I’ve been getting all sorts of press releases lately about new ringtones that are launching, and the general rule is that each is more desperate than the last. One of my “favorites” has been the annoying and offensive ringtone, for when you can’t be annoying and offensive enough on your own. There’s been talk of how a ringtone bubble has been building, as evidenced by the entry of everybody and their grandmother into the business, along with a proliferation of companies built on shady business models.

As if you needed more proof, here’s some that ringtones have jumped the shark: Donald “You Can Never Have Too Much Money” Trump now has ringtones. They’ll be lining up online for that, I bet.

Ok, an NPR affiliate — but anyway, I made my radio debut this week when I was interviewed for The Weekly Rundown on WAMC in the northeastern US about the ROKR and other music phones. The MP3 is up, and I’m about 33 minutes in if you’re interested.

Cuervo Tequila is claiming a phenomenal 80% success rate to a recent mobile marketing campaign, which is being picked up by the marketing press, like this article in Revolution.

80% would indeed be impressive, but if you dig a little deeper, I really don’t think it would have been much different using traditional techniques.

Cuervo firstly ran a PR-based campaign, supported by radio and posters offering people the chance to win tickets to a free party in a London nightclub. If you wanted to enter, you texted in and you were put into a free prize draw.

There are no figures for entries received and anyway, you couldn’t possibly say what percentage of people exposed to the message entered it. However, it’s probably fair to say that the immediacy and ease of entry boosted response rates to this element of the campaign.

The winners were then selected and sent their tickets in the form of an sms voucher. Of those who won, 80% turned up to the party on the night. In other words, 80% of people who had entered a competition to win tickets for a free party they had already said they wanted to go to, claimed their prize. Actually, I’m surprised it was that low!

Cuervo and their agency should certainly get a small pat on the back for using mobile as part of the marketing mix - although running a free prize draw by sms, rather than snail mail, is a bit of no-brainer these days. It would be like congratulating someone 10 years ago for allowing people to enter by post, as opposed to carrier pigeon.

But this isn’t pushing back the envelope of mobile marketing and the 80% response is no great leap forward for mobile marketing or marketing in general.

Intelligent mobile marketing can certainly achieve impressive results, but let’s not pretend it can achieve miracles.

This weekend, the 2 billionth mobile phone was connected, which is a pretty important milestone for the industry and for our very society too.

Another slightly mind buggering stat is that it took 20 years for the first billion and a mere 3 years for the next.

The world population is only 6.5 billion, so Nokia are forecasting slightly slower growth - the next billion will take around 5 1/2 years, they reckon. Meaning that sometime in 2010, around half the world’s population will own a mobile phone - and probably considerably more will have access to one. This level of technology penetration is simply unprecedented, as it bestrides both developed and developing nations. Is there anything else that comes even close?

Many great fortunes lie in wait for the entrepreneurs and investors who make the right bets. Just as many great companies will crumble away unless they accommodate the rapid changes that are already in train.

One of the old guard with perhaps the most to lose as the world changes from PC-oriented to mobile-oriented is good old Microsoft.

VC, Fred Wilson, has an interesting post speculating that MS has already used up 3 of its corporate lives and he wonders if they’ll do it a fourth time. Fred thinks that the driving force behind this is open source, but I think that’s only a symptom of the changes that are going to happen. Much more fundamental is that the mobile will become the primary way we access digital information and MS doesn’t even really have a toe-hold in mobile.

Fred calls the next phase on technology Web 2.0 but I think it’s actually Mobile 2.0 and once you get your head around that, you can start to understand that “paradigm shift” begins to look like an understatement, such as describing Everest as “quite a big hill”.

Brad Feld, another highly respected VC, inspired Fred’s post and it’s worth checking out too. Brad says that products like Vista and Office 12 will make 2006 the year of Microsoft. That may indeed be the case. However, unless they start seeing the way the mobile wind is blowing, it’s likely to be their swan song.

A week after launching its streaming channels from Sirius, Sprint now says it’s teamed up with RealNetworks to offer another streaming service with “five music channels, podcasts, music news and videos.”

Is anybody using any of these? Would be nice to hear your experiences with them.

In the presentation I gave at Mobile Monday Austin this week on messaging, one of the key points I tried to make (and hopefully the audience took away) was that things like MMS and SMS aren’t just P2P messaging applications, they’re platforms that allow for other applications.

Mark Donovan of M:Metrics (who coincidentally I interview this week for my next Gizmodo column) has posted a blog entry illustrating this point, via an anecdote about a road trip in an RV. If I had to pick just one sentence out, it would be this: “I only care about your technology if it makes my world better when I need it to make my world better.” Technology is great, but it’s real power is as an enabler for compelling — and ultimately useful — applications.

In case you’ve been underwater this week or something, Skype’s been in the news a a bit. With the big push from its purchase by eBay for a bubble-like figure, the “Skype is going to destroy all telecoms, especially mobile” line has been getting a lot of play. As I’ve been saying for a while, Skype and mobile isn’t a big deal. But this week, The Economist leads with “How the Internet killed the phone business”. That’ll probably shift some magazines, but they’ve got it all wrong, and Tomi Ahonen does an incredibly thorough job explaining why.

Tomi hits the nail on the head with his arguments of why Skype over a mobile data connection doesn’t have mobile operators shaking. What they have to worry about is Skype being used as a substitute, not a replacement. People will substitute Skype for standard mobile service on expensive calls — international and roaming calls, for instance. But many of the charges for these are already inflated well beyond margins acceptable to an operator, and the inherent advantage of a mobile phone over Skype — mobility, and mobility in a size more acceptable than a laptop with a data card — will still allow for some premium price. Skype is nowhere near being a replacement for a mobile phone, and it’s doubtful it will ever get there.

The comment of the week this week comes from Charlie Schick, who had a nice response to my little rant about handset subsidies and how they affect service from carriers:

“handset subsidies were removed in finland and italy. in finland, there is still no stopping the growth of handset purchases. in italy, the sales of handsets dipped when the subsidies were removed, but then started to climb and return to normal once folks were accustomed to full priced phones.

the problems with subsidies (and i am not whining as a manufacturer) is that it removes any value from the handset, such that folks couldn’t give a damn what phone they have, so long as it’s free or cheap. in this way a 6680 ends up on par with a basic 33nn phone.

also, in the us, you have all these buckets of minutes you need to use up every month, extremely long contracts, high termination fees, and user paying for incoming and outgoing calls. all this removes any incentive for the operator to improve service or retain customers - the contract and all guarantees that the oprator makes money whether the service is krappy or not.

real competition would be to have no fixed contract, calling party pays, and number portability without hefty termination fees - then the operators would have to compete for customers and would have to provide great services.

it is no coincidence that finland is mobile phone heaven - the competition here has been fierce: at least 4 operators duke it out for a few million users.

wake up usa - let’s have some real competition for customers.”

Back in June I wrote a post exploring the mobile payments sector - or what I called the next billion dollar market.

In the post I used Mobile Lime as an example of a company who were getting it wrong, in my opinion. In fact, I concluded “Mobile Lime, in the nicest possible way; Change or Die” , so I wasn’t exactly sitting on the fence when I wrote it. I was therefore very interested to read an article on Seattle PI which tested Mobile Lime in the wild, in the Boston area.

Would my theories and experiences be validated?

The first and most important point about any mobile payment system is what I called Buckley’s First Law of Mobile Payments:

If the transaction process is any more complicated than using a credit card or cash, it will never succeed.

Note the “never” part.

Over to Seattle PI:

When you’re ready to buy something, you pull out the cell phone and call MobileLime. An automated voice greets you by name. You key in your four-digit PIN followed by the location code, a short number posted in the store. Then you give the cashier the last four digits of your cell number.

It’s pretty fast - though with all those steps it’s slower than cash, unless you begin the keypunching even before the clerk begins to tally your order.

90% of the success comes down to usability. This is not a good system.

The next point I made, which is kind of related, is staff training. It’s an area that is always overlooked and in fairness, almost impossible to tackle effectively. The retail industry is notorious for its high turnover and seasonal and part-time workers, so even if you try to visit every single store and every single staff member, you’re still going to miss someone. This means that your service has to be simple and intuitive to use for the staff, as well as the user.

Back to Seattle PI:

In my first attempt with it, the sales attendant at KaBloom insisted I couldn’t use MobileLime to buy things. She thought it was merely a way to record my purchases so KaBloom could grant me rewards as my spending increased. Paying with the phone? That would leave her register short at the end of the day, she said.

I persisted, and tried to explain, but she stood her ground, and quickly the situation became ridiculous. Someone behind me was waiting. Unwilling to make a flower-buying commuter late for her train, I dropped my pleas, plunked down cash, and left.

Hmmm.

Mobile Lime also suffer from the classic chicken and egg syndrome that I wrote about. You can’t get enough merchants on board until you can show that you have lots of potential users. And users aren’t interested until they know they can use the system with lots of merchants.

Unless a payment system can crack this classic conundrum, they’ll never succeed, even if the usability is sorted out. This is not a nice-to-have in the business plan, but essential to success.

I know how I’d do it. How would you?

On the plus side, Mobile Lime have built into their service a merchant discount and loyalty tool:

Most attractive are the discounts many MobileLime merchants offer in exchange for being able to track your spending. I got two freshly made smoothies for a total of just $1.09 thanks to the combination of two such deals.

This gives the potential user a reason to use Mobile Lime, though I’m not convinced it’s a strong enough reason to overcome the violation of Buckley’s Law. I’d guess that many of these discounts are funded by Mobile Lime themselves actually, though there’s nothing wrong with that, as a short term marketing cost.

Longer term, someone has to create, organise and co-ordinate all the stores’ local marketing programmes and that’ll become a problem in itself. My experience suggests that retailers will rely on Mobile Lime to do the running in the next 3 - 5 years, which will also be difficult to scale. If users are using Mobile Lime primarily because of the offers and the offers don’t happen…..you see the problem.

The other potential glitch was that the system itself didn’t work several times, which the company claimed was down to switching computer systems for 20 minutes. Now, please don’t get me wrong - I have worked with technology for many years and I know that systems crash, upgrades must happen and things do go wrong. I also know that you should avoid live demo’s.

But if you’ve got a live payment system, you need back up and contingency to make sure that this simply can’t happen. Imagine the chaos if this were a popular payment method and the system went down on a busy Saturday in December? I also think that loss of service on the very day that a journo was testing it and in a 20 minute window when he was trying to make a payment was either incredibly unlucky or symptomatic of a bigger problem than they are admitting to, but let’s give them the benefit of the doubt.

In terms of results, so far Mobile Lime have signed up 80 merchants (most of whom seem pretty small) and 10,000 users. You could argue that this is just a test phase and in fact, they claim to be about to increase this “dramatically” with several nationwide additions to the merchant network. But I guess they would say that, wouldn’t they?

However, unless the company can improve the transaction complexity and time, I have to say I’d be surprised if a large offline retailer would take this on. Their Ops people would never approve something that slows down shop throughput significantly.

So, is there anything here to make me move away from my “Change or Die” gauntlet? What do you think?

In fairness to Mobile Lime, this is an insanely difficult product offering to get right. But the prize for the winner in mobile payments is more than worth the effort.

It seems sometimes like news is very streaky. The last few weeks brought lots of stuff on mobile TV. This week it seems to be music’s turn, so bear with me. Following yesterday’s post on dual-delivery systems carrying dual charges as well, comes a story on MocoNews highlighting the difficulty carriers are setting up for themselves in the mobile music download space. Long story short, the carriers want to get paid from downloads, too, making it nearly impossible to compete on price with wired download stores’ $1 per song. There’s just too many hands grabbing for too small a piece of pie.

Operators assume that people will pay more for mobile downloads because of “convenience”, by which they mean you can download songs from anywhere. I seriously doubt that’s a strong enough motivation for people to overcome the inconvenience of browsing through a download shop on a handset and pay more on top of it. Think about buying a ringtone through a carrier portal or something similar, then compare that to browsing the iTunes Music Store — because that’s how consumers will think. Why go through a difficult process and pay more, when for a short wait, you can find what you want more easily and pay less at home, then just transfer it to your phone?

Well, that’s assuming that you’re not caught in the middle of some DRM lock-in, of course, but I think you get my point.