Mobile internet adoption isn’t an inevitability

To tie in with the MRG conference, Mediatel is running a series of opinion pieces from the speakers.

Mine is on the diffusion of innovation with regard to the mobile internet (I’ll be speaking about Essential’s Brandheld mobile internet project at the conference). I’m not sure if it will eventually go behind a paywall or not, but the article can be found here.

In it, I say that the majority of people will eventually have powerful internet-enabled phones, but that adoption of the mobile internet isn’t guaranteed as

• Ownership doesn’t equate to usage
• The mobile shouldn’t seek to replicate the computer
• Needs and behaviours vary across the adoption curve
• Usage does not always correspond to value
• Seek to surprise

Each of these points are explained within the article, which even has a photo of me adorning the page.

sk

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Fighting potential irrelevance

Disclaimer: My employer, Essential Research, has worked with several of the UK network providers in the past, and hopes to do so again in future. All opinions expressed in this blog post – and this blog in general – are my own.

The first to market isn’t always the ultimate category “winner”. There were cars before Ford and social networks before Facebook, to give just two examples. Incumbents may hold the greatest influence, but through innovations and developments of products and services their position is rarely fully secure. Eventually a change of business strategy will be required.

I’m wondering if this is what the mobile phone networks are about to undergo.

For the past decade or two, the networks have had the power in the mobile market. They controlled the distribution – through both spectrum and their walled garden approach to content and services. Hence the huge bidding war when the UK government auctioned off spectrum for 3G a decade ago.

But this looks to be changing, as penetration of internet-enabled handsets that access the world wide web – both on a 3G network and on Wifi – shift the focus. While the debate over open access (symbolised by Google) and closed access (symbolised by Apple) continues, it appears that the shift in focus is to the detriment of the networks but the benefits of the operating system, and thus the handset.

This article – on the news that O2 and Orange are joining an open platform for applications – says that ‘The mobile phone networks fear that at the moment they are in danger of becoming little more than “dumb pipes in the air”‘

I’m sure they have methods to standardise the services across different screen sizes, resolutions, handsets and operating systems but it will be interesting to see whether it can compete with the OS based offerings of Apple, BlackBerry, Google and Nokia.

Do this mean mobile networks will go the way of ISPs? Viable businesses, but not wielding the level of power that AOL et al were hoping to achieve.

It is possible, but not inevitable. The main issue for networks is that when they work, they are invisible. We only notice when they fail, and most people will only contact network customer care when they want to complain (sales calls/contract renewals excepted). No matter how good (or otherwise) this service is, it is still ultimately dealing with negative issues.

A handset and operating system should also “just work”, but its visibility means we can also be delighted – whether through eye-catching menus or a satisfying tactility to the buttons or touch screen.

This visibility also means the handset is more closely associated with the service. Networks are still defined by the coverage and quality of voice communication above all else.

The networks risk becoming a utility, where price and quality are the only defining features.

The need to diversify is apparent, but I don’t think this should be in applications.

Aside from the handset/OS competition, there is a huge question-mark over the long-term viability of the applications market. Should HTML5 launch and grow, the balance of power may once again shift – this time from the operating system to the software or service provider. To the consumer, the delivery mechanism is largely irrelevant – they just want the best possible service in the most convenient format.

I’m also sceptical about exclusive content deals. Orange have successfully done this in France, but it raised anti-competitive issues and, ultimately, I think audience scale will mean openness will win out (I also think this is true with handsets trying to get content exclusivity).

Instead, I think partnerships – across a range of industries – are the answer. Mobile networks already have a significant presence in certain areas – such as O2 with live music and Orange with film – and these can be extended. There are also plenty of opportunities to provide complementary services – O2 moving into finance seems like a logical step, for instance.

Like gambling, one of the hardest things in business (so I’ve been told) is knowing when to call it quits. The era of networks dominating the monetisation of content and internet-based services looks like it is drawing to close. Yet there are many potential new revenue streams to develop. Whether picking the right strategy requires the luck of the gambler or not, time will tell.

sk

Image credit: Me

The general public doesn’t need an iPad

Steve Jobs’ powers of presentation and salesmanship have been well remarked upon. However, one statement in his recent keynote address launching the iPad jarred for me.

All of us use laptops and smartphones now

Who is this “us”? The people in the audience? The people in Apple’s target market? Because it certainly isn’t everyone.

Data from Brandheld indicates 24% of UK mobile phone owners aged 16 or over think they have a smartphone (given our consumer-friendly definition of one), while 59% say that they have a laptop with wireless broadband. 17% say that they have access to both.

To an extent, this is just me being pedantic. Of course everyone doesn’t have a smartphone or laptop. Not everyone has a phone of any kind, let alone food, clothing or shelter.

A device doesn’t necessarily need 95% penetration to be ubiquitous; it merely needs to be the most desirable. Look at the iPhone. While sales are still increasing, probably no more than 1 in 20 people in the UK currently own one. Yet it has defined the category.

But I think the turn of phrase is interesting because it indicates the scope of the iPad. It is not a mainstream device. Not yet, anyway.

More so than the iPod and iPhone, the iPad is a disruptive technology. The market for tablet computers isn’t yet fully defined. There is no well established pre-cursor like the Walkman or Nokia series to create consumer expectation, for Apple to then surpass. The Kindle, the e-reader et al are nothing more than niche.

Unlike the iPod and iPhone, there is no obvious unique selling point to differentiate the device. Certainly, nothing to rival “1,000 songs in your pocket” or touch screen mobile web browsing. It will be a tough sell.

The five (original) steps in Everett Rogers diffusion of innovations model are

• Awareness
• Interest
• Trial
• Evaluation
• Adoption

With disruptive technologies, the challenge is getting beyond the second stage. Aside from going to the Apple store on Regent Street in London, the only opportunity people in the UK will have to trial the technology is by testing an iPad that a friend or associate purchased. The path to adoption will be very slow.

Additionally, interest piques if, in general terms, a device is able to demonstrably save someone time, money or effort. The iPad appears to be a jack of all trades, but is it a master of any?

• Web browsing: Web browsers themselves are optimised for mouse and keyboard navigation. Nevertheless, touch-screen specific web applications can modify and improve the experience
• Video: Video is passive, so a touch screen isn’t really relevant. For lengthy programmes, the iPad will also become uncomfortable unless some sort of docking station is purchased in addition
• Reading: This is where the potential lies. Somewhat unfairly, the iPad is essentially a glorified Kindle. But as with the Kindle, the high outlay and the ongoing costs render it worthwhile to only the most avid readers
• Music: There seems to be little discernable additional benefit
• Gaming: There is some real opportunity for multi-touch gaming but there is also a danger the iPad gets caught between the more portable iPhone and the more immersive Project Natal/Motion sensitive in-home gaming
• Photos: There are certainly advantages to storing and displaying photos, but the lack of camera on the iPad is a startling omission
• Brushes – an application that could be genuinely useful, but it is not a deal-breaker. Unless you want to pay $500 for a glorified etch-a-sketch.

Admittedly, the first generation iPod (bulky, mac only) and iPhone (2G, no GPS or cut, copy & paste) were relatively poor. A killer feature could emerge on the 2nd or 3rd generation iPad. But at this stage, it appears to be little more than a status symbol for a small niche of technology enthusiasts to store next to their minidisc, neo geo and em@iler.

sk

A new era for mobile?

I’ve been speaking to a lot of people about mobile recently – partially because I have finally got an iPhone, but primarily because I am working on a project around how mobile phones fit into the media landscape.

Mobile phones as a technology are unquestionably mainstream, and have been so for about a decade. There are currently more mobile phones than people in Europe, and a recent study suggested that children get their first mobile when they are eight years old.

However, mobile as a media has taken a lot longer to infiltrate mainstream behaviour. There have been numerous false dawns in the past – notably around mobile TV – but the time for mobile does finally seem to have arrived.

And the driver for that is the mobile internet.

SIDENOTE: The mobile phone has found some exceptionally important uses in the developing world – Mo Ibrahim‘s work is a good place to start in this respect – but my research is focusing upon the West, and primarily the UK.

The four factors that have been influencing take-up of the mobile internet (in the UK at least) are

• Faster network/connection speeds
• Emphasis on unlimited data packages (even on pay as you go tariffs)
• Greater choice of content
• Better (in functionality and usability) handsets

In my opinion, the third and fourth points are a result of the iPhone. Relative penetration of the iPhone may still be low, and few of its functions may actually be “new”, but both the iPhone and the App store have changed the public’s conception of what a phone is and what it is used for.

To indicate how revolutionary it is, consider how many other phones are referred to by their brand name? Only BlackBerry, and that is arguably because it the initial emphasis was on email rather than telephony. The iPhone managed to set itself far apart from all other handsets on the market. It is aspirational and has caused other manufacturers to fundamentally change the way they design and market their handsets.

Furthermore, the iPhone has disrupted the mobile market. I believe iterative upgrading of handsets is still the most prevalent form of changing phones, but a significant minority are abandoning the previously well-formed “upgrade curve” and converging around high-end smartphones.

By changing the perception of what a phone is, a new coalition of users can be persuaded to change their willingness to pay. A person may have been willing to pay £20 per month for their mobile subscription to make calls and texts. However, that person may be willing to pay £35 per month for a smartphone subscription that gives them email, games, maps, videos and so on in addition to calls and texts.

These people may still have different levels of comfort with technology, and thus usage of the different features will vary, but the capability is there for all to engage in this new behaviour.

And that is quite exciting.

Not just in itself, but also in the effect this behaviour has on consumption of other media channels. The mobile extends the PC behaviour in complementary and competing ways, and it is important to understand the relationship that the two platforms have with one another (in addition to the other media channels – this remote record tool from Sky is a great example on how mobile can feed into the core business).

The environment is fast-moving and volatile, but it does appear that mobile is finally emerging as a media channel to be reckoned with.

I anticipate this a topic I’ll be returning to on numerous occasions – both here and on the Essential Research blog where I hope to update on the progress we are making on this project. In the meantime, I’m bookmarking all relevant articles and blogs here.

sk

Image credit: http://www.flickr.com/photos/cocoarmani/