It was pointed out via Twitter that the Operator should concentrate on delivering a great pipe. I’d like to think we can bring more to the table than the pipe, but on reflection I should have included the delivery of a world class network as one of the assumptions listed in Part 1.

Before I move onto the role of Customer Services, the interest in the marketing discussion justifies a little more attention. Last week we announced that, uniquely, O2 Litmus has started a marketing campaign to promote the Litmus Developer community to 1 million of O2 UK’s consumer customers.

This coupled with the instigation of the O2 Litmus “App of the week”, where we promote an app across our social media channels, has hopefully raised the bar in terms of an Operator’s commitment to increasing the profile of 3^rd Party Developer offerings with its customers.

Throughout November 2009 we will contact 50,000 select O2 UK customers per day inviting them to participate in O2 Litmus via a personalised email invitation, with a competition incentive for completing registration.

The sample group of customers have been carefully selected based on a number of criteria including handset ownership, usage of mobile data services, and the customer segment they sit in. We will of course update at the end of the campaign, but the initial results are very encouraging. Our registered customer base has increased 28.5% over the first 7 days of the campaign. To maximise cut through we are also sending a follow up SMS message to all customers that successfully received the email but did not open it within a predefined timeframe.

A great example of the “hidden” value that this kind of exercise can deliver is we have discovered an existing O2 UK customer that has participated in beta testing for Microsoft products, and has agreed to become an O2 Litmus admin to help us support and engage the fledgling Litmus community.

To provide you with some insight into the high quality of the Litmus community, here are some interesting facts and stats about the registered customer base ahead of the start of our current marketing campaign:

• Impressive levels of previous testing experience amongst the target audience, from websites, phones and software through to novels and cosmetics.
• 59% of O2 Litmus customers are Pay Monthly Consumers
• Over half (53%) of the Pay Monthly customers on O2 Litmus are on £35+ a month tariffs
• O2 Litmus members have a tenure of over 20% longer compared to a typical O2 consumer customer
• O2 Litmus customers have higher Voice, SMS and data usage than a typical O2 consumer customer
• 38% of O2 Litmus members use over 10Mb of mobile data per month
• There is a higher Male bias amongst O2 Litmus customers (66%) compared to the overall O2 consumer customer base.
• Customers going for O2 Litmus tend to be aged between 18 and 45, with 32% falling between 26 and 35.
• From registration data, there is a very diverse handset ownership pattern in the membership base. The Nokia 6300 is the most common handset in the member base, but only represents 6%  base share

Hopefully this data reinforces the high quality of the customer resource that we have made available to our Developer partners for testing and co-creation. They represent the cream of O2’s consumer base, and more importantly they have opted in to participate with O2 Litmus, indicating their willingness to be hands on, if the right apps and services come through.

As a refresher to Part 1, I explored the marketing support a Mobile Operator can bring to the table in answer to the question: “What role does the Mobile Operator have to play in the Developer ecosystem?”

Now on to the second part of the answer: Customer Service.

The world of mobile apps is still a very scary place for the average consumer.

Our consumer research tells us that trust and reassurance in times of trouble is the number 1 deal breaker for consumers getting involved in Developer programs.

Customers are fiercely protective of their personal data, and do not want to be spammed by Developers promoting apps to them. There is a clear role for a trusted middle man to “referee” the interactions of the community to ensure all parties are comfortable and respected.

Secondly the risks of beta testing unproven software are not clear in customer’s minds. There is a lack of understanding if software can damage their handset, corrupt or lose their personal data, or introduce viruses and other malware. Therefore having the confidence that a trusted brand is there providing a safety net is a huge value add to unlocking the vast potential of customer led innovation.

Who is best placed in the App ecosystem to step in to address these consumer concerns?

I would argue there is only one kind of organisation that operates in the value chain that can bring the necessary Customer Service competences to the table; experience, investment, infrastructure, backed with a trusted brand: The Mobile Operators.

Also, importantly, the Mobile Operator can take a more agnostic approach in supporting the high degrees of fragmentation in the market. Operators support multiple device manufacturers and operating systems as a business as usual activity.

Customer Service provision is costly and complex, and not for the fainthearted. It is unsurprising that other players in the ecosystem have, to date, avoided providing the required consumer safety net that is so important to unlock the value in this nascent market.

Of course it is a broad statement to say Mobile Operators can step up to this challenge. Execution is an entirely different thing. Already there is big variation in the levels of service provided by Mobile Operators around the world, and many Operators are already struggling to face up to the significant  challenges of moving from supporting voice networks and billing, to supporting data services, laptops, smart phones, IPTV and other advanced services.

However I maintain that the Operators are in the best position to exploit this opportunity, should they choose to compared to the other organisations in the ecosystem.

As I have already stated, the Mobile Operators have the foundations in place to do this, and more than anyone else, they will be impacted by the move to 3^rd party apps, regardless of their own in house Customer Service strategy, as more and more of their customers use open internet access to experiment with new non Operator services.

The simple question is then; if this is going to happen anyway, why not turn this into an opportunity by differentiating through service and delivering a unique selling point for their organisation in the industry. By getting this right it unlocks the commercial opportunity for the entire value chain.

With the support wrap in place, customers will increase their experimental behaviour, driving adoption of smart phone devices, usage of apps, usage on the network, and build an engaged audience that advertisers are looking for, thus driving value for all stakeholders.

It’s clear that Mobile Operators have a poor reputation in the Developer community, much of this negative sentiment due to their historical behaviour and an irritating habit of over promising and under delivering.

I suspect many Mobile Operators move into this space with the best of intentions, but the day to day challenges of big companies get in the way,like changing management priorities and reorganisations disrupting both the teams running the Developer programs, and their corporate sponsors. I think another important factor is they still think like Telco’s and not like a software company.

We conducted a comprehensive Developer research project from across the world over the summer. A typical quote was:

“I still don’t ‘get’ why Operators even have development communities – all the information we require for development comes from the Apple Dev site for iPhone, Microsoft sites for WM, Symbian / Forum Nokia for S60 etc”

Common problems cited from trying to work with Mobile Operators were:

• The Operator is greedy. They either charge too much for APIs, or take too much revenue share.
• The “ecosystem” is as important as the customer – Developers feel unappreciated
• Too much focus on mobile apps / widgets (on device apps), need to focus on PC and communication / network services.
• Lack of direct customer access
• Lack of timely technical support
• Lack of clarity on processes
• Lack of flexibility in experimenting with business models
• Lack of clarity on purpose of Operator development communities
• Lack of test phones
• Operator specific APIs put too much risk on Developers
• Difficult to determine if an ROI is possible
• Device fragmentation remains unaddressed by Operators
• APIs in silos – need integrated framework
• Too many communities – Operators should partner with device communities, providing APIs. Device communities are far easier to work with.

I will attempt to address these concerns in future posts, and share additional insights from our research, but initially in a three part post I will expand on the arguments I used at the recent Mobile 2.0 Silicon Valley conference to tackle the over arching question: “What role does the Mobile Operator have to play in the Developer ecosystem?”

 Firstly two assumptions:

1. No Mobile Operator should assume they have a birth right to play in this space. Apple has shown that a flourishing Developer community can be created without the cooperation or permission of the Mobile Operator community.
2. If you are an Operator reading this, you have already made some level of investment to open up API’s and provide basic Developer support and encouragement.

It is vital that Mobile Operators take a step back and assess the unique assets and knowledge they can bring to the party. Just offering “me too” API’s, which themselves contribute to a key industry problem – fragmentation, is going to do nothing to address the perception problem of Operators “just not getting it”

So, with this pause for thought, what are the current issues facing both Developers and the nascent apps and mobile data industry? Secondly, if we can identify those challenges, what can a Mobile Operator do to help, if anything?

Part 1: Marketing Support

The over riding thing we hear back from Developers time and time again, is help me make money. We are in the middle of the current trend for launching App Stores, but 99% of these stores are simply retail environments.

In this situation the Developer is reliant on download counts, user ratings, and comments to drive their positioning & prominence in these stores. Whilst community endorsement of the apps and services within a store is absolutely essential, it should not be the only method to drive visibility for the Developer. Data from September quoted 85,000 apps for the iPhone in the iTunes Store alone. So how does a Developer stand out from the crowd?

Spotify famously drove it’s own PR campaign ahead of receiving approval for it’s iPhone app from Apple, building pressure on the store owner to accredit their app, and also helping to build user anticipation ahead of launch. However these tactics, even if they largely leverage free mediums like social media, are out of the question for smaller software houses because they just don’t have the brand equity of a Spotify to stand out in the noise of the market.

Gambling your business’s potential on a user generated star rating seems risky to say the least. That view was backed up by the VC panel at Mobile 2.0. Only GetJar currently seems to understand and address this problem from within their own version of the App Store model. They offer Developers an advertising package which effectively mimics Google Adsense. Developers bid to promote their apps on GetJar’s store and only pay an advertising fee when someone downloads their app.

Most Mobile Operators are pretty effective marketing machines. There is a huge latent opportunity to utilize the weapons in the Operators marketing armory to help support the Developer community.

Of course there are always a million and one things that Operators want to push to their customer base each month. How realistic is it to expect a product manager to sacrifice their customer messages so the Operator can promote a 3^rd party application instead?

Key to success is effective segmentation of the customer base to ensure you hit the right type of customer with the right kind of message. Identification of customers that may be interested in experimenting with apps can be deuced from a mix of the demographic and behavioral data available to the Operator.

Indicators like the type of phone the customer owns, their usage of mobile internet services, their consumption of premium content, and their demographic information can be layered to build up a target audience profile which can be tested with Developer related marketing communications. When we launched O2 Litmus in January 2009, even a fairly rudimentary profiling of the audience lead to a dramatic uplift in the performance of the campaign verses a standard “blanket” direct email campaign. The Litmus campaign delivered a 24% email open rate.

If direct customer communications remain challenging, increasingly Mobile Operators are embracing Social Media as an opportunity to engage their customers in conversation. A quick, and non scientific, scan provides the following data:

Sample Mobile Operator Social Media Accounts:

These emerging channels represent a growing opportunity to promote the Developer’s wares to a switched on digital audience who will be receptive to the message, and peers via the Developer community specific accounts. Currently, there is also less internal competition to use these channels compared to traditional channels controlled by the Operator. At O2 Litmus we are now promoting an “App of the week” on the O2 Litmus Twitter account to help support our Developers.

Finally another huge area of differential and value add a Mobile Operator can bring to the ecosystem is the effective use of its retail footprint. Unlike many of the other non Telco Developer communities, Operators can leverage physical retail stores and a face to face relationship with end users / customers.

Today’s reality is the retail footprint is mostly utilised for selling standard tariffs and handsets and customer service, but there is no reason to not consider creating a “store within a store” environment to promote 3^rd party apps and services. On the Mobile 2.0 panel I described a shopper experience of walking into a store, placing your phone onto a Microsoft Surface table and flicking app’s onto your handset to try out. That step alone could revolutionise the sector by bring apps into the physical, mainstream, world.

In part 2 I’ll discuss customer service, and the opportunity for Operators to step up to provide the support wrap around the world of apps.

It is the second year that I have had the pleasure of representing O2 Litmus in San Francisco. It really is a unique event in the calendar. It’s run by the community for the community. It’s large enough to meet a variety of really interesting and influential people, but small enough to be personal and interactive. Unlike so many events where presenters and panelists speak and run, at Mobile 2.0 they hang around to speak, listen and network.

The business day opened up with a keynote from Intel’s Pankaj Kedia. Pankaj’s opening video “what is cool?” is shown below.

Highlights of Pankaj’s talk were Internet is going mobile. Every mobile device becomes a mobile computer. Computers become truly personal presenting multiple ecosystem opportunities.

Some interesting stats were provided:

• 2 billion photo’s are uploaded to Facebook every month
• 1 billion Google searches per month
• 22 billion videos uploaded to YouTube per month
• 210 billion emails sent per month

Pankaj also covered Moblin, a new mobile O/S from the Linux foundation:

Next up was the first panel of the day, “Developers, Mobile Ecosystem Development & Third Party Services & Applications” the moderator was Gregory Gorman, Tertius Advisory Services.

• Mitch Oliver, Vice President, Ecosystem Development, Qualcomm
• Terrence Barr, Senior Technologist & Ambassador, Sun Microsystems
• James Parton, Head of O2 Litmus, O2 UK
• Oliver Gunasekera, Global Alliances Director, Symbian Foundation
• Patrick Mork, Vice President, Marketing, GetJar

A short clip from the panel is below. Later this week I’ll post my thoughts around the subject of what a mobile operator can bring to the mobile developer ecosystem which we discussed on the panel.

James Parton at Mobile 2.0 SF from O2 Litmus on Vimeo.

My personal favorite part of the day is always the VC panel, this year being no exception.

• Tim Chang, Principal, Norwest Venture Partners
• Michel Wendell, General Partner, Nexit Ventures
• Greg Franklin, Principal, IntellectPartners
• Frederic Veyssiere, General Partner, North America, Innovacom

Some observations from the panel…

• “mobile apps could be interesting lifestyle apps but not VC fundable companies” Could not disagree more
• Greg Franklin tip to get VC backing – you need to have strategic partnerships into the value chain somewhere
• Frederic Veyssiere tip to get VC backing – you need 80% of your team in place
• Anything to deliver better health care at lower cost will get the attention of the VCs
• Frederic Veyssiere – the healthcare ecosystem is very complex, which is a challenge for mobile ventures to crack
• Frederic Veyssiere – telecare apps as example of viable services for ’seniors’
• Tim Chang – daily active usage (DAU) is the key metric in 2010 – in-app charging and micro-transactions are key models
• Michel Wendell – avoid corporate investors at round A funding because they will want to heavily influence the company direction
• Frederic Veyssiere – trend is towards mobile corporate investment to take lead positions in early stage funding rounds
• Tim Chang – bring game mechanics to real world activities for mobile app success.
• Tim Chang – take gaming mechanics and apply to other markets – e.g. gaming + LBS (Foursquare), gaming + healthcare, gaming + music (e.g. Guitar Hero)

On Day 2 of the conference we moved to Microsoft’s facilities in Mountain View for a developer oriented day of debating technology and the challenges / opportunities of mobile.

Paul Golding represented O2 Litmus on the first panel of the day “Evolution of the Web on Mobile Devices”

Be sure to read Paul’s thoughts on his Mobile 2.0 Blog post here.

All in all, two great days of mobile business and technology, wrapped around excellent networking.