McGuire’s Law

Techdirt has a great article this week contrasting people’s attraction to Wi-Fi enabled devices with people’s disdain for their cellular devices (seemingly largely driven by their dissatisfaction with their cellular carriers).

What are the lessons for those believing in the revolutionary power of mobility?

I tend to think it has to do with the direction of integration…  A laptop maker who builds mobility (in the form of WiFi) into their laptop, still has a great laptop but now the value is increased by mobility.  A wireless company that sells a voice plan, but then tries to build laptop functionality into a cellphone has a cellphone that’s slightly improved, but isn’t a very good laptop.

Building mobility into products creates significant incremental value.

Converging a capability into my mobile device creates some value, in that now I have that capability everywhere I go, but if the compromises are too great, mostly it can create frustration.

Techdirt has a great piece this week on the continued market strength of disposable cameras. They identify the logic behind this as “the best camera at any given point is the one you have with you.”

This, of course, is very close to the logic behind the Law of Mobility - that the value of any product (with cameraphones being one of my favorite examples) increases with its mobility - where mobility is the % of time the product is fully available for use.

Therefore, it’s a pretty logical conclusion that the same thing that makes a cameraphone valuable - the fact that you have it when you realize that you want to take a picture but didn’t remember/think to bring your “real” camera, is the same thing that drives sales of disposable cameras. I’m sure the makers of disposable cameras are all over this and realize that if sales of cameraphones continues to take off, then that’s bad news for them. I would guess that very few disposable cameras are purchased by cameraphone owners.

However, this is probably a good time to (once again) acknowledge that cameraphones generally don’t take very good pictures. The $5 disposable camera will almost always yield better results than the $200 cameraphone! A recent In-Stat study reported that phone buyers are fed up with the poor resolution and lack of storage options on cameraphones. Perhaps just in time, handset manufacturers are introducing cameraphones that may start to deliver. Of course, one of the hold-ups has been the time it would take to upload multi-megapixel photos over a pre-3G network. Especially as carriers roll-out even faster upload capabilities, the overall customer experience with these new devices may drive yet more change in photography market trends.

This past Saturday, at the Greenhouse event, Techdirt’s Mike Masnick commented that the value of a camerphone is not only that it is with you, but also that it’s connected. I certainly agree with that, and as those connections get faster in more places, the value of cameraphones will undoubtedly increase. Sitting amongst that collection of, admittedly technology early adopters, it was enlightening to see the broad use of cameraphones, accompanied immediately by sending e-mails (e.g. sending a photo of the CEO presenting out to the troops) and uploading to Flickr, as if to prove Mike’s point.

In trying to bring a thoughtful close to what has been perhaps my most rambling post ever… Perhaps we in the mobile industry should feel good, as stewards of creation, that the products we are bringing to market may some day make disposable products unnecessary (we can only hope and pray).

Yesterday was the second techdirt greenhouse in Sunnyvale, California. I was pleased to be able to participate and really enjoyed the interaction.

In the spirit of the event, modern tools are being used to capture and extend the day beyond the bounds of time and space:

• Wiki
• Flickr photos
• Podcast

As the token “big company” at the event, I hope I brought some different perspectives and I certainly benefitted from hearing fresh voices different than what I normally encounter wandering around our corporate campus in Kansas.

I set up the discussion with a very brief intro to the concepts of the Mobility Era and how the Law of Mobility is driving change into business. We then split into groups of about 10, with two assigned specifically to address the questions of how mobility would change how businesses operate and compete.

Some of the comments that resonated with me:

• Mobility creates convenience.
• Mobility also creates immediacy, which has tremendous value for any form of communications, so clearly mobility will be built into all modes of communications - even more than currently.
• Even when mobility is used for business, it’s intensely personal.
• A poor quality camera can have value because it’s mobile, but the mobile applications available today (in at least one person’s opinion) “suck” and making them mobile doesn’t create value.
• For mobile applications, the key will be whether the network is open or closed.
• The fact that carriers require you to sign up for at least a year before you can use the network will limit businesses’ willingness to experiment with new mobile applications.
• WiFi is an interesting study in the power and danger dynamic of mobility. In general, IT departments deployed WiFi because of the “danger” (or more accurately the cost and hassle) of running cables. But once there, people discovered the power of mobility, working in ways previously not imagined to create tremendous new value for the company.

If anyone was there and has additional comments, please feel free to share them!

A column this week by Richard Martin, senior editor of Unstrung, highlights the key points made by panelists in a session Martin moderated at the Globalcomm conference.

The panel included Dr. Pat King, head of global electronics strategies for Michelin; Luc Roy, the vice president of product planning for Siemens AG ; and Nate Walker, the senior director of product management for Meru Networks Inc.

Martin referenced a slide by Siemens’ Roy as saying “the overarching responsibility of the traditional IT department moving from ‘information technology management’ to ‘mobility management.’ In other words, the entire job description and world view of IT are being shifted by the larger transition to mobility that we are seeing in enterprises today.”

Although I totally agree with the general direction of movement - that mobility will be a dominant focus for IT in the coming decade - I think he’s going a bit far.

What do you think?

I’m a big fan of industry research.  I’m an especially big fan of the “top-line” stories that are told publicly to generate sales of the expensive full reports.  You couldn’t build a credible business plan off of these headlines, but I think they’re still pretty supportive of how Mobility is getting built into every product and every business:

• 28% of employees are using mobile phones as primary work phone
• Study Finds Users Happier With Their Cell Phones
• Global Mobile Worker Population Will Increase By More Than 200 Million Users Between 2004-2009
• Altogether these segments represent a potential market of over 600 million wireless M2M connections
• Cell Phones Take 30 Percent Slice of 88 Million Navigation Market by 2010
• 8 Million TV Phone Sales In 2006 Escalate To a $30 Billion Megavendor-Dominated Market
• 2006 Enterprise Wireless Data Revenues Set to Top $22 Billion
• Wireless Connectivity Found in 65 Percent of Networked Home Devices

I will present the concepts behind the Law of Mobility at the upcoming Techdirt Greenhouse on June 10 in Sunnyvale, California.  If you’re in the area, register to join in the discussion!

A new article has been published by Mobile Enterprise magazine on their website. 

Mobility: Way More Than Connectivity (click to read) talks about how capturing the power of mobility involves much more than just giving employees the ability to access stuff across a wireless link.

Let me know what you think!

An article at Morningstar provides a telling indicator of what the mobility age means for chip companies like Texas Instruments and Intel.  The article states that chips for cellphones now outpace chips for computers.

If you think about it, the PC age put Intel on the map.  Companies like IBM that thought the single-vendor integrated system was the winning model in the industry were the big losers in the PC era while companies like Intel and Microsoft that provided key components and companies like Dell and Compaq that integrated together components from different suppliers were the big winners.

In the Internet age, Microsoft has struggled a bit because, just as the PC era knocked the single-vendor system model off the pedestal, the Internet era shattered the single-vendor software model.  Instead, Google has been the big winner with its focus on enabling “smash-ups” that integrate capabilities from different innovation leaders into customized solutions.  But the biggest losers have probably been companies like AT&T and MCI (R.I.P.) because the traditional network model has really been dismantled, with intelligence moving out of the core of the network and to the edge where lots of innovation can happen.  But the Internet era has still been all goodness for Intel, because all that innovation at the edge is running on servers, many of which consume Intel processors.

Now, as we move into the Mobility age, we wait to see who the big winners and big losers will be, but we can count on chip makers like Intel continuing to be winners as mobility (requiring chips) gets built into all products and all processes.

A new article on the Law of Mobility is available on the website of Telephony magazine:

• Will the Mobility Age Help or Hurt Telecom? 

Back in March, I commented on the reported price being negotiated by Verizon and Vodafone for the portion of Verizon Wireless owned by Vodafone.  I used those numbers to calculate the premium value for Verizon Wireless compared to the non-mobile part of Verizon.

This week, these negotations are back in the news, with Vodafone reportedly holding out for $50B for its 45% of Verizon Wireless.  That translates into a total value of $111B for all of Verizon Wireless, or $61B for the portion owned by Verizon.  The market cap for all of Verizon is about $96B, meaning that the value of the wireline portion of Verizon is only about $35B. 

Verizon had $42.8B in wireline revenue in 2005, and Verizon Wireless had $32.3B in wireless revenue in 2005.

In other words, each dollar of wireline revenue is worth 83 cents in market cap, while each dollar in wireless revenue is worth $3.44.  Or, summarized once more, each dollar of mobile revenue is worth more than four times each dollar of non-mobile revenue.

As I said in March, there’s bunches of factors that influence these valuations, but I prefer the simple explanation of it being a case of the Law of Mobility in action.  What do you think?