Hutchison offshoot pushes handsets for new mobile internet model

Many cellcos are focusing on social networking as a likely route to win more subscribers and boost their mobile internet usage. Since the popular application is particularly suited to mobile devices, as it can be integrated with location and presence facilities, it is expected to be the biggest driver of consumer mobile web services in the coming year, after email and search. Small would-be disruptive players and established giants are all trying to get in on the act, with Telefonica and Hutchison subsidiary INQ the latest to show their hands.

A small part of the Hutchison Whampoa empire is seeking to ride the social networking wave, expanding on the model of offering simple phones focused on a key integrated application - as pioneered by 3 UK with its Skype phone (see separate item). INQ, a new subsidiary being officially launched this week, is focusing on low end handsets that come with certain key web and messaging applications pre-installed. The aim is to appeal to the rising number of people, especially in the teenage market, who want to make more use of the mobile internet, but who have limited budgets and are looking for an easy-to-use experience. Just as Hutchison’s 3 operations are looking to harness the open internet business model on their wireless networks, rather than sticking to cellco-specific services and profit streams, so INQ will do the same from the device point of view, looking to open access, low-subsidy, web-optimized phones for the mass market.

The devices will launch first via 3 UK and Australia and will integrate several services but will be particularly focused on social networking, via the Facebook offering. It will also pre-install eBay, MSN, Skype and others, with quick links from the simple home screen. The innovative user interface, driven by simplicity and multitasking rather than the highly complex designs of true smartphones, was built on the Qualcomm Brew platform, which underpins a range of web-optimized environments, most notably Alltel’s. The INQ project is another breakthrough for Brew and its user interface system, UIone, in the GSM/HSPA world - Qualcomm has been using Brew to try to expand its reach beyond its traditional CDMA market, and the software is no longer tightly tied to that network. UIone is also used by O2.

“We’ve built a multitasking environment on top of the Brew platform. Basically you just log into Facebook and the client goes out and fetches all your contacts, punches them into the phone, and asks if you’d like to integrate some or all of your contacts with the address book. It’s the same thing with Skype and MSN,” said Frank Meehan, INQ’s CEO. This offers a good halfway house between an entirely siloed Facebook device and an unfettered web experience, which can still be confusing and hard to use for many non-enthusiasts. The contact list acts as the foundation for the whole range of apps including email and messaging.

The devices also aim to support modern mobile internet models by being sufficiently low cost to need little operator subsidy. They should retail for about £100. After the UK and Australia, Meehan says about six other markets will follow by mid-2009. Although 3 operations are the most likely initial partners, INQ wants to target a wider base than its sister companies and is aiming for a US launch, though it does not expect a US carrier deal until at least the middle of next year.

Meanwhile, Telefonica is the latest tier one operator to try to seize the initiative and put itself in the center of the mobile social networking world, creating an international Facebook community in all its territories. The Spanish multinational is following a lead set by T-Mobile, which was the first major to launch an integrated dashboard covering many social networking programs, as part of its Web ‘n’ Walk offering. Telefonica is extending a deal it pioneered through its UK arm O2, allowing access to Facebook from any of its networks worldwide.

The expanded agreement calls for a phased roll-out of the new services, with the first stage O2’s operations in Ireland and Germany; Telefonica’s homeland of Spain; and some of its Latin American territories - Brazil, Mexico, Argentina, Chile and Colombia. The second phase will include Venezuela, Peru, Ecuador, Central American countries, the Czech Republic and Slovakia.

Every participating country can include a link in the browsing menu of its handsets to Facebook’s mobile service, allowing customers to send photos and videos through integrated MMS services. Currently, more than 24m pictures are uploaded to Facebook each day and the service has 100m registered users. Telefonica has 171m mobile subscribers worldwide, a base that could create a major social networking community.

According to ABI Research, 46% of users of online social networks are accessing these from their handsets on at least some occasions. MySpace and Facebook were the destinations of choice, claiming 70% and 67% of mobile social networkers respectively; no other site reached 15% adoption. This may bode ill for companies like Nokia, which claim they can create a mobile optimized social networking experience that will outdo the big PC brands.