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« Blyk hits target 5 months early, 100,000 youth members VERY happy with mobile ads | Main | Understanding finer points of mobile phone users »

April 30, 2008


Dabe Yia

Great overview article. Almost qualifies as one of your thought papers, as it definitely has the content. Tomi, you should rant more often.

William Volk

My vote would be to hire someone from the content side of the business or an executive with proven consumer product successes.

Tomi Ahonen

Hi Dabe and William

Thanks for the comments.

Dabe - ha-ha, thanks. I like that. But seriously, obviously, just "talking to Moto" would not make a very interesting thought piece for too many in our industry (apart from Moto employees and shareholders ha-ha) but equally, the points I talk about - the 20 changes in the mobile telecoms industry that were in this rant, are all quite meaningful to all of us in this industry. I might well turn that into something. That is how all my Thought Pieces start, by the way, from an original blog - which tends to be too long - and then I perhaps return to the topic a coupla times and fine-tune it and refine it, and find the theme and topic focus and then edit it heavily down to 2 pages..

Could be, could be. Currently I'm finishing the update to 7th Mass Media thought piece, the current one is way out of date :-)

William - good point. Content side could be good knowhow and competence. But there might be the danger, that the new CEO would push mobile too hard into a media device (pocket TV, pocket radio, pocket Google?) where it really is first and foremost a communication device. SMS texting is the single biggest fault of all Motorolas, if there was one dramatic change, that is where I'd start... But yes, a content person would be far better than someone from the existing USA based telecoms players..

Thanks for writing - hey, thanks for reading that monster blog all the way to the end :-)

Tomi :-)


Excellent read, Currently living in Europe (lived in US 2004-2006) I do agree with most points you have raised, and I think thats why I switched from Motorola to Nokia a long time back.

Venu.. :-)

Giff Gfroerer, i2SMS

What also needs to be explored is the "actual" state of mind of the American consumer/mobile user. What needs to be explored is the "actual" network availability to the average American consumer/mobile user.

Moto could come out with the most fantastic, state of the art device tomorrow. However, if the general public has not been made aware, through the natural progression of technology and learning via marketing, of how to use the new features, of the need for the new features, and the savings in time of the new features, the phone becomes a N95 where we have fantastic technology/features, yet need a Ph.D. to run all of the possibilities and find them on the menu. If the network can not carry the load, what is the point? (ie. - take T-Mobile, just now rolling out 3g in the states, but then declaring it ONLY for voice and not data).

This leads us back to your point on marketing. This is where the new CEO of Moto needs to come from. America needs educational marketing to teach what is available, how to use it, and what we can do with it. America then needs affordable plans as for the most part, if we aren't using it now, why do we need it at all? Possibly just give it away as standard with any plan over a set amount like Vodaphone's 500mb of free data with every plan over 40 pounds recently announced.

What America needs is an affordable iPhone, for the masses, publicized for the masses, rich in features and not 5 year old technology as in the iPhone. Then, we need a marketing guru to teach us all why we just "can't" live without it.

Excellent Read! Thanks for the time...


Martin Geddes

I'd have said "Hire someone close to the customers" -- grab the CEO of one of the content businesses that the kids and twentysomethings are mad about. Also hire a seasoned COO to translate the vision into action. (Then again, nobody pays me for headhunting advice either, so it's worth what was paid...)

My top priority for Moto's handset group? To internalise the lesson from Nextel (a Moto child), 3UK (SkypePhone), Apple (Visual Voicemail) and Nokia (Ovi) that you need to build an end-to-end solution or platform for the core 'converse' and 'create' functions. Why can't I press the camera shutter button on one Moto phone and you can see what I see on yours? Make Moto phones work best with the services people actually use. Make it easy to integrate SMS with every other form of messaging and communication they're engaged in. (I'm less bullish about SMS as a business than Tomi, because it'll suffer a lot of margin pressure from IM, regulators and flat-rate packages.) Why doesn't my handset address book search also search all the socnets and services I'm a member of?

I suspect they don't have the skills and resources left to do this. There's no obvious buyer. Nobody in PE has the cash. Looks pretty grim. Head for lifeboats?

Tomi Ahonen

Mi Giff and Martin

Nice to see you both here at this discussoin..

Let me start by saying, that Moto cannot survive if they "pander" (Tomi's been watching too much US presidential election coverage on CNN ha-ha) to the US market. The US subscriber base is only 7% of the world. So even if they somehow stole every US customer and converted them to a superb and cheap Supa-Moto, they would still be smaller than LG in the market..

For mobile phones, far more than say the IT business or media or advertising, the North American market is nearly irrelevant, it is that small now. They have to expand abroad. Or rather, Moto has to re-capture their former market share abroad. That is why I was so dismissive of American knowhow and market maturity in mobile phones.

Giff - great point on the relative maturity (and lack of) of the American market and consumer. Moto could not release phones competing with say the Nokia N-82, N-96 and E-90 Communicator, and expect them to do well in the USA, because these hit phones in the rest of the world are not doing well in the USA (or Canada). Very good point. But also, Giff, I hear you, but observing my comment above, what Moto needs is not a CEO to succeed in the US domestic market. That could work for GM or Ford, it could work for Dell or HP or Apple, but it would not work for Moto. Their market is 93% overseas (well, counting Canada and Mexico also into the "overseas" basket, ha-ha).

Let me argue a bit with you, Giff, playing devil's advocate. Imagine SMS text messaging - still not the hit wireless service in America, but growing strong with well over half of the population already as active users. Now - if you send 20 messages per day (600 messages per month) and you pay 10 cents per message and it costs you 60 dollars per month - then you are VERY attracted to any bulk offers, 500 free messages, 1,000 free messages etc. That is the typical heavy user teenager today, any country.

But the industry does not need to teach teenagers to love SMS. Give them their low cost buckets, sell them 500 messages for 20 dollars or 15 dollars or even 10 dollars (but not for free).

BUT - teach the non-users to become users. Give THEM free intro services of 500 messages that last three months for example - but make it very clear that these are only for sign-up or to start with, as a trial offer. And after them, the normal SMS rates (10 cents per message) will apply. The average US mobile phone subscriber only sends out one message per day, so 30 SMS per month is 3 dollars. These customers will not have any kind of sticker shock, if their monthly bill is 50 dollars. They find SMS initially as a funky, quirky, but occasionally quite powerful tool. They use it more and more, and become addicted. We move them to the 1 message per day level, and then watch the usage creep up to 2 messages per day, 4 messages per day etc.

To help boost that - announce any kind of gimmick days, of totally free messages for today. Today is the eigth anniversary of our first SMS message, or today is the 1000th day since the first MMS message or whatever, gimmicky types of celebration days. TOTALLY un-announced, and then for that day, give everybody totally free SMS - including to all other networks. What this results, is after the free day, the total monthly usage level is dramatically above what it was the month before this promotion. Do this on unpredictable basis a couple of times per year (its the birthday of our new CEO, he wanted everybody to have free SMS today, etc)..

So - my point is, that if SMS is addictive, then the way to capitalize on it, is to ensure every customer pays for the service. To use free trials - just like a drug pusher - to get people hooked - but NEVER give the total service for free, to anyone. If they want to buy SMS in bulk, that is fine, but always charge. The heavy users (above 20 SMS per day) will of course seek best offers. But most habitual users - 1-2 SMS per day - will not bother to try to find big SMS bundles, and are quite happy to pay 10 cents per message. The price point is below their pain threshold.

So, I hear you that Americans could use very good access to the internet and free packages etc. But I really do love this part of mobile telecoms - we are ABLE to charge for our service. Lets not kill the cow that lays the golden eggs (or however that metaphor went, ha-ha, its late here in Hong Kong).

Martin - very good point. Close to the customer yes. But then - is the relevant customer that of the US customer, absolutely not. The relevant (end-user) customer is young, employed, living in Singapore, UK, Scandinavia, Italy, Israel, Ireland, Portugal, Austria. (Not South Korea or Japan, they are perhaps too advanced).

Who serves that customer base? A youth-oriented mobile operator brand like perhaps Orange or Virgin in the UK (or Blyk)? As opposed to the O2 as the family brand or Vodafone the business/enterprise brand? Or perhaps a youth mobile oriented mobile service like Flirtomatic or Itsmy or the mobile arm of MTV (Europe)? Or perhaps the youth brand by one of the major players, like Telenor's D-Juice? The problem is that these tend to be "relatively small" compared to the Global 500 sized Motorola.. So the CEO of a company with a couple of dozen employees or even some hundreds of employees, is not really the right size for this jump in executive responsibility. But I agree, the right CEO from this kind of space would potentially be the best.

Of the "actual customers fo Moto" ie the mobile operators in these markets - then it gets difficult. There are some good CEO's out there in the mobile operator space but also many who are struggling just to get to terms with their own home market, and would honestly be quite lost trying to adjust that competence to a global handset maker (including their long 18 month development cycles etc) which has been drastically losing market share.

But at least, if they did go for a CEO from the mobile operator/carrier community, then yes, a CEO from these advanced mobile markets, Italy, Israel, Ireland, Singapore, UK, Sweden, Norway, Finland, Denmark, Austria, Portugal - would be far better than one from the US based carriers/operators.

Then on the ideas you give, brilliant. This is exactly the kind of thinking that is needed. But even there - you don't need 12 new ideas (a couple hot ones will help) but more importantly, the Moto would need to become far better at doing its main work today, text messages, voice, camera, mobile data services, etc.

Certainly the top management of the new Moto (and indeed any major American telecoms player) needs to visit Tokyo and Seoul and see that future. What it is like visiting the KDDI experience store - where you cannot even sign up for a contract on KDDI, it is only to play with the upcoming phones for the next few months, to see them in advance, to build up that demand (and to help estimate the sales volumes of mass niche audiences for a fashion good on very short production runs..).

We have friends here at the Communities Dominate blog, like Lars Cosh-Ishii of Mobikyo and Wireless Watch Japan, who does just that kind of exec tours for Westerners to visit Tokyo and visit with the execs of the telecoms/IT/media industries. I've joined him on that kind of excursions and they are truly eye-opening for Westerners. Before that it seems like science fiction and someone else's story and someone else's market. After you see it in person, you know this is the future, and either you get with it, or you are a dinosaur. Even for me constantly peddling South Korean and Japanese stories about mobile, whenever I visit those countries (several times per year) I am still always amazed..

Anwyay, your final point Martin - ha-ha, that the money is tight, who would want to buy this relic of the past, is a pertinent one as well. It may well be a good time for the rats to head for the lifeboats, brush up those CV's..

Thanks both for writing

Tomi :-)

Giff Gfroerer, i2SMS

Excellent points, Tomi. I see your light. Moto does not need to capture the US market, but the foreign market. This is where a leader from outside the US could really innovate Moto...

And preaching to the choir about SMS costs. Love your ideas about promoting it. As you know from my previous posts, the US has been doing the exact opposite on SMS charges. They keep raising the rates from 10 cents to 15 cents to 20 cents per message sent. This does not nudge people into "trying" the service, but instead inhibits them from wanting to try the service.

If the American carriers lowered their SMS rates, gave it free for 3 months on any plan, gave free days, all of your suggestions, then yes, people would be introduced to this highly addictive service that is a cash cow. Get people using the service, then show them the bundled packages. That will work. 100% in agreement with you on this one. But by making it cost prohibitive, I simply do not understand this.

Tomi Ahonen

Hi Giff

Thanks for coming back. Yeah, we agree :-)

There is actually even a worse effect to the prices at so high level. They are now strongly promoting the spread of mobile IM (Instant Messaging) solutions. That is bad, very bad. Rather than first teaching their youth customers to become addicted to SMS, they bypass that stage, and jump directly to mobile IM. Then it means that rather than using SMS as the default learned behavior and having to change for IM, now the IM form becomes the learned behavior and SMS only the messaging option of last resort.

And even worse, any IM environment is subject to the laws of the sizes of communities, the utility increases with larger communities. If a struggling IM provider for mobile in America can't make moeny, they might go away or struggle in their pursuit of growth and profits. But if customers "flock" to IM, it makes it that much easier for the IM providers.

Yes, this overpricing of SMS is terribly shortsighted by the American carriers. I am so often so saddened when I think of the American side of our industry. There is so much potential, and it is wasted at such gargatuan scale.

Well, thanks for listening to my rant ha-ha..

Tomi :-)


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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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