I’m glad you enjoyed the April Fool’s Lens issue.  I did receive a surprisingly high number of e-mails actually believing that Google will launch a free global Wi-Fi network…
This month’s Lens features three substantial notes on rather disparate topics:  first, a call on the industry to develop new metrics for measuring wireless data growth, usage, and profitability; second, a discussion of a major battle shaping up around the user interface; and third, a discussion of how design is taking center stage in wireless.
ARPU, CPGA, churn, MOU.  For all the talk about how the industry is changing, the metrics reported by and used to track the operators have changed little in the 20+ years since wireless services were introduced.  Look at data, which is becoming an important part of this industry.  Outside of total data revenues, which the operators only recently started reporting, very little detail is provided.  It was a little easier to grasp in the first wave of wireless data, which was driven by SMS (which we know has 90% margins) and “personalization” applications coming through an operator’s “walled garden”, where we know the approximate breakdown of who how a $2.50 ring tone is divided.  But our understanding of the real economics of the wireless business is rudimentary.  For example:
• How are wireless data subscribers “counted”?   Is CPGA for a data subscriber broken out?   
• What is the breakdown of data revenues between messaging, downloads, and “remote access” from PC cards?
• Of data revenues, what percent come from recurring monthly revenues (Blackberry subscriptions, consumer data plans) versus downloads pay per use?  Or transport versus transactions?
• What is the profitability breakpoint in remote access usage – for example when does the carrier start losing money if I leave my 3G connection up most of the day?
• Is there any way to meaningfully report the breakdown between the consumer and enterprise revenues and share?
• How do we break out consumer 3G usage, such as Vcast and PowerVision, in order to better understand the business case for expanding upgrading these networks?  What is the actual definition of “successful”?
• Another hugely missing piece, and one that is admittedly very difficult to track, is what users are doing with content once downloaded.  For example, how often does a user actually play that game that they paid $5 to download?
The picture is even murkier with the growth of multimedia and the shift toward off-portal content. Firms such as M:Metrics and Telephia are playing an important role in gathering consumer usage data via extensive user panels.  And companies involved in the billing and settlement piece, such as Qpass and Qualcomm’s BREW unit, have some additional insight and report some aggregate data, but again they only get a glimpse of the overall picture. 
Contrast this to the granularity we see in other industries.  In the grocery business, for example, there is detailed data by SKU on items sold.  Closer to home, in the consumer electronics world, extensive detail is collected at retail point of sale to give us a pretty good idea of exactly how many copies of the latest DVD or video game were sold, by store, and with a pretty robust demographic profile as well.  Or (for better or worse) think about how much the Google, AOL, and Amazon know about consumer online activity, purchase behavior, and preferences. 
We also have very little appreciation of the profitability of data services.  With data, we’re dealing growing complexity with the move into song downloads, music videos, and mobi-sodes.  There are numerous additional elements involved in thee transactions, such as copyright, digital rights management, marketing/promotion, slotting fees, and so on.   What are the accounting principles for these?   For example, wireless operators report continued growth in data ARPU, as a gross number.  But the content provider/publisher share of revenues has increased significantly as we’ve moved into more mainstream, copyrighted content, such as Master Tones full song downloads, and higher-end, games, which of course would reduce operator net revenues. 
We also need to get a better handle on the cost piece.  As data becomes a bigger part of the business, operators will have significantly higher customer support costs, due to the complexity of devices and applications.  For example, a call to help configure wireless e-mail problem will probably take longer than a common billing question, and will require a higher-trained (read higher paid) customer service representative.   And wireless is unique in that the operator is the default for customer service, regardless of the problem. 
The other interesting piece of this is that wireless data might have other, indirect effects.  For example, it could be that even if operators get a smaller share of revenues per download, they are making it up in other ways – such as a higher monthly service plans and reduced churn that lead to greater subscriber net present values. 
I am, frankly, surprised that Wall Street has not pushed harder on this issue.  The relative lack of standard metrics results in a pretty imperfect understanding of this market.  Look at the stock price plunges of Infospace and Verisign just because of the slowdown in ring tone sales growth.  Are there any other gauges that could be used to measure the health and potential of the market?
Finally, this is not all about the operators sharing information that might be of significant strategic value.  They themselves need better tools to be properly armed to negotiate revenue share deals with the major media and entertainment brands.  This issue will also magnify as we start to think about potential revenue streams that involve greater complexity, such as advertising, click streams related to search, and the beginnings of true mobile commerce. 
Wireless, which in so many ways is at the technological leading edge, must catch up to other, adjacent industries in key metrics across product profitability, customer value, and business intelligence.
When we think about competition, we consider traditional metrics such as market share, ARPU, churn, data revenues, and so on.  But I believe a new competitive battleground is emerging around the user interface, and its importance to the overall customer experience.  At one time, the UI was more the territory of the handset OEM.  Nokia’s rise beginning in the late 1990s had a lot to do with a unique UI, on which it has built and even licensed elements of to other phone OEMs.
The UI issue has become vastly more complex.  Yes, the phone can both perform many more functions and access much more content than ever before.  But the usual limitations of limited screen size and input capability still apply.  A new dynamic has also emerged, where numerous parties want to play a role in the UI – from the usual operator/handset OEM tug of war to content providers, ISPs, Google, and so on. 
Every major wireless operator in North America is involved, to a greater or lesser extent, in a project to improve the user interface (UI) on the device.  And as an example of how the UI has already become a key differentiator, Cingular has emphasized the significant improvements of MediaNet 3.0 as a key competitive element in the data arena.  MVNOs, particularly AMP’D and Helio, are as much about the UI as they are about offering wireless voice and data services.  And Verizon’s deal with Adobe to deliver Flash on the mobile phone was one of the most important announcements at CTIA.
The evolution of the UI has many different elements.  In my view, the key battles will be waged in the following areas:
• Look and feel.   This mainly has to do with how information is presented on the device, and the extent to which a common look and feel pervades across applications.  The playing field is increasingly tilting toward the operators in this arena.   
• Navigation.  There are many aspects to this.  One is how easy and intuitive it is to do simple things on the device, such as dial a number, launch a service, move between applications and so on.  Good navigation requires a unique partnering of the phone hardware and software, plus carrier design elements.  Another key question is how many clicks it takes to perform key applications, from uploading a picture to downloading a video clip to buying a song.  Speed on the device is another important factor, which is largely a function of the processing power and memory.
• Search and discovery.  There are thousands of SKUs of content out there.  The issue is, how does a user find and discover what’s out there, other than what the operator presents on the top “deck”.  Here, I’d like to see a better marriage of what’s presented on the device and what the user sees on operator Web sites. 
• Personalization.  This in some ways is an extension of search and discovery.  Historically, what’s presented on the menu or the deck has been pretty common across an operator’s subscriber base.  We are at an early stage of operators being focused on presenting a more personalized “home screen” based on an individual’s preferences or areas of interest. There are tremendous opportunities here for operators to use personalization as part of a more focused segmentation strategy.
• Advertising.  This is one key area that will have a huge impact on the UI over the next several years.  One issue is how to present ads in a way that is effective yet unobtrusive.  Advertising will also be a gate between free and paid for content.
• Integration.  You’ll know from previous columns that I see wireless as a critical component of an individual’s overall “digital lifestyle”.  There’s a great opportunity to think about the phone as a “remote control”, or “bridge” across many elements of the broader consumer electronics/digital entertainment framework as a way of evolving the UI. 
The broader competitive battle will be waged over control of the UI.  Currently, operators are at the center of the equation, but there are many nipping at their heels in a classic example of “co-opetition”.  The erosion of the walled garden, and the move to a more open OS framework will be key factors in the battle for control.
What were the two most successful consumer electronics products of 2005?  The Motorola RAZR and the iPod Nano.  This is notable because neither device leads its category in traditional metrics or specifications.  You can buy an iPod or other MP3 player with a better display, more features, storage, and video capability.  But millions of people are paying a premium because it has that intangible edge in form factor  – it’s cool.  Same for the RAZR.  Many other phones are more feature rich, have better battery life, a more vivid display, and a better UI.  But the RAZR is as much a fashion statement as it is a phone. 
As wireless becomes as much as consumer electronics product as a communication service, design and usability will take on much greater importance.  Wireless operators are putting as many thought cycles into how users navigate through phone menus and discover content as they are dollars invested in higher speed networks.  Cingular emphasized this in a recent meeting when they showed how many fewer clicks it takes a user on its new MediaNet 3.0 interface to get to a “basket” of commonly desired content when compared to its competitors. 
As phones become more multi-function and multi-media devices, there will be a much greater degree of experimentation around design elements.  In order to expose keyboards, cameras, and content that is better viewed in “landscape” mode, look for more things that slide, swivel and rotate.  And instead of trying to decide whether to buy stock in Nokia or Motorola, you might make a bet on “materials” instead.  Such as titanium, which is to small devices consumer electronics what steel is to fancy kitchen appliances.  
The emphasis on design will also help create new markets.  The accessory market, for example, is increasingly being driven by form as function.  As an example, Bluetooth headset sales had been increasing steadily for the past three years.  But sales accelerated in 2005 when a new suite of smaller and snazzier products were introduced.  Again, Motorola took some design risks and won big.
A couple of the U.S. operators will cross the $1 billion mark in accessory sales alone this year.  I’ll argue that consumers remain “under-served” in the wireless accessory market and this is a larger opportunity than many people think.  There are more than 150 accessories in the average Best Buy store for the iPod.  Belkin and others are becoming household names just on the power of their iPod accessories.  As another example, look at the market for connector cables for home video components.  Remember those $5.99 red and white RCA cables that used to connect the TV to the VCR?  Well, somewhere along the line, $50-100 Monster cables with those gold end jacks started appearing in Radio Shack and Circuit City and a new king of the connector business was crowned.  Outside of the headset market, many typical wireless accessories are remarkably clunky and low rent.  I think you’ll see more energy put into add-ons that are as cool as the devices and applications they are supporting.
Retail stores will be another area where you will see a greater attempt to extend the notion of wireless as fashion and lifestyle.  Wireless operators, a new wave of independent retailers such as Imo, and Nokia are taking a cue from Apple, Starbucks, and Bang & Olufsen and are trying to reinvent the in-store experience.  That carpet emblazoned with the carrier logo? Fluorescent lighting?  Out.  Wood floors and pendant lighting are in.  People have been replaced by Pods.  Plasma displays aplenty.  Heck, next thing you know it Cingular might invite you to a wine tasting. 

Design and form factor, always important in wireless due to its highly visible nature, has become an even more important source of competitive differentiation over the past couple of years.  The next chapter in the story will be the extension of that experience into other corners of the mobile lifestyle, from the in-store experience, to the phone UI, operator Web site, and the after-market.