The Mobile Internet is dead – long live the Internet!

I think it’s time to stop using the term “mobile Internet”. In the early days of mobile Internet services, these were in WAP or similar formats, and usually within a separate universe compared to ordinary online Internet services. With increased bandwidth and capacity of the mobile devices the mobile and online versions have gradually converged. Today most content accessed through the mobile is technically integrated with the online web platforms, but often adjusted to the limitation of the mobile.

The mobile has become an additional access point to more or less any Internet service. We are referring to services “in the cloud” independent of access point and ordinary web services are increasingly viewed directly on more advanced phones such as the iPhone, parsed into a more mobile friendly format or through an app. What is then the difference between the “mobile Internet” and Internet? Well, there’s actually no difference as it is all one and the same Internet accessed and viewed through the computer, the mobile or, soon also to a high extent, the TV. However, there is still a need to adjust the content depending on context and device where the computer probably will be the exception compared to other devices, as it’s the only one with a full size key board.

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The network apocalypse is getting closer

Mobile internet services have gained significant increase in attraction and usage. About 20% of all active on Facebook use the mobile to access the service. 27% of the mobile phone owners browse the Internet, use applications or download content, according to comScore. 3G, smartphones and flat rate data plans are key enablers.

Apple demands that the iPhone is sold bundled with a flat rate data plan to encourage the use of data services. The success of the iPhone gives a good indication for how large the unmet market need is and what can be achieved when services are easy to find, buy, download and use in combination with simple pricing. High quality screens, improved data speed, and flat rates also open up for services that are quite data heavy such as streamed videos, TV and music, for example YouTube and Spotify. The perceived end user value per MB decreases as the users become more advanced and with the introduction multi media services. The dilemma is that the additional value is usually less than the additional cost of production. With flat rates we can expect that the usage of non-voice services will grow rapidly resulting in heavy pressure on the mobile networks, demanding further significant investments.

Flat rates as such are a good thing for the end user giving cost control. The network operator may also initially get an increase in average revenue per user (ARPU) as customers migrate to flat rate data plans, but exponential increase in data traffic drives cost and additional network investments. There is today no incentive for a player like Apple to decrease the data consumption. This situation should worry the network operators as they may be trapped in a situation with competition on flat rate pushing the prices down at the same time as usage increases heavily.

What are then the options for the operator? Trying to avoid introduction of flat rates on the market is probably not an option. To cap “unlimited” data plans is possible but the upper usage limit has to be set at a quite high level not become counter productive. We will also see attempts to increase the price but it may be difficult depending on the competition. Most probably these alternatives will either not be possible or may have a too limited effect. The equation does not add up and we may gradually move into a situation where the networks collapse as it may be impossible to justify further investments. It may be necessary to enter into stage of network apocalypse before we can rebuild the ecosystem on sustainable business principles. Is there then no way out of this situation?

Let’s go back to the original thinking of NTT DoCoMo regarding imode. This success story was created in times of quite limited network capacity. imode was built to maximise the end user value per consumed data volume. The whole system was built based on this basic idea safeguarding that all actors in the value chain should be happy. NTT DoCoMo thereby forced, as they did set up the rules, the content providers to develop services that used as little data as possible. It is now time to once again try to optimise the value for the end user to data consumption ratio, the value density. The operator needs to incentivise the content providers and device manufactures to promote concepts with less data consumption and to develop technology and services to avoid the collapse of the system. Is it too late for this? No, I don’t think so given the options. Flat rates are needed and are welcome but all, including the end user, should be incentivised not to waste data as we today are aware of not wasting any resources in the society.

The operating system forest may turn into a jungle

First when the mobile phone became a device for more that voice and sms we started to worry about the different operation systems. Ringing tones and games were down loaded and we started to surf the operator WAP portals. The non voice services were taking off and the enthusiasm was high. This was though shown to be rather difficult to manage for the content providers and operators due to different operating systems and even variations depending on phone model and brand. Many versions of each individual game had to be developed and we had to keep track of exactly what phone model the end user had and sometimes even the software version of the particular phone model.

The kind of obvious solution to the issue was to try to agree on open standards and platforms and harmonise the different operating systems. One solution after the other was announced to facilitate the further development, new operating systems such as Symbian, operator initiatives on common device specifications, and languages such as Java. But Symbian ended up being owned by Nokia, operator initiatives never materialised fully and a language such as Java ended up in many different versions. Why? The strategic agendas of the device manufacturers and the operators as well as others in the ecosystem were not aligned and most players thought they had more to lose than to gain through cooperation. All claimed to supports open standards but the drive to differentiate and keep competition out was evidently stronger. This has resulted in a forest of operating systems significantly increasing the barriers to innovation and decreasing the efficiency of the industry.

Then Apple iPhone added further to the complexity, having a very positive impact on the take up of new services but being a vertical it added yet another operating system. Next solution that we then hoped for was Android, being a free software and open source and we finally seemed to get closer to making it all more simple for the developer community. But is this really the case?

Now device manufactures, such as Motorola, start doing their own versions of Android. Where will an Android quickly mutating itself get us? If we to the present complexity and all verticals add a number of versions of Android, similar but not similar enough, this will not make it easier but rather turn the present operator system forest into a jungle. A decrease in number of operating systems that all know would make life easier and spur innovation is obviously a too scary thought for most and will most probably not happen within the coming five to ten years. The only short to mid term solution that seems available is to add a layer on top of all existing operating systems creating a virtual common operating system interface. This will make it much easier to reach the mobile users and minimise the hassle created by the jungle of operating systems. This needs to be made in a way so that the overall performance is not set by the weakest system and so that we achieve a good enough overall user experience.

Cloud computing – a key enabler for mobile service development

I remember the early hype regarding cloud computing within the computer and operator industries, this was the way to go and all the benefits were piled on top of each other in endless power point presentations. All wanted to become Application Service Providers etc. A lot of the thinking was of course right as it usually is, but the timing was wrong. Once again we have experienced that the take up comes later but then it’s in many aspects more pronounced and with a broader impact compared to what was expected. The impact of cloud computing is now widely recognised, as for instance this week’s cover of The Economist illustrates.

Cloud computing is today a given and it does dramatically change the business logic and balance within the software/computer/Internet industry. The triggers and drivers for the take off are not always the expected. The increased network capacity and low cost storage are for sure key enablers for services in the cloud. Initially the limited need for local computing capacity was seen as a major benefit opening up for cheaper computers, but as prices anyhow rapidly went down this has not really been a driver. I would say that the key drivers from a user perspective are good, convenient and easy to use services giving end user value in relation to the cost. The end user does not care about the technology and if the service is within the cloud or not, as long as it delivers.

We now see mobile services moving into the cloud. How will this change the game and will it experience that same development phases as was seen for the computer services? There are similarities for sure, but some quite important differences. Most services that now show significant increase in the mobile environment have been used since long on the computer. The mobile is not a totally new media in that respect but rather a new access point to existing services. The mobile environment is unfortunately quite complex with many different operating systems etc. Mobile phone capacity when it comes to computing and storage will be a limiting factor for mass market devices for quite some time. In this aspect cloud computing may be even more relevant in the mobile context compared to what it has ever been for the computers. We may now see a development where low end devices can make use of all types of Internet services.

Services and storage of data in the cloud will further drive the presently strong growth for mobile development and penetration. This is not anymore an expansion of what we so far have called “mobile Internet”, this is an expansion and an extension of the Internet. The mobile Internet as a separate parallel universe will now die and Internet will with its mobile access become ubiquitous – at last. This development will change how we access and relate to Internet, also when still using the computer.

Microsoft moves into the Universal Mobile Interface space launching OneApp

Microsoft announced a few days ago their launch of OneApp. OneApp is “a new software application that enables feature phones — commonly found in emerging markets — to access mobile apps such as Facebook, Twitter, Windows Live Messenger, and other popular apps and games.” Microsoft thereby aligns with the basic horizontal operating system independent structure of a UMI. The primary focus is on less smart phone penetrated emerging markets and the distribution will be through operator partnerships. First out is Blue Label Telecoms in South Africa.

It is very positive that Microsoft moves into this space and it will be really interesting to follow the progress. The trend that mobiles will rely more and more on cloud computing is clear and clients will be the tool to make this happen, even if they are quite complex to manage. It’s not really clear how Microsoft intend to play this game mid to long term but so far this UMI approach seems to miss some key elements of which the most important are that the services need to be operator independent to reach the full potential and that it has to be very simple and cost efficient to create applications for true long-tail content and services to become available. The business model would be interesting to know more about to evaluate the service fully. OneApp is part of Microsofts Unlimited Potential initiative aiming to “enable social and economic opportunity for everyone”. This is of course a good cause, but what is really the strategic agenda behind OneApp? Given the history, there will always be the suspicion that Microsoft this way try to create a virtual mobile operating system.

The launch of OneApp by Microsoft clearly shows that the UMI approach now gain acceptance and will be one very important way forward overcoming the present limitations of the mobile phones. We’ll follow this development with excitement.

The first ever true UMI is born!

I just want to inform you that the new version of Squace went live a few days ago. We now have the first service to illustrate the strength of the Universal Mobile Interface, UMI, concept. Hopefully more services will follow, but presently this is to my knowledge the only service that can be regarded as an UMI. The new version of the client already runs on about 1000 different phone models. For further information about the service and to down load please visit the Squace site.

What is it then that makes Squace a UMI and why will this release the potential of the mobile Internet? The new version of Squace has the capability to act as the mobile desk top comprising most key services, such as messaging, calling, web links and applications. It does so independently of operator and device and is fully controlled and customised by the user. In addition, it is also very easy to integrate existing web services or create mobile services enabling long tail content going mobile. Compared to the previous version of the Squace service, launched in the spring of 2008, the whole Internet is now available and there is also direct access to applications. The user interface has become even more intuitive. The number of clicks to whatever content or applications, the individual may prefer, are fewer than ever. The viral potential of Squace, being a fully operator and device independent service connecting all users, will be really interesting to follow. We are now in a similar position compared to the early days of the Internet with the position to experience massive peer to peer distribution of content, but this time in the mobile space and now including more or less the whole population on this globe, not just those having a PC. Exiting!

The new version of Squace certainly holds a huge potential and with more integrated content and applications this may be a key mile stone within the development of the mobile Internet. However, what this type of UMI service does is to fully integrate the mobile and the fixed Internet. This is making the mobile what it should have become a long time ago, just another window or access point to the Internet and its services. Well done!

Here are some examples:

GigaOM, Oliver Starr, TechCrunch, Google Search, Yahoo mobile

 

 

Will the business models of web 2.0 services work when expanded to the mobile?

Over the last years, many successful web 2.0 services have been launched, well received by the end users but many times struggling to reach break even and profit. Some made impressive exits based on future revenue potential and good timing. The business is often based on an advertising model and follows a standard Internet approach. First launch a very compelling free service with potential to spread virally, with the primary target to attract many users and gain significant penetration. In a second step, capitalise on the digital real estate by offering advertising space, premium services and sponsored links. Several have succeeded in getting the service and distribution right, but a quite limited number have made real money as the costs quite often by far exceed the limited revenues per user. You can always hope for an exit, but eventually someone needs to make a profitable business out of the service. In addition, operators are concerned by the increased IP traffic advocating more traditional telecom business models, reflected in the debate about net neutrality. The rights issues are not obvious as technology is at least one step ahead of the legislation. The financial ecosystem surrounding these new services has not stabilised and matured fast enough to judge the sustainability of the models.

Even with quite unproven business models within the present context, many of these players are now working on expanding their scope adding mobile access to their services. The purpose is to increase the usage by existing users, further improving stickiness and value of the services, but also to acquire new users and initially gaining an edge to the current offer. Already having difficulties with existing business models, will expanding into the mobile space further increase the pain or will adding the mobile channel significantly improve the overall business case? To convince and ask investors for additional funding may many times be a tricky pitch to make. Why expand into a new channel already before the concept has been proven financially? Especially given the financial climate and due to that advertising spending may not develop as once predicted. No wonder that many players are cautious investing time and money into going mobile. And many of them should be, while for some going mobile may be exactly the correct move.  

The mobile arena is the place to be and all predict a growing global business of very large magnitude: we soon reach 4 billion mobiles; it is the most personal device; it is always on etc. But will the existing business models be supported when the web 2.0 services are used trough the mobile? The following factors may impact the existing business model substantially and may make the web business model hard to transfer into the mobile context:

• There is much less room for banners etc.
• The service may find a very large audience but in markets that may be less relevant for the service and with an unfavourable ratio between revenue potential versus cost
• The usage pattern between the mobile and the PC will differ, resulting in shorter sessions and more to the point usage
• Present premium services may not be relevant in the mobile context
• Significant additional cost may arise depending on chosen technology
• Acquisition costs may rise due to cost of sms and clients
• Keyboards, if any, are used to a much lesser extent
• Search is less developed and users can not be expected to click on a link and banners if not really relevant
• Data speeds are limited
• Existing content rights may not be cleared for this media

The existing business model may still work well given the characteristics above, but for most this will not be the case. Then you either have to accept the fact that the mobile will mainly be a cost that should be balanced by increased loyalty, gaining new customers etc. or you can refine the model adjusting it to the limitations of the mobile and focus on what creates value in this new environment. Some assets of the existing web services can become very valuable when utilised in a correct way. As predicted below relevant links and ads will become very valuable. The end user is expected to rely much more on trusted parties such as micro communities and peers and will be much more inpatient demanding useful stuff just a click away. That given, a service holds a substantial potential if it can or can be adjusted to:

• Give a good user experience on the mobile, given its constrains in window size and keyboard functionality
• Be designed to be used regularly on the mobile
• Be capable, by profiling etc., to recommend very precise and valuable links
• Offer non intrusive and opt in advertising
• Act as recommendation engine based on peer to peer, blogs etc
• A natural home of relevant links where users share even sponsored links
• Encourage selection on relevant links on the web to be saved directly into the mobile user interface
• Offer premium services useful through the mobile

This is not any more about putting ads with limited value for the user all over your sites, this is now a game about being one of the ten to twenty preferred services and giving really relevant offers and links to the specific customer and at the right time and place. If you can do that, then you are in the position create substantial value, if you can’t then not even big volumes will save you.

This all applies to web 2.0, but what about other services? For those that mainly use the web for marketing of old fashioned profitable products and services the mobile will undoubtedly be a very important part of the marketing communication mix and will, correctly used, be a quite profitable and necessary component. These players should also consider developing their services in line with the above to further strengthen profitability.

In conclusion, the mobile may be just what many web 2.0 services need to capitalise on their core assets. Utilised wisely it should even be possible to make up for the presently weak existing business cases. In addition, the mobile channel will increase reach, loyalty and usage supporting the overall case at large.

Why search will not be as powerful when accessing Internet through the mobile

The new digital era has made the vast range of content available and just a few clicks away. This has resulted in that the end user has so much to chose from that it becomes hard to find what you really look for and that it’s very difficult for a publisher to become visible. This issue is addressed by search engines, such as Google, but as we all experience it is still a challenge to find what you look for and for those publishing it’s not really obvious why competing sites are ranked high by the search algorithms. There’s today a growing business in advising companies in how to optimise the sites to get a better score.

For many of us we start a session at the PC with search, and most of us use search every day and for sites that we visit regularly we don’t even save bookmarks as it is so easy to just type in a few search words or many times the URL directly. Many have predicted a similar behaviour on the mobile but this has not been the case and will most probably not be the case. The mobile is different; it is used in another context and has obvious limitations when it comes to screen size and keyboard.

When using the computer you usually click through for instance a news site from the start main page, then to for instance sports and from there to the specific results you’re interested in. Many take this path to what they are interested in even though they could have saved a bookmark for the specific pages of interest to gain direct access. On the mobile it is much more probable that you save bookmarks to the relevant information, as clicking through less relevant pages is painful.
The mobile is neither well suited to run an ordinary search as it is not easy to type in words and as the long lists of results are hard to digest and select from. In addition, the mobile is used in situations where you need specific information fast and you are not expected to have long sessions surfing around. There’s a need to get more or less direct access to the specific content of your choice based on your needs on the move. There will still be a need for search when using the mobile, but it will most probably be less important compared to other means to explore new content.

So now when companies eventually have learned about the importance of search engine optimisation etc. there is unfortunately some bad news, this will not be sufficient for gaining visibility and presence in the mobile. Should then those publishing on the web bother about this? They should, as been discussed in a previous contribution to this blog, all trends show that the mobile will become an increasingly important media over time. In addition, there are also extreme differences between developed and developing countries when it comes to the ratio between PC and mobile penetration. So how to combine the very personal need for specific individual “long tail” choice of information and that search is not the primary tool to explore new content?

Key to visibility in the mobile is to get a link on pages visited by the user. As the user can’t be expected to use search to a large extent, other means such as recommendations etc. will be used to find new links to save into the individual collection of bookmarks. The following ways to get new links can be expected to grow in importance:

• Recommendation of sites by trusted parties such as friends
• Links promoted on specific and trusted niche sites and portals
• Preinstalled links on new browsers/portals/UMIs
• Links down loaded directly from web pages used on the PC
• To some extent non intrusive opt-in high quality recommendations and sponsored links

Ads may also be important and can target quite well defined segments utilising the user profiling available by different mobile platforms. The number of ads will be limited due to the small mobile screen and as general surfing will be less frequent compared to the PC. The possibility to target specific segments and as the number of ads are limited, will make the advertising space quite valuable and expensive, but most probably a good investment when used correctly.

I recommend publishers the following to gain visibility in the mobile:

• Use existing digital channels to promote and download links to the mobile
• Don’t waste money on search engine optimisation etc. for mobile search
• If possible, be visible on link start packages when new browsers/portals/UMIs are downloaded
• Use advertising and sponsored link investments wisely and very well targeted
• Make it easy for the mobile users to share your links
• Incentivise users to share links and support viral distribution of your services
• Be directly visible in services, such as maps, travel information etc.
• Be visible on trusted niche sites/portals to reach the correct segment directly

On average a user can be expected to have about 20 bookmarks where maybe half are very personal (micro communities etc.) and all are saved to get direct fast access when on the move. The individual link collection thereby represents a significant value to the user, giving her direct access to really valuable content. And not to lose her own collection of bookmarks when changing phone or operator becomes very important. All these features are key strengths of the UMI concept. The significance of the link collection to the individual results in a collective quality control of all links saved. This will further strengthen the peer to peer exploration of new content but may also create a barrier for new content to find an initial audience.

The Reversed Long Tail – Key to the success of mobile Internet

Let’s give a though to what’s really valuable to you when it comes to content accessed trough your mobile phone. And your explicit and immediate needs in different every day situations.

Analysing what content people really value and want immediate access to, independently of were they are, can be divided into two main categories: broadcasted live streams such as sports, news etc. and on the other hand micro community or very personal stuff, such as your own contacts, photos, messages etc. Radio, television as well as to some extent the web, all with their merits and drawbacks, are utilised to broadcast content to a wide audience. Television is the dominating media for broadcasted live sports, while all three media are more equally important for the distribution of the latest or live news. The mobile can act as a complement for the distribution of both sports and news, but so far the additional value having access to these services through the mobile has been perceived as limited. For the majority the incentive has not been large enough to overcome the initial obstacles to get started and become a regular user of Internet services through the mobile phone.

What has shown to get people started to use Internet services through their mobile phone is rather the very personal need for unique information, information that is extremely valuable for the individual or a very small community and in a very specific situation when other media are not available. What type of information are we then talking about?
This is information such as: your own travel schedule; when and where your kids have their next football training; the phone number to your kids’ friends’ parents etc. Information needed when on the move and that facilitates a normal everyday life. These types of services are many but each one is used by quite few and they thereby belong to the Long Tail of mobile services, borrowing the term first introduction by Chris Anderson in 2004.

In a trial with a number of day care centres in Stockholm, done in cooperation between Squace, SICS ,Vinnova, the possibility to get schedules, contact information etc. has been very well received by the parents and resulted in that many now use the mobile Internet for the first time and regularly. The same effect has been seen as a result of mobile extensions of web sites for kids’ sport teams, school sites, local communities etc. The value of the content to the individual is not a function how many that value that specific piece of content but rather how unique and difficult the content is to substitute and access. The entry point to the mobile Internet services thereby seems to be the end of the long tail and not as was seen in the early days of the web where we started with the most popular services and then found niche content. It’s now time to turn the picture around; the success of the mobile Internet comes from starting with small services. This phenomenon is called the Reversed Long Tail. The users will gradually explore more services and probably the usage pattern will eventually be similar to the PC.

To improve the value of mobile access to the Internet, and to get people starting to use the services, niche content thereby has to be available. And as we all are interested and value different things in life the whole Internet and the long tail of content thereby needs to be accessible and in a user friendly way. Key to this development is that all micro communities and sites with a very limited number of users can distribute their content to the mobile in a very convenient and cost efficient way without bothering about all the messy technical complexity that we unfortunately presently have. They also need to rely on technologies that can deliver the content independently of what device the user has. The best example of a UMI that presently deliver this is Squace, that now also are just about to release their new version of the UMI Squace service.

Why companies should do mobile versions of their web sites

Many times I find myself taking for granted that all organisations and companies understand the importance of having their web content and services accessible through the mobile phone. All don’t, and many seem not even to have reflected over the need. Others have, but show a reluctance to create a mobile version of there web site. Indeed, there are a number of very good reasons why they should be sceptical, such as: cost, limited penetration, immature technology etc.

 

 

But what can they then gain by doing a specific mobile version of their site/service? This depends on the explicit requirements and environment. The needs the PC and the mobile phone meet can be categorised in two dimensions: timing – is the need immediate or can it wait; and complexity – does the service demand a large screen and keyboard to be used in a proper way. The first dimension, timing, is very hard to circumvent while the other, complexity, may be reduced by making the site much simpler and by using a concept such as UMI.

 

A very simple answer to those that wonder if they should do a mobile site is to respond with the following questions: Is it important for those you address to always be able to have immediate access to the site? If yes, is it possible for you to simplify the site so that it is possible to use over the mobile and more or less any mobile? I would argue that the answer to the second question is always yes, but it may demand some additional work to realise. But are then the users as logical as predicted above in terms of when they use one device as an alternative to the other? Do they really use the optimal tool? No, experience has shown that there are many reasons to act less rational.

 

Comparing the PC to the mobile, there are clear differences in how they are used, when they are used, why they are used, why they are not used, differences in screen size etc. The table highlight the limitations of a PC compared to a mobile phone and vice versa. Special attention is given to why the devices are used despite not being an obvious choice.

 

Reasons not to use the mobile when it still would be the best choice are mainly due to lack of experience and knowledge about the mobile. There are still limited possibilities for cost control, the settings may not be correct and the user may not even know how to use additional features and clients on the phone. These barriers are all expected to gradually decrease in importance as the maturity improves over time. Reasons to use the mobile when the PC would be a better choice are different in nature and can be expected to remain. The most significant one is of course that there is a quite limited penetration of PCs in many regions. But there are also less logical reasons such as laziness, similar to why many of us have made more expensive calls from a mobile as we don’t have the energy to look up the phone number and then make a cheap call from a fixed line phone when in reach.

In conclusion, you do not need to do a mobile version of your web content if: there’s no need for your users to access your site when only having a mobile phone available; and if the web site is so simple and with so limited functionality that it can be used directly on any mobile. I guess however that most will conclude that they need good, ubiquitous and user-friendly mobile presence and that the present web site is unable to deliver a good enough user experience. In addition, please keep in mind that the mobile will also be used in situations where you would expect the user to prefer the PC.