Quazza, who recently became the boss of SurfKitchen, a Reading firm that provides handset software to companies such as O2, was one of 40,000 mobile-phone industry executives who last week descended on the Côte d’Azur resort for the annual 3GSM World Congress. 3GSM is first and foremost a technology show but, as Quazza observed, the industry’s suppliers are not above employing pretty young women to push their latest gadgets and gizmos.
But this was not the only sign of returning optimism. Mobile-phone manufacturers shifted more than 600m handsets last year. Stock-market valuations have improved on the back of evidence that network operators still have room for growth, even in seemingly saturated west European markets.
Perhaps most important, many leading companies have finally begun the long-delayed roll-out of their 3G services, offering video, music and other entertainment over a higher- speed connection.
Mike Beckerman, general manager of Microsoft’s digital music division, said: “People seem to be pretty pumped up. There’s a palpable excitement this year.”
Music is at the centre of much of that excitement. Microsoft was one of a host of companies publicising initiatives to crack open the mobile-music market. Nokia, the Finnish handset giant that has long been wary of Microsoft’s ambitions, agreed to embrace the Windows Media Player, making it easier for Nokia phones to use music stored on personal computers.
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Sony Ericsson also decided to put music at the centre of its strategy, and is being allowed by Sony to create phones under the Walkman brand.
Others, including Britain’s Sendo, unveiled handsets specially designed to make it easier to play and download music.
The mobile companies, desperate to find a popular “data service” besides text messaging, have jumped on the coat-tails of the success of Apple’s iPod, which has demonstrated the demand for “mobile” music.
The irony is that the iPod offers portable music without having to download it expensively over a mobile network. Apple’s iTunes website charges 79p per track. Vodafone Live charges £1.50.
Few doubt that mobile phones will soon double up as music players. But downloading is only one of several ways of putting music onto the handset.
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Duncan Ledwith, who recently left Microsoft to become European vice-president at Melodeo, a music software company, said the Microsoft/Nokia deal would make it possible for mobile users to load up with music just by “synchronising” with their PC.
Another option is to use memory cards. Richard Chernicoff, vice-president of business development at SanDisk, was in Cannes to launch a one-gigabyte miniSD card — the same storage capacity as Apple’s mini iPod.
Joe Steel, Virgin Mobile’s commercial director, said: “It’s not straightforward for the wireless industry. If we’re going to encourage customers to use airtime, as an industry we have got to be creative.”
The industry has struggled to produce another hit to match texting. Picture-messaging has yet to take off, hampered by high prices and dismal “interoperability” problems between different networks and makes of handsets.
Mobile companies need something beyond voice telephony to justify the billions they have spent on 3G networks.
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Some fear the industry has learnt the wrong lessons from Apple’s success, and that it is too quick to reap easy profits without thinking about creating a sustainable business as technologies evolve.
Dave Peterschmidt, a technology veteran who recently became chief executive of Openwave, a leading supplier of mobile-browser software, said: “People have tried to go for the quick hits early without thinking about the longer-term revenue models. That’s where people have got to do some serious thinking.”
Firms have reaped a bonanza from mobile ringtones, but Peterschmidt doubts that consumers will continue to be happy to pay anything up to £2.50 for each one. He is surprised the mobile has not experimented more, particularly with advertising. Google has shown how companies can generate huge revenues from targeted advertising without leaving its users feeling constantly exploited.
For all the money that is spent on advertising, mobile-phone brands generate little loyalty. Combating “churn” is a constant problem. Mobile-phone companies tend to fall back on the power they enjoy through the billing relationship.
Apple’s success came from a combination of a great-looking product and the inexpensive music available from iTunes.
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Quazza said: “The industry has been driven by devices. Customers buy devices, they don’t buy services. (Retailers) can’t sell services. They don’t have the incentives to sell services. There’s been a lot of talk about data. A lot of it is lip-service because we have to keep our investors happy.”
He added: “The industry has had a bananas-and- monkeys attitude. Throw enough bananas at monkeys and some of them will catch one. Everybody can be fooled by a technology tomorrow.”
Companies such as SurfKitchen and Melodeo are hoping to create more appealing services by identifying what truly interests customers.
For example, when customers download a song, Melodeo can use that information to offer enticing music from the same genre. The hope is this should make music services easier to use, and encourage customers to spend more.
Ledwith said Melodeo would shortly introduce a service enabling customers to send songs to friends or lovers. Recipients would be able to listen to a free preview before deciding whether to buy. Ledwith said the service offered record companies “free customer acquisition, a zero cost of sale”.
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Emblaze Mobile has spotted a similar opportunity. It is planning to offer phones with music preloaded — again to encourage the use of music services.
Laurence Alexander, the O2 executive about to take over as chief executive of Emblaze, said mobile operators could be a big distribution channel for the record industry. “Record retailers have no idea who bought what track or what they’re into,” he said. “When customers buy a ring tone or track, I can feed them more stuff depending on what genre they like.”
The power of this information, so-called customer- relationship management, opens up further possibilities. Melodeo talked about offering fans of a band early and “semi-exclusive” access to new releases — at a premium price.
The full-track downloading market is still so new — just a few months old — that it barely exists. Yet already the mobile industry is thinking about how to extract the maximum amount from each and every customer.