Like a lot of people, I was surprised by the seemingly stupid comment made yesterday by Randall Stephenson, CEO of AT&T, about a next-gen iPhone using 3G coming “next year”. Many bloggers, journalists, and analysts jumped all over his remarks wondering if the guy had taken leave of his senses. After all, wouldn’t such a pronouncement be a serious blow to holiday sales of the iPhone? Why would he do such a thing? PBS commentator and industry observer Robert X. Cringely thinks he may have the answer.

I don’t think Stephenson’s statement was by accident and I don’t think he is out of touch with reality. I think, instead, he was sending a $1 billion message to Apple CEO Steve Jobs.

It is no coincidence that Stephenson made his remarks in Silicon Valley, rather than in San Antonio or New York. He came to the turf of his “partner” and delivered a message that will hurt Apple as much as AT&T, a message that says AT&T doesn’t really need Apple despite the iPhone’s success.

It’s one thing to have a private disagreement between companies but quite another to take it public in a way that costs real money.

What I believe is troubling the relationship between AT&T and Apple is the upcoming auction for 700-MHz wireless spectrum and AT&T’s discovery that — as I have predicted for weeks — Apple will be joining Google in bidding. AT&T thought its five-year “exclusive” iPhone agreement with Apple would have precluded such a bid, but that just shows how poorly Randall Stephenson understood Steve Jobs. Steve always hurts his friends to see how much they really love him, so AT&T probably should have expected this kind of corporate body blow.

To his credit, Stephenson took the dispute to the streets this way, showing he isn’t intimidated by Jobs. It was a bold and rare response for big business and was definitely unexpected by Cupertino, which won’t underestimate AT&T again.

Hmmm… is a public spat emerging? With MacWorld – Steve Jobs’ biggest stage – coming in little more than a month, what kind of fireworks might we see?

Update: Fake Steve Jobs weighs in with a hilarious post. May not be work safe depending on where you work.

Earlier today I received an email from the PR firm being employed by mobile email company Berggi. In the message the author attempts to get me to agree to speak with Berggi CEO Babur Ozden about the company’s growth. The subtext here is that in 2006 I authored two posts on MobileCrunch that roundly bashed the company and its investors for utterly failing to understand the US mobile economy and introducing a product that in its then current configuration was bound to fail spectacularly. In my post I promised to issue a public apology if the company managed to defy my predictions and accrue more than a million users by the end of 2007.

Since then the company has made a number of statements that have at best misconstrued the facts and at worst have been outright deceptive. The email which I received (and which I excerpt below) is no exception. Since I felt obligated to respond to this message with some detailed analysis it seemed to me only fair that I share my thoughts with blognation readers and for the benefit of the Berggi CEO who should learn that it isn’t nice to try and trick a blogger into apologizing when in fact that blogger has been right all along.

Hi Oliver,
Despite your prediction last year that Berggi wouldn’t reach 1 million
paying customers, they are nearing the 2 million mark (should top it
by end of December), and continue to grow at about 15,000 users per
day…

…the partnership will deliver a broad range of consumer
mobile services — including ad-supported mobile applications — for
the Chinese market.

Would you have 30 minutes tomorrow afternoon to speak with Babur Ozden
(CEO) to discuss the deal? We will also discuss related news about
Berggi’s global momentum - new investors, new partners, and its
presence in Silicon Valley (its new HQ) and Beijing.

Best,

XXX

My Response

XXX,

Let me ask you a question; do you think I am stupid? As in unintelligent, of low IQ, mentally impaired or otherwise incapable of even average reasoning capability?

I only ask because your message is insulting to my intelligence in the extreme.

It is also incredibly disingenuous that you would characterize Berggi’s current situation as defying my prediction when in fact it proves it.

When I evaluated Berggi and predicted that it would not fly I based my prediction on your then current business model which was to charge average consumers with average phones $9.99 per month to access their email from their phones.

I quote from my original post:

“offers a downloadable application that bundles email, IM and texting capabilities, which costs $9.99 per month. Your phone needs to be data-enabled, to use the service, and the regular data fees from your carrier (per usage or on a plan) apply.”

Now come on… we both know that Berggi’s original model flew just about as well as the airplane in the image that accompanied my original post. To try and get me to retract my original statement is simply disingenuous. Especially based upon how Reuter’s now describes Berggi’s model:

Originally, Berggi planned to charge $9.99 a month for the service, then changed course earlier this year and made its consumer messaging services free, switching to an advertising-supported model. Growth took off with that change.

In the United States, the service runs on AT&T Inc., and Sprint phones, the No. 1 and No. 3 mobile operators, respectively.

Berggi is one of a growing number of start-ups seeking to bypass entrenched mobile network operators by offering consumers software directly over the Web, which they must download and install on their phones.

One big draw: Among Berggi users, text messaging is free. Berggi compresses text files into the data channel of mass market mobile phones, bypassing costly text messaging services.

This is perhaps the most backhanded attempt to get an apology as I’ve ever seen. You should really learn that bloggers do a good job with their diligence. In my case it has been a long time since I’ve made a prediction like the one I made about Berggi and been mistaken and I am careful not to make broad predictions in a cavalier manner.

The fact is that not only did your original $9.99 model fail and fail in spectacular fashion (as I said it would) but your user-base is comprised almost exclusively of people from third world countries.

As published in Alexa, here is Berggi’s composition of users.

Berggi.com users come from these countries:
Chile27.0%
Venezuela10.7%
Argentina10.2%
Mexico7.4%
Peru6.7%
Dominican Republic5.9%
Colombia4.7%
Ecuador3.7%
Puerto Rico3.5%
Brazil3.3%
Costa Rica2.8%
El Salvador2.6%
Guatemala2.5%
Bolivia2.2%
Panama2.0%
Uruguay1.4%
Paraguay1.3%
United States0.8%
Honduras0.5%
Spain0.4%
Cuba0.1%
Nicaragua0.1%
Other countries0.2%

At Berggi’s published rate of $9.99 per month for mobile email it would cost the Chilean consumer 5,151.34 pesos per month! for your service. Do you really expect me to believe that someone from that country would conceivably be willing to pay this amount of money for a service that they can get from a provider like Google or Yahoo! for FREE???

Additionally the US ranks 18th at 0.8% (yes, there’s a zero in front, it is really less than 1%) of Berggi users! (Not exactly stellar is it?) What did I say about getting middle America to adopt this model?

Like I said, how stupid do you think I am?

It seems that my original post really rankled your CEO, Babur Ozden, but the fact remains that my predictions have been exactly on target and the only reason that Berggi is still around is due to a significant change in business model and deals with international carriers that have also made substantial investments.

It is not clear from the various press releases or from available metrics but my suspicion is that in addition to being accurate about the financial model, Berggi has had trouble getting consumers to download the application to their phones too and that most of the “reported” growth has actually come from carrier deals where Berggi is actually pre-installed on handsets and does not accurately reflect on real world downloading or de-novo subscriptions.

This is not even the first time that your CEO has tried to use deceptive remarks to mis-characterize Berggi’s growth as exceeding my predictions. In a piece on Venture Beat earlier this year the reporter contacted me to find out my thoughts on your CEO’s claims that Berggi had proven me wrong author Dan Kaplan wrote: (and I quote)

Until now, the company has offered BerggiMail, a useful but relatively undifferentiated offering that packages e-mail, free SMS texting., and an instant messenger that works with all the major IM services. Berggi’s chief, Babur Ozden, says that BerggiMail has registered 500,000 users around the world since its launch in last November, and is on target to hit one million by the end of the year.

These stats are solid for a downloadable mobile application, but in order to reach them, Berggi had to make its service free. It originally planned to charge $9.99 per month, a business model that commentators like Oliver Starr criticized at the time.

It seems that Babur has a penchant for attempting to mislead journalists in an attempt to make it appear in articles like Berggi is doing better than it really is. He apparently hasn’t yet learned the painful lesson that journalists, and particularly journalists like myself that are also experienced analysts neither make predictions lightly nor do they take what a CEO (and especially a CEO that has mis-characterized factual data in the past in order to try and prove a point) says at face value.

In Babur’s case the numbers - and especially the numbers that would be based upon the model which I accurately predicted would fail - simply do not come remotely close to adding up.

In fact, let’s do that math, shall we? Let’s assume that Berggi has now amassed some 1.5 million users and that those users are all paying the equivalent of USD $9.99 per month.

Further let’s assume that on January one there were 500,000 such users on Berggi and that to get to that 1.5 million user mark Berggi is adding 100,000 new paying users per month.

I’ve taken the liberty of creating a little chart to demonstrate what Berggi’s income statement should look like:

Wow! $125,874,000.00 in top-line revenue in what would not even be Berggi’s second full year in business? I can’t verify this since the company was private at the time but not even Google had those kind of numbers. In fact, I don’t know if there has ever been a company that generated revenue like that in so short a time period.

If this was even the barest approximation of the truth not only would Babur be on the cover of every business magazine in the country but Berggi would be a household name (and you’d have deals with T-Mobile and Verizon in addition to AT$T and Sprint).

What’s more, if you were generating revenue like this there would have been no need for the investment that you took from Avanzit and Adara earlier this year - and any CEO that would give up equity in a company spinning off this much cash would be certifiable.

So… let me offer a suggestion; Berggi needs to apologize to me. I was right and in spite of your multiple attempts to demonstrate otherwise, it is patently evident that no amount of misleading remarks will change the fact that to stay alive Berggi has had to dramatically change its model, make deals with carriers, raise significant additional capital and expand almost entirely outside the US.

I’d also like an apology for insulting my intelligence. As I said earlier I don’t appreciate it when someone tries to make me look foolish when in fact I have been right all along.

Oh, and to answer your original question as to would I like to speak with Babur? Honestly, not particularly. He’s more then demonstrated his propensity for creatively misconstruing the facts and I don’t really have the time or inclination to have a discussion with someone that takes that approach. Particularly when it is so evident from the factual information that is readily available what the truth of the situation really is.

Incidentally, I realize that your goal in this was to get me to a) apologize for being incorrect in my prediction (which I was not) and b) to do so publicly on my blog as I had previously promised (in the event that I was wrong- which as stated now multiple times, I was not). In considering that this was your goal and feeling somewhat badly that it hasn’t gone as expected I do think it’s fair that I give you some coverage so I think I’ll repost this analysis since I’ve now devoted far more time to proving my point than would have been required had the real facts been acknowledged by your CEO.

In parting let me offer one last bit of advice; don’t insult the intelligence or credibility of a journalist lightly and never do so when the public record makes it clear that your assertions are factually false. It won’t ever turn out positively for you - as I’m sure is clear from this exercise.

Oh, and one last thing; have a nice day.

Oliver Starr, Global Mobile Editor
http://usmobile.blognation.com
http://blognation.com

PS: please forward a copy of this email to Babur Ozden, I don’t have his email address or I would have done so myself.

Andy Abramson at VoIP Watch weighs in on the recent foul-up in the UK in which a number of SkypeIn users found their numbers taken away. It turns out Skype didn’t actually own those numbers but was leasing them them from another carrier. Andy sums things up quite well I thought:

Do I see both sides of the issue. Certainly. Is it fair to the user…NOPE! Does it point to the need for new leadership at Skype from the outside. YUP!

I just got an e-mail from the very clever folks at Jott announcing the latest thing I can do with their voice-to-action service:

Starting today you can Jott™ to Amazon! No need to add Amazon to your account, it is already there in your contact info for your convenience. It’s easy to use, and will make all that holiday shopping fast and convenient.

Jott: “Who do you want to Jott?”

You: “Amazon”

Jott: “Amazon, is that correct?”

You: “Yes”

Beep!

You: “iPod Nano” (Please only state the product or item name; just like you’d type it on Amazon’s website).

Jott will send you an email with the top 5 results for your search, complete with price info and user ratings. Click one of the items in your email and you will be sent right to the product details on Amazon, where you can easily add it to your Wish List or shopping cart.

Shop Amazon on-the-go with Jott! For more details on using Jott to Amazon, click here.

Not sure how often I’ll use this – I tend to be something of an impulsive shopper but it’s another great demonstration of what this parser is capable of.

Blognation was just given word that a new partnership, that of Vantrix and MoPhap, will be bringing real time ad insertions to streaming mobile media (try saying that three times fast). By combining MoPhap’s Sparkmobile ad serving and campaign management tool with the Vantrix Ad Booster advertising insertion and optimization platform, the partnership intends to bring real time ad insertion that can be dynamically targeted based upon content and at the same time customized depending upon the capabilities of the end user’s handset.

This is one of those announcements that I honestly make with mixed feelings. I’m not a huge fan of advertising plastered over every nook and cranny of the web and in the mobile space, where many people are on a usage sensitive environment, the price paid for being the recipient of this type of advertising could potentially be fairly high. On the other side of the coin, advertising subsidizes much of the “free-content” that people view, Blognation included.

Without these advertising-based subsidies, a lot of the content we enjoy would either be paid content (which hasn’t proven to be terribly successful on the web) or no content whatsoever. Given those options, the vast majority of people will take the advertising subsidized stuff hands down.

Thus, overall, I’m guessing that better targeting of advertising along with better provisioning of ads for each handset is a net benefit. Hopefully, they ads that target each of us are so well targeted that what we see is actually of sufficient interest that we either want to buy whatever they’re offering or at least find the commercial sufficiently entertaining that we don’t find the extra time it takes to get to the chosen content, or the extra nickels that add up on our phone bills too heavy a price to pay for the other stuff we were looking for in the first place.

From my perspective it will be interesting to see if the Vantrix/MoPhap partnership yields a substantial improvement in customer click-through or can be proven via some other metric to offer a real improvement over the less advanced methods of mobile advertising that are being put forth today with our mobile video content.

With all the news coming out about Open Social yesterday I thought it was interesting how conspicuously absent any mention of mobile seemed to be in the mix. Seems that in spite of the fact that the market literally dwarfs the PC market with mobile devices outnumbering PCs some ten or more to one, there would be at least some “tip-of-the-hat” acknowledgment of the platform or some more specific mention of the hooks by which mobile developers could take advantage of this new platform.

Perhaps that is due to change later today as Google appears set to (finally) announce their much discussed (but not by Google) new mobile OS (or is it a phone?) Android (originally a mobile software company that Google purchased in 2005) at around 11 AM.

Lots of speculation and few details are all that we have to go on at this time, however there has been a bit of talk concerning the “Open Mobile Handset Alliance” that - if you can believe the rumors - includes NTT DoCoMo, KDDI and a host of manufacturers that reads like a who’s who list of mobile hardware suppliers.

The brings me back to my original and fundamental question from Google’s Open Social announcement of the other day; will mobile go open social? In a world that makes sense this would be a no-brainer. Your mobile phone is, at least originally, a social device. Unless you’re one of those folks that walks around talking to yourself with a phone held to the side of your head, I daresay that most anytime you have the thing near your ear you are engaging in some social interaction.

By opening up the platform and rounding out the collaborative functions, making sharing of all media types obscenely easy and taking the financial bite out of doing anything other than talking or sending text messages the phone could become an even more important, more central device in the individual’s technology arsenal.

In fact I would go so far as to say that mobile has more reason to go Open Social and makes more sense Open Social-enabled than does the PC. So from my standpoint the case certainly exists for mobiles to go Open Social but that doesn’t mean that they will.

it doesn’t mean they won’t either, but until such time as we first see what Android is really about (all we really know at this time is the it will be licensed as open source under the Apache License Version 2, that it is based on Linux and that Wind River Systems appears to be playing a major role in tailoring the embedded platform).

I guess we’ll just have to hold out a few more hours to see what bold new steps the G-Plex is taking as it marches all the participating companies in lock step down their own mystery shrouded path. One final thought on all this; it must suck to be Microsoft this week.

For the past couple of weeks, I’ve been evaluating the Cardo S-800 Bluetooth headset. It’s a very small in-ear unit that also offers an optional over-the-ear hook. The sheer number of features loaded into this headset, combined with its small size, excellent sound quality, and impressive battery life make this one of my favorite headsets and one I highly recommend looking into.

I was initially concerned that many of the features that the S-800 offered would not be terribly useful to me as I’m currently using the iPhone on a daily basis and it lacks common features like speed dialing which the S-800 is designed to use. To my surprise, I found the S-800 could, in fact, offer me headset access to three of my favorite-ed contacts (it uses the first three numbers in the iPhone’s Favorites list). To use this feature (on any phone with speed dialing) you simply tap the central control button a specified number of times to invoke the first, second, or third number in the list. Very handy for a quick call to home or the office.

I make extensive use of Bluetooth headsets in the car, in airports, and at conferences and other events where I need either be on the move constantly or have my hands free. Since adopting the iPhone as my primary device I’ve noticed I use a headset even more often to avoid getting “face goo” all over the display. The S-800 is all-day comfortable (well, as much as any headset is) thanks to its extremely small size and light weight. As I mentioned above, the sound quality is excellent with great isolation from outside sounds if you simply push the earpiece snugly into your ear canal. I’d rate it a very close second to the Plantronics Voyager 520 for sound quality and give it a a slight edge in comfort.

Some of the most interesting features in this unit include:

• Talk time: up to 8 hours
• Standby time: one week
• Weight: 10.9 gr. / 0.38 oz.
• Battery type: rechargeable Li-Po
• Charging time: approximately 2 hours
• Volume up and down: 8 levels, 20 dB range
• Mini-USB charging jack: charge from wall outlet or PC/Laptop (cable included)
• Hot dialing (store 3 speed-dial numbers)
• Call back button (calls back last incoming caller)
• Missed call indicator
• SWAP Technology: Toggle between two active phones
• Headset location Buzzer
• Turn LED on/off (my wife approves!)
• Multi-pairing: up to 8 devices
• Auto answer option

That’s a tremendous amount of functionality to pack into such a small unit and it proved to be a short learning curve to figure out how to use all of them with ease. I am particularly fond of the placement and ease of use of the volume rocker at the back edge of the unit and the fact that I can carry one less power brick with me when I travel thanks to the USB charging cable. The S-800 has suggested retail price of $84.99. Amazon currently lists it at a ridiculously inexpensive $39.99. If you’re in the market for a full-featured Bluetooth headset, I can heartily recommend this unit.

In case this tidbit is of interest to anyone, I’ll be in Silicon Valley and then San Francisco from Thursday AM until at least Sunday afternoon. Principally I’m coming in for a Nokia event, their “Mobile MashUp” on Thursday, but I’ll also be available for meetings, meet-ups, clandestine gatherings, late night trysts, subversive exchanges, flash-mobbings - (but no mob flashings)- assorted conversations, and…well you get the picture. Pretty much I’m up for anything so long as it isn’t absolutely certain to get me arrested.

More seriously, and more to the point, if anyone would like to get together with me for anything related to mobile devices, applications, strategy, entrepreneurship, business development,, Web2.0 or just to hang out I’m planning on staying in town (San Francisco on Friday and Saturday nights) until Sunday evening when I’ll be heading back down south.

If you’d like to schedule something please give me a call at 415-704-4544 and we’ll find a slot on the calendar. Looking forward to seeing everyone and to meeting new folks and making new friends. Cheers.

Oliver

We’ve written about Spinvox before (have a look in the company index), but this week has seen a number of announcements from the Voice to Text company, including the ability to leave messages directly from the website, a carrier product that allows your voice mail to be converted to text (very useful in a crowded pub, for example), and integration with Twitter, Jaiku, and Facebook so you can call in your message and have it transcribed. Tony Carter, one of Spinvox’s Directors, talked to me about the announcements.

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Derrick Oien is one of the founders of Intercasting. Their main product is a portal to a number of the largest social networks out there – but the portal is specifically designed to run on mobile handsets. With all the US carriers (bar one) signed up to the service, and running on over 180 handsets, it’s an impressive feat of management and negotiation. And it’s giving real world value to end-users, networks, and the social networks themselves. I interviewed him to find out what the secret is, and where the company will be expanding to before the end of the year.

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