McGuire’s Law

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.

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!

Last week I had the chance to chat with Steve Trundle, founder and CEO of Alarm.com.

Here’s the description of Alarm.com from their website:

Alarm.com was founded in 2000, and since then, has been dedicated to the pursuit of convenience and control for home and business security systems using wireless, web and mobile technology. We set out to build a platform based on wireless technology that provides solid security. In 2003 we were the first company to launch a secure, all-digital wireless alarm system with novel features like always-on activity reporting and a web-based control panel.

Alarm.com’s proven technology platform enables consumers to monitor everything that happens in their homes or businesses, not just alarms; they can keep track of activity on entry doors, windows, liquor and medicine cabinets, safes, drawers, and more. Unlike traditional security systems, Alarm.com does not require a phone line or broadband connection; Alarm.com services work wirelessly through a secure GSM network to maintain a dedicated connection that will continue to work for 24+ hours after a power failure. Alarm.com also offers Video Monitoring, emPower™ home automation, Crash & Smash Protection and mobile apps that let consumers enjoy anytime, anywhere access to their property. With Alarm.com, home and business owners can be in 2 places @ once. Simple, flexible and powerful, Alarm.com is designed to fit your lifestyle.

I became an Alarm.com customer 4 years ago when we moved into a new home. Since we’d cut the cord on AT&T, I was thrilled when our local alarm company proposed a sophisticated wireless solution. Not only would it be safe from getting the line cut, but we also wouldn’t have to wait for the alarm system to finish dialing before calling the monitoring center to explain we’d accidentally tripped the alarm (as we had too often had to do with our previous systems) - and it demonstrated the power of mobility!

Steve shared that a similar experience led to him starting the company. When they had a system installed in his home, he asked the contractor why a burglar wouldn’t just cut the telephone line. The answer he heard wasn’t convincing. Steve was CTO for MicroStrategy at the time and he also immediately began considering all the possibilities for the data that could flow over an always-available wireless connection to the home.

I asked Steve if wireless had redefined the alarm industry and he said it definitely has. Especially these days, folks just assume that wireless connectivity will be built in. As consumers adopt smartphones, they simply expect there to be an app to control every aspect of their lives.

A year ago, we were awakened in the middle of the night by an alarm telling us of flooding in the basement. Being able to respond quickly enabled us to save many precious possessions and minimize our loss. Now, imagine getting that same type of alert even when you’re out and about, during the workday or when running errands around town.

Thanks for listening. After talking to Steve, it was clear to me that Alarm.com’s experience is yet another great example of how mobility is changing how each of us interact with our world and changing the rules of competition across industries, and I wanted to share it with you.

Today is the five year anniversary of my first post on this blog!

Wow!

A lot has changed in five years.

The industry has gone through a major transformation! (e.g. Five years ago Apple and Google weren’t active in mobile.)

My job has changed significantly. (In 2006 I was director of strategy in one of Sprint’s divisions, today I’m vice president of strategy for the corporation. Five years ago, Sprint and Nextel had just merged and the merger still looked brilliant. )

Life has also gotten busier outside of work.

When I started blogging, my goal was to use the blog to share my opinions on the industry. Early in my blogging career, I set the goal of posting a new piece every weekday. These days, I’m doing well if I post one opinion piece in a month and some weeks I struggle to post anything at all. More than anything, this blog has become a way to interact with customers to help improve their experience with Sprint.

To be honest, I feel stressed out by the pressure to keep this blog current. I think it’s time for a change - time to destress.

I will continue to look for opportunities to help customers and I will continue to look for opportunities to share my opinions on the industry. But I’m calling time-out on my posts of lists covering industry news. I think y’all have better sources for that information anyway.

Over the next few weeks (months?) I hope to revisit some of the major themes that I’ve covered over the past five years.

Stay tuned!

I downloaded Tomi Ahonen’s 11th book back in December, but just today got far enough into it to find his references to McGuire’s Law of Mobility. I recommend downloading the book (for free for now) for many reasons more than just the references to McGuire’s Law!

I like to bring good news, but in openly sharing, sometimes I have to be the bearer of news that won’t be seen as good by many.

An additional clarifying point has been added to the FAQ on the new SERO Premium plan. Read to the end of the paragraph below. I apologize if the next to last sentence effects you and dampens your excitement about the October 1 options.

What are the plan details of the new SERO Premium rate plans?

As of 10/1/10, there will be two SERO Premium plans available, SERO Premium 500 at $40/month and SERO Premium 1250 at $59.99/month. SERO Premium plans will match current SERO rate plans with two added features, Any Mobile Anytime and Unlimited GPS Navigation. SERO Premium rate plans will be compatible with all devices offered by Sprint. Only customers on a current SERO rate plan as of 10/1/10 will be able to swap to a SERO Premium rate plan. SERO Premium rate plans will not be discountable – customers on current SERO plans receiving discounts above and beyond the already discounted SERO rate will lose those discounts when moving to a SERO premium plan. 4G handsets such as HTC EVO 4G and Samsung Epic 4G will also require the $10 Premium Data add-on.

For years, we’ve talked about the cellphone as the swiss army knife.

And I’ve found the analogy to be really on-target. I’ve told the story many times about how I used to (pre-9/11) always carry a small knife in my pocket that had a small pair of scissors and a tiny screw driver. There were times when I found myself trying to demo the latest telecom applications at a customer site or a trade show and I’d use those scissors to strip a wire and the screw driver to lock down a connection. (Scary, I know…)

But, in reality, those scissors and that tiny screw driver were a poor excuse for real tools. They were incredibly valuable because I had them with me, but given my druthers, I’d rather use a real stripping tool or real screw driver.

Cellphones have been the same way. You can use your cellphone as a camera. You can use your cellphone to watch TV or movies. You can use them as an eReader. You can use your cellphone as a navigation device. And your cellphone is incredibly valuable for those purposes (relative to its quality at each) because it is always with you. (That’s a big part of McGuire’s Law of Mobility, by the way…)

But in reality, given the choice, most people would rather use a “real” camera, a “real” TV, a “real” book or eReader, or a “real” navigation device.

The EVO 4G is the first phone that really changes that reality. Its true broadband connectivity, high powered processor, 8MP camera, huge screen, and HDMI output make it truly competitive as a “real” product in each of those categories. Add in stereo Bluetooth, 720p video recording, an additional front facing camera for video chatting, hot spot capability, a digital compass, and all the applications in the Android marketplace, and suddenly the EVO becomes the ultimate “swiss army knife” capable of credibly replacing a broad range of products.

Wow.

Rudy De Waele invited me to participate in a broad view of the coming decade. An impressive set of visionaries from across the mobile ecosystem provided their perspectives on the next 10 years. Set aside some time to be able to absorb the presentation below (you’ll want to view it in full screen).

Here are the 5 trends I contributed:

1. Just as microprocessors have been built into virtually every product that has a power source, over the next ten years, it will become expected that wireless connectivity will be built into virtually every product that has a microprocessor.
2. Businesses will redefine virtually every internal process and virtually every service they offer customers to leverage wireless access to information and contextual data to create new value for customers, to grow their addressable markets, and to reduce their operating costs.
3. Fixed line broadband will overshoot the performance needs of the market, resulting in increasing data cord cutting as individuals, families, and businesses appreciate the value of mobility more than the value of excess bandwidth.
4. By the end of the decade, mobile devices will be thought of first for the applications they run rather than for their ability to make voice calls.
5. In the U.S., the Obama administration will stimulate significant expansion of the mobile market through regulatory policies (e.g. reduced backhaul costs) and direct and indirect stimulus investments (e.g. wireless broadband, smart grid).