No Chance to Stand Still – changes in the Mobile Industry

It never stands still in the digital world. Each week, day, sometimes every hour brings out new announcements of exciting new technologies that often promise to transform our personal lives, businesses, schools and infrastructure. There is no doubt that we all live in times of tremendous change and that is exciting. Every so often there are events that punctuate the pace of change; one of those is the Mobile World Congress (MWC).

I recently attended the MWC 2010 in Barcelona, it was a wet and chilly week (apparently it’s usually quite warm down there at this time of the year). However, the weather didn’t dampen the spirits of the people attending. There were about 50,000 people there over the 4 days, ranging from the big names like Steve Ballmer of Microsoft all the way through to the smaller start up companies in the App Planet. It was exciting and an opportunity to have chance meetings with people trying to create new opportunities; it was a very good time to be there.

What were the big things coming out of this conference? Well, the main thing for me was that Mobile is an industry still in reaction to the inroads that Apple has made. Apple did not attend the conference at all and neither did Nokia; not in an official capacity. In particular, the congress saw the reaction to the progress Apple has made with the iPhone apps store. The iPhone, with its usable interface and successful app store has transformed the way that mobile companies do business. However, app stores are not a new thing, they have been around since the mid to late 1990s in their various forms on handheld devices but Apple has managed to package it and make the system work in a way that has truly grabbed the public’s imagination. They’ve also managed to make it pay, particularly for small developers who can get into the apps store relatively easily compared to old models and start making money. This is significant because it has opened up an entire new industry that was previously shut off to small developers.

One of the problems for the Mobile Network Operators (MNO) is that the Apple model doesn’t give them any space to be involved in it and there were many comments at the Congress to suggest that the rest of the mobile operators don’t like that. For example, Telstra, the Australian MNO, are suggesting a kind of shopping centre model where they are looking at the idea that they will front on their devices various apps stores where customers then buy from. This will be a basis for potential further revenue generation for the MNO.

Another reaction to the apps stores is the creation of the Wholesale Applications Community; being driven by the GSMA who hosted the conference and from a technical viewpoint, were offering an API (Application Programming Interface) approach. In theory, this should allow developers to produce one application that can be used across platforms with relative ease. At the moment, from a development point of view, producing native applications for mobile phones is complicated. Each time you code for a mobile phone you have to recode for a different platform and that increases the expense, which is why you start to see developers focusing on one platform or another.

However, the question for the Wholesale Applications Community is that with the competing models like Telstrar’s and the introduction of the Samsung Bada application platform is there enough momentum for that kind of model to work across the platforms? It’s too early to say as it will take at least 12 months for the politics and technical hitches of the Wholesale Applications Community to be sorted out and the impact of that store to really happen. In the meantime, the mobile phone market is going to be fragmented with different app stores on different handsets and MNOs combining and competing with these approaches.

MWC also saw the launch of the Microsoft Windows Phone 7 operating system (OS). This new mobile phone OS is a significant shift in Microsoft thinking, away from the idea that Windows mobile is primarily a business tool, which is how it has often been packaged in the past. The new Windows mobile OS has a definite focus on social communications. One of the features being pushed particularly strongly in Barcelona is that from your contacts book you will be able to see your contacts’ latest Twitter, Linked In and Facebook updates, etc. Therefore, the phone becomes a communications hub (some might say, isn’t that what a phone is anyway?). The OS will also provide access to Xbox Live, Microsoft’s gaming platform. Given the Xbox’s popularity this could well prove a shrewd move to market to an existing fanbase. One of the things Microsoft was particularly coy about on their stand in Barcelona was any technical insight into their phone as this will all be announced later this year. All that could really be gleaned is that Microsoft is going to be stricter with the hardware manufacturers and MNOs about how the new OS can be implemented.

A message from Barcelona was that the MNOs are starting to feel the strain. Not only does the iPhone apps store freeze them out of an area of additional revenue (the iPhone App store takes 30% of the revenue the developer the rest) but the increase in the popularity of 3G due to the uptake of smartphones, means increased traffic on the network and this is a struggle for them. For example, in the UK 3G coverage is not brilliant, penetration through buildings is quite poor and coverage is variable outside the major city centres and there are many areas of the country where there is no effective 3G coverage across the network. So whatever bandwidth is available is being used heavily. Longer term we will see LTE (Long Term Evolution) high performance networks but that’s not here yet, and even when it is ready, it needs to be rolled out and integrated into the infrastructure. So for a good few years yet we’re going to see struggles about network capacity and bandwidth. The problem is that for a long time users didn’t use data on their phones because the data packages were too complex and many people never opened up an Internet connection on their phone because they would be terrified about the cost of that experience. Now we are starting to see flat rate data packages which are almost a prerequisite of smartphones and so, of course, people will start to use that capacity and as a consequence networks are getting clogged. The MNOs need to figure out how to make that work. I suspect that the people who are developing mobile apps and mobile web applications will have their part to play and need to optimise their services for increasingly congested networks. This will be an important part of the next few years, the optimisation of services across these networks to make best use of the bandwidth available.

Another big theme which came out of the MWC was the mobilisation of finance. Money was a big theme, we are starting to see mobile phone operators team up with credit card suppliers and banks moving into the mobile sphere; all wanting to be able to enable payments through and via the mobile system. There is a various mix of technology going on; everything from near field communications technology all the way through to wireless payments through SMS messages. Lots of different ways for people to start to use their mobile to facilitate financial transactions. Micro payments especially are becoming very interesting. Mobiles are available across countries and are now very common across the world (there are 5 billion mobile phones world wide). Many parts of the world don’t have access to banks and there are people who have mobile phones but can’t access credit, the under 18s for example, yet if they could use the mobile as a form of payment system and a way of storing money then that becomes a very quick way of making money payments across the world and that’s highly attractive. We’re in the early days of that happening at the moment but we are already starting to see people in Africa using their mobile phones in this way and in other places starting to see the acceptance of mobile payments via NFC (Near Field Communication) payments where you essentially use your phone like a swipe card.

The other area where we are seeing mobilisation is the area of media services. For example, I can already watch the iPlayer on my iPhone and my desktop computer; increasingly services like the iPlayer are becoming embedded into TV set-top boxes as well.

It is particularly interesting to see that as we look towards the future we are going to see cross platform technology available across devices, from mobile to televisions. Already Adobe, Java, Opera and others are looking (and competing) at how to deliver internet enabled services onto TV set-top boxes and other media. So we are going to see an increase in the number of people consuming media on the web, television and mobile. Let’s add to that mix machine to machine connections to the Internet and there are some really interesting things happening with regards to how that happens. The machine to machine connection is essentially a device which has a 3G or LTE card put into it and connected to the Internet, sending information back and forth. For example, you might have some kind of health monitoring system (e.g. heart monitor) linked into your body and that sends information to a remote point about your heart rate. Start combining that with other services such as mobile money, how we spend money and we start to see the “always on” connection, people always on the Internet and information always available about them and to them.

Eric Schmidt (Google SEO) summed up how the world was changing. From now Google was going to be ‘Mobile First’. Remember this is a company that dominates desktop Internet search and it is behind Android the open source mobile OS that is used on an increasing number of smart phones. This message of convergence from Schmidt summarises nicely the challenges and opportunities ahead. The large players in hardware, software and services are going to enter into each others areas and challenge one another. Google and Apple are already shaping the next stage of mobile development and still operating in their traditional territory. For everyone involved in the digital ecosystem. Now is a time of constant adaptation and opportunity.

In conclusion, we need to recognise that at the moment we are in a reactionary and fragmented time. The iPhone has transformed the mobile ecosystem, without a doubt. Apple has really turned it on its head, making huge inroads and has set a new standard and Google is determined to match them. At the moment there is nothing coming out of the MWC that really challenges that dominance directly. However, we are seeing a recognition that other services being delivered on mobile is important. The BBC, for example, are moving into the mobile applications area and they recognise that by the time the Olympics come to London in 2012, the mobile is going to be a very significant device to lots of people wanting to stay in touch with that worldwide phenomenon. For businesses (from micro to corporate) across the world, now is the time to start planning for these opportunities.

Image Credit: