With its “Give It A Ponder” campaign, the handset maker walks the line between lecture and laughs

LG's viral marketing campaign is using humor to get teens to think before they text. Image: Facebook.

One in five teenagers have received a naked picture in a cell phone message. That's one scary stat that LG marketing executive Ehtisham Rabbani uncovered while researching how teens use mobile technology.

Most interesting, though, is what Rabbani did with the information. Rather than ignore the trend – or engage in a lot of hand wringing about the problems with kids today – he set out to change it. To that end, he and his team built a unique yet risky marketing campaign about bad mobile manners like sending racy pics, bullying and spreading rumors. Called "Give It A Ponder," it embraces YouTube (GOOG) videos and Facebook networks to spread its message virally online, and tries to convince teens to think before they text.

The risk? Well, as any parent will tell you, teens don’t like being told what to do – so Rabbani and his team had to be sure and get the tone just right, or they’d end up alienating the very audience they are trying to influence.

“There was a certain amount of nervousness about having this conversation with teens and how well it would be received,” Rabbani says. “So we did a bunch of research.”

To figure out the right approach, LG set up a series of mini focus groups, interviewing young people in groups of three so they’d be more comfortable saying what they really thought. Fortunately, the teens really opened up.

Ehtisham Rabbani, vice president of marketing for LG Mobile Phones, set out to talk to teens about their behavior without sounding preachy. Photo: LG.

“What we heard over and over again was, this is a message that teens are ready to talk about,” Rabbani says. “But it was important that whoever led that discussion didn’t talk down to them. And it had to be somewhat humorous, entertaining, and at the same time provide kids with a guiding principle.”

What they ended up with was an edgy video series starring James Lipton of Inside the Actors Studio. Though Lipton isn’t the obvious choice to reach a teen audience – he’s 83 – he has established his comedy chops in stints on Saturday Night Live and Late Night with Conan O’Brien. In LG’s “Give It A Ponder” videos, Lipton removes his beard and lends it to teens so they can stroke it as they think twice about sending risqué messages. There's nary a BlackBerry (RIMM) or an iPhone (AAPL) in sight – all of the teens in the commercials, of course, use LG phones.

The videos seem to be a hit so far. Since the campaign launched late last month, the Ponder Beard Facebook page has snagged more than 1,000 fans, and the YouTube videos have pulled in nearly half a million views. And that’s just the online audience – LG is also showing the ads on the Channel One network in high schools and in movie theaters before teen-centric movies like The Twilight Saga: New Moon.

The early success is a source of satisfaction for Rabbani, who has a personal connection to the campaign. At a recent family gathering, one of his teenage nephews left the room upset after receiving an intimidating message from an acquaintance – an example of mobile bullying, which LG’s survey found is even more common among teens than sending naked pics.

So Rabbani hopes LG’s message about mobile manners continues to catch on – and, he insists, not just because it’s good brand exposure for LG. “We have literally seen the traffic since the day we launched it go up 10x every single day,” he said earlier this month. “I’m hopeful that as the word gets out it will become a destination for kids to have a conversation.” It’s too soon to say whether LG can convince teens to change their mobile manners. But it's certainly built some nice buzz.

The trouble with being number one in any industry is that you have nowhere to move but down. Few companies know this better than Nokia (NOK), the Finnish telecommunications giant that has dominated cell phones for so long that in some parts of the globe the brand itself has become synonymous with the device.

Nokia has long excelled at making beautiful phones, but in today’s competitive smartphone market, beauty is just a start. The devices that make consumers salivate are the ones that have great software, offer the most games and social networking features, get great service, and come attached to fast networks. Oh, and they have to be cheap.

One company has shaped this new competitive environment, and it’s not Nokia—nor was it even a telecommunications company until 2007 when it debuted the iPhone.

Apple (AAPL) is eating Nokia’s lunch.

With the iPhone, Apple created a consumer lust for smartphones by showing us we could browse the web from our palms and enjoy it. It launched a device so perfect in form that it has become the gold standard by which all other devices are measured. And it moved the global hub of telecommunications innovation from Asia, where form factors had previously trumped all else, to Silicon Valley, where software makers now race each other to come up with the coolest applications.

None of this has been good for Nokia, which had already lost substantial ground in the North American cell phone market (see “Nokia’s North America Problem”). Their struggle for market dominance in the age of the iPhone has been less about nailing an innovation strategy than playing a hardcore game of block and tackle.  Enter the latest move: on October 22, Nokia filed suit against Apple in a Delaware federal court claiming infringement on 10 patents it holds on the integration of several technologies at the heart of Apple’s iPhone.

As my colleague Philip Elmer-deWitt points out, you can’t blame Nokia for having its nose out of joint.  Apple, according to Nokia, has gotten a free ride since the iPhone launched—a very fast ride. Apple commands 22% of the smartphone market in the US, according to IDC. Globally, it holds 12% of the market, more than doubling its share from last year.

Meanwhile, despite its best efforts, Nokia has steadily lost ground. It holds 40% of the market, down from 43% last year, according to IDC. And in the competitive North American market, Nokia is barely holding its own with just 3%.

Recognizing that the North American market is more crucial than ever, Nokia has spent the last couple years retooling its strategy. It installed its chief financial officer in the U.S. It opened new offices in Atlanta to be close to AT&T Mobility (AT&T) and in Parsippany, N.J., to be near Verizon Wireless (VZ). And it put several hundred product developers in its San Diego design center to work in collaboration with AT&T and Verizon Wireless on some new products.

The efforts have begun to yield dividends as North American carriers have started to support a slew of new cell phones—and even a couple of smartphones—but progress is slow going. “We’ve not been good at delivering promises in the past,” Niklas Savander, who heads up Nokia’s services division, told me recently, in describing Nokia’s relationships with the carriers. “It’s a trust thing and it doesn’t go away easily.”

Savander said he's also stepping up the company’s efforts with its Ovi store by making strategic acquisitions, mostly as a way to hire new software development talent. In September, Nokia bought social networking company Plum Ventures and traveling startup Dopplr.

So far, these changes have not been enough to jumpstart Nokia’s smartphone growth. On October 15, the company reported a third-quarter loss of $836 million as sales fell 20% from a year earlier (in North America, sales dropped 25%). And as the Christmas season approaches, bringing a gaggle of gadgets for Santa to deliver, Nokia has a paltry smartphone offeri. It’s easy to understand why the telecommunications giant, explaining that it has sunk $60 billion into the research and development that has helped enable the devices to take off, might at least want Apple to share the wealth.

Startups and disruptors (yes, Google) seek to rethink voice calling.

Andy Jagoe is zigging while the rest of the mobile world zags. Let everyone else chase the next hot iPhone app. He’s betting the next big thing is a twist on the same old thing: making calls.

He may be right. Jagoe, CEO and co-founder of startup 3jam, is one of several Silicon Valley dreamers who thinks he can reinvent the phone call. And really, let’s admit it’s in need of some Internet-style innovation. We’re in 2009, for crying out loud. Why isn’t call forwarding as easy as e-mail forwarding? Why don’t your voicemails live in a nifty little online inbox?

Remember web 2.0? It’s time for phone 2.0.

And it’s arriving. The most prominent example is Google's (GOOG) Google Voice, an invitation-only service that offers a free Internet telephone number that forwards calls wherever its owner chooses and delivers features like visual voicemail, call screening and transcription.

Mountain View-based Ditech Networks (DITC) has a similar invitation-only offering called toktok. San Francisco-based 3jam, which is open to the public and starts at $5 per month, adds tricks like convenient group text messaging.

Voice apps are coming

Not everyone is a fan. Apple (AAPL) caused a stir last month when it barred Google Voice software from the iPhone App Store, saying it duplicates features the handset already provides. But Jagoe thinks the services will prevail eventually. “It's going to be hard,” he says, “to prevent this kind of functionality from appearing on a phone.”

Indeed, people who use these services swear by them, and in Silicon Valley these days it’s a growing cohort. (At a mobile technology panel this month at Microsoft’s (MSFT) Mountain View campus, Google Voice users outnumbered Amazon (AMZN) Kindle users five to one.) The reason is simple: phone 2.0 is liberating phone calls the same way webmail liberated e-mail a decade ago. Now you can keep your phone number, your call history and your voicemails no matter how many times you move, change jobs or switch carriers.

Over a burger at a San Francisco lunch spot, Jagoe explains why this revolution in phone calls is happening now. First, it recently became more affordable for startups like 3jam to forward calls to landlines. Second, Neustar (NSR), a company that enables text messaging, this year gave Internet-based phone numbers a boost by allowing them to send and receive text messages. And third, mobile consumers increasingly crave better options for managing their conversations and staying productive.

Of course, even if the masses are ready for a phone call revolution, there’s no guarantee they’ll buy it from 3jam. If Google Voice opens up its free service to the general public soon, it will get a lot tougher for Jagoe to sell monthly plans. And then there’s the threat from the phone giants: Glenn Lurie, president of Emerging Devices at AT&T (T), tells Fortune that he’s keeping an eye on Internet-based voice services. Clearly carriers would prefer to be the ones selling those kinds of features.

Regardless, Jagoe has a couple of things going for him. 3jam recently finalized a deal with Peek, maker of the eponymous e-mail device, where 3jam will offer phone numbers to Peek users. With those numbers, users soon will be able to more reliably send texts as well as e-mails, and even get voicemail transcripts.

Perhaps more important, Jagoe is running a lean operation, having recently cut 3jam’s full-time payroll from 25 people to 5. He says the company is on track to be cash flow positive by the end of the year, which should help him to avoid the fate of VoIP peers like Yoomba and Jangl that burned through cash before they could figure out a long-term business model.

In the end, the business part has to work. Even in the phone 2.0 world, if you can’t pay the bills, you get disconnected.

It's undeniably interesting to talk about the health of Steve Jobs. And whether Apple plays nice with the competition. Oh, and the multiple conflicts of interest between the boards of Apple (AAPL) and Google (GOOG), even after Eric Schmidt removed himself as an Apple director. (Genentech Chairman Art Levinson remains on both boards, and unless something has changed recently, Apple lead director and Steve Jobs confidante Bill Campbell is still Eric Schmidt's executive coach and a heavily involved advisor to Google's senior managers.)

This is all true, and truly worth jabber-jawing about. It also explains why there hasn't been all that much chit-chat about an astounding if unexciting report released earlier this week by the respected Sanford Bernstein analyst Toni Sacconaghi that details just how freaking profitable Apple is. The once-beaten company's ability to spew out cash may indeed be its neatest trick of all.

Some of Sacconaghi's points to consider:

* In the first half of 2009 Apple's iPhone accounted for only 8% of the cell-phone industry's handset revenues but 32% of its profits, Sacconaghi estimates. Its profitability blew everyone else away, 40% operating margins versus a 7.5% industry average.

* Similarly in PCs, Apple's meager 6% share of revenues translated into a quarter of all the industry's profits. Apple does this, the analyst surmises, by only going after the high end, designing gorgeous  products and benefiting from the integration of hardware and software.

* All by itself, Apple accounts for as much as 20% of worldwide purchase of NAND memory, the type of chips that go into the iPhone. Such dominance gives Apple a tremendous cost advantage.

For years Apple was a yes-but story. Yes, its Macintoshes were pretty and well loved by hipsters. But its market share was minuscule and therefore it was irrelevant. All of a sudden we see in the financial data that revenue market share is the wrong way to consider Apple. Its share is high where it counts, profitability, which translates into a market value of $148 billion.

Sacconaghi, by the way, used his report as an opportunity to up his price target on Apple's shares to $185.  At $165, the stock price had reached his previous target.

It seems Apple's various battles with competitors, the Federal Trade Commission, and even would-be partners will keep the company busy for months. None of these issues, however, will put a dent in the company's profitability in the near term.  For financial types, at least, that's a pretty sexy story.

Randall Stephenson’s business is all about connectivity, which means these days the AT&T chairman and CEO spends a lot of time talking about Apple.

While the company may have an exclusive deal with the maker of the iPhone, Stephenson said don’t expect it to last forever, although he wouldn’t expand further.

When asked if he was completely satisfied with AT&T’s relationship with Apple, Stephenson said, “I don’t think I could get my wife to say that about me so I don’t think I could say that about a business partner.”

While he thinks that on balance the relationship with Apple works well, there are some areas he’d like to “tweak,” such as the expense of the handset. “You subsidize these handsets with the expectation you’re going to get a high-end customer,” he said, speaking on the back of quarterly results, released this morning.

Responding to an audience question, he did acknowledge that the company is having network issues in some markets, centered around were iPhone penetration is highest.

“It’s a big deal,” he said. “All of us rely on these services for our day-to-day activity,” adding that “you’re only going to win in this business if your network quality is the best.”

But Stephenson said no one is experiencing the same volume levels as AT&T, and the company is spending billions of dollars to address these problems.

Stephenson also revealed that he’s a big fan of the Kindle. “I bought one of the first devices out and fell in love with it,” he said. While the Kindle may or may not be the one that got away for AT&T, the company has partnered with e-reader maker Plastic Logic to capitalize on what Stephenson thinks are going to be very important devices in the future.

Mobile platforms VP Andy Rubin talks about Android, Chrome, and the smartphone.

The second Google (GOOG) phone in the U.S. had a showcase event last week in San Francisco, and afterward I sat down with Andy Rubin, vice president of mobile platforms at Google.

Rubin believes Google helps consumers

I asked him about Google’s vision for the Android smartphone operating system, whether the search giant is sending mixed messages by promoting both Android and its upcoming Chrome OS, and whether Android is really a good fit for netbooks. Below is an edited transcript:

Q. Android is open and free, so anyone can put it in their devices – phones, cars, washing machines, whatever. But what uses is Google actively encouraging? Are you just focused on smartphones, or are you trying to get it on other types of devices?

A. This is kind of where open source meets business. I encourage high-volume things. A million customers? Not that interesting. Ten million? Not that interesting, but heading in the right direction. A hundred million customers starts getting interesting. So what consumer products have the opportunity to affect 100 million, 200 million, 300 million customers? There aren’t that many. What’s the most successful consumer product on the planet? People used to say the DVD. It’s the cell phone. They’re everywhere. That’s why we focused on the cell phone first – it’s the biggest volume opportunity.

Q. What other high-volume opportunities are there for Android?

A. Use your imagination. Whatever it is – it might not be something I know about today – but if it’s high volume, I’m on it.

Q. iPods are pretty high volume.

A. The iPod’s a media player and that’s a pretty high-volume consumer product. The problem with iPods, when it comes to the Internet, is that they’re not connected devices, they’re media players. And so it doesn’t move forward our desire to see a lot of consumers connected to the Internet, getting access to information and having it organized in relevant, interesting ways.

Q. Now we’ve got Pandora and other Internet radio offerings on media players though, and they seem to be taking off in popularity precisely because they’re connected. Does that change your outlook?

A. What I hope it will change is hardware manufacturers’ perspective on what features they build into their products. You’ll see more and more connected media players, media players with WiFi built into them. I think that will become an enabler from a chicken and egg perspective, of having Android in a lot of those devices.

Q. It seems netbooks could be a high-volume device, but we’ve got two messages coming from Google at the moment – Chrome OS and Android. So what do you with Android and netbooks do – do you encourage that, or are you waiting for Chrome OS to come out?

A. I certainly don’t discourage it, right? Why would I want to do that? It’s providing as many consumer products as possible with access to the Internet. I don’t care if they use Chrome, I don’t care if they use Android. As long as we’re giving people access, the engine that is Google can do its job. We’re trying to get more people on the Internet so they’re enabled to use Google services. Honestly, it’s not a religious thing. I don’t care how we do it ,as long as we do it. I truly, deeply believe that we’re helping consumers.

Q. I get the sense that you personally care about Android and its success because your work on it predates your employment with Google. But does Google really care about Android itself, or is it a means to an end – getting more people onto the Internet so they can use Google search and other products and generate revenue by doing commerce through Google? Isn’t Google just as happy about an iPhone or a Palm Pre as it would be about an Android device?

A. I think when we introduced Android, the most telling answer to that question was when [Google co-founder] Sergey Brin did a video. And he basically said, when I was a college student and Larry and I invented Google, we based it off of open source. We used Linux. And he said he feels morally that he wants to give back to the open source community because it was something that enabled Google. So he believes, obviously, in running the business. But he also believes that the business wouldn’t have even existed if it weren’t for this type of technology. So what other businesses can you create on this type of technology? And it changes Google’s role into more of a mentorship role in helping those other businesses get off the ground. I think it’s a very, very broad view, different from your traditional CFO, who’s just focused on bottom line and incrementally doing stuff. It’s not an incremental vision. It’s a many-year, long-term vision. And the fact that the guys inside this company understand that is one of the reasons Google is successful today, and will continue to be successful. And by the way, that’s the reason I agreed to come work with Google. It’s that type of leadership that, for me as an entrepreneur, it enables every one of my visions. I don’t feel blocked at all.

A year ago this week Apple opened the floodgates and began letting software developers sell software for the iPhone, and geeks everywhere caught iPhone fever.

Since then Apple's iTunes App Store has swelled to more than 50,000 titles, logged more than 1 billion downloads, and inspired an entrepreneurial surge that's reminiscent of the dot-com gold rush — only without the illusion that everyone is making tons of money.

In fact, aside from Apple and AT&T, it's hard to point to many folks that are raking in a pile of iPhone cash quite yet. Matt Murphy, a venture capitalist at Kleiner Perkins Caufield & Byers, guesses that as many as 95% of the developers building iPhone apps "aren't trying to build a company on the iPhone" — they're just hobbyists making a little money on the side, or companies using fun iPhone apps as marketing vehicles.

The world is still waiting for the equivalents of eBay, Amazon, or Yahoo — the groundbreaking new companies that will redefine and inspire the mobile ecosystem.

Not that people like Murphy are discouraged.

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