McGuire’s Law

Big Bell Dogma is the entrenched mindset that seeks to solidify the status quo and inhibit the mobility revolution in order to protect legacy positions of power.

FCC chairman Julius Genachowski has written a letter to the FAA asking that outdated rules limiting the use of mobile devices in flight be lifted.

The chairman’s letter provided an admirable defense of the mobility revolution:

This review comes at a time of tremendous innovation, as mobile devices are increasingly interwoven in our daily lives. They empower people to stay informed and connected with friends and family, and they enable both large and small businesses to be more productive and efficient, helping drive economic growth and boost U.S. competitiveness.

Vive la revolution!

Years ago, shortly after starting this blog, I would write a post each week that catalogued all the items that were being replaced by the cellphone. Yesterday, Nick Drake, in his NY Times blog did a great job of bringing that perspective up to date:

Last week, I realized I didn’t need to carry a wallet anymore. My smartphone had replaced almost everything in it. So, it’s gone. Add that to the pile of things — my address books, Filofax, portable music player, point-and-shoot camera, printouts of maps — that have melded into the smartphone.

What’s next?

In an interview in Network World, Roberto Saracco, director of the Telecom Italia Future Centre, said “the major reason carriers are placing data caps on their LTE services is to prevent users from going exclusively with wireless data services and ditching their landline connections.” (Note, the quote is from the article in Network World and not a direct quote from Saracco.)

Network World’s article included this direct quote from Saracco: “You’re always going to want to make the maximum amount of value, and you don’t want to have your fixed-line network being cannibalized by mobile.”

This is a great example of Big Bell Dogma: Do what you can to slow the mobility revolution in order to protect the status quo.

Ever since Sprint announced availability of the iPhone, I’ve been swamped with questions and requests for help, primarily from SERO customers. Over the past few months, I’ve probably helped answer or resolve hundreds of customer issues.

I can’t keep it up.

You may have noticed at times that it’s taken me days to respond and I’m sure I’ve totally dropped the ball on some comments or emails.

Unfortunately, for many, I’ve become the default go-to source for any question to Sprint. That’s not a good situation for anyone. You need a more responsive answer (with authority) and I need to get back to my real life.

So, I’m implementing an early New Year’s Resolution. From now on, when I get questions, if they don’t start with “I’ve contacted employee care, but…” then I’m going to respond with “Have you contacted employee care?”

As a reminder, here are the two best e-mail addresses for getting answers to your SERO and EverythingPlus questions:

• For support questions (questions from existing Sprint customers about your account, upgrading your account, etc.): everythingreferral@sprint.com
• For sales questions (customers considering becoming a Sprint customer through the EverythingPlus program): everythingplus@sprint.com

Thanks for being a customer and for your patience with me.

Blessings,

Russ

Addendum: As Will notes in the comments, the Community site at sprint.com is also a great place to get help. Claudia wrote in separately pointing specifically to the section of the site best suited for SERO questions:

“The URL for the Plans forum where all SERO/EPRP questions should be asked is http://community.sprint.com/baw/community/buzzaboutwireless/plans.”

It’s been a couple of weeks since I posted the initial piece on the four drivers of change in the industry. I didn’t intend to take this long to post the second piece, but I guess I’ve been pretty busy…

As I indicated in my first post, one of the key drivers of change has been smartphone adoption. Obviously, smartphones have been around for a long time. The Handspring and then Palm Treo’s were great early smartphone products for Sprint starting almost a decade ago. Nokia, Microsoft, and RIM also have had smartphone platforms for many years.

But, it wasn’t until Apple introduced the iPhone in 2007 that the smartphone became a mass market phenomenon.

I believe the iPhone also introduced a fundamental shift in approach to the smartphone. I’m most familiar with Palm, Microsoft, and RIM, so my apologies for not representing Nokia well. Both Palm and Microsoft focused on creating miniature computer environments. The experience had much more to do with running applications on the computer and also using the computer to make phone calls. Yes, there was an e-mail client and a browser, but these were application-centric models in the traditional PC mold. RIM always has been very messaging centric. Yes, there was a browser and yes you could run applications, but the model was very much about messaging.

The iPhone was the first smartphone that truly was Internet-centric. You may recall that for the first year, Apple didn’t even support native apps on the iPhone - they expected developers to create services/apps that were browser based. Of course, the iPhone had the first beautiful browser that ignored any concept of carrier walled gardens and gave users access to the full Internet. A year in, the App Store similarly ignored the concept of a carrier deck and created a win-win-win opportunity for developers to develop/market/sell/deliver applications and for customers to enjoy a rapidly growing array of available apps.

Of course, this invited competition and Google introduced Android at the end of 2007, with the first handset available late in 2008. And today, patents and intellectual property are the weapons of choice in this competitive battleground.

IDC estimates that US smartphone sales have increased from about 5 million in 2005 to over 100 million in 2011. Not bad growth…

Stay tuned…

My latest article for Christian Computing magazine is on the power and the danger of the iPhone. It can be read here: http://www.ccmag.com/2011_11/ccmag2011_11mcguire.pdf

Just over a week ago, I presented “Seismic Shifts in the Mobile Ecosystem” at Sprint’s Open Solutions Conference. The session was well attended and seemed to be well received, so I’d like to share some of the content here. I’ll set up the topic in this post, and then dive deeper in additional posts over the coming weeks.

The basic premise of the session was that there are four key drivers of change that have resulted in ten seismic shifts in the mobile ecosystem. These changes reflect the Mobility Revolution and create opportunity for businesses that can understand and capitalize on these shifts.

So, what are the four drivers?

The first one is mass market adoption of smartphones.

The second is mobile bandwidth being built into all kinds of products.

The third is ubiquitous broadband (wired and wireless).

The final driver is the emergence of real world interfaces between mobile devices and the real world, including NFC, compass, gyroscope, cameras, and other sensors.

I’m already very late in writing an homage to Steve Jobs, so let me take a different angle…

Steve Jobs may represent the most successful example of a man and his company being able to maximize the profit from innovation. He and Apple have done this by taking an approach to innovation that appears to be a paradox: Steve Jobs was extremely innovative and extremely anti-innovation.

That Jobs was innovative hardly needs to be explained. He truly invented and reinvented industries over and over again. Years ago, I observed that Apple was great at introducing products that had great design, were first of their kind to truly appeal to the mass market, and that broke down traditional barriers. Over the years, I think the company has proven those points time and again. However, what I missed then was the nature of the boundary breaking… Jobs created and reinvented industries by breaking down the barriers between the digital and analog worlds.

Look at the industries that have been completely redefined by Jobs and his companies: personal computers (Apple II, the first mass market personal computer and the foundation of everything that followed), publishing (the shift to desktop publishing ushered in by the Mac), music (mass market adoption of digital music thanks to iPod/iTunes), movies (broad adoption of CGI-animation, led by Pixar), photography (Apple was a bit later to the party on this one, but the iPhone helped cement the role of the cameraphone), and telephony (or whatever you want to call this industry that connects the devices that are now central to our lives).

Bottom line, Jobs was a master at leveraging incredible design instincts to turn nascent ideas into mass market hits, and in the process completely redefining industries. That’s why I believe he was extremely innovative.

However, Steve and Apple have also been extremely anti-innovation. Not long ago I observed that Apple suffers from Big Bell Dogma. I summarized it this way: “They want to put constraints on how innovation can happen so that they dominate the ecosystem and extract the most value.”

We have seen it time and again. They limit how their innovation can be leveraged. No one but Apple can make a device running iOS. Only a select few carriers can sell it, and then under far more stringent parameters than any other phone OEM imposes. Apple regularly tweaks the rules under which developers can operate - each time shutting down one or more areas of innovation that are threatening to the company. Apple sues competitors seemingly to keep their products out of the market. All of these actions put constraints on innovation. Without these constraints, there would be much more innovation in the ecosystem, but not necessarily to Apple’s benefit.

Which brings me back to my original point. Apple, perhaps uniquely, does an excellent job of monetizing innovation precisely because of this innovation paradox. The company focuses (i.e. actually deselects distractions) on innovating to create insanely great products (usually building on the innovations of those that went before them), and then protects their financial benefit from that innovation using every possible means (great marketing, carefully constructed legal agreements with complimentary partners, full legal enforcement of intellectual property, etc.).

Who knows if Apple, the company, has so fully integrated the nuances of this model to continue to enjoy its fruits for years to come, and who knows if the strategy will actually pay off with the current spate of patent disputes and developer decisions, but part of Steve Job’s legacy will undoubtedly be his mastery of this innovation paradox.

It’s been a long time since I last posted. I’m also very behind in responding to comments, I apologize for that and hope to get caught up in the next few days. Between a lengthy overseas vacation and a full plate of work, it’s been hard to carve out time for this blog.

But, there are a few news items that are worth commenting on.

The first few items point to Sprint’s commitment to continuing to accelerate the Mobility Revolution. This shows up in a number of ways - Sprint has been scoring well in RootMetric’s network comparison tests demonstrating our commitment to the network investments that are necessary to support the Mobility Revolution.

According to Chitika, we’ve also been increasing our share of the Android market (see graph below). Note that Android sales from our prepaid brands (Virgin and Boost both have Android handsets that are selling well) are not included in Sprint’s numbers and probably are a meaningful part of the growth in “other”. This demonstrates our commitment to the open development environment which is key to customers integrating mobility into all aspects of their lives.

This commitment to the network and platforms necessary for the Mobility Revolution is reflected in how our customers use their devices. According to a Consumer Reports study, Sprint’s smartphone customers use about twice as much data as our competitors’ customers - proving the point that Sprint’s customers are way out ahead in the Mobility Revolution - making mobility integral to everything they do.

The final news item I can’t pass without commenting on is Google’s proposed acquisition of Motorola. This deal is a clear demonstration of the Mobility Revolution in action. Google, perhaps the most powerful company on the planet, has put their money where their mouth is. For a couple of years Google has been saying that mobility is their top priority and now they are proving it. As with any big deal, this one’s not a simple black and white, good or bad news story. I think I can best address it in terms of what’s good, what’s bad, and what’s ugly about the potential tie up.

The Good:

• Google gains Motorola’s patents, which help in the patent wars in which Big Bell Dogmatists have been trying to slow down the Mobility Revolution by impeding Android-based innovation.
• Google gains a better appreciation of the complexities OEMs face in building Android handsets, likely leading to improvements in the operating system.
• Google likely gains traction with Google TV through Motorola’s Set Top Box business, potentially bringing additional value to the Android ecosystem and encouraging some pretty interesting cross-platform innovation (imagine a Netflix or Hulu app with your smartphone as remote control and the STB as video player).
• Motorola’s strength in low-cost feature phones may provide Google with insights into how to expand the Android ecosystem into emerging markets.

The Bad:

• Motorola is obviously a strong competitor to Google’s other Android OEM partners. Samsung, LG, HTC, and others are likely to pause and consider their level of commitment to Android going forward.
• Google gains leverage in the Android and overall mobile ecosystem, making all other players work harder to earn their fair share of industry profits.
• The deal will require regulatory approval, which will take months, potentially slowing down innovation at Motorola, Google, and other ecosystem players.

The Ugly:

• Google has to convince everyone that they won’t unfairly favor Motorola over other handset OEMs.
• RIM, Microsoft, and Nokia are all in unstable positions in the mobile industry. Microsoft potentially has the opportunity to win the hearts of Motorola’s competitors, but if they fail to do so, they may find themselves with an unsustainable market position. Microsoft may also succumb to the urge to keep pace with Google by acquiring Nokia or RIM. And RIM’s only hope (other than being bought) is if enough of the ecosystem shifts from Android to Windows to keep RIM within sight of the pack.

What do you think - did I miss anything?

Yesterday, Verizon confirmed their elimination of unlimited data plans for smartphones and revealed the details on their new tiered usage-based pricing plans. In doing so, Verizon followed AT&T’s lead in adopting usage-based pricing as a weapon in their fight against the mobility revolution.

Since T-Mobile also started punishing heavy data users earlier this year, that leaves Sprint as the only national carrier still encouraging customers to embrace mobility for more than just talk.

Usage-based data plans can be a very effective baricade to hold back the mobility revolutionary masses trying to storm the status quo fortress (Bastille Day is a week from tomorrow…). If the Big Bells can get people to stop and question “Should I view/download that now on my mobile device, or should I wait until I get home and use my fixed broadband?” then they’ve turned the tide in the battle for the freedom that mobility promises.

Why are the Bells so set on slowing the revolution? I think there are two answers: money and power. Some financial analysts have observed that the U.S. wireline industry has already lost about $15B in EBITDA (a measure of profits) and that Verizon and AT&T are on track to lose another few $billion each over the next few years due to cord cutting. It’s also a natural response for a historical monopolist to oppose any threat to the status quo, to do everything possible to retain or grow market dominance so that they can dictate the pace and nature of innovation.

Of course, the Bells want to have their cake and eat it too. They don’t really want to kill the growth in mobility - that sector is their best hope for revenue growth. But they’d love to squeeze as much profit as possible by dominating the ecosystem and dictating how business models unfold.

How are other ecosystem players likely to respond to usage based pricing? If I run a business that depends on delivering high bandwidth content (e.g. YouTube), these Big Bell moves threaten my business model. If people are scared to watch my content, they’ll watch less and my value will be destroyed. What can I do? Well - I could go to the Big Bells and negotiate. I need my customers to know that they can continue to watch my content without worrying about data overage fees. In exchange, the Big Bells will exact their pound of flesh.

Of course, it’s handy that the Big Bells can point to the reality of rapidly growing data use to explain the need for usage-based pricing. Unquestionably, there’s a need for mobile operators to find ways to cover the rapidly growing costs of supporting smartphone users. But, it is my hope that we at Sprint will continue to find ways to do so that are fair, equitable, and continue to power the mobility revolution to the benefit of all!

Vive La Revolution!