At CES 2006, AT&T was quick to show off a highlight of its exhibit, the Yahoo!-enabled Nokia 6682 phone. The Nokia phone has all this sexy functionality \u2013 it can do all of the standard \u201csmartphone\u201d organizer\/calendar functions, acts as an MP3 music player and even shoots video. And on top of this we could scroll around the Yahoo! interface and do all sorts of things we could do on Yahoo!\u2019s Web site. Equally impressed. But the ebullient AT&T product manager was flummoxed when I asked why he was not concerned about the branding on the product. \u201cThis is a Yahoo! phone really, not a Cingular Phone,\u201d I said.At CES 2006, AT&T was quick to show off a highlight of its exhibit, the Yahoo!-enabled Nokia 6682 phone. The Nokia phone has all this sexy functionality \u2013 it can do all of the standard \u201csmartphone\u201d organizer\/calendar functions, acts as an MP3 music player and even shoots video. And on top of this we could scroll around the Yahoo! interface and do all sorts of things we could do on Yahoo!\u2019s Web site. Equally impressed. But the ebullient AT&T product manager was flummoxed when I asked why he was not concerned about the branding on the product. \u201cThis is a Yahoo! phone really, not a Cingular phone,\u201d I said. Indeed, except for the SBC\/Yahoo! logo stuck in the corner, I was essentially in a Yahoo! portal. After all, I\u2019m accessing my Yahoo! e-mail, my Yahoo! instant messenger, my Yahoo! preferences, and so on. It\u2019s Yahoo! at this point.Soon, this will be likewise linked to my Yahoo! U-Verse IPTV environment, and before long, my CallVantage phone I\u2019m sure. When all is said and done, I\u2019ll be able to do all the sexy stuff using my Yahoo! portal functionality and Microsoft IPTV software interface.Oh yeah, and pay a bill to AT&T each month.But hey, it\u2019s a competitive world. Microsoft has this same IPTV-style interface on its Xbox and Media Center platforms, and Yahoo! has an open SDK that is putting this same function on all sorts of other devices. Where\u2019s the differentiation going to come from? What makes my AT&T service sticky to AT&T? Price? Aggregated content?Take another example: Motorola and Google. I can now have one button on a phone that I push to search the Internet with Google. Hey, as a confirmed Google user, I think that\u2019s great. But too bad Motorola didn\u2019t want to have its own on-board search capability there (I heard somewhere something kooky about there being a lot of money in search). Did Motorola get a piece of the revenue action? Most probably so, but if you keep littering your phone with all sorts of other brands \u2013 brands that have no loyalty or exclusivity to your brand \u2013 you lose in the end, we think.Now don\u2019t get us wrong \u2013 we love all the neat new functionality coming on phones. And we surely understand the competitiveness of launching new telecom services. But the need to meet Wall Street\u2019s 90-day horizon for revenue growth and the benefits of brand name announcements are giving way to solid long term strategy.Take Microsoft IPTV for instance. Sure, it\u2019s a nice interface that is finally getting some meat behind it as the company figures out how to integrate the offering. But tell us, despite the promises of Microsoft, how really open has it shown itself to be in the IPTV space towards decoupling the applications from the middleware in its offering to allow telcos to offer a differentiated experience?One thing that was obvious from CES was that the innovation continues to come from start-ups. Video search is not new, it's just that Google is starting to do it. Extending the Yahoo! portal to non-PC devices is not new (witness the SBC\/Yahoo! IPTV offering mentioned above), it's just now everyone can do it. The really innovative stuff involving wireless and television is coming from start-ups that have to break into the \u201cNo one got fired for buying IBM\/AT&T\/Google\/Microsoft\/etc.\u201d environment.Telcos are going to the quick wins here and trying to piece together all these short victories into a long-term win against competitors. In a world where your competitors are locked out from doing the same thing, you can obviously win this long term war this way. But that\u2019s the fallacy here \u2013 not only are the long-term competitors changing from the traditional cable, satellite and ISP competitors to Internet brands, but it is these very Internet brands that the telcos are teaming with to show differentiation now. We can never get our pithy phrases right, but there\u2019s something about letting the lion into your house or a wolf into the sheep pen or something like that, which is applicable here.We love brands. We love the leverage and publicity they give. We love how one powerful brand plus another powerful brand can multiply perception and sales. But it has to be done smartly. Taking a company like Google that offers Google Talk, VoD, and is reportedly building a national fiber infrastructure, and putting then on your telco branded phone, something like that just does not strike us as smart.