The SUPERWEB: YOU win

Nasty three way tug of war

There's a three way tug of war going on in mobile and it is going to create massive disruptions in the web which is great news for smart entrepreneurs and great for consumers. Read on.

Two major and radically different worlds are about to collide: the fixed web and the mobile web. We're not quite there yet. A number of websites are not quite easy to navigate on a smartphone (even the iphone), there are missing components on the security side which prevent me from logging on to a number of accounts (I can't do banking for example) and so on. We're not there yeat but we're really close and what will result is one superweb.

Furthermore, accessing this superweb from a mobile device will provide some extra features and services that only make sense with a mobile device: GPS, presence, mobile coupons, mobile payments and so on (many of these services already exist). So while the mobile web is inferior to the fixed web for now, accessing the superweb from mobile will allow us to actually do more. I think that is really cool.

Actually, it is more than cool, it is HUGE
The significance of this superweb coupled with all the app stores popping up everywhere, is that anyone can now provide value to mobile customers in the form of applications and services and with value shift comes a shift in dollars. But how are the dollars going to shift?

Handset manufacturing playing tug of war with carriers
Mobile carriers (Rogers Wireless, ATT, Verizon, Orange, Vodafone ...) have traditionally controlled the end mobile consumer in terms of the critical piece: billing. Any service on your mobile (long distance, voice mail, text messaging, ringtones) was payable to the mobile carrier. However, handset manufacturers are wrestling that away from them with things like app stores. Nokia even announced that it will be including skype with some phones (will start with N97). Nokia might as well just put up their middle finger to the carriers.

An even more concrete example: I bought a twitter app from the app store for 99 cents and my carrier got absolutely nothing for that (Apple and the app developer share that revenue). Add webservices that bypass even the app stores and you can easily see the danger carriers are in: becoming the big dumb pipe. Of course, they hate that. All is not lost for the carriers of course,they are doing some cool stuff too, but that is the subject of another post (I don't think carriers are evil BTW).

Web developers playing tug of war with handset manufacturers and carriers
This one is less obvious but hang on for a bit, I'll explain. Right now, wireless bandwidth is still poor, mobile browsers are sucky and people haven't yet figured out how to build good mobile websites. Apps provide far superior functionality and usability on a mobile phone which explains why they are doing so well. This walled garden is not going to last more than a few years. PCs are now moving more and more to web services in the cloud instead of on-board applications you have to download. This same trend is going to happen in mobile devices since after all, they are simply very small, always connected little computers.

So basically, all seems fairly quiet with everyone catching up to Apple and all major handset dudes positioning themseleves to cut out the carriers from the applications market. While that is happening, bazillions of web people will ultimately be able to reach the consumer directly and cut out even the handset dudes. Fun stuff. Will be interesting to see how it will shake out .... either way though, it will no longer be business as usual which hopefully creates opportunities for you.

Cheers,
Allan Isfan
CEO, FaveQuest

Barcelona 3GSM trip report

In case you missed the previous post, I attended the 3GSM Congress in Barcelona last week. This is arguably the biggest show in the world that focuses exclusively on cellular technology. It is a pretty large show and is attended by roughly sixty thousands people, mostly wearing fancy suits and looking stylish ... no golf shirts here. Barcelona is one of the most amazing cities in the entire world. Coming out of the conference center, you are presented with a beautiful plaza with an amazing statue and fountain like you rarely see anywhere. At night, fire comes out of the bowl at the top! I strongly recommend you come to Barcelona whenever you can .. you'll be amazed. Just keep you belongings close at hand or as by magic, they'll disappear.

Besides the setting, the conference itself was extremely busy and packed ... this is a good indication of a very healthy vibrant business environment. Anyone who had the chance to attend some of the more telecom oriented shows like Supercomm a few years ago would be shocked by the excitement and energy in the air at this show instead of the sound of crickets.

I attended the show to reconnect with some key people, make new contacts and especially to get a strong pulse on the world of wireless and cellular. A huge success on all fronts .... very glad I made the trip even though I came back utterly exhausted like I have never been before. I flew the red eye on the way there and took such an early flight back on Thursday, I didn't bother sleeping the night before at all. Keeping in mind these people start eating at about 8:30pm and the night life starts at midnight, it wasn't exactly a restful trip. When I was back home Thursday night, I fell asleep 5 times while my 8 year old daughter was reading her book before bedtime ..... daddy ... wake up!!! My wife tells me I fell asleep before my head hit the pillow.

I have so much to tell about what I learned or reaffirmed, the blog would go on forever so I'll stick to the highlights.

Wireless providers are struggling to figure out what is next

The stock market has a strange way of forcing the value of companies to be dependent on future earnings. Wireless companies are desperately trying to figure out where growth is going to come from and many billions of dollars are at stake. If you ever analyze the various big service providers such as AT&T (SBC, BellSouth & Cingular), Verizon, Sprint, Telus, Rogers and Bell that provide multiple services such as telephony, internet access and wireless services, you note that the wireless division is the strongest. Doesn't everyone review quarterly earnings reports like I do? However, although you could do all sorts of cool things with you cellphone and especially smartphones, most of the revenue still comes from voice services ... i.e. minutes of use, roaming, long distance ... basically boring stuff and the revenues are getting flat.

All wireless providers are extremely motivated to figure how to sell you more services and increase average revenue per user (ARPU). This makes for some pretty cool stuff but much of it hasn't been doing the trick. Most non-voice revenue still comes from silly things like ringtones (roughly $5Billion in 2006!!!) and texting. If you're over 30 years old, like me, you don't get texting. These kids are as crazy about texting as business people are about the crackberry .... must be connected!! As my trainer told me the other day when I asked him how much he texts, he said "huge" ... nearly 2000 in the last month". That can't be quite right ... must have misunderstood ... either way, it was a big number. When people call him on his cell phone, his response is ... "dude, why are you calling me ... text me!"

So voice, ringtone, texting are already huge ... what is next? Video, Music, IM and Bluetooth are just a few things.

Video to your mobile

It appears that video on the cellphone is one of the expected key drivers of growth but the uptake hasn't been as huge as hoped in much of the world. You're thinking ... duh ... who wants to watch t.v. on a cellphone? Well, you would be hugely wrong. The cell phone is becoming the first screen in many countries, especially in ASIA. Some wicked phones were on display at 3GSM ... ultra sharp and clear ... very watchable. But, the services today are just too expensive and complicated.

If it takes more than two or three clicks ... forget it. Cost can also be ridiculous. If you don't have an unlimited data plan, which is the case for most people, data costs can be huge. Bell Mobility for example charges roughly $12/Mbyte for a Pocket PC or Treo plan!!!!*(&((!!!!. A typical song is about 4 Mbytes. So downloading a song from some third party location would cost you $48. Going off-portal can ruin you literally. These stories get out and it scares the crap out of everyone especially since it is very hard to actually figure what it will cost you. This is what is called the walled garden. You can pick flowers from within the garden all you want but stick your arm over the wall and it gets cleaved off clean leaving you bleeding and you don't even notice until you try to reach for your wallet. Ok maybe a bit dramatic but you get the point.

Music

Music on your cellphone is going to be so ridiculously huge. Why do you think Apple decided to build the iPhone? The iPOD is pretty cool with roughly 100 Million shipped so far ... a big number. But this is puny in comparison to the cell phone market which is estimated at 1 Billion units per year!!!! The market for music on cell phones, excluding ringtones, has been pegged at several billion dollars by the end of this decade. If you don't think people are going to listen to audio on their phones, you're once again way out to lunch. Stay with the tour! It is already happening everywhere else.

Instant Messaging

People of all ages are glued to their instant messengers. They chit chat back and forth sending cute emoticons ... lots of fun and useful too actually. IMs are coming to your phone and it will be very popular. I already have it on my pocket PC running windows mobile. I remember my wife MSNing with her mom as we were returning from Nova Scotia this summer and stopping by their cottage in Quebec on the way back. We were in the car and grandma was on the laptop we gave her. We decided Raclette would be a good idea for supper and she had it mostly ready by the time we got there ... it paid for itself right there!

Bluetooth

Bluetooth was actually a old Norse king. For some reason, he inspired a pretty exciting new wireless technology for close range communication. Bluetooth is being embedded in most laptops, many cell phones and even cars these days. It has been years in the making but this is now taking off like absolutely crazy. Many people are now making some pretty neat accessories such as headphones. I tried out a new pair being launched by Motorola at the show which was playing music from one of their music phones. It sounded great. I also checked out a retrofit kit from Motorola that allows you to connect to your existing card stereo over bluetooth ... sounded great from the cell phone. They were also demoing a small GPS puck that communicates with cell phones and PDA over bluetooth. I checked out an ultraportable 20G hard drive Seagate is launching called DAVE. You leave it in your pocket and you can stream music or video from it to your portable and save files and pictures to it. It worked very nicely over bluetooth (though it also has wifi I believe). I would be shocked if we didn't see cameras, portable screens and zillions of other bluetooth gadgets in the coming months and years.

Anyway, I have hockey at 7AM so I best retire to sleepland. More on 3GSM and cool stuff in the next post.

Cheers,

Allan