Helio’s Blue Ocean

I spent last week in Los Angeles on a project with Helio. Helio is an MVNO, which is a fancy way of saying they are a mobile phone operator that leases their network, in their case, from Sprint. They were started in early 2005 as a joint venture between Earthlink and SKTelecom, the largest mobile phone operator in Korea, offering service in the US in May 2006. They have exclusive phones, of which the Ocean is their current flagship. You can read more about the Ocean’s development in May 2007 issue of MIT’s Tech Review (requires free registration).

I’ve had a chance to test out their Ocean handset and I must say I am impressed:

Good:

• Full QWERTY Keyboard: writing an email is actually a pleasant experience considering it’s a phone
• Messaging and Email Integration: I was using AIM and Gmail, and every time I got a message or email the phone alerts me and it’s one click to view and start my reply.
• GPS Navigation: Helio was apparently the first to offer Google Maps with GPS.

Shortcomings:

• It’s a little bulky.
• No full HTML browsing: iPhone has set the bar pretty high.
• Some of its most useful services are hidden under menus or need to be downloaded.

Despite its shortcomings, the Ocean has been getting some incredible free press and marketing from the tech community doing side-by-side comparisons with the iPhone. The fact that it is compared at all is impressive.

This started me thinking, in the light of the Ocean and iPhone and a landslide of new cell phones out there, what do consumers now expect from a cell phone? My personal wishlist would look something like this:

• Full HTML browsing (more for info than interaction)
• Large screen (I am still on the fence about touch screens)
• QWERTY keypad (now that I’ve experienced Ocean’s keypad, I can’t go back)
• Kickass Contacts list (in the end the phone is all about staying in touch)
• Long battery life (don’t we all need it?)
• Wi-Fi (for faster, cheaper data downloads and free calls)

In a conversation with a friend who lives in LA and used to work for McKinsey, this last point – free calling through wi-fi, we realized is a disruptive innovation. It is something that could revolutionize the whole mobile phone business. It is only a matter of time that wi-fi (or some better data communications infrastructure) will be widely available. Cities are considering providing free wi-fi to their inhabitants. Google has big plans. If this is so, then services like Skype will make the business model of charging for call service obsolete.

In this scenario, it is operators like Helio who have not sunk billions in the network infrastructure that have most to gain. If they can offer a phone that seamlessly switches between wi-fi and the cell network, then the traditional revenue structure of mobile phone operators who charge for the use of their pipes, in the form of usage minutes, data transfer and service fees will have to be rethought. It’s like Apple’s iTunes and the music industry. Once the transfer of music shifted from physical media to digital, the music industry that had the traditional models of charging for the sales of CD could not move fast enough to change and had to relinquish control over distribution to operations like Apple’s iTunes. The shift is only a matter of time – but it seems like the established mobile operators are trying get as much mileage as possible and no-one wants to be the first to rock the revenue boat. I think Helio should do it. They have nothing to lose and in the best position to find what the new revenue model should be.

I wish I could have spent more time checking out LA, but I just had to settle for a trip to In-n-Out Burger, and a hotel next to the Fox Plaza (AKA Nakatomi Tower), the site of the first Die Hard movie.