As I indicated in my first post, one of the key drivers of change has been smartphone adoption. Obviously, smartphones have been around for a long time. The Handspring and then Palm Treo’s were great early smartphone products for Sprint starting almost a decade ago. Nokia, Microsoft, and RIM also have had smartphone platforms for many years.

But, it wasn’t until Apple introduced the iPhone in 2007 that the smartphone became a mass market phenomenon.

I believe the iPhone also introduced a fundamental shift in approach to the smartphone. I’m most familiar with Palm, Microsoft, and RIM, so my apologies for not representing Nokia well. Both Palm and Microsoft focused on creating miniature computer environments. The experience had much more to do with running applications on the computer and also using the computer to make phone calls. Yes, there was an e-mail client and a browser, but these were application-centric models in the traditional PC mold. RIM always has been very messaging centric. Yes, there was a browser and yes you could run applications, but the model was very much about messaging.

The iPhone was the first smartphone that truly was Internet-centric. You may recall that for the first year, Apple didn’t even support native apps on the iPhone - they expected developers to create services/apps that were browser based. Of course, the iPhone had the first beautiful browser that ignored any concept of carrier walled gardens and gave users access to the full Internet. A year in, the App Store similarly ignored the concept of a carrier deck and created a win-win-win opportunity for developers to develop/market/sell/deliver applications and for customers to enjoy a rapidly growing array of available apps.

Of course, this invited competition and Google introduced Android at the end of 2007, with the first handset available late in 2008. And today, patents and intellectual property are the weapons of choice in this competitive battleground.

IDC estimates that US smartphone sales have increased from about 5 million in 2005 to over 100 million in 2011. Not bad growth…

Stay tuned…

The basic premise of the session was that there are four key drivers of change that have resulted in ten seismic shifts in the mobile ecosystem. These changes reflect the Mobility Revolution and create opportunity for businesses that can understand and capitalize on these shifts.

So, what are the four drivers?

The first one is mass market adoption of smartphones.

The second is mobile bandwidth being built into all kinds of products.

The third is ubiquitous broadband (wired and wireless).

The final driver is the emergence of real world interfaces between mobile devices and the real world, including NFC, compass, gyroscope, cameras, and other sensors.

Steve Jobs may represent the most successful example of a man and his company being able to maximize the profit from innovation. He and Apple have done this by taking an approach to innovation that appears to be a paradox: Steve Jobs was extremely innovative and extremely anti-innovation.

That Jobs was innovative hardly needs to be explained. He truly invented and reinvented industries over and over again. Years ago, I observed that Apple was great at introducing products that had great design, were first of their kind to truly appeal to the mass market, and that broke down traditional barriers. Over the years, I think the company has proven those points time and again. However, what I missed then was the nature of the boundary breaking… Jobs created and reinvented industries by breaking down the barriers between the digital and analog worlds.

Look at the industries that have been completely redefined by Jobs and his companies: personal computers (Apple II, the first mass market personal computer and the foundation of everything that followed), publishing (the shift to desktop publishing ushered in by the Mac), music (mass market adoption of digital music thanks to iPod/iTunes), movies (broad adoption of CGI-animation, led by Pixar), photography (Apple was a bit later to the party on this one, but the iPhone helped cement the role of the cameraphone), and telephony (or whatever you want to call this industry that connects the devices that are now central to our lives).

Bottom line, Jobs was a master at leveraging incredible design instincts to turn nascent ideas into mass market hits, and in the process completely redefining industries. That’s why I believe he was extremely innovative.

However, Steve and Apple have also been extremely anti-innovation. Not long ago I observed that Apple suffers from Big Bell Dogma. I summarized it this way: “They want to put constraints on how innovation can happen so that they dominate the ecosystem and extract the most value.”

We have seen it time and again. They limit how their innovation can be leveraged. No one but Apple can make a device running iOS. Only a select few carriers can sell it, and then under far more stringent parameters than any other phone OEM imposes. Apple regularly tweaks the rules under which developers can operate - each time shutting down one or more areas of innovation that are threatening to the company. Apple sues competitors seemingly to keep their products out of the market. All of these actions put constraints on innovation. Without these constraints, there would be much more innovation in the ecosystem, but not necessarily to Apple’s benefit.

Which brings me back to my original point. Apple, perhaps uniquely, does an excellent job of monetizing innovation precisely because of this innovation paradox. The company focuses (i.e. actually deselects distractions) on innovating to create insanely great products (usually building on the innovations of those that went before them), and then protects their financial benefit from that innovation using every possible means (great marketing, carefully constructed legal agreements with complimentary partners, full legal enforcement of intellectual property, etc.).

Who knows if Apple, the company, has so fully integrated the nuances of this model to continue to enjoy its fruits for years to come, and who knows if the strategy will actually pay off with the current spate of patent disputes and developer decisions, but part of Steve Job’s legacy will undoubtedly be his mastery of this innovation paradox.

But, there are a few news items that are worth commenting on.

The first few items point to Sprint’s commitment to continuing to accelerate the Mobility Revolution. This shows up in a number of ways - Sprint has been scoring well in RootMetric’s network comparison tests demonstrating our commitment to the network investments that are necessary to support the Mobility Revolution.

According to Chitika, we’ve also been increasing our share of the Android market (see graph below). Note that Android sales from our prepaid brands (Virgin and Boost both have Android handsets that are selling well) are not included in Sprint’s numbers and probably are a meaningful part of the growth in “other”. This demonstrates our commitment to the open development environment which is key to customers integrating mobility into all aspects of their lives.

This commitment to the network and platforms necessary for the Mobility Revolution is reflected in how our customers use their devices. According to a Consumer Reports study, Sprint’s smartphone customers use about twice as much data as our competitors’ customers - proving the point that Sprint’s customers are way out ahead in the Mobility Revolution - making mobility integral to everything they do.

The final news item I can’t pass without commenting on is Google’s proposed acquisition of Motorola. This deal is a clear demonstration of the Mobility Revolution in action. Google, perhaps the most powerful company on the planet, has put their money where their mouth is. For a couple of years Google has been saying that mobility is their top priority and now they are proving it. As with any big deal, this one’s not a simple black and white, good or bad news story. I think I can best address it in terms of what’s good, what’s bad, and what’s ugly about the potential tie up.

The Good:

• Google gains Motorola’s patents, which help in the patent wars in which Big Bell Dogmatists have been trying to slow down the Mobility Revolution by impeding Android-based innovation.
• Google gains a better appreciation of the complexities OEMs face in building Android handsets, likely leading to improvements in the operating system.
• Google likely gains traction with Google TV through Motorola’s Set Top Box business, potentially bringing additional value to the Android ecosystem and encouraging some pretty interesting cross-platform innovation (imagine a Netflix or Hulu app with your smartphone as remote control and the STB as video player).
• Motorola’s strength in low-cost feature phones may provide Google with insights into how to expand the Android ecosystem into emerging markets.

The Bad:

• Motorola is obviously a strong competitor to Google’s other Android OEM partners. Samsung, LG, HTC, and others are likely to pause and consider their level of commitment to Android going forward.
• Google gains leverage in the Android and overall mobile ecosystem, making all other players work harder to earn their fair share of industry profits.
• The deal will require regulatory approval, which will take months, potentially slowing down innovation at Motorola, Google, and other ecosystem players.

The Ugly:

• Google has to convince everyone that they won’t unfairly favor Motorola over other handset OEMs.
• RIM, Microsoft, and Nokia are all in unstable positions in the mobile industry. Microsoft potentially has the opportunity to win the hearts of Motorola’s competitors, but if they fail to do so, they may find themselves with an unsustainable market position. Microsoft may also succumb to the urge to keep pace with Google by acquiring Nokia or RIM. And RIM’s only hope (other than being bought) is if enough of the ecosystem shifts from Android to Windows to keep RIM within sight of the pack.

What do you think - did I miss anything?

Less than six months after AT&T Mobility, Verizon Wireless and T-Mobile USA announced their mobile commerce initiative, called Isis, it appears that these major players are already starting to rethink their ambitious plans.

Today the Wall Street Journal is reporting that the operators are scaling back Isis, which they had originally hoped would compete with Visa and MasterCard and instead have decided to set up a mobile wallet.

Interestingly, this new mobile wallet plan sounds very similar to what Sprint Nextel has been doing. If you recall, Sprint was noticeably absent from the Isis joint venture. The operator said at the time that it was not interested in competing with the credit card companies and didn’t want to be part of a proprietary system. Instead, the company unveiled a mobile wallet solution in November that enables customers to use buy physical and digital products directly from their phones, entering a universal PIN code and billing purchases to their existing Visa, MasterCard and Amazon Payments accounts. Sprint’s Mobile Wallet is not a carrier billing mechanism, instead the company calls it a “container” for on-the-go customers to leverage traditional payment methods.

It appears that AT&T, T-Mobile and Verizon Wireless are taking a cue from Sprint. The WSJ article says that Isis is in talks with Visa and MasterCard and others to see if they will participate in this mobile wallet initiative.

Here’s what I had to say about Isis back in December:

Isis is a perfect example of Big Bell Dogma. Carriers think they can do a better job than Visa, Mastercard, American Express, and others in the payments ecosystem, so they invest billions to try to replicate capabilities and compete with existing players rather than focusing on what carriers actually do well and enabling the existing players and nimble startups to leverage the carrier’s infrastructure to bring real value to consumers. Carriers have been trying to do that for over a hundred years in different industries. Sometimes they get lucky and succeed, but most of the time it’s a miserable failure.

Does this Isis abandonment point to the death of the Bell’s “Big Bell Dogma” strategies?

I hope not. As I concluded in that December post:

Maybe I shouldn’t be trying so hard to put an end to Big Bell Dogma. Instead, in the short term, Sprint can enjoy the benefits of being the best partner for everyone else in the ecosystem, and in the long term, we all can enjoy the fruits of Big Bell Dogma’s glorious failures.

So, as the Big Bells continue to compete with their customers/partners in home security and social coupons, all I have to say to everyone in the ecosystem is: if you want to move at carrier speed, go talk to the big bells and wait for them to enter your market and compete with you. If you want to move at silicon valley speed with a true partner focused on mutual success, come talk to Sprint.

In 2010, Sprint was awarded 357 patents. At this luncheon, all the individuals across the company who either received a patent in 2010 or submitted an application for one during the year, are recognized and honored.

What I love about this event isn’t the food (although it’s always good). What I love is that it’s a rare opportunity in the spotlight for the folks behind the Sprint innovation that has made this company great for more than 100 years. The folks walking up on stage and getting their photo taken with the company’s top executives (4 members of Dan Hesse’s senior team were at the event) spend most of their days being brilliant in hidden labs and obscure cubicles across the Sprint campus.

Throughout the year, as I have meeting after meeting in Sprint’s boardrooms, or in high level partnership meetings, these aren’t the folks I see. But when Sprint wins awards for innovation in systems, devices (and here), networks, or even customer service, it’s often the innovation coming from this group of folks that’s behind it.

Go Sprint! Power up!

Sprint’s official position is clear:

The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry.

AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80 percent of the U.S. wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete.

The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the U.S. economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.

I won’t comment further, but I’m curious what others think. Feel free to leave your comments.

It looks like a sweet deal. (Especially combined with Everything Plus.)

If you’ve been thinking about giving Sprint a try, now might be the perfect time! If you’ve had a bad experience with us in the past, we are a changed company, as Vocalabs and J.D. Power can attest.

Welcome to Sprint!

I’ve just started a new series called “Tablet Time” and the first column in the series is about the iPad. Future columns will talk about how I use the Hotspot feature of my Samsung Epic 4G phone to keep my iPad connected and about Android tablets, specifically the Samsung Galaxy S Tab.

I recommend you read the entire article at the Christian Computing website, but here are highlights from the article:

The iPad is one of the most disruptive product launches in the history of computing. Analysts believe that the success of the iPad is impacting the entire industry.

The first victim was Netbooks. Netbooks were the hot new category in 2008 and 2009, with monthly year over year growth figures ranging from 179% to 641% throughout the second half of 2009. The iPad was announced in January and launched in April of 2010. By April, Netbook growth had fallen to 5% and has since gone negative. Given Netbook limitations, many people considering buying a Netbook realized that the iPad could do everything they wanted from a Netbook, in a more convenient package, with a simpler user interface, and, to be honest, a “cooler” image.

The next victim was Notebooks. Many people who were considering buying a Notebook were less convinced that the iPad could be a credible replacement. But, as iPads reached the market and users gained experience (”technology lust” took hold), many of those Notebook customers decided that the iPad was the choice for them. For the second half of 2009, Notebook growth had mostly hovered in the 30% range. Between the iPad announcement and its launch, Notebook growth stayed in the 20-35% range, but in April, Notebook growth was cut almost in half, and by August it had gone negative.

Interestingly, unlike the iPhone, competitors have been quick to launch very credible alternatives to the iPad. Apple sold a million iPads in the first month of availability. Samsung announced and launched the Android-based Galaxy S Tab in September. It took Samsung about two months to reach the 1 million sales mark. RIM, the maker of the popular Blackberry smartphone line announced their PlayBook tablet in September, but the product has not yet launched to market. Early reviewers, however, are comparing it very favorably to the iPad, and given the loyalty of Blackberry users, I would expect sales to be brisk following launch.

Despite the sudden success of tablet computers, this is not a new concept.

I bought my first Tablet computer early in 2006. Since I wasn’t convinced that a pen-based interface (state of the art for tablet computers at the time) was going to meet my needs, I went with a convertible model - the Toshiba Portege M405. By flipping the screen around, it could either be used as a tablet or a fairly standard notebook computer. This compromise made it pretty big, bulky, and heavy to use as an actual tablet, and the Windows XP Tablet edition operating system wasn’t overly effective either. I used it almost exclusively in Laptop mode.

Microsoft took another shot at a more effective tablet form factor and operating system with the “Origami” concept, which became the UMPC (Ultra Mobile Personal Computer) upon official launch (also in 2006). Unfortunately, the concept never really translated into meaningful sales. I summarized the challenges in a blog post at the end of 2006, which I summarized with this plea: “Will anyone be able to bring a UMPC product to market in the $500 range, with long battery life, the power of ‘real’ Windows (XP or Vista), usability, portability, ubiquitous network connectivity, and contextual relevance? I sure hope so!”

Well, it may have taken Apple 4 years, and of course they didn’t deliver a Windows-based system, but I think the iPad delivered on these criteria - finally resulting in market success for tablet computers.

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I’m often asked what devices I’ve been able to replace with my iPad.

For starters, I’ve replaced my iPod with the iPad. You can’t stick the iPad in your pocket, but I’m not the type to go running with an iPod anyway. I mostly used my iPod in my office at work and when traveling (on the plane and in the hotel room). The iPad works perfectly well for those locations. The iPad has all the capability of the iPod interface, but with the feature richness of desktop iTunes.

I’ve also replaced the Kindle with the iPad. The Kindle App for the iPad makes all of my Kindle books available and even synchronizes where I am in each book between my Kindle and my iPad. Since I’m already taking my iPad with me, there’s no longer a need to take the Kindle as well.

For e-mail connectivity when traveling, the iPad has replaced my laptop. While I often would travel with just my smartphone, the e-mail experience on a phone is still a bit limited compared to the laptop. The iPad mail application is a beautiful thing, making it easy to connect to all of my e-mail accounts and to have confidence I’m seeing all of my messages in all their formatted glory. Composing and replying to messages is a step up from most smartphones, but I’m still not a total fan of on-screen virtual keyboards. I’ve had my eye on the iPad cases that have a built in Bluetooth keyboard to overcome this limitation, but I’m not sure yet whether that’s going to make the combination bulky enough to be a problem.

The calendar on the iPad is also a beautiful thing, with reliable connectivity to my Exchange calendar for work and Google calendar for personal use.

The iPad has also replaced my notebook - the paper kind. I now take the iPad into meetings where I previously would always take an ink and paper notebook. I use the Notes application and thumb type notes from the meeting. I then can e-mail the notes to myself and others on my team, as appropriate.
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So, is the iPad a perfect replacement for notebook computers?

No, it’s not. I’ve already mentioned the lack of a physical keyboard, but probably the biggest challenge for me is the kludginess of doing simple cut-and-paste on the iPad. Yes, you can do it, but the process is much more difficult than it is using the trusty mouse and keyboard shortcuts. This one limitation keeps me from using the iPad for many of my everyday tasks, including serious writing (like this article - written on my laptop), keeping up to date on blogs I read, and updating my own blog (which relies heavily on cutting and pasting headlines and links from other blogs).

The tablet is clearly changing the face of computing, but it’s not yet a perfect replacement.