The roles and perspectives of five kinds of stakeholders are discussed and debated: the end user; the device and hardware manufacturers; the traditional media houses; the Internet giants and the telecom operators. All are very important and play essential parts in the mobile/Internet eco-system. The balance between them has shifted over time and will continue to do so. The telecom operators seem to be the most criticised and questioned. Is this unfair or have they earned it?
Historically the telecom operators have been enormously successful offering high quality global fixed line telecom services. Next in line was mobile telephony developed in cooperation between Nordic operators, such as Telia and Sonera, today merged into TeliaSonera, and hardware suppliers such as Ericsson and Nokia. The success of the operators has been based on a network centric business model. Even with many attempts to expand into new adjacent areas almost all of the profits still come from the original core of the business. Moving into new areas has shown to be difficult. This is probably due to limited knowledge and experience, cultural differences and conflicting business strategies. Focus has been on increasing traffic and not end user value, a strategy which now even may show quite dangerous risking ending up in a network apocalypse scenario. Should then the operators avoid new tempting areas and just stick to what they clearly understand, running networks and offer access?
The operators struggle with the dilemma of finding new revenue sources at the same time as they desperately defend the existing cash cows. The main difficulty lies within that the old network business is local/national and telecom centric and most new business is global and based on IP/Internet logic. You can’t move into the new business without starting competing with the old thinking. Moving from a fully controlled stove pipe environment to a horizontally layered business structure with fierce competition on each layer may be an almost impossible equation.
What we see over and over again are attempts to move into new value added services without understanding what it takes to become successful. The new services most often need to be competitive by their own on a regional or global scale utilising significant scale advantages. Instead the new business is subsidised by the old until some brave young business controller analyse the case, showing that the new business is not competitive, have a far too high cost level and do more harm than good.
We have entered into a situation of access independent services also for the mobile. As outlined in a recent report by Gartner the mobile will already in 3 years be set to overtake the PC as the most common web browsing device. Internet will finally be available for all of humanity through Internet enabled mobiles, especially important to developing countries. The operators are of course instrumental to make this happen. We need well run high quality and efficient networks. There is also a number of enabling functionalities, such as efficient payment solutions, location data, device management etc. that the operators may offer partners. However, there are still some very basic elements related to cost control that urgently need to be in place, the two most important being: affordable flat rates and reasonable and transparent data roaming charges.
There is also a lot of talk about utilising all the data the operators have about usage and the end user. However, this data is hard to get out of the systems and is rather technical in nature and not originally defined for marketing purposes. It’s time to realise that the huge amounts of detailed data hidden in the operator’s systems is rather useless. We need specific data depending on business logic, that can be used for marketing purposes, and that is automatically generated and monitored without first involving the technical staff for weeks.
The operators need to shift focus from traffic maximisation to end user and partner value creation. They also need to support device and operator independent initiatives, such as UMIs, as all will be winners when penetration of Internet access through the mobile increases. Differentiation of the access offering through exclusive value added services and content is a very costly and is not sustainable. Stop doing costly experiments in attempts to find new revenues sources in business areas you don’t understand. There’s no reason why being a bit pipe provider should not be a profitable business even in the future, except for if the regulator mess things up completely. Please realise that moving into an IP environment gives access independent services, focus on making data charges understandable and affordable and incentivise all to maximise the value to traffic ratio.
I was asked at the Mobile Monday event at the Squace office in Stockholm yesterday what people read on this blog. Going through the statistics over the last year some conclusion may be drawn. If this says anything at all regarding general mobile trends could be debated. The top three posts discuss the importance of the mobile to developing countries, as a new marketing channel and as a way to distribute long-tail content. Reflecting key industry trends? Yes, I think they do.
Below the top 10 blog posts are ranked based on popularity:
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 reach of the mobile phone by far outnumbers any other communication device. There is today about 4 billion mobile subscribers and half of the worlds population is estimated to have the possibility to access the Internet through the mobile by 2010. This should be compared to about 1 billion PCs accessing the Internet. In addition the PC penetration is very low in developing countries. In Africa the mobile penetration was about 30% by the end of 2007 and is estimated by Africa & Middle East Telecom Week to pass 50% already 2010. This should be compared with the overall Internet usage penetration in Africa which according to Internet World Stats was only 5.6% by the end of 2008. The primary access point to the Internet will for the majority be the mobile and not a PC. Already today all phones have the capability to receive and send sms giving messaging services a superior reach but there are clear limitations with sms compared to Internet services.
There are a number of issues to address in developing countries. These are different from one country or region to the other and the possibilities to find solutions are not the same. There are some general needs, such as political stability and democracy, education, working financial system, health care, distribution of wealth, human rights, transparency etc. The capability of the mobile phone to act as a tool to educate and gain knowledge as well as spreading viewpoints and communicate with the rest of the world, support but do of course not directly solve all the issues. This importance of the mobile phone has been recognised by organisations and agencies such as the UN and USAID, which support and reward new mobile services suitable to meet the needs of developing countries. The community MobileActive.org work actively in trying to increase the effectiveness of NGOs through mobile technology.
In industrialised areas such as the US and Europe, we presently debate the LTE (4G), iPhone, app stores and advanced smart phone (high end device) applications as the solution to increase usage of advanced and a new generation of mobile services. These new services will not for the foreseeable future be a solution for developing countries. They are many times too costly and are most often not possible to use independently of device and operator. What’s needed are services that give access to the Internet, the whole Internet and not just the very limited mobile Internet sites, through all mobile phones including the lowest level of Internet capable phones. There should also be possibilities to easily publish content directly through the mobile. These services also have to be quite cost effective so that they can be offered for free to the end user. The services also have to be able to work on more or less any phone and phone operating system solving the issue with different mobile technologies. Even though it is important that all Internet sites are made available they still have to be transformed into a format that: substantially decreases the data capacity need; makes them readable and possible to brows on the small mobile screen; takes into account that there are no real keyboards on simple phones. Services that from many aspects may be brilliant, but can only be used on smart phones or a limited number of phones, will not penetrate these regions. What’s needed is a general Internet service platform that can migrate the vast user base from just using sms to taking advantage of the full Internet, but done in a way so that it’s easy to use and gives a decent user experience when using quite simple low end phones. I believe the Universal Mobile Interface concept is what can make all this happen.
Let’s invite the rest of the world to the Internet by making it possible to access the web over simple mobile phones. I’m convinced that we then put a very powerful tool in the hands of the people to support them in their ambition to improve their situation. In addition, this will also unleash massive innovation based on specific needs, as well as local limitations. Utilising a general platform that works independent of device and operator will also create an environment where viral and very fast distribution of information and services is possible. I really look forward to see how this can spur development and awareness.