November 12, 2008
The FCC has created the next big technology gold rush, literally out of thin air. Chip and mobile technology mavens are the first folks who will strike the new mother load, but others will follow.
In between existing television channels are buffers collectively called “white space”. The FCC established these buffers in the Bad Old Days™ because back then television broadcast equipment was less than precise. A broadcast signal could drift a little up or down the frequency spectrum causing recliner-bound fathers to order their children to adjust dials, knobs and rabbit ears (if you do not know what “rabbit ears” were, then you are too young to be reading this). Basically white space buffers kept channel 2 from clobbering channel 3.
But with television broadcasts going digital this February and the unused white space spectrum being valuable, the FCC has opened it up for “unlicensed” use. Unlicensed spectrum devices do not require getting FCC approval for every user. Your home wi-fi, your kids walkie-talkies, your BlueTooth toys are all unlicensed gear. Unlike all these gizmos, signals for devices in the white space 700MHz band can travel for miles and go through walls, which is why your old television worked indoors even if your kids couldn’t tune it properly.
The FFC’s idea is to open white space for unlicensed data devices. Being unlicensed, there is little restriction for what this space can be used. As long as the device follows FCC mandated rules for not interfering with other devices, anything goes. Think of it as wi-fi without the limitations of wi-fi. Think of a long distance wi-fi connection that runs between 10-20 megabits a second (slower than home/corporate wi-fi but significantly faster than 3G mobile data). Think of it as a huge arena where devices will freely communicate with other devices in an all but unregulated environment.
Think that this market is 100% untapped.
Like the Internet itself, profit in the white space derives from its unregulated nature. When the cost of entry is low and the variety of uses nearly endless, potential and profitability are mind boggling. Chip makers will be obvious early winners, and I expect Intel will quietly shift some of their WiMax investments to WhiteSpaceMax in 2009. Cisco no doubt has engineers soldering away on breadboards today. Since Google pushed hard for the FCC to allow white space exploitation, they likely have an advertising revenue backend already mapped.
These are the obvious profiteers. The yet identified winners fall into two categories: companies that understand new uses of data and companies who redefine “devices”. We have to look at these in inverse order.
What is a “device”? An automobile is a device. So is a toaster. I can think of about 100 useful ideas on how a car with free long distance wi-fi could benefit from data. So far I’m drawing a blank on how toasters would benefit from having fresh data feeds (maybe my brain needs some toasted carbohydrates to restart the idea factory). Creative minds who view “devices” as an abstract, and who can leverage the wealth of data available via the Internet, going to make some money.
Let’s take a really simple idea like GPSs and gasoline. If a GPS maker augmented their product to mine the data at GasBuddy.com, the device could at the press of a button find the cheapest gasoline nearby, guide the driver there, then prompt him to enter-in what they paid and thus update the GasBuddy database. When gas goes back to $4 a gallon, this will be a much sought after addition (note to Garmin, TomTom and everyone else in the GPS business — considered this copyrighted and I expect royalty checks when you implement this).
But GPS toys are existing devices. What previously unimagined gizmo could be mass manufactured and download/upload data? The answer may lie in what data is useful in motion when using a cell phone is not practical. Or better still, when a cell phone is present but passive. Imagine an eye-level billboard that sense that you are standing in front of it, and from some white space signal knows who you are (is told your cell phone number). Based on a database in the cloud, it could tailor an advertisement to you and the location where you are at (“Hungry? Try the Peking Cat restaurant two block east on Main Street. Much better than the Vietnamese food you ordered online last week from Wok my Dog.”)
Combinations of existing devices may suddenly become useful by their ability upstream data. Convinced your kid is abusing his driving privileges? Why not add a camera in the car, tied to the speedometer and GPS system that streams audio/video/location/velocity data back to your PC, and let’s you VoIP him in real time? “Billy, get your hands off your girlfriend and back on the wheel …. NOW!”
White space is a big and very empty world. But it is a largely unregulated world and one ready for profiteering.
September 30, 2008
Advertising is only part of Google’s gain with mobile phones.
Much has been made about Google’s mobile advertising potential in deploying Android, their free Linux-based mobile operating system. Google will indeed make a(nother) boatload money through advertisements on cell phones. But this is only part of the Google strategy. The other components should worry competitors more.
Let’s stipulate a few things in order for the market dynamics to be clear:
- Mobile devices are the prophesized unified communications portal (servers be damned).
- Due to constant availability, mobile devices will become the first option for most people for discovery and use of information.
- Unifying the end user experience while roaming and at the desk creates commitment by the customer/user.
Therein lay the competitive threat from the G-Phone. For years now Google has created end user services (search, maps, photo galleries, office apps, more). The services are generally cost free for the users. These applications have mobile counterparts and most (soon all) are bundled on G-Phones.
In other words, Google built the backend to mobile services before offering mobile phones.
Contrast this with Apple and the occasionally-on Mobile Me. Apple delivered a fancy handset and later added server-side applications that crashed often enough to cause the news media to suspend their Apple Adulation long enough to question if massively scaled server operations were Apple’s forte. Alternately Google has built an empire on centralized services and now is creating the mobile experience to extend it.
Sure, Google gave away mobile apps all along and you can run any of those apps from nearly any mobile handset (thanks to Google testing those apps using the services of another Silicon Strategies Marketing client DeviceAnywhere). But Google prioritizes access to these applications by bundling them onto G-Phones. Since the unit cost to handset makes for G-Phone system is zilch, handset vendors have a great incentive to adopt Android, put G-Phones in the hands of their customers and thus make Google apps the defacto mobile standard.
Slick.
Now here is where things get a bit scary … scary enough that the Federal Trade Commission will eventually investigate. Once enough people adopt Gmail, Google Office, Picasa, etc. for their application of default, Google track almost every moment of your life (turn off the cell phone camera when you and your sweetheart go to bed). Google will have a direct intelligence spread superior to the U.S. government.
Perhaps the CIA will be more interested in Google than the FTC.
Google has executed a classic blocking maneuver that will feed their core advertising business. By making mobile and desktop a contiguous environment they drive a wedge between users and all application competitors. All things being equal, who wouldn’t want to use the same apps in the office and in a restaurant? Microsoft can’t compete because they won’t give away Window’s Mobile to handset makers or port mobile apps to non-Windows handsets. Symbian will not compete as there is no central server backbone for applications.
Slick.
After the markets finish sinking, buy Google. Their mobile advantage will take Google stock even higher.
August 12, 2008
The mobile handset market tipping point has arrived, and it is a wonderful thing to watch.
In very short order (relatively speaking) the mobile market has seen:
In short, the mobile market has opened up and this trend will accelerate (which is seemingly impossible, but I never bet against an avalanche). Two dominate forces are causing this to happen: competition and customer resentment.
In a rare moment of governmental lucidity, regulatory agencies in charge of frequency allocations made sure that no company could monopolize the cellular industry. This came as a huge surprise to AT&T who is unaccustomed to real competition, and it showed in their perpetual inability to focus on their market mission.
Congress — in an even rarer show of caffeinated consciousness — made your telephone number your property, forcing cellular carriers to release your number if you ever decided to switch to another network. This removed vendor lock-in based on the obvious need human and business continuity through numerical IDs.
Competition required each cellular providers to keep trying new things in order keep their customers happy, and thus keep their customers. Better and simpler service pricing, faster data networks, fancier and heavily subsidized handsets. The technology and markets have evolved so rapidly and brought so much new end-user convenience that many people would rather do without television than their mobile handset.
But there was a weakness in the market induced when the carriers tried to keep customers locked-in. The choice of handsets for any carrier was limited to what they sold and supported. The back room economics of this had to do with the terms of your service contract. The logic (so to speak) went like this:
- To encourage you to subscribe to our services, we’ll sell you a $500 handset for $1.95 (we, the network carrier, eat the $498.05)
- In turn you agree to subscribe to our services for no less than two years, and pay massive fees for an early cancellation
- Don’t worry, we’ll earn enough off of you in two years to more than make-up for this initial loss (unless of course you don’t use your hands free kit, fly your car off a bridge, drown and thus fail to pay your cellular bill on time)
- And if you use some foreign device on our network, don’t expect to get any help from us
The carriers then would write sole-source deals with handset manufacturers for the latest and niftiest new handsets. So if you wanted a SuperCell X400L then you could only get it by subscribing with Honest Earl’s Cheapo Celluar. This limited the number of X400Ls, the number of applications and accessories that worked with it, and thus your choices.
This model is about to break and break hard. As more and more people start carrying these portable computers we call cell phones, they want more functionality which means more applications. Carrier network are not software companies and cannot possibly design every type of application for their set of phones. Thus, customers are a bit disgruntled by the limitations of what handsets run on what networks. What do you mean I have to subscribe to Sprint is I want to play Mega Reversi?
Led by the techie caste, people have started using “unlocked” devices — unsupported devices on carrier networks. The carriers may offer support for unlocked devices, but the end-user success rate has been high enough to spawn a thriving market in unlocked devices. This is in part because the handset manufacturers earn a better margin by selling more directly to the customer and also broaden their markets in the process. Want an AT&T Tilt without the AT&T? Buy an unlocked HTC 8925 and slip in your SIM card from your old Alaska Wireless handset (unwise if you are not in Alaska).
Vendor lock-in was beginning to break, so the rest of the market decided to help the process along. Nokia will gladly sell their handsets to anyone as will HTC. Google wants to make one operating system to cover all cell phones (which has to keep Steve Jobs up at night) and Symbian was released into the wild as Open Source to counter Google. The networks are beginning to see the trend and not fight it.
When competition is assured and customers can collaborate on alternatives, it is better to lead the trend than to be crushed by it. Cellular customers will have the final say and it will eventually be that all devices will work on all networks (tower protocols being the current, and perhaps temporary limit).
Want to make some money? Start thinking about mobile applications. That is where the next next thing will be.
December 11, 2007
Closed systems make money. Open systems make money. And the two dynamics are co-exists … for a while.
I’m pondering these realities as I comb through reports in the wireless market, where Silicon Strategies has a new client. The evolution of the wireless market will soon make a shift and the smarter vendors are rapidly adapting to the inevitable.
First, a musing on closed and open markets. In closed markets, the vendor has control by virtue of either a monopoly or through customer lock-in due to the high cost customers face in switching to different technologies. The IT technology industry was a closed market for a seeming eternity until the folks at Berkeley began porting and promoting their flavor of UNIX (which could be considered the original computer virus). When Sun Micro and other vendors began using open standards (like UNIX) as a wedge into the market, the closed system protected by high switching costs began to fade. Microsoft has a virtual monopoly on desktop operating systems, and we may be seeing the first cracks in that closed system as well.
Open systems work on the principle that choice creates other competitive realities and opportunities. For example, there is not a dime’s worth of technical difference between most of the Linux distributions. Linux purchasing decisions are primarily based on other issues, such as the perceived financial soundness of the vendors or their dedication to Open Source principals (or in the case of Novell, the seeming immunity from litigation by Microsoft).
TV cable operators are another case study of closed systems. Due to the dubious nature of local franchise laws and the instituted monopolies they create, cable carriers have zero incentive to innovate. It wasn’t until home satellite came into being that there was any movement by the cable companies, and even that has been lackluster due to the limited competition created between these two closed systems (like the limited innovation that existed between VMS and MPE — and if those abbreviations don’t date me, nothing can). There have been various attempts to create an standardized set-top box for cable consumers, but higher margins are created by renting gear to couch potatoes instead of letting customer buy one of many makes at Circuit City.
Now we are about to see a fissure in the wireless market. Google started the collapse by prodding the FTC to mandate some degree of open access by whomever wins the bidding war of the soon-to-be re-purposed 700Mhz spectrum. Google’s stand (and now the FTC’s as well) is that whomever wins temporary ownership of this chunk of air must make some or all of it open to allow any application, and certified device, any wireless service and any third party services provider to tap into the 700Mhz waves.
Naturally, this raised a stink from every vendor who had designs on any piece of this space. Cisco complained. Verizon cried foul. Even Satan, who current resides in Redmond, grumbled. But as soon as the FTC put their bureaucratic foot down … well, people started changing their tunes. Verizon, who had been one of the noisier detractors to Google’s open system scheme not only turned their opinion 180 degrees, they started opening the existing network, presumably as a show of philosophical acclimation to curry FTC approval.
In other words, once the inevitable opening of cellular services were going to be mandated somewhere, Verizon decided to join the new paradigm than fight to preserve the old.
Good move on their part. Sun rode the UNIX revolution, and took a great deal of market away from competitors, and opened new markets as well. Later in life they fought the Linux revolution and lost big. Both UNIX and Linux were opening previously closed systems, and Verizon learned from Sun’s mistake.
There is a truism among market strategists that notes the best way to win in a market is to change the rules. But the same applies when the rules are changed against you. If the change is inevitable, or worse still mandated by law, then the smart people will use the new rules to their advantage, create new differentiators, and leave their competition to slowly die.
October 30, 2007
I want to brag about one of our clients and use their main product as a micro case study in product identification and whole product definition.
Mobile Complete provides a unique service called DeviceAnywhere (which I don’t think is a great name for the service, but Silicon Strategies Marketing was not engaged with Mobile Complete during their initial branding efforts). What DeviceAnywhere does is allow you to remotely use real, live mobile handsets for testing mobile applications. They give you access to hundreds of popular devices, in regions all around the world, and the ability to test every aspect of the device and your application.
Before DeviceAnywhere, the market had two options: use emulators for testing or buy one of each phone, for each carrier, in every country and carry monthly service charges for all of them. The later is an extremely expensive option, and even wealthy companies like Google were unhappy with outlaying that much lucre. And as anyone in software knows that emulators don’t.
Thus the expected outcomes for a mobile application developer were:
- I need to test on real devices
- I need to test with all the popular devices, and a few orphans
- I need to test cell phones in London even when I work in San Francisco
- I need full access to carrier telephony and data services
- I don’t want to invest a lot of capital in handsets
- I don’t want to pay for monthly service contracts for hundreds of phone
 Mobile Complete did what any good company — software or otherwise — should do, and that was to first understand the expected outcomes, then design the product accordingly. By matching customer expected outcomes to product realities, they have satisfied a large and growing number of customers. At the recent CTIA event in San Francisco, they informally estimated that 60% of exhibitors on the show floor with either customers or partners (click on these photos for a larger image).
 One aspect of their customer’s expected outcomes (or the whole product definition) is that testing of mobile applications had to have no emulation. Some vendors load software agents onto devices for remote controls. The problem is that any software agent has limitations on functionality (try to pull a battery out of a cell phone remotely using an embedded software agent) and typically induce problems. Mobile Complete actually hard-wires each mobile device and makes every function (like opening and closing a flip phone) a physical or electrical connection, so the device responds as if it were in the developers hands.
Their approach was not easy to implement, but it delivered what the market wanted, and that is what really matters.
Next Page »
|
|
|
|
|
|
