Devices, Media, And The Future Of Everything

T-Mobile's Fortuitous Timing

[Charlie] Following up on their spending spree in Auction 66, T-Mobile recently disclosed their  deployment plans for this new spectrum. As expected, they've chosen UMTS/HSDPA -- the same technology used in T-Mobile's 3G networks throughout Europe -- since it gives them considerable leverage in their equipment purchasing, both for network gear and handsets (as T-Mobile pointed out, their global subscriber base is 76% larger than Cingular's). What caught me off guard is that T-Mobile's timing looks to be nearly optimal although I doubt perfectly intentional. Why?

• Others have worked out the hardware kinks. T-Mobile will deploy second generation network gear, much smaller and less costly than the initial 3G networks in Europe, reducing their lease costs at each tower. Unlike the initial limited choice of bulky 3G handsets, they will have a wide selection of appealing phones to choose from -- today 3 in the UK offers at least 18 different models in compelling form factors like the Motorola RAZR V3x (in pumpkin, no less).
• Their competitors are building awareness . . . Verizon and Sprint are pumping marketing dollars into their VCAST and PowerVision services, educating consumers about why they want broadband speeds and applications like music downloading and video. But today uptake is limited to younger experimenters -- in our Q4 2005 survey barely 2% of adults say they had ever listened to streaming audio or watched streaming video on their phone.
• . . . Which should translate into demand by 2008. By the time T-Mobile launches nationally in 2008, data use will have moved into the mainstream of mobile phone users. They will come to market with competitive services that benefit from the lessons their competitors (and their European colleagues) will have learned the hard way. They should be able to both win customers from their competitors and entice their current customers -- who already are among the heaviest data users -- to upgrade their service and pay accordingly.

Now I admit this assumes that they deliver on their plan, and as evinced by both Verizon's stellar performance and Sprint's recent travails, execution is critical. But wouldn't it be ironic should it turn out that T-Mobile's spectrum shortage over the past several years was a blessing in disguise, since it forced them to sit on the sidelines until the time was just right to capitalize on consumers' shifting behavior?

What do you think?

Note to ESPN: It's a phone

[Charlie] Yesterday Disney called it quits for Mobile ESPN, the Mobile Virtual Network Operator (MVNO) launched barely eight months ago but fell at least one order of magnitude short of their subscriber targets. Certainly Mobile ESPN made many missteps, from their unsubsidized $499 price for their first (and only, at the time) phone to their marketing that failed to clearly establish the offering as a service and not just a phone. I draw two key lessons from their demise:

• MVNOs require a well-defined and targetable audience. ESPN has a powerful brand but it is extremely broad and appeals to everyone from casual fans who just enjoy the entertainment of Sportscenter to the maniacs at whom they were aiming, who devour heapin' helpings of minutiae. The questions that MVNOs like Helio and AMP'd have to answer are whether they have a unique appeal to a specific audience, whether that audience is willing to spend what they are charging, and whether they are able to successfully reach that audience.

• A phone's primary purpose is communication. This was the greater failing -- ESPN crafted a mobile service offering based on the assumption that their content was the primary experience. But even the most devout sports nut (ok, except for a couple of tens of thousands) still cares more about using their phone for voice and messaging than for ESPN's content. This is the same lesson Apple learned with their iPod Photo misstep -- devices have to be targeted at their primary function and do it well; other features are all secondary.

Disney has got it right on the second point in their other MVNO (Disney Mobile) -- they're offering families better control over their communications and tools for parents to feel comfortable with giving their kids a mobile phone at a young age. I'm not sure about the first point, though -- especially as kids grow to an age where the last brand they want to show their friends is Disney. But then again, Virgin and Boost have the same problem.

Think differently? Let me know.