A Billion Web Users

Some time in January 2006, if the growth curve continues on its current path, there will be a billion web users—roughly one sixth of the world population. So how does that stack up against mobile phone users? As it happens, right now, there are just under two billion mobile phone users—and rising. I’m not sure when mobile phone usage barged past Internet usage, but I guess it happened some time in 2004. It happened years earlier in some countries. In Italy, remarkably, mobile phone usage has always led Internet usage.

When the number of mobile users overtook the number of web users an important shift in power occurred, the impact of which is yet to become clear. At the moment there are about 130 million PCs sold every year. This compares with 750 million or so new mobile phones sold, two thirds of which are digital cameras too. The significance of the digital cameras statistic is simply that the talk-only era of mobile phone usage is over. A mobile phone is now a text device (either by virtue of SMS or by actual email), a sound and music device, an image device and a platform for applications. Quite often it is also a web access device—so ultimately the number of web users and mobile phone users will even up.

The ‘PDA mobile’ now competes with the laptop in terms of connectivity and ‘must have’ applications—and it is already displacing some laptop usage. The Blackberry is largely responsible for this, having demonstrated that secure and usable email was possible on a PDA. For most organizations the decision between laptop and PDA comes down to how much on-the-job keyboard activity there is. Unless there’s a lot, the PDA is the economic choice.

Speaking of Blackberry…

RIM Plays Chicken With NTP

NTP, if you didn’t know, is the company that is locked in a legal battle with Blackberry. It has become a game of chicken, using the US legal system as the field of play. NTP is not a PDA manufacturer, just a company that has some patents that it accuses Research In Motion (RIM) of violating. There are 7 patents involved, 5 of which have been rejected by the US Patent and Trademark Office—but NTP is challenging those findings, so this could persist for a while.

In the meantime, a judge in the Federal District Court in Richmond, Va, has ordered RIM to close down its US operation or reach an agreed settlement with NTP. RIM claims it has a service that circumvents the patent problem, but has not said how long it would take to deploy. If it takes more than a month then RIM will, by court order, go off air in the US (except for government users). The US is roughly 70 percent of RIM’s business—so that’s not going to happen.

RIM and NTP failed to agree on a $450 million settlement—after coming close to agreement. What may have stuck in RIM’s craw was the demand for an on-going royalty. RIM has a cash pile, which is well over a $1billion—so paying up is not the problem. Getting the best deal is the deal and RIM will probably have to settle for more than the $450 million—now that it has lost this round in the courts. Next stop is the Supreme Court if RIM wishes to take it further but an interim settlement is inevitable now.

What has this got to do with technology? Very little from the consumer’s perspective. It is RIM that established the Blackberry as the most compelling of PDAs so it will be a shame if RIM is badly damaged by this long running dispute.

Xbox Joy For Microsoft

The two most sought after Xmas presents in the technology space are the iPod and the Xbox. It seems that Microsoft is at last seeing some success outside its core markets (Windows + Office) and it is well deserved. The new Xbox 360 is getting ecstatic reviews, mostly because the graphics are awesome—but the games are few and far between at the moment. It looks like Microsoft seriously underestimated the likely success of its new gaming machine. So much so that it is 550,000 units short of the Xmas demand (which may be an underestimate) and Xbox 360s are now being sold at a premium on eBay. The demand for it is making newspaper headlines in the UK and the US.

The initial Xbox target is for Microsoft to replace Sony as the number one games box company and it may have achieved that (for consoles) by getting to market first (Sony’s PS3 will be available sometime in the new year) but unless Sony has something unexpected up its sleeve, its going to look like a ‘me too’. Sony, by the way, has seen demand for its PS2 rise dramatically because, some commentators suggest, it was the second choice—but you could get one. Sony will sell about 2 million in the Christmas period.

The Xbox 360 is not just intended to give Microsoft a leading position in the games market, Microsoft intends it to be a natural and dominant component of the ‘home entertainment’ network (videos, music, gaming—it plays DVDs, connects to most things, etc).

Microsoft is trying to head off Apple in the battle for the home entertainment market and it’s a credible challenge. I doubt if Microsoft can do it via this route alone, though. It is handicapped by the following:

1. More people buy iPods than gaming machines, by a multiple. It’s a larger market and Apple has established a de facto monopoly on music download—which may translate into video.
2. Everyone has become an iPod customer. The secondary market in iPod compatible devices is massive. Nowadays some cars even have iPod docks. Games machines are more niche.
3. Apple has complete control of its consumer products whereas Microsoft has to depend on PC manufacturers for complementary products. This means that Apple can be more nimble in providing an integrated home entertainment environment. It is in control of its destiny.

Nevertheless, the Xbox 360 is a victory for Microsoft. The immediate challenge the Xbox 360 poses is for Sony, which is now getting eaten on one side by Microsoft and on the other by Apple. Rootkits or no rootkits, Sony has problems.