There is a piece today in the NY Times about the
problems with Planet Mobile:
...at a recent conference, 3G was called “a failure” by Caroline Gabriel, an analyst at Rethink Research. She said data would make up only 12 percent of average revenue per user in 2007, far below the expected 50 percent. (The 12 percent figure does not include text messaging, but you don’t need a 3G network to send a text message.)
Similarly, surveys by Yankee Group, a Boston research firm, show that only 13 percent of cellphone users in North America use their phones to surf the Web more than once a month, while 70 percent of computer users view Web sites every day.
We'd agree with these notes. We've been conducting interviews with players up and down the mobile media value chain over the last few months, and the story emerging is essentially that:
(i) There is limited collaboration across the value chain (content standards, distribution standards on Mobile TV, handset standards etc) which makes the "friction" in the supply chain high compared to alternative (IP based) plays.
(ii) This means that the user audience finds mobile multimedia hard to use, they tend to try it out and then (apart from a small subset) by and large give up on it.
(iii) In addition, the economics of "pay as you go" drives people to minimise service / content usage - and there is still a lot of fear of "sticker shock" from big data transfer charges for content usage. Even though "as much as you can eat" deals are emerging there is still a strong
(iv) This small audience means that the economics of new content and service creation are less enticing than they should be. Exacerbating this is the small share of these small revenues that the upstream players typically get in most schemes.
That the mobile multimedia market has a high potential is not disputed - the problem is that the traditional players in the industry seem unable to collaborate to "sort it out". Many observers categorise the industry today as AOL type closed service models, on pre Wintel devices. No one player has been able to impose a Microsoft style de Facto standard across the delivery chain, and neither has the (OECD based) industry shown much willingness to work on open solutions.
The irony is that successful models do exist for the industry, eg Japan's DoCoMo, which imposes standards across the value chain (and shares revenue more liberally with upstream service providers)
The new US/European supply chain solution is emerging slowly - in an earlier post we
noted that players outside the traditional "Planet Mobile" - operators, handset makers etc - such as Google and Apple are starting to make plays to end-run the current mobile value chains.
Building mobile services is harder - its a new medium, and demands a new user experience - unfortunately at the moment all the content is on the older formats (WWW, digital video etc) and as noted above the pull through right now makes any major expenditure on new service development - or even major content repurposing - hard.
This impacts the mobile web experience - there are currently 2 main schools of thought - (i) define a unique "mobile web", and (ii) make devices better at coping with existing web content. The problem with the mobile web option is the expenditure given the low pull through (plus the soiled reputation of WAP, the first attempt at this). The problem with the One Web option is the ergonomics of a small screen and limited key functions.
We suspect the endgame will actually be more "One Web" owing to the economics - its easier to build a better webphone (iPhone and successors) than to get millions of websites, digital media playesr etc to write for a "mobile web" - but with players designing web services specifically for mobile functions. In fact, in response to the NYT article Dave Winer points to their own
"River of News"
