It was a long time ago, but I still remember it. We were in Melbourne, Australia, in the 80ies, and on a beach we were discussing how to decouple in an effective way the physical resources in a network from the “performances” needed by an application and we used a stick to sketch diagrams on the sand. It was a week-end during an ISO meeting that eventually resulted in the publication of the now “taken for granted” ISO stack.

But now we are “stuck” with it!

The decision taken at that time were based on the fact that an application in general would need many more resources than the ones a generic network could provide. And it would have been too costly to develop specific applications to fit specific network performances. Hence, the idea of decoupling one from the other. A set of layers would provide each a set of performances to the above layer, up to the application, making use of what the lower layer could provide and virtualising resources to provide more features to the layer above. So, as an example, you might have an application in Turin that needed to talk to another one that was located in New York and the physical network could not provide a direct link between the two. Well, an intermediate layer (transport) would provide a virtual link between Turin and New York by using the lower layer (network) to create a sequence of links from Turin to New York.

The system worked well, so well indeed that we are still using it, although today the TCP/IP has made some of these layers to collapse on one another.

The crucial implication, though, was, and still is, that an infrastructure Operator (a Telecom Operator) need only to be concerned with its own physical infrastructure and through inter-Operator agreement provide a trans-infrastructure path that could sustain end to end communications.  But this end to end path was, and is, about physical links and transport. Whatever you are carrying on the pipes is not an Operator biz, it is an application biz.

As long as what the pipes were carrying was voice, and voice only, there was really no issue in terms of “transported value”. You could charge by the pipe: the longer the pipe, the longer time you were using them the more the price charged. But then the digitalisation of any media into bits has created a variety of different values at the application level that do not correspond to different values at the insfrastructure layer.

For a certain time this was not a big issue since resources at the infrastructure level remained relatively scarce and if an application needed more resources (e.g. to carry bit intensive information) it would have to request “more infrastructure” and hence to pay more. Than, almost all of a sudden, the infrastructure capacity multiplied by orders of magnitude (thanks to massive fibre deployment) and there were plenty of capacity for any kind of transport. This created a gap between the value perceived at the application layer and the value/cost of the bit transport that according to the ISO stack is independent of what is being transported. Almost at the same time, the digitalisation of “anything” made possible to transport voice and images, and video, and music and… you name it.
At the infrastructure level (layers) given the huge capacity all bits are grey. At the application layer bits have different colour, they generate different perception of value and therefore can be charged differently. This situation has opened up a Pandora vase of opportunities to enterprises that can exploit the cost/value differential existing between the infrastructure and the  application layers.

Basically, you can get a 10 Mbps transport capacity from the network and use it to offer short message service. Charging by message, as Operator do (SMS) would charge 1,000 euros per MB. An application provider can squeeze into a 10Mbps stream 10,000 messages at a cost per message that is basically zero and a cost per MB of just, well almost zero too (if you like figures, an ADSL line with a 1 Mbps upstream capacity can carry 1.851 billion SMS per month, and an ADSL line with that upstream capacity is priced at about 50$ – hence the cost per SMS equivalent package is 2,7 millionth of a Eurocent! Clearly the real cost should take into account not just the transport but you get the gist!). This gap is therefore exploited by the Over The Top, OTT, with the result that the Operators see their revenue shrunk.
The customer benefits from this, clearly, the Operators lose revenues but this loss does not translate to significant revenues for the OTT since their cost is so low that they can afford it and get revenues from other sides, like ads. Hence the customer gains are not the result of a revenue shift but of a market depreciation!

This is why there is no point for an Operator to play the OTT game. They would not recoup the money!

Wrappin’ up: the ISO stack made sense at a time were resources were scarce, computation cost was high and could only be faced by centralising it, and all services were basically the same, voice, (more transport capacity required more resources and more could be charged).
Now, transport capacity is huge, and in most cases it exceeds demand, intelligence at the edges in the devices is more than enough to manage the infrastructure transport directly (layers from 4 to 7 are collapsed in the device/application) and we are rapidly moving towards the direct control of the physical layer (collapse of all the stack from layer 2 to layer 7 in the device/application), as an example a smartphone manages all the protocols and decides when to use a WiFi link and when to use a cellular radio link.

It is time for the Operators to change their approach to transport, acknowledging the flattening of the ISO stack and providing service directly to the application, end to end, even if this means leaving behind the concept of focussing on their own physical assets. They remain important but so are the immaterial assets of managing authentication, ownership, metadata and dynamically serving users needs based on her context and her specific needs. The times for one size fits all are over, if you want to make money!

It’s like the most persistent sales clerk you’ve ever encountered.

Major retailers are working with a new smartphone application that tracks and offers promotions to shoppers as they move from outside the store, to counters, to cash registers — even inside the dressing room (now that’s persistence).

The app, called Shopkick, is now available on iPhone and will be available by fall for Android phones. And with five major companies supporting it — Macy’s, Best Buy, Sports Authority and American Eagle Outfitters, along with the Simon Property Group, the prominent mall operator — it is getting a big introduction.

Customers with the Shopkick app will get points (called kickbucks) for entering a store. Pick up a putter at Sports Authority, and points drop into the app. Stop in the dressing room at American Eagle, and more points arrive.

The points are redeemable for gift cards at the retailers, along with music downloads or credits toward Facebook games. It takes a lot of points, however, to earn even a $5 gift card, although the stores say they may adjust the point system to make points more valuable.

Whether shoppers will get a kick, so to speak, out of being followed — and pinged from one floor of a store to the next — remains debatable. What retailers see as sophisticated marketing, privacy advocates see as intrusive. Shopkick knows “where you are, what you buy, your spending habits, passions, excesses,” Jeffrey Chester, the executive director of the Center for Digital Democracy, said via e-mail.

Unlike apps like Foursquare, Shopkick tells retailers when users are inside, not just near, a store.

Shopkick goes further.

On Monday before the launch of application, Mr. Roeding stood on a slim strip of sidewalk on 46th Street in Manhattan, trying to avoid Times Square tourists as he demonstrated the app. As he stood a few yards from the entrance to an American Eagle Outfitters store, the app showed him all the nearby stores where he could check in — including American Eagle or the tiny candy store nearby. For each check-in — which did not require him to actually go inside — he could receive 0 to 2 points.

As per Mr. Roeding “Foot traffic is so important, Why does no one ever reward anyone for visiting a store?” By actually going inside the American Eagle store, the app told him, he could earn 35 kickbucks. The app knows someone is in a store by listening for an audio transmitter placed in each participating store; the phone’s microphone picks up the signal, which people cannot hear.

Once inside, Mr. Roeding swiped through offers: a 15 percent discount, a sale on jeans. Enter a dressing room, once a shopper tries on clothes, sales rise, retailers know and posters on the walls offer points for scanning the bar code.

“It’s the first reward programs for desired behaviors,” Mr. Roeding said.

Shopkick earns a small fee for each kickbuck a customer earns. If a customer buys something after using the app, Shopkick gets a percentage of the price.

Right now, it takes a lot of kickbucks to earn anything — a $5 gift card at American Eagle requires 1,250 kickbucks. And retailers limit the number of eligible visits each day, so someone cannot sprint in and out of Best Buy all afternoon.

Soon, the retailers would become more sophisticated, giving points or promoting items based on sex or age, where people live, how frequently they shop or their buying history.

The companies can even weave in rewards-card numbers, as Best Buy is already doing. With that, “we have the ability to target down to even an individual level,” said Mike Dupuis, the vice president for marketing and operations at American Eagle Outfitters Direct, the Web and mobile division of American Eagle.

With advent of applications like Shopkick, its only a matter of time before many such applications shall hit the market and further fine tune their settings to meet customer requirements, based on the valuable learnings from this particular experiment.

For more info. visit http://www.shopkick.com/

Here at Future Centre it’s time that we observe how innovation 2.0, the applications to be clear, is revolutionizing the tourism sector. Days ago I was reading an article about an interesting application dedicated to in-flight mobile usage, developed by SITA Lab and recently showed at the SITA Air Transport IT Summit in Brussels. The app enables passengers on special all-business class flights from London City Airport to New York JFK to access local information on events, check their destination weather and traffic, track their flight progress while reading live sports news, book chauffeur services (provided by Quintessentially) and receive one-on-one response from a concierge based in either London or New York. The in-flight connectivity service is provided by OnAir, a leading provider of in-flight communications solutions, that has chosen British Airlines as the launch customer for its wireless Internet portal “Club Mobile”. The service is available once the airplane has reached ten thousand feet. As soon as passengers are connected they receive a welcome SMS with a link to the portal. Users need a mobile internet account and are billed through their network provider. The airline does not allow voice-calls, not only in respect of other passengers, but also to maximise the bandwidth for all users.

Below the demo of the Club Mobile service.

Similarly, Cathay Pacific has launched its CX Mobile application for the iPad. In addition, the Hong Kong’s home airline has announced its plan to develop an in-flight entertainment portal which passengers can access via their mobile devices or via the seatback screen. As reported in the Media Centre Section of the company’s website, the portal “will include a range of content updated during the flight, access to airline and partner sites, e-commerce, airline-specific advertising, and live television with a unique pay-per-view capability for special events”.

Three years ago Global Motion Media released EveryTrail, www.everytrail.com, an application running on cell phones (first was on iPhone, now you can use it on RIM and Android as well), letting people track their whereabouts as simply as pushing a button. They could record where they went, how long time it took, where they stopped and so on. In a short time hundreds of thousands of trails were created and more are being created every day.

The recording of your whereabouts obtained by the GPS could be extended by including photos you took on the way and comments. In addition Google maps is glued under the path to show exactly where you went and addditional information on sights and commercial enterprises could be added.

All this information could be used as personal diary or iit could be shared freely letting other people browse you trail and make use of your experiences. Most people choose to shase. All together they created, and are creating, a wealth of information. It is crowdsourcing at its best.

Now Everytrail has announced the availability of guides you can buy. They are a collection of information and trails provided by users and each one has been revised and ranked. There are guides for every parts of the world, a mapping much more detailed than the one you can find on Lonely Planet and much more accurate since it is likely to find something that has been created in the last month and possibly just few days before. The nice thing is that you can look for and download trails where you are, on the spot, asking for trails in that area. It is instant gratification and I am sure there will be enhancement letting people to filter trails based o their profile.

Now Every trail is really on business and by making money it is providing a service to all of its users, starting with the ones that contribute informaiton. In fact, every time you contribute information you get points that can be redeemed to download maps on your phone.

When Wolfram announced Alpha, its marvel search engine able to calculate results based on the information sought (you type Moon Earth and it gives you the average distance, the orbit parameter and calculates the actual distance at the time of the question) there was a lot of commotion by web users. They reached 2.8 million hits a day. But after a few months the hit fell to 200,000.

Now Wolfram has announced a plan to revive interest on its engine. The plan calls for releasing application programming interface to let other parties to develop applications based on the results that Alpha provides. An iPhone application has also been announced.

According to the news published by Technology Review:

It will be interesting to see how third-parties leverage the depth of Wolfram Alpha’s knowledge in math, science, geography, and engineering beyond the simple search-engine-like interface that now confronts users. Right now, the engine has a ways to go to meet the goal of its brainchild, the physicist Stephen Wolfram, to “make all systematic knowledge immediately computable and accessible to everyone.”

It is also interesting, from our point of view, to see that the biz shifts to ecosystem as a way to harvest new wealth.

http://www.technologyreview.com/blog/editors/24254/?nlid=2439&a=f

I just read this news on dpreview.com:

Panasonic is pleased to announce that a new firmware is released for the Lumix G interchangeable lens LUMIX G VARIO 45-200mm / F4.0-5.6 / MEGA O.I.S. (H-FS045200).  The firmware includes improvement of auto focus performance in AFC mode for taking photos. It also enhances performance of auto focusing and stability of O.I.S.(Optical Image Stabilizer) while reducing noise of aperture control for taking movies(Except for FHD mode of AVCHD in DMC-GH1).

The Pentax lens that is being upgraded by a new software release

What strikes me is seeing the change that is happening in objects as they get a computer embedded: we have been used in the last 5 years to buy digital reflex (and more recently top of the line point and shoot) and get software updates fixing problems and providing new features. Now it is the turn of lenses. They have an embedded PC and you get software updates.

I consider this as a general trend that in the next year will  make washing machines, cars, televisions, you name it, looking mor elike services than products. I can easily imagine offering new features at a price through software updates (this is already reality for the iTouch). The possibility to third parties to offer software upgrades is also around the corner. Ecosystems are coming to the mass market, sooner that I imagined.

The Apple App Store is a concept that according to Andy Lippman and Charlie Fine will need to be adopted by the industry in general. Industry today consciously makes of product incompatibility their strength, they lock in their customer, fidelity is not based on the appreciation of the brand but on the burden of overcoming incompatibility.

As products are becoming more flexible they allow third parties to plug in applications and industry can see these third parties application as an increased value to their product. At the same time this can reshape the industry landscape with the growth of fewer bigger products hubs.

Dirk Trossen who worked at Nokia pointed out that moving that way may be the future but it is a very difficult proposition to follow. Nokia tried to do that and basically failed.

There must be a value, a strong one, in the apps developers to piggy back on an industry apps store. It can be the access to a bigger market size, a dramatic reduction of transaction cost (e.g. managing the billing and advertisement).

The problem with all piggy backs, from an app developer, is that the producer of the seed product has all the lever. If they decide to change something, as Apple is doing with the release of OS versione 3 of the iPhone, they can invalidate the existing apps and force developers to rework their apps for compliance. Basically the compliance issue is on the shoulders of the apps developers.

This is quite a change from Telecom Operators habits of ensuring at any cost compatibility (also backward) and interoperability. It is a change in their chromosomes.

Last week, our team did a presentation about Apple and its new operational system iphone OS 3.0 that will be coming soon in the summer.

Our purpose was to present the new strategy of Apple and new features of iphone OS 3.0. Our guess is that Apple is trying to sell ways for you to realize your dream. How? It is doing it by offering its new services platform where it enables new and existing Apple Store users to sell their products and services in a very easy and fast way.

We began the presentation by giving an overview about Apple and the new features of the new OS. Then, we tried to analyze the impact of the new OS to Apple’s main stakeholders: customers, hardware manufacturers, applications’ developers and content providers, and competitors. We closed the presentation linking with what everyone here at the Future Centre is studying and of course, raising many questions about the future:

- Will Apple Store be available in other cell phone manufacturers’ products?

- Only Apple devices carry Apple Store: for Apple, it might be its strength, but for the consumer, is it a positive thing? You, as a consumer, would you like to have more than one platform in your cell phone? Would you like to have Windows Mobile and iTunes in the same handset?

- Will Apple have a strong competitor in the future?

- My colleague just got her first smartphone, and as a matter of fact, this smartphone ended up to be an IPHONE! Her insight was that once you have an Iphone, you don’t get away from it! Iphone basically fulfill many of your needs: entertainment, games, agenda, flashlight, social networking, etc, etc… Yes, sure… you can get many out of the 35000 applications available to be downloaded at Apple Store! But like she said: You live in Apple’s world! You get so fascinated with surprises that Apple offers you on a daily basis that you don’t think about switching to another handset. Do you agree?

- It seems that Apple is also trying to target the corporate market by creating strong partnerships with big companies like Oracle on one hand and on the other hand, its competitor, Blackberry seems to go in the opposite way trying to attract the consumer market.

Well, those were a few questions that we raised during our discussion. What’s your opinion? Would you like to join Apple’s world or you’ve already joined? J

Yesterday I watched the presentation about the release of the iPhone OS 3.0. This release has a lot of new features that will enrich the Apple’s business ecosystem.

I will try to explain briefly the most interesting part of the main features of this new operating system:

1) With this new OS, it is possible to purchase content and services directly from the application. In this way, a company can manage directly all aspects of the transaction including process payment and can also provide the customer all the information regarding the purchase. This is managed by Itunes Store like a services provider.

2) The Apple Push service will be available not only for the email application but for all applications that needs it; this service has been designed in order to save energy.

3) APIs for the new OS will be released to connect every application with external HW either through the 30 pin connector or wirelessly with bluetooth; that means that a new developer of HW products and the connection of the iphone with real world can be done through sensors, machines, instruments, appliance, etc…

4) Applications can use the bluetooth in a very simple way, without pairing, to develop social network and facilitate smart messaging; not just games but also the possibility to bring the social network from the virtual world to the real world with a face-to-face interaction among people.

5) The option to use google maps like a tool inside the applications allows the development of information mash-ups.

6) The possibility for applications to use the contents of Itunes and perhaps, in the future, the use of  personal preferences can allow the development of personalized services.

I see a convergence between these new features of Iphone 3.0 and so do our researchers in Future Centre.

Points 1, 3, and 6 could enhance applications’ performance in the Micromachine and Market@One project.

Point 4 could be used in an application for the direct interaction among people who are in the same physical place according to their profile and tastes; it could be used by a services provider like Facebook or other social networks for a face-to-face interaction; Life and Lives project is studying this kind of scenario.

Finally, point 5 can facilitate the mash-ups for Iphone applications.

I think that it’s an amazing idea to give payments and process control tools to companies that want to improve and manage their business models; it means flexibility, true payment services with one click, no troubles to manage accounts.

Integration with mobile CRM can add value to these tools; in the presentation, Oracle has showed an application based on his mobile CRM.

Iphone, Ipod, Itunes, and Apple Store are becoming a business platform and it’s amazing that this platform can be used to improve services in different vertical markets. I think that it can be a good opportunity for Telco operators to improve ecosystems in different areas.

Apple is looking at the market and how to help companies to develop their business in different markets…and now it’s only the beginning of this new way to play in the business ecosystems.

Facebook, a rapidly growing Social Network, is also a perfect example of an ecosystem. It has now over 175 million users, http://www.facebook.com/press/info.php?statistics ; 95% of them are using one or more of the 52,000 applications made available by the over 600,000 developers based in 180 countries. Every day more than 140 applications are added.

The numbers are mind-boggling and more than that they really represent an ecosystem of business:

3 billion minutes are spent on Facebook every day, worldwide. Every months are uploaded 850 million photos and 7 million videos. There are 2 million events per month generated by over 25 million groups. Users are exchanging over 28 million documents per months.

It is a melting pot, communicating in hundreds of languages and using 35 on line translators with 60 more under development.

Here the ecosystem seed is the Social Network attracting a variety of businesses to offer their wares. This in turns increases the value of the ecosystem. Facebook had 300 million $ revenues in 2008, and it is rapidly growing. The overall value of the ecosystem, however, is much larger and this ecosystem value is the one that is growing most rapidly.

In the words of Simon Beresford Wylie, CEO of Nokia Siemens: “Facebook (is) a great example of the kind of innovation that a healthy ecosystem can achieve, an ecosystem built on openness and simplicity. It is time for the communications industry to focus on creating its own vibrant ecosystem.

This sector (mobile telecommunications, editor note) enjoys a scale and value that is far beyond anything that Facebook can hope for. Value lies in a huge global subscriber base that will grow to five billion by 2015. It also lies in unbeatable services that people are willing to pay for – voice and SMS.” (Unite Magazine, issue 5)