Mobile musings and wireless wanderings

Before getting into any great detail, I’d like to briefly state the main points I will aspire to address in this two part post.

Mobile 2.0 is here today and can already be observed in the market.

There are three key drivers that will catalyze Mobile 2.0 in particular and innovation in general:

• > Open, frictionless distribution
• > Ubiquitous mobile broadband access
• > Rich, Interactive Application Platforms

The verdict is still out on the browser. Mobile 2.0 will be much more than the Internet viewed through the lens of a 2 inch browser (i.e., taking the Internet to go).

Mobile 2.0 Redux

There has been an active dialog surround Mobile 2.0 going back to 2005. The most detailed analysis and discussion has stemmed from Open Gardens and Mobile Web 2.0 by Ajit Jaokar and Tony Fish. Ajit and Tony have developed a detailed and nuanced discussion surrounding the impact of mobility as it relates to Oreily’s principles for Web 2.0. At this point in time Web 2.0 definitions can essentially be distilled down to the utilization of the web as a platform. Marc Andreessen recently provided a great overview of Internet platforms I will review current mobile platforms according to Marc’s taxonomy in a future post. In contrast, Mobile 2.0 definitions still widely vary although generally focus on the user experience and the corresponding ability for individuals and communities to create, personalize, interact and mobilize rich content and services. A sampling of definitions for Mobile 2.0 include:

• > The convergence of mobile devices and services - Cashmore
• > Next generation of data services to mobile connected devices – Applequist
• > Open standards, open platforms, open source and centered on content and messaging – Capobianco
• > The entirety of the device and its myriad and highly differentiated possibilities for interaction with the end user – Starr

Mobile 1.0 content and services can be characterized as repurposed broadcast assets such as personalization content (ringtones, wallpaper), games and rich media (video, music). Depending on your outlook, Mobile 2.0 can either be thought of as taking current Web 2.0 services to go, or as representing a radical departure in which a whole new set of services are created by putting mobility at the center of a whole range of personalized, interconnected multi-platform content and services.

Catalysts for Mobile 2.0

Drivers that will catalyze the uptake Mobile 2.0 services include:

• > Open, frictionless distribution
• > Ubiquitous mobile broadband access
• > Rich, Interactive Application Platforms

Ubiquitous mobile broadband access is foreseeable in the imminent future. Nationwide data networks are pervasive. Now, all handsets ship with data access capabilities. And, multimedia capabilities have moved well beyond smart phones into standard feature phones. The question is how soon will we achieve open, frictionless distribution and, how long will it take for mobile RIA platforms to get widespread adoption. And, will the existing RIA platforms be sufficient for the needs of Mobile 2.0?

Open, frictionless development and distribution

For Mobile 1.0 content and services, we are getting quite close to having frictionless content distribution in the N. America and Europe. Off-deck services are thriving and pSMS billing, from a consumer perspective, is easier than any of the micro-payment systems that exist on the Internet.

The areas that are still impeding the frictionless development and distribution relate to the following types of impediments:

• > Fragmentation & Lack of Standards
• > Control & Regulation
• > Complexity and User Experience
• > Cost Structure

Fragmentation and Lack of Standards

There are thousands of phones, hundreds of network configurations and dozens of content formats. This fragmentation of the delivery of content and services is compounded by the relative lack of standards relating to software and service delivery. A majority of phones utilize proprietary operating systems. This has led to a thriving middleware ecosystem that does not exist on the PC (due to the dominance of Windows) as well as the prevalence of standardized Internet browsers. Middleware, runtime environments are required on mobile phones so that third-party developers can create applications for the phones. The dominant environments are currently Sun’s Java (J2ME) and Qualcomm’s BREW for feature phones and Symbian, Windows, RIM and Palm for Smartphones. A majority of the complexity associated with distribution (i.e., devices, networks, formats) can be handled by mobile content delivery platforms. In terms of service creation, the current environments for creating and developing mobile applications and services are proprietary and difficult to use - a key impediment for innovation.

Control and Regulation:

It is well known that mobile operators have invested heavily in their networks, services and subscribers. Burdened with this significant cost of ownership and operation has led them to move cautiously in creating and / or adopting new services and methods of distribution. Furthermore, given the investment they’ve made in acquiring subscribers and maintaining a level or service quality, they have become rightfully protective of their overall network and billing relationship with the consumer. This leads to a number of actions to control and regulate service offerings.

Two examples of the types of control they wield over content and services, namely (i) the use of decks as a primary means of marketing services and, (ii) restrictive usage of their network for any bandwidth intensive content and services.

Mobile operators have relied upon decks (i.e. “portals”) as their primary vehicle for marketing and distributing premium mobile content. In a sense, these portals function like big box retailers (i.e., Walmart, Best Buy, Target) in which shelf-space is limited and in high demand. Third-party content providers whose brands and services are able to leverage a strong position in the deck combined with a strong consumer proposition (i.e., price, brand strength, content / service uniqueness) yield high volume of subscribers viewing their service offerings and with resulting strong click-through and conversion rates. Sales of premium content sold from their decks have started to flatten and is causing them to focus on many aspects of the deck including, but not limited to, the amount of content on the deck, the user experience and number of clicks required to access the content, how best to personalize the end-users view of the content offerings, the role of search, and the role of bundling and theming of content and services.

Second, given that their data networks are considered a scarce, limited and costly resource, they are quite protective when enabling off-deck rich media content such as full video streaming and downloads. They have the ability to entirely shut down any unauthorized off-deck services. These actions do not apply to all off-deck content. Mobile operators are quite supportive of off-deck content and are even looking to third-party direct marketing companies (e.g., Thumbplay, Buongiorno, Acotel, Jamba) to drive premium content sales. It is often confused that off-deck means bypassing the mobile operators. Mobile operators receive revenue splits from a majority of all off-deck premium content and services.

Complexity & user experience:

There are a number of examples of poor user experience and complex processes for discovering content and services. First, it is still quite difficult to find, try, buy, share and enjoy mobile content and services. Second, the quality of the experience and overall cost of delivery is impeded by the plethora of phones, networks and formats. Finally, the delivery of content and services via SMS and over-the-air (OTA) downloads can been unreliable. On a whole, a number of these limitations and complexities have been or are being addressed by both the carriers as well as third parties that provide end-to-end solutions.

Flat rate pricing will be a key driver that will accelerate user adoption. We saw the impact on the Internet of moving from a per minute dial-up plans to flat rate pricing. Moving from complicated data platforms (e.g., per Kbyte, constrained flat rate plans, roaming data charges, etc), will have a similar impact on mobile data adoption and the corresponding impact on ARPU. Odlyzko makes a strong argument that flat rates were a key role in the rise of the Internet in the U.S. than in other countries.

Rich Interactive / Internet Application Platforms

On the Internet, the success of Java and Flash drove a new model for creating and deploying applications that go beyond the traditional “thin client” applications that were delivered and rendered for the end-user via browsers. Applications written in Flash are an example of what Macromedia coined Rich Internet Applications (RIAs).

RIAs can be thought of as extending the traditional website model (i.e., in which a browser accesses pages on a server) by adding an additional client-side functionality to handle the user interface thus making the user experience richer and more responsive. It is worth noting that most RIAs are written using some combination of a standard declarative markup language (e.g., XML) and a standard procedural language (e.g., Javascript) for the user interface and application logic, respectively.

Six frameworks for creating and deploying RIAs are widely discussed: Adobe’s Flash / Flex, Microsoft’s Silverlight, Mozilla’s XUL, Sun’s Java FX, AJAX, Laszlo’s OpenLaszlo.
These platforms will be reviewed more detail in Part 2 as they relate to mobile.