CORONADO, Calif.--It's the mid-1990s for the mobile industry: lots of walled gardens, lots of fragmentation, and lots of promise.
We've been writing about the future of mobile computing for years now, and it's no surprise that panelists at the Future in Review conference are eyeing the same space. There's a clear shift going on toward mobile computing, seen both in the PC space, as notebooks overtake designs, and in the evolving handheld/subnotebook space with a surge in interest in smartphones and things like the Eee PC.
Moderator Chetan Sharma, Telestra's Hugh Bradlow, and Yahoo's Gary Roshak (left to right) listen to a fellow panelist discuss mobile computing.
(Credit: Tom Krazit/CNET News.com)The current mobile situation reminds Jonathan Bulkeley, formerly of AOL and currently CEO of ScanBuy, of his days at the once-ubiqituous ISP in the mid-1990s. Companies like AOL, Prodigy, and CompuServe offered metered access to the Internet in those days and strictly controlled what the user accessed on those networks; just as mobile ISPs like Verizon, AT&T, and Sprint have done for many years until recently.
By 1996 or 1997, however, the entire market had changed to meet demand for flat-rate pricing, again mirrored by the recent actions of the carriers to provide all-you-can-download plans. Once subscriber revenues were fixed at a certain number, the ISPs needed to find advertising and service revenues to keep growing. And that's what the current mobile industry needs: "The next phase is advertising and commerce growth--who's going to get the $1 trillion in value (that's up for grabs)?" Bulkeley wondered.
Before that comes to pass, however, a few things have to change. Hugh Bradlow, chief technology office for Australian carrier Telstra, bemoaned the current fragmented state of the mobile software industry. "The handset industry is in an absolutely shocking state," he said, noting that mobile application developers are faced with way too many competing platforms for their products.
Yahoo is trying to completely bypass that issue by focusing on mobile widgets, said Gary Roshak, vice president of mobile advertisers and publishers at the company. "The world doesn't need another phone operating system. We don't really care if you run on (the various operating systems). We want to fuel these mobile-first experiences."
The devices themselves also need to change, Bulkeley said. "These devices aren't meant to navigate a portal page, but they are best suited when you know what you want to get and you go right to it," he said. Bulkeley's new company is trying to get the mobile industry to support bar-code scanning, where mobile users can take a snapshot of a bar code in a store and get instant information regarding a product or service.
But the trends are undeniable. Rajeev Chand, managing director and wireless analyst at Rutberg & Co., noted some statistics that ESPN released just after the end of the last NFL season. On the last weekend of the season--when football fans were captivated by the thrilling New England Patriots-New York Giants game--ESPN's mobile site recorded more hits than its regular site.
However, it's just not enough to capture the traffic, as any ex-AOLer knows.
"We learned from the first phase that whoever controls the traffic and monetizes it, wins," Bulkeley said.
Influence is tough to measure, but it's one of those things where you know it when you see it.
Apple's influence on the mobile phone industry after just over 90 days as a player was evident at the CTIA show Tuesday. Microsoft CEO Steve Ballmer didn't mention the iPhone specifically in his keynote address, but noted that Apple "has done some nice work." After Ballmer's keynote, a friend of some staffers in Microsoft's booth enthusiastically demonstrated his iPhone for an audience checking out the latest Windows Mobile phones. And a panel of five mobile executives spent 90 minutes discussing the impact of the iPhone on their businesses and the future of the industry.
Surrounded by Windows Mobile phones, a friend of the blue-shirted staffers at Microsoft's booth shows off his iPhone.
(Credit: Tom Krazit/CNET News.com)That's not because they're scared Apple is eating into their piece of the pie, observed Motorola's David Ulmer, senior director of entertainment products. Apple may have sold over a million iPhones last quarter, but "some of us sold that many before breakfast," he quipped: The entire mobile phone industry ships well over a billion handsets a year these days.
Instead, panelists recognized the iPhone as bringing two major changes to their industry. First, the iPhone is the "first mass-market non-carrier controlled event," said Adam Guy, general manager of the telecom and media practice at Compete, a market research firm. Apple owns the experience and the relationship with iPhone users, not the carrier, and that's a feat the other hardware companies have yet to pull off.
The iPhone also is a new way of looking at smartphones: Is it a computer? A phone? An iPod? Lee Ott, director of product management for Yahoo Mobile, said, "The iPhone is the first phone that puts the Internet and data right up on a par with calling," explaining that while there are plenty of phones out there capable of browsing the Internet, few of those products emphasize data as much as they do voice calls. In fact, the iPhone is already one of the top five devices in the world that accesses Yahoo Mobile on a daily basis, he said.
Well then, why didn't the established players figure out that formula? Given the lack of a carrier representative on stage, panelists spent a fair amount of time discussing the sins of the carriers. Ulmer said that Motorola sells tons of touch-screen capable phones in China, but when they approached U.S. carriers with similar designs two years ago, they were rebuffed by executives who said, "Come back when you've got a keypad."
He also noted that in the past, it was more profitable for carriers to emphasize voice and text messaging on bandwidth-constrained networks over interesting video or data applications, so that's what they did. That's changing as 3G networks become more widespread, but helps explain why the iPhone caught the industry flat-footed.
But these are companies with deep pockets and enough experience to know which way the wind blows. All major U.S. carriers and most major phone manufacturers will have an answer to the iPhone available by the end of this year that emphasizes a better user experience, said Sam Altman, CEO of Loopt, a start-up that lets friends track each other's whereabouts through their mobile phones. "Even for people that don't have iPhones, they expect their phone to behave like that."
Sometimes, it takes an outsider to remind an industry where it needs to be, said Cyriac Roeding, executive vice president for CBS Mobile. "For the first time, you have a Silicon Valley company disrupting the entire (mobile) market. The fact that we are sitting here talking about the iPhone, and that Motorola is joining us to talk about the iPhone, shows the power of the iPhone. It's an awesome version 1.0."
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