2.5 billion currently in circulation." ~ Tim Manners, editor

Apple Flipped

apple

It wasn't greed, stupidity or strategy that made Apple overprice its iPhone -- it was the flipside of Moore's law, writes Rich Karlgaard in The Wall Street Journal (10/3/07). Moore's Law, as you probably already know, dates back to 1965 and originally held that "the number of transistors that could be shrunk and baked into a silicon chip of constant size was doubling every year or so." Later, "everyone agreed that 18 months was the predicted interval of doubling."

Moore's Law meant that computers would become increasingly powerful over time, and that's exactly what happened. However, the flipside of Moore's Law is that if "chips and therefore computers would get twice as fast every 18 months 'at the same price point,' then that meant "prices would drop 50 percent every 18 months 'at the same performance point.'" This drop in price (or rise in performance), says Rich, is at the center of what he calls "hyper-charged global capitalism."

The reason, he says, is that "the ticket to entry into the global economy today is not a computer costing $2,000 running on a $400 chip. Rather, it is a web-enabled phone costing $200 running on a $20 chip." As Rich sees it, Apple was "forced" to cut the iPhone's price because "cool as it is ... the price could not be sustained in the world of the cheap revolution, where Moore's Law drives the cost down and buyers in China and India will set the price." Rich says these "twin forces blowing in Apple's face" gave it no choice but "to drop the price of the iPhone and offend its geeky customer base." ~ Tim Manners, editor

Cellfire.com

cellfire

A new service that lets you sign up to receive coupons by cellphone is generating "good" results for Virgin Megastores, reports Stephanie Kang in The Wall Street Journal (9/11/07). The service, called Cellfire, is strictly opt-in. You can either go to cellfire.com or else text message Cellfire from your cellphone. You have to disclose your year of birth and home zipcode, but your phone number is not shared with any of the 200 marketers that so far have signed on to use the service to send out coupons.

You cash in simply by showing the your "cellphone screen -- where the coupons are displayed --- to a cashier at checkout" (eventually it will be possible to email the coupon from the phone to the cash register). Dee McLaughlin, vice president of marketing at Virgin Entertainment Group, "sees Cellfire's subscription-based service as a safe first step into mobile marketing." As Dee puts it: "You look at email, and everybody hates 5p4/\/\ ... You don't want to be 5p4/\/\/\/\3d on your mobile phone."

Virgin Megastores "has offered discounts on products such as DVDs," and Dee reports "redemption rates ... at seven stores in New York and California at 15 percent, far higher than the typical return for paper coupons." Virgin is also using Cellfire to promote "in-store events, such as a Halo 3 videogame competition." According to eMarketer, "mobile phones are still a nascent business, with marketers in the U.S. spending just $421 million in 2006 ... That compares with the $13.5 billion advertisers spent online" last year. Cellfire says that "about one million people have signed up" for its service to date. ~ Tim Manners, editor

Quelli dell’Intervallo

Disney has a hit in Italy with a different kind of TV show where the actors are not professionals, the action is static but the episodes are perfect for watching online or on a cellphone, report Emily Nelson and Stacy Meichtry in The Wall Street Journal (10/9/06). The show is called Quelli dell'Intervallo, (translation: Those at Recess), and it features an ensemble of middle-school kids, who talk about their lives via "rapid-fire dialogue" while hanging out in a hallway during recess. Each episode lasts just four- to six-minutes and "uses one stationary camera to film a single image." The actors were chosen in "open casting calls" and then trained in acting workshops for two months before the filming started. In other words, it is all very low budget, costing Disney "less than an animated cartoon would cost."

Says Disney's John Hardy: "I could double or triple the spend but I don't need to." That's mainly because "kids find the program's style surprising" and its scripts funny. For example: "In one episode, Valentina, the most popular girl at school, competes in a beauty pageant. The odds are not in her favor, however, because her rival has a deeper suntan, a highly prized asset in Italy. Intent on winning, Valentina sunbathes until her alabaster complexion turns red. But while she ends up losing, she does win a consolation prize: "Miss Red Shrimp." The show also scores on its authenticity, as Disney based the program on field research, having "sent a team of writers to 'spy' on middle schools in Milan and study preteen speech, mannerisms and gathering places."

Their "spying" itself became part of the concept, leading to the idea of "a voyeuristic format" with just one camera angle instead of the usual four. Perhaps most important, the show works because it originated in Italy, not America, the source of all previous programs aimed at tweens. Disney plans to carry that concept through to other countries, "working off the Italian scripts but adapting them for local audiences .... in Britain, Spain, Germany and France this fall." Disney suspects the show may be seen as "too hokey" among U.S. kids but does think it may provide a new way to develop "child talent for Disney ... last month, producers held an open casting call for a guest spot" and "received more than 13,000 applications" via its website. ~ Tim Manners, editor

Syndicate content