Remember the days when Internet Service Providers (ISPs) were all the rage? AOL was the darling, as well as UUNET and PSINet, amongst hundreds of other local ISPs. Where did they go? The only names that remain are our telephone and cable companies, like Comcast and AT&T, who have become the new ISPs. What have the ISPs been reduced to? Just commoditized data pipes on which many Internet brands, such as the real value-added players like Google and Yahoo?
Is this the beginning of the same commoditization of mobile data services? Just looking at the U.S. market, where many of us are used to buying unlimited Internet access every month for a set price, it seems very likely that we will see unlimited data plans and very little control of the mobile operator on the value-added services, unless mobile operators see the light and make the necessary changes that are required to move forward.
Research in Motion has been offering e-mail services worldwide to its network of Blackberry users. However, unlike Apple, Research in Motion didn’t manage to convince mobile operators to make them the arbiter of applications running on Blackberry. Instead, there are many sources for Blackberry applications, but mobile operator decks remain the most popular, even though BB lovers are calling for RIM to take control of its application platform. Nokia has been trying to reinvent itself as an application developer, competing with many of its application developer partners, as well as with mobile operators’ offerings. Many mobile operators have been resisting this movement, but some are giving in. Google, with its mobile OS Android, is going to try to become an application hub as well. Microsoft doesn’t want to be left behind and, while I was writing this, Microsoft announced its entry into the mobile applications world too.
Bottom line is that there is a battle brewing between handset manufacturers and mobile operators to offer applications to mobile subscribers directly. Will mobile operators give in and let every other handset vendor control it’s own destiny, like some did with Apple? Or will they retract and act against these moves? T-Mobile announced its intention to compete with the Apple store. So one would have to wonder if this is indeed a wake-up call to mobile operators: Maybe now is the time for them take this battle seriously. And more so, since mobile operators have a lot of power, given the amount of subscriber data that they're able to track.
Despite this power, the relationship between mobile operators and their subscribers can, at best, be described as a love-hate relationship that starts and ends with a monthly bill. The relationship between mobile operators and software developers is not always a great one either – marred sometimes by bureaucracy delaying the launch of applications or by greediness in taking a much larger share of the revenue.
It is time for mobile operators to take control of their application revenue streams. Otherwise the only thing they will have to contend with is a monthly bill for Internet access, just as the case is with ISPs. I am sure there are many recommendations that the industry can offer, but I thought I would add some personal suggestions to the mix:
- Encourage applications that enable mobile operators to extend a relationship with subscribers beyond the monthly bill
- Refocus on application portals by rebuilding, marketing, and selling them prominently amongst the operators’ offerings
- Refuse to sell handsets that don’t offer open and well documented software development platforms
- Allow for faster and standard ways for developers to launch applications on mobile operator portalsAllow application developers to acquire a larger revenue share of the application – remember that the PC industry exists today only because of application developers. As such, applications cost more than the hardware they run on. If allowed to flourish, this will be the future of mobile applications too.
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2 comments:
The analogy between ISPs and mobile operators is a good one. The key difference between then and now is that the mobile world today is almost a monopoly and the ISP world was a commodity. There are no questions that mobile operators will retain the network fees (voice and data). The trend is that the mobile operators will let any 3rd party except the big guys like Yahoo/Google/Microsoft develop a niche application initially using the revenue sharing model. When the revenue reaches a level, the operator will take it over and send the SP home. An SP can never grow big.
Is there a way for an SP to grow beyond the operator? I think there is one.
I sure would like to hear your opinion on the way you think an SP can grow.
I don't necessarily agree with your comments. If having three to four players in a market is a monopoly then most markets are monopoly. At that time people also said to Yahoo and Google that with Microsoft and AOL being there they had no chance either.
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