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US vs Rest of the World

38 replies · 5,806 views · Started 13 June 2009

It's official - Tomi Ahonen is Rafe Blandford and I claim my £5.... Industry luminary Tomi is famed for his mobile-related books and essays and here goes into interesting (but extensive) detail on the history of the smartphone and why the US market is different to the Rest of the World. Can Nokia ever crack the USA? Will RIM or Apple take over everywhere else? Tomi echoes many of the conclusions that Rafe has come to in recent podcasts and I guarantee you'll find yourself nodding in agreement.

Read on in the full article.

When pointing out the inferiority of the US cellphone infrastructure, the author neglects to mention the geographic challenges that are the main reason. It's far easier to cover a small densely populated nation with cells than one with vast areas of sparse population.

A good written summary of what we all already realise though. The differences show up in other ways. All over Europe you can see Porsche 911s everywhere, they are ubiquitous like a plague of locusts. But Corvettes or Dodge Vipers are very rare beasts, despite being much cheaper.

The iPhone has spawned out of an entertainment device, the iPlod, an as such is considered more as a toy thing rather than utility in Europe. It is also marketed with US style restriction, confined to single networks without competition - which Europeans resent, especially in Deutschland where the exclusivity deal was kicked out - and rightly so.

Wow, such a huge, mindtwistingly long post. I spent almost an hour reading it. And IMHO recommended reading for anyone interested in smartphone business. Towards the end he started to digress but most of it was pure enjoy to read.

Unregistered wrote:When pointing out the inferiority of the US cellphone infrastructure, the author neglects to mention the geographic challenges that are the main reason. It's far easier to cover a small densely populated nation with cells than one with vast areas of sparse population.

Given the length of his blog entry, I don't think that he could have fitted anything more. Besides, the reasons for US cellphone infrastructure quality is not important. The way it affected consumers' preferences over phone design is.

Unregistered wrote:This guy is a Nokia tool.

Well duh! He kinda admits himself also on the post. However, what he is does not take away merits of the post.

"When pointing out the inferiority of the US cellphone infrastructure, the author neglects to mention the geographic challenges that are the main reason. It's far easier to cover a small densely populated nation with cells than one with vast areas of sparse population."

He mostly writes about nordic countries, which have the same population density (Sweden) or are even more sparsely populated (Finland) than USA.

Compare to any Nokia Symbian cameraphone - they all have always done video recording straight out of the box. The user does not need to - is not expected to - install any parts that should be there to begin with?

The writer appears to have forgotten about Nokia's very first cameraphone - the 7650. That didn't support video recording when it first came out. Only later did they make an application for it that would allow this.

Unregistered wrote:"When pointing out the inferiority of the US cellphone infrastructure, the author neglects to mention the geographic challenges that are the main reason. It's far easier to cover a small densely populated nation with cells than one with vast areas of sparse population."

He mostly writes about nordic countries, which have the same population density (Sweden) or are even more sparsely populated (Finland) than USA.

But even if Finland is sparsely populated, Its not that big in physical size compared to US, which is why it becomes a bit more feasible.

Arcade wrote:But even if Finland is sparsely populated, Its not that big in physical size compared to US, which is why it becomes a bit more feasible.

Sure, but from investment point of view the situation is roughly the same. You cover same amount of people per money invested. American corporations also have vastly bigger resources, and the possible pay off from those investments is much bigger.

Besides, even the really big american metropolises tend to have inferior mobile and broandband services than their european equavalents.

Hurtta wrote:
Given the length of his blog entry, I don't think that he could have fitted anything more. Besides, the reasons for US cellphone infrastructure quality is not important. The way it affected consumers' preferences over phone design is.

I would agree but he managed to fit in several sentences apologising for pointing out how bad the US cellphone infrastructure is. A simple mitigation would have been much more efficient.

Unregistered wrote:

He mostly writes about nordic countries, which have the same population density (Sweden) or are even more sparsely populated (Finland) than USA.

I would suggest that Finland with 5.5 million people in 340,000 sq km is significantly easier to cover with a cellnet work in a nation with 300 million plus people in 3.75 million sq km including vast mountain ranges, deserts, plains etc.

Finland is only half the size of Alaska in territory. Finland would fit into the Great Basin with room to spare.

Cell coverage for the USA is a massively difficult undertaking.

He seemed to ignore the 'unlimited data' plans. I think unlimited data plans completely change the use of the cell phone - they make wifi almost useless (only necessary for transferring large amounts of data), which is more of a focus in the US.

I think this was one of the smarter parts of the whole 'iPhone' package - forcing people to have unlimited data plans completely changed how they used the device. This might not have been such a big deal in non-US countries (still pretty big) since internet use from phones was very common elsewhere, but in the US the difference was marked.

Amazing post. Really interesting insights from an insider and pretty well balanced overall - very hard to argue with anything he says.

<i>This guy is a Nokia tool.</i>

So that's why he says the answer is neither Symbian nor iPhone but somewhere in between, and bigs up R.I.M. more than any other company at the end, right?

Someone didn't read this article properly. . .

Unregistered wrote:I would suggest that Finland with 5.5 million people in 340,000 sq km is significantly easier to cover with a cellnet work in a nation with 300 million plus people in 3.75 million sq km including vast mountain ranges, deserts, plains etc.

Finland is only half the size of Alaska in territory. Finland would fit into the Great Basin with room to spare.

Cell coverage for the USA is a massively difficult undertaking.

You might be right. However, when I lived in Silicon Valley, I could not even travel into the hills without losing cell phone coverage.

While living there, I once went on vacation to SiChuan in China (yeah, where the earthquake was). While traveling on the bus up in the mountains, I was amazed that the Beijingers on the bus were actually able to make phone calls from up there (and I guess SMSing was even easier).

When in Silicon Valley, I even had to purchase *two* phones - one which was digital SE t68i that would work with my TiBook, was advanced and worked well in the valley; and an analog Nokia that would better out of the valley. I kept the Nokia in the car for emergencies - the digital was close to useless out of the cities.

A couple of years after that, I moved to Beijing. I traveled quite widely throughout China - not just in the cities, but often in the subburbs. I don't recall ever not being able to use my phone. Of course, I don't tend to make too many phone calls in China, but I sent/received many SMSes.

So, your argument may well have merit when comparing with Finland, but China?....I don't think so. ...but that's just my opinion.

...or did I miss something?

> It's official - Tomi Ahonen is Rafe Blandford and I claim my �5

You say this because of the content of the article, or just it's exhaustivity[1]?

😉

[1] Is that a word?

Hi All About Symbian and all who posted here

Thank you for mentioning my blog posting and yes, I'm sorry it was too long, and yes, I agree that towards the end I rambled much too much. I was just pretty exhausted after all of it and it is, after all, just a blog, not a real book ha-ha..

I am really touched that so many read the long thing, and of the kind sentiments that on the whole I seem to have touched on most of the relevant points. Thank you all.

About the US size argument. That is a very compelling argument and on first glance it has a lot of merit. A vast country with very wide variety of geographic features. It would be very solid, were it not for other giant countries that have had less time to build their infrastructure, have less financial and technical resources to do so, and have managed better than the US. Specifically I mention China roughly the size of mainland USA and Russia, obviously the biggest country on the planet. Both have economies far smaller than the US and yet both have far better network quality - someone in this thread mentioned China already - than the US.

So yes, large area coverage seems like a good reason but as Russia and China have managed it (as has Australia, another country the size of mainland USA, and with far superior cellular coverage in all areas where there are populiations) then it now becomes only an excuse.

I do have the related article - follow the link from the blog - that discusses who leads and who lags in mobile. In my newest hardcover book, Mobile as 7th of the Mass Media, I end with a chapter on "why America lags" and explain all real reasons - and why some stated reasons like geography (or the dense buildings of cities like skyscrapers in New York and Chicago) are not the reason.

Thank you all and also for this discussion here. I'll come back Monday and see if there is more here and continue. I'll also be responding to the comments at my blog.

Tomi Ahonen 😊
www.tomiahonen.com

USA is geographical challenge for operators? I dont think so , there are bigger countries in world, Russia, China. Also more population in India. Australia is very diverse , sparsely populated.
All these have better networks than USA. USA is in stone age. I feel its joke when we hear that users get charged for incoming sms. Only USA seems to lag behind in terms of real smartphone usage, not crippled , so called revolutionary apple toys.
Revolutionary -- crippled bluetooth, they called tethering revolutionary, 3.2 revolutionary
closed iphone os revolutionary, still no multi tasking.
Joke

I haven't been to China, but their political system is entirely different from the USA, and their resources whilst economically smaller are more practical.

I have been to both India and Australia and can reasonably say that the coverage in both countries was patchy away from the population (In Australia it's goo along the cost and crap elsewhere. India was good in cities and pot luck elsewhere.

Unregistered wrote:I haven't been to China, but their political system is entirely different from the USA, and their resources whilst economically smaller are more practical.

I have been to both India and Australia and can reasonably say that the coverage in both countries was patchy away from the population (In Australia it's goo along the cost and crap elsewhere. India was good in cities and pot luck elsewhere.

Somebody tell us what Canada is like, that's the more valid comparison to USA.

And whilst some countries of large area are behind other large countries, fact remains that smaller countries like Finland are always going to be easy to cover by comparison.

I finished mowing my lawn (about 3 tennis courts in size) in under 30 minutes today. My neighbour with two soccer pitches was out all morning and still hasn't finished.

What a great article to read and I agreed with what most is said.

I do somehow think in the very near future the mass market consumers will shift ever so slightly to more tech savvy consumers so will not just appeal to geeks and tech savvy users of now. Yes European/Asian markets will still want phones that can quickly and easily send text messages but teens and pre-teens are more tech-savvy than your average daddy Joe. They sometimes know how to do things that adults working in I.T don't... But that's a different debate. lol

The next generation of users will look for more features such as social networking, digital camera, music players, games console, video cam, internet etc.

You act as though the poor quality of GSM networks reflects poorly on the US as a whole. Something worth pointing out is that Verizon and Sprint have far more widespread 3G networks than AT&T or T-Mobile, albeit on a system that is incompatible with the phones that most of the condescending European writers use when ridiculing us here.

They use CDMA-2000, though Verizon will be switching to LTE. Yes, Korea and Japan are ahead on the CDMA front, but they are smaller, more densely populated countries. As for India and China, consider that they invested huge sums in their cellular networks because they had no choice. Landline network coverage was limited and it was cheaper to start from scratch with wireless.

Finally, consider that, although we pay for incoming calls and SMS on most networks (US Cellular being the exception), we get larger data allowances for our plans (usually 5GB on an "unlimited" plan). We also get lots more total minutes. Plus, have you looked at the cost of outgoing calls from landlines or mobile phones out of network in Europe that subsidize those "free" incoming minutes?

Some of you comment as if Tomi was making a law as to why US smartphone users are better/worse than their ROW counterparts. He was making an informed observation with peeks into what is the course of battle now, and what will probably be the place where carriers and manufacturers both vie for more customer dollars and attention.

The takeaway though that US operators hedges their bets towards ensuring more profit without shoring up the networks is why the iPhone is playing out the way it is (changing perceptions, and the realization that ATT didn't build out its network enough to handle it).

I stated in the comments there, and I maintain still that the smartphones will (a) change in their definition; and that, (b) users will change their behavior now knowing what to pay/expect from a mobile. We are literally at the beginning of a major shift in acting/thinking with tech, and not all of the lessons of the past media paradigms will apply.

Some more food for thought.

I think it is a lot easier for Apple to let the iPhone evolve into a mass-market world phone than it is for Nokia to take a phone and modify it so that it sells well in North America. Apple developed a platform, knew its initial market, and rather wisely released a phone that didn't do everything, but did everything that it did do superbly. Most things that were "wrong" with the original iPhone, apart from the lack of 3G, could be fixed with software (something Apple excels at), and indeed, has been "fixed." 3G's addition was a given, and the 3GS introduction sees Apple branching out into multiple segments (as the "original" 3G remains for sale). I see sales of the iPhone line growing exponentially (or at least geometrically) over the next 5 years. As it is, they are already a major player in the most profitable segment of the phone market. Not bad for someone who wasn't even in the phone market 3 years ago.

Nokia's issue is that they, like most Euro/Asian manufacturers, are still stuck in their old ways that led them to domination in the 1990s and early 2000s, but that is fading. Look at how much the European carriers paid for all those 3G licenses, and to this day their most profitable service remains 2G-oriented SMS. What about video calling, mobile web, and all those other services that were supposed to take off? 3G data use is pathetically low in Europe. Nokia phones reflect this. The web is just not that efficient on a Symbian phone. Their attempts to "break into" other markets (e.g. n-Gage, Comes With Music) have largely been unsuccessful. Most "smartphones" aren't used as such, and are really just fancy feature phones in all but name. Why am I not surprised that it takes late-comer Apple to realize the promise of 3G, mobile web, and applications?

Basically, Apple shook up the entire market, and their influence goes far beyond their actual sales numbers. Before them, who would have envisioned capacitive touch phones becoming ubiquitous? Nokia still clings to resistive on the grounds that it is easier to use with a stylus (again clinging to the supposed "US/PDA" model). The only other company to come close was RIM, who thought outside the box and created another strong niche from which to expand.

In a larger sense, as RIM, Apple, Nokia (and to a lesser extent Sony Ericsson) have shown, it is far easier for a company that has cracked the US market to expand worldwide than it is for a company that has dominated the world markets to crack the US. While I agree the future lies somewhere in between the Apple and Symbian models, I think companies like Apple can do more to influence the future than companies like Nokia. Sometimes, companies who thrive in markets that "do things their own way" find it easier to think outside the box.

In many respects, China is evolving into another global powerhouse that, like the US, does things its own way. Perhaps in the future we'll see a Chinese version of RIM that branches out into the rest of the world. I see the same difficulties in a foreign company dominating China that I see with Nokia's experience in the US.

If my network tried to charge me for incoming calls I would dump them without another thought, I don't know how US users tolerate that.

out of network charges are getting cheaper and in contract minutes are effectively free. There's nothing to see here. The regulators continually work down the roaming charges.

I spent some time in the East Bay (Contra Costa). I gave up and started leaving the cellphone behind, so poor was the coverage. For such a populous area, at the end of the BART network, it was a joke and unthinkable in Europe. On the other hand, West Chester Pa, was near perfect.

The iPhone users didn't know what 3G was. LOL!

Hi all..

Good discussion and many valid points and observations.

On a radio network installation basis, to get city-wide coverage in metropolitan areas, there is mostly not much difference in covering cities of similar scale. New York or Chicago or London or Tokyo or Shanghai or Moscow or Buenos Aires, is a similar task. So if you compare New York and Chicago and Los Angeles to European big cities like London, Paris, Frankfurt; or Asian cities like Tokyo, Shanghai, Hong Kong; or developing world cities like Moscow, Buenos Aires or Johannesburg, the network experience should be similar.

By this test alone - and please ask your friends who travel a lot - it is totally obvious, to any travellers, that US cities have far more dead spots, and dropped calls, and network congestion than European, Asian or indeed developing world megacities.

Note, that there are some exceptional issues, in particular mountains, which make cellular coverage a more complex problem, consider Seattle or Oslo. Have a guess which has perfect radio coverage and which gets continuous problems in coverage..

Then for the rural area. Here the issue is not country size, it is like someone said earlier in this thread, it is population density. The population densities of Sweden and Finland are far less than those of the USA. Therefore it is significantly more difficult and expensive to deliver cellular coverage to rural areas the less dense that country is by population, ie to cover Finland or Sweden - countries that are a bit smaller than California, alone, and together are a bit bigger than Texas - is a bigger problem than to cover equivalent population in America.

So, take your average freeway like I-80 or I-10 in America and start to drive. See how rapidly you lose network coverage. Then take an equivalent drive in Finland or Sweden, and drive. Finland stretches about the distance from New York City to Chicago. You can drive on the main highways of Finland from Helsinki towards Lapland, and maintain near continuous cellular coverage almost half the way - I've done it. But if you start from New York and drive towards Chicago, you won't make it through the tunnel to New Jersey before losing coverage, and yes, if you take the bridge, you'll definitely lose your signal within the Garden State (I've done that too, used to live in the USA for 12 years)

But the kicker is equivalent big countries. The five giant countries of roughly the same size, and also being singular monolithic landmasses, are in order of size Russia, Canada, USA, China, Brazil and Australia. Canada, USA and Australia are advanced, industrialized world countries. Russia, China and Brazil are developing world countries, and you would expect them to have noticeably worse networks than the developed countries.

Australia has excellent networks (but the coverage is non-existent in the central parts of the country where nobody lives). Russia, China and Brazil have excellent networks. Only the US and Canada have bad networks. Ask any of your friends or colleagues, who has recently - past 2 years - lived in two of these countries, and I promise you they all agree, the US and Candaian networks (and carriers, and their customer services, and their handsets, and their pricing, and their calling centers, etc etc etc) are the worst of these six and the four other countries are better in every way..

I do not mean this as a critcism of America, I love America and I do business there all the time. I just find it frustrating that the US industry is so backwards, that it sustains all these punitive methods (crippling the phones, locking the phones, even that disasterous PR move of the Sprint 1,000 of "firing" the customers who complained "too much" when the network was literally the worst company in america and had all sorts of legitimate reasons to complain).

But it is a fact. The US cellular coverage is not as good as similar sized countries. And there is no "logical" reason for it (geography etc). The only reason is greed. American carriers are not in any way incentivized to give good service. They sell you a bundle of near-unlimited minutes and messages, but the networks are so congested and patchy, that you can't use them all...

The one good point is, that very slowly, the US industry is also improving its customer service and overall quality. Things are getting better. But all of my colleagues from both sides of the seas, say the same thing, if they move to or from the US, they email me and tell about how stunned they are about the cellular networks (either incredibly positively surprised if Americans moving abroad, or depressingly distressed if foreigners moving to America)

Please readers understand. "Third world" nations like Russia and China and Brazil - give you better networks, better handsets, better prices, better quality - than the US and Canada.. Its not just the network coverage, its everything. And ALSO please note, the CTIA, the US industry body, and the CWTA the Canadian industry body - do NOT DISPUTE these international comparisons.. This is not just some silly Finnish ex-nokia dude sitting in Hong kong telling you this.. This is consensus view of the major industry bodies worldwide.

Ok. enough of my rant. I hope the above helps show to some who find this strange. It is not a fault of Americans, and not a criticism of the USA. It is just a fact of the current market status, perhaps not unlike the airline industry (did you notice American airlines are also rated among the worst in the world by customer satisfaction and anyone attempting the same routes flown by both US carriers and international ones, tend to find the international carriers far far better. I personally don't have experience of Latin American airlines, but I am talking of European and Asian airlines and just about every major US and Canadian based airline. It is night-and-day).

Tomi Ahonen 😊

Wow, this was the best article I've read in a while. I lived in a couple different countries before coming to America (where I am right now) and couldn't agree more. Most of my friends could not understand the concept of an unbranded, expensive phone, until the first iPhone came along. Even my mother, not the most technically inclined lady around, was baffled at having to pay for incoming calls/smss.

And regarding the out of the box experience, the N97 is good at that, with apps and widgets and homescreens pre installed. I still think, disregarding all the pessimism around, that Nokia knows where they're going.

It is hilarilous to compare the I-80 with a short journey in Finland. You could coil the I-80 up several times and not fit it in Finland. It goes out of the densely populated mid west, across Iowa and Nebraska and into the hills. Distances involved, cost, all make it more of a challenge in a country where the existing wired infrastructure is so advanced. And remember when there are a lot of people you need a lot of capacity, not just coverage, but concurrency. I believe the greed and control factors are correct, but the challenges in the situation include many that we just don't see.

Interesting that Norway and Sweden have DAB coverage, Finland does not. Did Finland go satellite radio like the USA?

That is a great post explaining why Nokia is getting their asses kicked. The iphone is a success because of poor US infrastructure? Wow.

1. There are a lot of reasons why the US doesn't have the same density and coverage as EU and other countries. That has a lot to do with structural factors (geography, use of the lower MHz bands for analog, market conditions). The US is also cheaper if you sign a contract and data plans are unlimited. He manages to leave out 1/2 of the US which uses CDMA.

2. He manages to complete diss Palm, and the Treo was the biggest smartphone in the us for most of the 2000s. That form factor legacy, plus the success of the star-tac, is why Americans like thumboards and flips.

3. Like all Nokia tools, he is focused on market share rather than profit share. That is where Apple will kill you. They don't need market share to take 1/4 of all the profits.

4. Can he just admit once that the S60 interface is backwards and there are no signs of improvement. Also support from Nokia blows. A two year old iphone runs the latest firmware. Good luck getting my e61 updated.

5. Anyone who thinks a keypad is better for SMS than a thumboard is seriously wacked out. People like SMS b/c it was cheaper compared to phone calls. With unlimited Night and weekends in the US, it took much longer for SMS to gain traction.

Loyal Nokia user

"The iPhone users didn't know what 3G was. LOL!"

I'm not sure what your point is. If I stopped 100 average people on the street in a European city, how many would know what 3G really is? At the end of the day, people just want their phones to work. What Apple has done with the iPhone is create a phone that switches seamlessly between Wi-Fi and cellular (2G/3G the same as any other phone). Because it makes accessing the web ridiculously easy, it makes 3G worthwhile, as evidenced by the web statistics of iPhone users vs. other smartphone users. The point is that the iPhone is the first consumer-oriented smartphone that appealed to the US market because Apple was the first company to figure out what American consumers really want from a smartphone. It has been a lot easier for Apple to adapt the iPhone for the supposedly savvier world markets than it has been for Nokia, LG, HTC et. al to adapt world smartphones to the US market. I think there is a reason for that.

Part of the reason that smartphone adoption is so much higher in Europe is not that European users are that much more savvy, but that European carriers "give away" those phones on the plans. Tomi admits that SMS is the main product consumed. At the end of the day, it doesn't take a smartphone to be good at text. An ordinary feature phone can have a decent keyboard and excel at SMS. Hence, we have lots of N-series devices out there being used for SMS and not much else. Yes, these phones have better cameras, are capable of playing music, accessing the "real" web, and being used as a GPS, but these features are largely underused on the average device out there because either a) they are too difficult for the average person to use, b) the average buyer doesn't know or care that the phones even have that capability.

[QUOTE=KPO'M;422826]"The iPhone users didn't know what 3G was. LOL!"

I'm not sure what your point is. If I stopped 100 average people on the street in a European city, how many would know what 3G really is?
[/QUOTE]

In the UK at least, the sell off of the licenses by the government to the networks was a major news story when it happened and raised a lot of cash for the exchequer.

[QUOTE=KPO'M;422826]
At the end of the day, people just want their phones to work. [/QUOTE]

That's unfortunate for a lot of people trying to use cellphones in the USA then.

Basically, the iPhone born of an entertainment device is the lightweight end of the market in europe, compared to the RIM devices, more widely accepted by business, and RIM have been outselling iPhone in the UK so far this year. Everybody else buys Nokia, which is why worldwide (worldwide does not mean the USA despite what a lot of Americans believe) Nokia is still kicking ass big time.

By the way, I can't stand Nokia phones. I still use an old Sendo.