For a CEO of a start up who launches a new product, what just happened to me is very discouraging. I wrote a post about the new Fonera SIMPL that we will soon launch. I mentioned that it is called SIMPL because, as opposed to the Fonera 2.0N, it is not a buffer to the cloud. I was surprised at the amount of extremely negative comments that I got about the quality of the Fonera 2.0N. I am suprised because the reviews we got in blogs like Techcrunch, Wired, Boing Boing and many others are positive. Whereas, the comments that you can see here are extremely negative.

Now the danger of blogs is that the people who are motivated to comment are in general those who are experiencing problems. So if you listen too much to your blog’s comments, you can get very upset as a CEO. So to find out if the level of dissatisfaction expressed in the post about the SIMPL is realistic, I am running a poll among Fonera 2.0N buyers in both my Spanish and English blogs. And in the meantime, I would like to apologize to those who are experiencing problems and say that we are working very hard on a new firmware release. We also offer discounts to Fonera 2.0G buyers to upgrade to Fonera 2.0N, and I am open to any other ideas that the community has. In the meantime, we are getting large orders for the Fonera SIMPL which is just that, simple, an N router that shares some of your bandwidth so you can roam the world for free and make money when others connect to you.

I end by saying that I use the Fonera 2.0N every day of my life, that I am using one now to write this post. I connect my iPhone, Nexus One, and Blackberry to the Fonera 2.0N. The customer care group is, on purpose, right outside of my office, and I just can’t replicate the bugs that people report. In the past, I used to be the first one to find bugs.

The translation from Spanish is this:

The first choice is, while you would like to see improvements in the Fonera 2.0N it is a product you can use.

The second choice is, as the Fonera 2.0N stands now, with the current firmware, you cannot use it.

FON struggled initially in 2009. But we managed a steady turnaround and ended the year with phenomenal results. In September, we reached breakeven and launched a new WiFi device, the Fonera 2.0n. From Q1 to Q4, we increased our monthly gross revenues by 250%, decreased costs by more than 60% and tripled WiFi access. FON now has over one million FON Spots worldwide.

The outlook for FON in 2010 is even better thanks to the ever-increasing demand for WiFi. FON is well positioned, growing strong in several directions, including sales of passes and routers to individuals, and partnerships with fixed and mobile operators.

The FON community is growing because people want more access to free WiFi while roaming, and a superior WiFi experience at home. Our fixed partner list, including BT, ZON TVCABO and Comstar Russia, is growing because operators now clearly understand the importance WiFi and the benefits to partnering with FON. They reduce churn and customer acquisition costs, sell more broadband and increase ARPU. Our mobile partnerships, including E-Plus Group (a division of KPN), SFR and others yet to be disclosed, are growing because operators can offload data traffic. In sum, mobile and fixed operators who partner with FON make more money, reduce costs and get higher valuations than the competition.

Industry players are calling 2010 “the Year of WiFi”. RBS expects WiFi to play a key role in the world of fixed and mobile Telcos and significantly influence their value. For example, E-Plus, our mobile partner in Germany, was the only mobile company not downgraded by RBS for 2010. RBS and Morgan Stanley recently named BT, our major Telco partner in the UK, “Top Pick” for 2010. RBS specified that BT’s partnership with FON (BT FON) put it “in a strong position” and offered it “a great chance to benefit from WiFi.”

Benefits aside, many operators may soon be forced to embrace WiFi out of pure necessity. WiFi is quickly becoming an alternative to mobile data subscription. Demand is increasing rapidly for WiFi-only devices such as the iPod Touch and for WiFi-enabled devices, including smartphones (especially Apple iPhone, Google Android and RIM Blackberry), laptops, notebooks, eBooks, tablets and even TVs. Within three years, mobile networks may become “infill”, useful only between WiFi spots. Within five years, all phones in the US may be smartphones. RBS notes that WiFi progressions like these may very well occur faster than current market estimates due to the enormous cost savings for the customer (up to 50% on a usage-based mobile phone bill) and the influx of WiFi innovation (“smarter” gadgets, faster WiFi signals, value-added services such as voicemail to email, etc.). Finally, attempts to regulate or constrain WiFi growth or VoIP are not expected to stand up to public pressure.

I am calling 2010 “the Year of FON”. Not just because what’s good for WiFi is good for FON and our partners, but based on FON’s record-breaking sales already this January. We sold over 400,000 Foneras SIMPL to an important mobile operator, our largest order in history.  We also have several new partners and products in the pipeline.

I predicted the imminent importance of WiFi when I started FON in 2005. Since then, WiFi usage has skyrocketed and FON has become the biggest WiFi community in the world. With no slowdown in sight, 2010 should be the year for both.

Sources:
RBS: Telecommunications Equity Europe Report, 13 January 2010
Morgan Stanley: Telecommunications Services Industry Review, 4 January 2010
Frost & Sullivan, 2010 Outlook & Forecast: Mobile & Wireless Communications

This week, FON will unveil the newest Fonera WiFi device at the Mobile World Congress in Barcelona. Visit us at booth 2EZ19. The new Fonera SIMPL features the speed of 802.11n, a powerful, detachable antenna increasing reach, sleek design and tiny enclosure. It will be available to the public in May for 39€ and will give users easy, fast and affordable access to the world’s largest WiFi community.

The FON network is growing fast. We surpassed 1 million hotspots in December 2009 and we continue to add close to 100,000 new FON Spots each month. This growth comes from our users who activate their Foneras and from our partners, including BT, ZON Portugal, SFR, and Comstar Russia, who build FON functionality into their own WiFi routers.

Now, with the Fonera SIMPL, we have developed an even better WiFi device. We named it SIMPL for two reasons. First, because it has only FON’s core functionality of creating two WiFi signals – one for public and one for private use. It does not have any of the Fonera 2.0n features. Second, because we are working on a series of improvements to make the registration and connection process with mobile devices as simple as possible. Yesterday, WiFi was all about laptops. The future of WiFi is all about e-books, tablets and smartphones. We are working to optimize the FON experience on these devices.

The target group for the Fonera SIMPL is individuals who want to join the FON community by buying a great WiFi router. But we’re also distributing this Fonera to mobile operators who will bundle it with their smartphones to help offload 3G traffic. We have distributed test models already to mobile operators and they like it.

Here’s a sneak peek…

It took Fon almost four years to sell half a million WiFi routers known as Foneras. But in the last 2 months we have received orders for another half a million. This is because mobile operators have changed their view vis-à-vis WiFi. They see WiFi not as a threat anymore, but as a great add-on to 3G, to do the heavy duty work of downloading. Mobile operators know that WiFi cannot really compete with 3G in terms of mobility and that people will continue to want both 3G and WiFi, and will be willing to pay for both.

WiFi improves customer experience and saves CAPEX on a Smartphone when people are at home or in the office. Smartphones don’t need WiFi for email or Twitter, low bandwidth apps. But Smartphones do need WiFi when they become entertainment centers, when they are used to watch TV Series, stream video, stream music. And that is also when Smartphones become real burdens for 3G networks. Think of this, an N router nowadays has as much capacity as a cell tower, less range of course but at cost of $100 vs. $200,000. Here’s an article from the BBC that explains the problem that 02 is having with the iPhone.

With FON people autoconnect their Smartphone at home and also offer 20% of their bandwidth to others who may capture the same signal while at home visiting or nearby through walls and windows. So with FON, Smartphones get coverage at home and at other homes or offices with our Fonera routers. In certain countries, like the UK, FON has a venture together with BT, known as BT FON that has close to a million hotspots. That is great coverage and our network is becoming more and more valuable to mobile operators who want to complement 3G with WiFi.

But in order to preserve the ecosystem, and not go against fixed operators, FON is not free to those who don’t donate bandwidth. FON has a rule, “you share a little WiFi at home and you roam for free”, but if you don’t share you have to pay. In this way, FON has solved the leeching problem that free wifi networks have. As great as Free WiFi networks are, they never really took off because there are many more takers than people who offer WiFi. Also frankly, if they would take off, they would destroy most of the fixed telecom industry. With Fon there is a balance. To take you have to give. So people continue to buy fixed broadband services from companies like BT, ZON, Comstar, Neuf and other partners of ours. So in this telco/consumer ecosystem FON helps consumers, but also promotes fixed and mobile bandwidth. This is why FON has in its capital structure, telcos like BT and consumer internet companies like Google.

Here’s a video in which I try to make this point 🙂