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Information and Communication Technologies
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Interview: Pelago's CEO Jeff Holden Maps Out Vision For Mobile Social Networks
Last week, I caught up with Jeff Holden, the CEO of Pelago, which is developing Whrrl, an application for mobile phones that lets people share opinions about events and restaurants and organize meet-ups with friends. Pelago has the distinction of being the first investment of Kleiner Perkins Caufield & Byer's iFund, which is dedicated to funding iPhone applications. It subsequently also raised funds from T-Mobile's investment arm, among others. But Holden, who is a former Amazon exec, is distinctive in his own right. From his office in downtown Seattle, where he was wearing cargo shorts and a polo shirt on a rainy day, he covers ground quickly, and makes whopping predictions. One is that Amazon (NSDQ: AMZN) will become a hardware company and the second is something he's banking on—that Apple's (NSDQ: AAPL) iPhone will evolve from a niche device to one that gains double-digit market share. When it comes to explaining his company's vision, he references scenes from sci-fi movies and uses made-up words and phrases, like "foot-streaming" and the "digital augmentation of the physical world." He addressed the challenges they faced with the first iPhone app, the new version; integration into Facebook and Twitter, and the carriers Whrrl will launch with soon. Holden summarizes his excitement by drawing parallels between Pelago and Amazon: "Whrrl makes people's lives a lot better. Amazon made their lives a lot better, too. I get charged about that."
Here's a summary of our conversation:
-- The iPhone app: The Whrrl application launched In July with the App store, but received hundreds of complaints on its landing page for not using GPS and not being able to zoom to find restaurants. Holden said it still was downloaded more than 100,000 times over the first few days, and that iPhone users have been more active and engaged than users on the Blackberry platforms. A new iPhone version launched in the last week solves the zooming and location issues (the app now updates your location every 90 seconds in the background).
The rest is after the jump…
-- Mobile advertising: The company just announced that it has hired John Kim as VP of advertising products to figure out the company's plan for how to make money. Kim was most recently vp of product management and marketing for mobile search company Medio Systems, and before that was Yahoo's (NSDQ: YHOO) senior director of strategic product marketing. Although Whrrl doesn't have any advertising yet, Holden believes they have a big opportunity. "We have patient investors, who are looking for the long-term return. We'll make money along the way and it will off-set our burn."
-- "Foot-streaming": "Foot-streaming" is the reason why Holden believes that they can demand high rates for their ads. Foot-streaming is the act of tracking where people go using GPS: "You are able to say people—who go to these places—also go to these places." Sound familiar? Amazon does that all the time, by showing people what other people buy when they buy a particular book. "This has never been done in the physical world." With Whrrl, advertisers will be able to target people who go to competitors, and then actually find out if that person walks into their restaurant (using GPS). Holden is targeting the $100 billion local advertising market, which normally places ads in newspapers, yellow pages, etc. Those advertisers are difficult to get on a national scale without a localized sales force, but without providing details, Holden said "We have some interesting thinking going on about de-fragmenting that market."
-- Carrier decks: Pelago has deals in the works to get on the carrier decks of Verizon Wireless (NYSE: VZ), Alltel (NYSE: AT) and T-Mobile USA. Right away, the Verizon and Alltel application will be LBS-enabled, with support coming later for T-Mobile.
-- Social network integration: There's a ton of social networks, so instead of fighting them, Pelago is embracing them. It launched a Facebook app called "Been Here? Like it or Not," and also integrated into Twitter, so that status updates in Whrrl are sent to your Twitter followers.
-- The competition: Whrrl is often compared to Loopt, the friend-finder. Yelp and other restaurant review sites also compete. But Holden says each company is tackling a small piece of the market. Loopt is like candy because you can see where your friends are, and with Yelp, likely only 1 percent of the audience is really engaged, he says.
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Mobile Video Services Launched On Telcel And Cricket Carrier Decks
Cricket Communications and Mexico's Telcel both announced two separate mobile video services today:
-- Cricket is rolling out a flat-rate unlimited streaming mobile video service for $5 a month. Subscribers will get access to one-to-four-minute video clips including music videos, artist interviews, music documentaries, sports clips, entertainment news and Spanish-language content. The service can be personalized to include the most popular clips downloaded or recommendations based on previous usage. (Cricket release).
-- Telcel hooked up with ROK (LSE: ROK) Entertainment Group to launch Ideas TV, a streaming live and on-demand mobile TV subscription service that will include three live channels and seven pre-recorded channels that will play on a loop. The service, which will feature content from MTV, Nickelodeon, TV Azteca, History Channel and the Discovery Channel, will be available for a daily rate or monthly subscriptions. ROK said its technology will play streaming video at up to 24 frames per second over 3G networks. (ROK release).
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Text Messages Increasingly Used To Send Alerts, Ringtones, Video Clips, Etc.: Report
The number of text messages sent during the second quarter jumped 20 percent to 52 billion messages, compared to the previous quarter, according to VeriSign (NSDQ: VRSN), which compiles statistics based on the messaging traffic it sees from its media division. Although the figures are skewed because they come from one vendor, a number of impressive records were hit, including a single-day record of 648 million texts and a one-hour record of 42 million messages. However, some of the more interesting information was found at the bottom of the press release. VeriSign also tracks news alerts, ring tones and promotional video clips that were sent by text message, which the company calls "application to person messages." It found that people increasingly using text messages to receive content. The number of application messages rose almost 34 percent to 249 million messages in the second quarter from 186 million in the prior period. VeriSign attributed the rise to mobile banking services. Release.
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Sony's Chief Says A Solution Must Be Found For Sony Ericsson
Sony's (NYSE: SNE) CEO Howard Stringer was quoted as saying in a German newspaper on today that its mobile-phone joint venture with Ericsson (NSDQ: ERIC) must do better, Reuters reported. "We have to work together again as we did two years ago. Or the joint venture will have to find its own solution," Stringer said. Asked whether Sony is planning to put an end to Sony Ericsson, Stringer said in German paper Die Welt: "It's certainly been a difficult year but buying out a partner is never an easy thing."
Sony Ericsson, which is often being coined 'the next Motorola' (NYSE: MOT) for its troubles, reported last quarter that profit plunged 97 percent while its biggest market — Europe — is seeing phone sales fall, and mid-high end handset margins are coming down.
Stringer said one of the complexities of the business is being nimble while still checking in with two different companies. "You're always engaged in discussion and negotiation. We and Ericsson are always discussing ways of making Sony Ericsson as successful as it possibly can be."
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Orange Admits To Capping iPhone 3G Speeds
Maybe it's not all Apple's fault after all. French wireless carrier Orange has admitted to capping 3G network speeds at 384Kbps for iPhone customers, AppleInsider reports. Perhaps that's why iPhone users on Germany's T-Mobile network were reporting speeds as high as 1800Kbps while Orange customers' data moved at a much slower pace. As with other carriers that recently launched the new iPhone 3G, Orange's customer care lines lit up. In some cases, representatives were able to dramatically increase specific iPhone users' speeds to as much as 3Mbps by simply altering some technical parameters. Orange told FranceInfo that the network speeds were capped to preserve network stability, but that it intends to raise the download cap for iPhone users to 1Mbps by Sept. 15.
It's doubtful that will resolve the concern of many Orange customers that have signed a petition saying the artificial limitation is in direct violation of Orange's service agreement, which should allow for HSDPA speeds up to 7.2Mbps. And it's likely to stoke the debate on whether iPhone 3G connection issues are the fault of Apple (NSDQ: AAPL) or the carriers. Is AT&T (NYSE: T) doing the same thing in the United States? Apple may not want to rustle the feathers of its carrier partners, but it would serve the company well to deflect criticism if it's not a chipset or software problem that's crippling iPhone 3Gs. If the blame rightfully belongs elsewhere, why hasn't Apple said so? My guess is there's a group of snafus gathering here, the fallout of which we'll be seeing for some time to come.
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