Business Observations: September 16, 2008 Edition

Standard disclaimer: don’t take from my selections, ordering, headlines, etc. any indications of the interests or plans of my employer (if you do, you’ll undoubtedly be disappointed when they don’t play out.)

CTIA is behind us.  Mobilize is looming large.  I’d better get this summary of mobile business buzz out quickly before I’m swamped with more content…

Openness continued to be the mobility theme for 2008 as the industry’s fall CTIA confab blew through the Moscone Center.

InternetNews’ coverage of the opening session with three of the four leaders of major U.S. wireless carriers talking about openness summarized the situation this way: “In a panel discussion that kicked off the show, the CEOs of the three top U.S. carriers touted open networks as the key to a even greater revenue in the future. That’s a sea change from the conventional telco wisdom that they needed to control what devices could access their networks and which applications could run there.”  The article quoted Verizon Wireless CEO Lowell McAdam as saying “All the people making applications for the PC desktop now want to move to mobile.  We couldn’t handle all that innovation, so opening up the doors and just protecting the network is only thing we have to do. Now, developers will place those bets.”   InternetNews notes “These statements are somewhat ironic, since in the early days of mobile data services, would-be developers had been stymied by a lack of access to the telcos and their networks.”  The article closes with a prediction by Sprint’s CEO Dan Hesse: “About 20 percent of users will adopt this very rapidly, and if their experience is good, it will grow.  It’s up to carriers to facilitate this.”

FierceWireless’ Sue Marek summarized the same session more concisely: “If you want to come away with one theme from the CTIA Wireless I.T. & Entertainment show, it’s that wireless networks are opening up.  But if you want to understand exactly what that means, you’re going to have to do some more probing. … During the opening keynote roundtable Wednesday with the CEOs from three of the top four wireless carriers, it appeared that some operators will focus on opening the network to devices (Verizon Wireless) while others will likely focus more on applications (Sprint and T-Mobile).  AT&T, unfortunately, did not participate in the panel.”

Just before the show started, Sue asked Sprint’s Kevin Packingham for a definition of Open.  Kevin’s response: “Open has become the trendy description for a strategy. Every year we go through a different trend and 2008 it’s open. There are two ways to approach this and these variations get confused. One variation is open access, which is the ability to take devices and recertify them on different networks. I don’t think there is a huge opportunity there. I don’t think that is something that a huge volume of subscribers are interested in doing. … Where most people are spending their time right now is application development. There is a lot of buzz around it.  … Right now it is too challenging and too big of an investment for developers to go to the mobile space. As an industry there is an opportunity for us to make it easier for them and get some more compelling services on the phone so we can really see this massive growth in data adoption.”

Meanwhile, the Phoenix Center used the week’s attention as a launching pad for their study on a potential Carterphone-like ruling on mobility – a heated topic within the industry.  “It is ironic that proponents of wireless Carterfone tout their rules as being ‘pro-consumer,’ because our analysis shows that such rules would likely drive up the cost of equipment with little, if any, reduction in wireless service prices,” said Lawrence J. Spiwak, President of the Phoenix Center and co-author of the study. “The pricing implications of wireless Carterfone are about as anti-consumer as you can get.”

On a more productive note, Alan Quayle also used the week’s attention to share his experience and knowledge on the topic of “Open Innovation and Application Developer Needs.”  He summarizes with: “Operators provide the ideal channel to market for many applications, with control over their network and devices, a billing relationship with the customer, a nationally recognized and trusted brand, high-street store presence, and a strong position in the industry’s ecosystem.  However, if an operator is not as effective as the Web 2.0 models mentioned above, developers will ignore them.  Which means service innovation is lost to over-the-top services, further pushing operators down the path to become just an ISP (Internet Service Provider). ”

Mobile advertising was another popular topic last week at CTIA.  Hmmm… Seems folks really ARE looking for a way to make money at this mobility thing…  Phil Goldstein of FierceWireless covered a couple of panels on the topic at CTIA providing divergent views on the topic: “In the emerging world of mobile marketing there are often divergent points of view between carriers and ad agencies over what values should be emphasized in targeting consumers. … In an afternoon panel focused on carrier concerns, with participants from Alltel, AT&T, Sprint, and Verizon Wireless, the idea of working in market on demand was emphasized. … The agencies’ panel’s moderator, Mark Lowenstein, the executive director of Mobile Ecosystems, echoed some of the themes from the carriers’ panel: mobile data usage is taking off, smartphone growth has led to an increased potential market. … David Katz, the vice president of mobile advertising at Yahoo!, said the key to mobile markets was obvious: to deliver audiences, and, in turn, revenue. The problem, with this, [Ansible Wireless’ Julie] Preis said, was developing a clear line between brands and consumers and delivering on the promise of mobile marketing as a persistent and personal form of advertising. … All of the panelists acknowledged the value of respecting consumers on all levels though in a demand-driven market.”

Frost & Sullivan has found their own way to make money off mobile advertising – offering up a new report on the topic… If you’re cheap, like me, listen in to what the report’s author, Jeff Teh has to say on the topic for free: “Unlike traditional media which mainly delivers content, mobile advertising has the ability to also deliver services and personalised content to consumers. … One of the key drivers of mobile advertising is the evolution of the mobile phone into something virtually inseparable from the owners; many even working on their devices beyond simple communication. … As mobile users pay for services, they are unlikely to be receptive to ads and promotions unless there is a perceived value from receiving such ads. … Moreover, consumers’ willingness to receive and participate in ad campaigns depends on whether the campaigns are permission-based, and that subscribers retain control over the extent of their involvement with the campaigns and their personal information is protected. … Operators are in a unique position to exploit subscriber data to ensure that only relevant content reaches subscribers, as well as enable easy single-access for advertisers, publishers and content providers.”

And we can’t let another week go by without talking about APIs and App Stores…  Michael Mace shared his always insightful comments on the topic this past week: “If you make a web application or mobile platform, one of the trendiest things you can do is add APIs and a software marketplace to it so developers will extend your product. … In mobile, applications have an interesting history. Lately some new mobile players have generated huge attention for their application marketplaces.” He then talks about the huge growth Palm experienced in their developer base 10 years ago. “Disturbing, isn’t it? The idea that a platform could take off like that and then crash and burn…makes you wonder if the same thing could happen to the platforms that are popular today. … If you’re a developer trying to pick the right platform to create your apps on, that choice is very dangerous — you’re betting the success of your company on something that has a better than 50-50 chance of failing. … The success of a developer program is not driven just by the beauty of the APIs or the store, but by how the overall ecosystem works to enable developers to prosper. The two parts of the ecosystem that are most important to developers are the ability to create something cool, and the ability to make money.  If the ecosystem breaks down anywhere in the chain, the developer community will eventually collapse.”  He then goes on to describe exactly what a developer should look for in an ecosystem.  He summarizes with “Based on those tests, no mobile platform offers an ideal ecosystem today. … The ideal mobile app ecosystem would have the API power of the iPhone and the discovery experience of the iPhone store, coupled with business terms that allow add-on APIs like Flash, Java and Google Gears, all working across a much larger base of devices.”

That’s enough for this week.  I’ll see you at Mobilize!

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Now playing: Sara Groves – Add to the Beauty

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