Christian Values

Towards the end of last year, David Murphy met with Christian Lindholm, ex-Nokia handset designer and now a director of digital innovations and design consultancy Fjord, to talk about the iPhone, Android, mobile wallets and much more  

So tell us about Fjord, Christian. What do you guys do?

Were a design company, so we conceive new innovations. We go from nothing to something and then from something to something better. Weve done work for the likes of Nokia, the BBC, Orange and Yahoo! We won a 3GSM Award for our work on Yahoo! Go, and we were involved in the first tangible manifestation of the iPlayer in 2005.
There are four elements to what we do. Firstly, Services this is the funnel; how you get consumers interested, engaged and then monetise them. Second, Interfaces, which is at the heart of everything we do. Then theres Research - user shadowing, ethnography, contextual enquiry, advanced benchmarking, usability testing. Then finally, the System this is all about designing the system, the collection of different services and how they interact with each other.

So whats caught your eye in the mobile space recently?

Well I think with the iPhone, a new era has started. As someone coming from the handset industry, I look at it as a new kind of computer in which one has stuck a phone. Genetically its not a phone; its not as efficient and smooth as a phone, but its good enough. Also, from an engineering point of view, there are some issues. When you use it in Korea, for example, the device gets hot and the battery goes flat in no time. This is because the phone is not tuned to the network, so it needs more power to stay on the network, and this drives up the power consumption. The issue here is field testing. Its a massive process and an essential process, and I have the sense that they have not done it in Korea. I have the same feeling about Hong Kong, I dont think its been tuned to the network there either.

What else apart from the iPhone?

There is a massive business emerging in connected laptops, such as the Eee PC with built in 3G cards, emerging, and these will be bought by operators and sold with the same business logic as a phone so you get it free and pay 30 a month. All sensible operators are moving in this direction, but the device is still a computer; it needs to evolve to a giant connected Blackberry that hangs on to the network and pulls in emails, even when its closed. This is going to be a giant market. I would not be surprised if half a billion of these things are sold each year, five to seven years from now.

What makes you think the market will be so big?

The price point is the same as a high-end phone. It is very easy to sell; its obvious what it does. The computer is omnipresent enough globally. Most people have seen one; its not an alien object.
What needs to change though is the business system. The laptop business is fragmented in terms of distribution. I would be surprised if BestBuy would buy more than 100,000 of a certain model. A mobile operator could buy a million; they buy millions of phones, because they have a much better business model, which is: Get it now and pay later. Its the best business model ever invented.
Then you have to ask yourself, who is king of the pocket? Is it the phone or the connected PC? Theres a high correlation between who has the crown and who has the biggest screen. Big is better. But at the same time, youre battling against pocketability and one-hand use and being able to hold and use it at the same time. So the question is, who has the balls to make a better display and get away with it?
Because users will adapt to physical objects that are bigger. If you trace the history of phones and pick up a few of the popular phones, what I call the hitphones, the phones that get a 5% market share and put a few billion in the bank for whoever makes them every couple of years or so.
The Nokia 8210 was one such phone. That had just about the smallest screen of any hitphone. Post that one, the hitphones have all started to grow. The iPhone is still the current hitphone and its the biggest of all the hitphones, which says to me that we are in the midst of an organic transformation into a new type of object.
So you have these objects, the PC and the phone, are approaching each other. So the way I see it, the future is not one Holy Grail converged device. You will have your laptop, your Eee PC, perhaps slightly smaller, that you can carry around with you the whole day, and you will have your phone, and the user will gravitate to the most powerful UI. So given a choice, they will use the PC. 

So if people have got a laptop and a phone with them, will we see them wanting phones that are just phones?

Well thats interesting. There was some research done among digital nomads and it found that they are starting to downgrade their phones to more basic phones and using their PC for more tasks. I see that trend and I can understand it, and the key reason why it will prevail is because of the greed of the mobile operators for short-term data profits, particularly in Europe. The cost of using that connected device is simply so high that users cannot be bothered. The legislators got greedy and taxed the spectrum. Pay now play later was a huge mistake on a European scale.
The operators invested in the infrastructure and had to recoup the investment, and five to 10 years from now, they will look back and say it was a massive mistake that turned Europe from a leader in mobility into a laggard.
Executives at Nokia say that the US is the most interesting market for mobile because it is a single, big market consisting of 50 united states, in which data roaming is free, so as a result, you have lots of application creators and service providers and interesting devices.
(European Telecoms Commissioner) Viviane Reding is pushing for 1 per MB, but that is way too much, because if you start to use these services at that cost, youre going to run up a huge bill. 
Most people do not travel. Maybe 5%, but it is an important 5%, and once these decision makers say they are cool with having a basic phone, and they can select a stylish object, so the phone turns into the Rolex, then the phone might evolve in that direction.
Look at Japan, its like mobile Galapagos; things evolve differently there. In Japan, 74% of iPhone users use the device as a second phone. It does not qualify as a first phone because keys are not integrated into it, and because it cant function as a wallet. The amount of coins in circulation recently decreased in Japan for the first time. Money is expensive to move around, so there is a lot of logic to make it disappear. The wallet is a 2-hand operated object, so there is some security risk and if youre using a credit card, you have to sign or put in a PIN, and that can be done on the phone with one hand so youre making payment more usable and you also get instant feedback telling you how much you have left.
Now of course, Visa, for example, will fight to the bitter end to have an object. They dont want to be just an icon, or worse still, invisible, so they will try to put more utility in it, like with the Oyster card, but long term they are doomed, because theres no battery, no UI (user interface), no OS (operating system) so they will not have any rich interactivity to it. So I think the wallet will disappear. 
Similarly, the key and lock industry is very fragmented. The biggest firm has only a 5% market share, so it will take time before it disappears, but it has in Japan, and if you cant use your phone as a key in Japan, then it can only be your second phone.
So theres a lot of interesting stuff that can be integrated on the phone without usability issues or ergonomic conflict. Things like keys, wallet, cards, money, business cards. It will all end up on the phone.

So how do you square that with this idea of people going for more basic phones?

I guess it depends on your definition of basic. For services and the Internet you need a big UI, but for things like keys and wallet, you dont need a big UI. Over the past 15 years, weve really just figured out how to mobilise voice, but over the next 15 years, all kinds of things will be mobilised, and the stakes are enormous; huge fortunes will be made and lost.

What else is exciting you at the moment?

Cloud Services are interesting. I come from a hardware background, where the way they got you to buy things was to make it bigger, better, smaller, lighter, more, or whatever. This still works; people buy objects, they are considered more valuable than services somehow, but objects alone are close to commodities, so the next big game will be to make hardware the service. Like the iPod. People buy iPods because the object is cool, but also, where the value lies is in the iTunes library and playlists and ratings and so the lock-in is there.
Then you have the Amazon Kindle. Thats a traditional service provider starting to make hardware. We will see more of these kinds of objects, and I see a giant opportunity to figure out how, for example, Asus will build services around their Eee PC, whether thats backup or app shops or extra storage. So they sell you the object and then they can sell you the extra services. The mobile operators are a great example of that. They will figure out how to upsell you to different services.

And what do you make of Android?

Last year (2008), I wrote an article for Forbes magazine, where I talked about Google, which has been running on Internet time, which is maybe three times as fast as a normal year, slowing down to telecom time, which is maybe half the speed of a normal year. I explained in the piece that a telecom year is slower, because operators enjoy fantastic profit ma rgins just by providing a few new mobiles and getting people to sign up for 12- to 18-month contracts. There's no big reason to challenge the status quo, and no real force that can challenge it either. I said in the piece that entering the mobile industry will grind Google, which has been an iconic darling of the Internet industry, down to telecom time, and I think thats happening.
Google had a good strategy, and ambitions to start to make an open OS for mass market firms, so the first device is built on an ARM7, the processor that powers most phones. So they built a good OS to run on ARM7, showed it at last years MWC, and it worked. Then the media started hyping that and put Google against Apple and the iPhone is built on an ARM9, so conceptually they had a motorcycle from Google that they had not seen compared to a car from Apple.
So Google panicked and changed their strategy and evolved into touch(screen), and T-Mobile probably wanted an alternative to the iPhone and a touch experience, so they rushed a design out of the door for touch which does not seem totally thought through to me. I dont think it has a very good bone structure from the experience point of view, and they have added too many clothes and muscles on a bone structure that is not good enough, and building the right bone structure is hard. At the more basic DNA level it is probably quite good; it seems to be a modern and flexible type of OS, but they seem to have changed their strategy during 2008 because of these media comparisons to Apple.
Operators are going to be somewhat sceptical to Android, so it will be slowed down by lots of operator due diligence and technical enquiry, and on top of that, handset vendors will be sceptical about what is the value to them if they take Android.
Then finally, to get it working in Telefonicas network and Ericssons SMSCs and Nortel base stations, there is lots of blue collar software work, which is not culturally so attractive for Google to get involved in, so again going from one device to many devices to many operators will be a very complicated thing for them to scale up, and locally, they are so US-centric, fighting in a local resource market with Apple, so I stand by this view, and I dont know if they have the patience to play in telecom time.
The classic creative in Silicon Valley has a 3-year patience span and then their interest goes away. There are lots of people working on Nokia Series 60 who have been at it for 10 years, and this probably applies to Microsoft too, so one has to have a lot of patience to be successful in mobile.
But I welcome Android. I think its great that there will be more innovation in the mobile OS space, and I hope they do have the patience and are successful, because that will stimulate innovation and lead to the development of cooler gizmos. And there are some big players getting involved now. You have Qualcomm wanting to provide an OS for mobiles, Intel wanting to do stuff, Microsoft too, and the big operators who want their own stuff, so there is a tremendous amount of activity in that space, which has to be a good thing.

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