Archive for November, 2007

Speech is the most popular interface known to man. Long before the written word, man has used talk to influence and alter the world around him. Young children rapidly learn it, entertainers do it to amuse, diplomats prefer it to war. People talk to other people, to animals, to plants, to themselves and to God. The main reason humans invented written symbols and language is to have permanent records. Fragments of ancient texts that have survived to the present day state laws and business accounts as often as not. Like the QWERTY keyboard, sometimes objects can become so familiar that we forget they were originally designed to work around technical and physical limitations. If we could talk to machines, then we would. In fact, we often do talk to machines – we just do not expect them to respond. Even the most forward-thinking can forget this; Steve Jobs announced that “voice is the killer app” before showing off his new phone with a touchscreen. He was half-right. Voice is the killer app, but not just because people want to talk to each other. Phones are designed to be talked through. It would be just as natural to design phones to be talked to.

Speech interfaces are not new. Back in 2000, UK cellco Orange acquired the Wildfire Communications, and its voice recognition service, for US$142m. That deal was small compared to Nortel’s purchase of Periphonics for US$436m the previous year. But in 2005, Orange terminated their Wildfire personal assistant service due to declining numbers of users. As a consequence, Orange had to manage the uproar from a legion of visually impaired users who relied on Wildfire to make their calls. Wildfire would have been more popular, and would still exist today, if it had worked well for the general public. Talking is great because it is a fast and effective form of communication. You would not email the fire station if your house was burning down. But talking is frustrating and time-consuming if the person you talk to has difficulty understanding what is being said. The same is true of voice recognition software. Misunderstanding only a few percent of the words said may seem like a reasonable level of performance, unless you are the person not being understood. When Orange pulled the plug on Wildfire, they had to meet their obligations to disabled users by voice recognition software on the handsets themselves. This has one obvious advantage; the quality of the line is not a factor in whether the speaker is understood. The drawback of voice recognition software on the handset is that handsets lack the processing power to match the sophistication of software run on dedicated servers. So an approach based on thin clients, where a universal voice recognition service is accessed over a network, continues to be the most popular way to deliver this functionality. It is especially popular when provided as a common front end to a service like booking tickets or directory enquiries. In the US, the 1-800-FREE411 and 1-800-GOOG411 directory services are a good example of the latter. The reason for that, though, has more to do with eliminating the cost of paying call centre staff to answer calls than it has to do with providing an enhanced service to customers.

The breakthrough for speech recognition is perhaps just around the corner. Necessity is the mother of invention. Handset manufacturers have been riding the crest of a wave over the last few years, always able to come up with new additions to their devices in order to generate replacement sales. One of the interesting things about the iPhone, though, is that it shows the limit of the new ideas. Better screens, in-built cameras, music, touchscreens… but what comes next? Speech-driven interfaces are an obvious next step. The poor history of Apple’s own speech recognition software shows that the technical challenge is enormous, but they have reason to keep on investing in research, and not just because of the social obligations to provide communications to the disabled. If they do not, they will open up an opportunity for the networks to provide a valuable feature to their customers. Why store phone numbers on your device, if you could just call your network and then tell them, through a spoken command, to put you through to the person you name? Names pose an enormous challenge because, unlike commands, cultural and language differences cause many more variations in pronunciation. But after video, speech is the last great frontier for mobile communications. Whoever can get first-mover advantage in providing an effective voice interface to the most universal of demands – making calls, programming home devices like PVRs, and internet search – will reap the rewards.

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Arun Sarin announced today that Vodafone will never lock a handset again… okay, I made that up. But Vodafone is playing a dangerous game at the moment, which may lead to unpredictable and undesirable consequences for Vodafone and others. Vodafone Germany is using the law to mess with rivals T-Mobile and prevent them from selling iPhones locked exclusively to their network. The laws on locking handsets vary from country to country. In some, it is common practice. In others, there are legal obstacles. Using German law and precedent may dent T-Mobile’s immediate attempts to steal Vodafone’s customers with the seemingly irresistible iPhone, but at what ultimate cost?

Pandora’s box held “burdensome toil and sickness that brings death to men”. The contents were scattered, spreading a myriad of pains. Vodafone Germany may benefit if iPhones are unlocked, but adopting the moral high ground in one country only begs the question of whether they want to adopt the same policy everywhere. For a start, the European Commissioner for Information Society and Media, Viviane Reding, has demonstrated she is a forceful politician with a strong populist streak. She may well be able to turn legal spats in Germany and France into a Pan-European consumer right that no handsets are sold locked, and that contracts do not tie-in customers for excessive periods or with significant penalties for early termination. There have also been moves to introduce a cellphone “bill of rights” in the USA. However, it is Europe usually takes the lead in opening up telecoms markets and protecting consumer interests. The rest of the world may not follow immediately, but it often does follow. Number portability is a good example. Indian GSM customers are set to benefit from the similar portability to that enjoyed in Europe for several years, but this has also opened up debate about unlocking of handsets. If the world does follow a European trend away from unlocking, Vodafone may regret losing the option to lock customers to their network. As Vodafone has greater influence over the handset manufacturers than its rivals, by virtue of its size and global reach, that means they are giving up a bigger advantage than most.

Perhaps I am wrong to suggest that Vodafone is thinking just in the short term. They may also be thinking in the long term too. Locking handsets may be an advantage, but not if somebody comes along with a very very desirable handset. A handset manufacturer could start using their market dominance to call the shots with operators desperate to appease them. Does that remind you of anyone? Which brings us nicely back to Apple and the iPhone. Previously I blogged that Apple may well use the iPhone and the iTunes portal as a springboard to become a virtual service provider. This would cement the power of Apple’s brand, with control over the relationship with their customers, and leaving most customers blissfully unaware of who runs the network they are using. Turning networks into a brandless commodity would further undermine their power to earn margins, and hand it over to the companies like Apple that do have brand recognition. But if there is no handset locking anywhere, then there would be little reason to buy an iPhone on the Apple Virtual Network, as opposed to any other. So legally challenging handset locking may help liberate markets just at the right time to undermine the attempts of manufacturers to enter them. We shall have to see who suffers most if Pandora’s box – or handset – is unlocked.

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Regrettably, I do not understand the Spanish language. But I have some good friends who do. The TMF has kindly translated my English article on Assuring Wholesale Services in Latin America into Spanish: Asegurando precios al por mayor e ingresos en América Latina. The title certainly sounds better in Spanish. The article I wrote was pretty good (in my own humble opinion) but maybe they managed to improve the rest of it too ;)

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Will the world eventually turn on the new age internet user-generated social networking giants that have proven to be minnows when it comes to making money? I hope so. You know the companies I mean. They all exhibit the following characteristics.

  • Their names are all created by welding two or more very common words together. This means they can trademark their name and people will find it easy to remember the URL.
  • Lots of people visit their websites when they have nothing better to do. That means they are most popular with young affluent people who are a bit lonely.
  • One aspect of the business model is to be an empty vessel, filled up by other people’s content. This works because people who create content – both good and bad – just want an opportunity to reach as big an audience as possible. Some of the content donators want to make money. Some want to be famous. Others have nothing better to do.
  • Another aspect of the business model is that the people who created the site intend to make a lot of money by selling it.
  • The final aspect of the business model is that lots of money can be made by exploiting all those young affluent lonely people that hit the site on a regular basis. The only problem with the final aspect of the business model is that nobody has worked out how to actually do that part yet.

My bet is that the only people who can expect to make money from the user-generated internet craze are the people who create the websites and then sell out when the market high. The market will not always be high, of course. At some point expect a few thousand Harvard drop-outs to run back home to their rich parents crying like babies because their internet start-ups went bust and never found a buyer.

Is sentiment already turning on the Weld-Words of the Web? Recent changes to Facebook designed to increase revenues were largely derided by both public and press, with the sole exclusion of a strange quarter of the business press that seems to think its job is to uncritically hype any business model that gets hyped plenty already. Now YouTube is getting strong criticism. Take a look at this article in the Financial Times. Here is an excerpt:


“The lack of monetisation on YouTube today is astounding,” said Dennis Miller of venture capital firm Spark Capital.

There is only one thing wrong with Mr. Miller’s comment. He should have said “The lack of monetisation on YouTube today is utterly predictable. Let us quickly go over the business model again. Content people give away for free? Check. Lots of hits from people that are just killing time for free? Check. Obvious ways to make money? erm, no, not really. Because if people have to pay for something that is essentially being given away for free, or have to suffer being directed towards making lots of payments (i.e. advertising) to get to it, then what will they do? They will stop hitting the site completely, or go to another which is free and has less intrusive advertising. The upside of WeldWordWeb companies – that they can quickly build interest at minimal financial outlay – is also their downside. Twenty-something millionaires are created by markets that lack barriers to entry. The absence of barriers to entry means anybody can set up a rival website and fragment the market. The interest of thousands of people can be switched off – or switched to an alternate site – as easily as it is switched on. Content is not a source of competitive differentiation. Because content is gifted for free, it can be just as easily gifted to rival sites too. So the only advantage of the sites with first-mover advantage is that, well, they moved first. They are hoping that users will form and keep the habit of using their site, quite like the way Google won the battle of the internet search engines. But habit is not a very strong bond between website and reader. It will not carry the extra load of taking much money from readers. The bond between website and reader is about as strong as the bond used to join two words together.

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According to my web stats, the popularity of this blog keeps growing – hoorah! But a funny thing is starting to happen. People keep talking to me about it. You know, old fashioned talk, sometimes over the phone, sometimes in person. It seems some people prefer old-fashioned talk to fancy new ways of communicating. How strange that a blog would provoke conversation. Even more strangely, it seems people talk about my blog without reading it. So I get people asking me things like “I hear you wrote something outrageous about [insert name of business here], what was it? Erm, well, if I wanted to stand on a soapbox and rant I would spend my Sundays down Speaker’s Corner in Hyde Park. I do not. That is why I write the blog instead. And if people do not want to read it, well, they are in the majority, but it is pretty irritating to have someone call you because somebody else said I had written something that might be a bit – how shall I say it? – uncompromising. So, to clarify things, here are a few principles I abide by and encourage you all to share:

  • I write what I think. If it means I make less money or upset some people, so be it.
  • If you do not like what I think and find it upsetting, feel free to stop reading, refuse to do business with me, ignore me at parties and so on.
  • I never publish information I receive privately or in confidence, so all I ever blog about is what is already in the public domain and my opinions.
  • I do not pick on anybody in particular. Everybody is fair game. Complaining about rough treatment is pointless because nobody gets treated better than anyone else.
  • I cannot abide hypocrites. A good example would be people who moan an awful lot about how much I moan. I try to be fair to everyone but if anyone is going to get a rough ride, it will be hypocrites.
  • What I write is published in public for everyone to see. If you want to know what I wrote, read it. If you want to know why I wrote it, read it. It is all very self-explanatory. There is no need for further explanation. So there is no point calling me and asking what I wrote and why I wrote it.

Now, you may have noticed that the title of this piece was “do not read on…” But you did! So you have been warned at least twice now. Most of the time I get grumpy and blog about revenue assurance and vendors and consultants and telcos in general and other stuff because they/it/we are rubbish. (I did warn you.) When I am not grumpy about things being rubbish, I get grumpy because I hear people talking about how great everything is supposed to be. Well, not everything is great. I feel pretty entitled to try to balance things by pointing that out. So this is not a “feel good” blog. But it makes me feel good to do it. It may make you feel a bit better when you read it. I suggest you come back for more if you feel the same way as I do. Otherwise, my advice is… well I think you probably get the idea by now ;)

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