Sprint's McGinnis talks Sprint ID and redefining the mobile app experience
with Kevin McGinnis, Sprint's director of open enablement
The recent CTIA Enterprise & Applications 2010 event generated its share of headlines, but few announcements were as intriguing or as innovative as Sprint ID. Trumpeted by Sprint Nextel (NYSE:S) CEO Dan Hesse as a tool to help customers personalize their Android smartphones and more effectively navigate and discover applications, Sprint ID packs collect apps, widgets, ringtones, wallpapers and related content into a single download experience, bundled together under one overarching brand (partners include Amazon, Yahoo!, ESPN, Home Shopping Network, Disney and MTV) or one category (e.g., entertainment or fitness). Moreover, ID packs can be geared toward consumer tastes as well as enterprise requirements.
Sprint ID will be available starting Oct. 10 on two Android smartphones--the Samsung Transform and Sanyo Zio--and will expand to a third device, the LG Optimus S, later this year. For content providers, the Sprint ID pack format represents an opportunity to deliver content directly to the mobile audience--in many ways, its approach recalls the MVNO model, but without the service plans and handsets. In addition, the ID packs offer publishers the opportunity to curate consumers' mobile app download experience, guaranteeing that users obtain an aggregate of integrated, complementary solutions in one fell swoop. FierceMobileContent editors Sue Marek and Jason Ankeny met with Sprint director of open enablement Kevin McGinnis hours after the operator formally launched the Sprint ID initiative, further exploring its conceptual possibilities, what it portends for content providers and what it means for consumers.
FierceMobileContent: The Sprint ID press release makes it sound like, on some rate plans, the Sprint ID packs are free, but it's not entirely clear. What determines the price?
McGinnis: Let me walk you through the different models, and what we think the business model objectives are on our side and some of the framework we've put in place. At the highest level, we think our business benefit is through gross adds--it's about customer acquisition. We have our own channels today, and we have our brand that we go out and try to swing doors with today.
But we think there's a huge opportunity to work with other large affinity brands and special interest groups who have a more emotional relationship with their consumers--greater than our brand--and let them start advocating that you can get the best experience on Sprint. We can have them spend their marketing dollars and generate interest, without us investing in that marketing initiative.
FierceMobileContent: It's a distribution channel.
McGinnis: Absolutely. It's a lot of distribution channels.
FierceMobileContent: So that's what [Hesse] meant when he talked about the MVNO model of years past [at the CTIA press conference announcing Sprint ID].
McGinnis: Exactly. We've removed the high investment and the high risk associated with those older business models. The old enterprise model where an IT manager configures all 10,000 devices for their employee base--that goes away now. Hopefully we line up hundreds of distribution channels, as large and as small as they're willing to invest in the application development. It's no longer about device development, device inventories and all of the other heavy lifting.
The second business benefit we see is through stickiness. Subscribers have an affinity for these brands and the things they identify with, so there's now multiple reasons on the device to keep them satisfied and keep them compelled to stay with Sprint. Now I've got my business pack with my employees' information, my special interests and my hobbies, the brands I'm generating interest with, and so on--they're all participating in a much more interactive way.
The more granular business model issues revolve around whether we'll ever charge for the download of a pack. At launch, they're all free. We're leaving that choice to the content community. We don't feel like it's our role to determine the value of their content. If a brand or a special interest or an individual feels like a consumer has an interest in their ID pack and will pay a price for it, then by all means, they should have the opportunity to do that. We'll provide monetization vehicles. As it relates to purchase of packs, purchase of premium content within the packs and so on, the content provider can provide their own monetization vehicle, like a relationship with PayPal or Google Checkout, or credit card billing--whatever they want to do.
We are also setting up a Sprint mobile wallet. It's not a financial instrument--it's basically a container that allows you to very easily put your own financial instruments into the device and then choose how you want to use them. You can put your credit card or debit card information in there, similar to what you would do with an iTunes account. We'll have partners in the mobile wallet as well, so the PayPals, Google Checkouts and Amazons of the world will have their financial instruments and prepaid account capabilities in there as well. We'll talk more about it at our developer conference at the end of the month. We're very close to launching it.
The third vehicle is carrier billing. The carrier bill is a vehicle to bill and settle with these partners--it's a more traditional model, and very popular with end users. We assume greater risk in that model, so we probably won't just open an API and let anybody take advantage of that.
So there's charging for packs, and charging for premium content within a pack--the freemium-to-premium model. I use ESPN as an example--on the Internet today, they offer teaser content, and if you see the Insider logo next to the link and you really want to read that story, you pay for the subscription. Otherwise you only get to read the first two sentences. That model can be stood up--but again, it's not for us to decide. All we are is an enabler.
We've really stepped out of the walled garden view of approval. The business has evolved--more of the money goes to the developer now. We look at this more as an opportunity to cover costs and make sure we stay whole on care and support and the platform capabilities that allow transactions to take place.
The last thing here is the mobile advertising model. There's a really rich opportunity here to get beyond banner ads in mobile. When you've got the stand-by screen as a platform, and when you have the tools we'll put in play with ID packs--some enabling tools we'll talk about at our conference--you really start to turn advertising into a service for the user, especially with opt-in capabilities. I want to know when there's a discount here, I want to know when there's a promotion--I'm interested in these things. If you combine depositing coupons in the wallet so the user can go get them, as opposed to having ads pop in front of them constantly, it starts to seem more like a trusted advisor service than an intrusion. And we still believe that users understand content is free and subsidized by the ads they see, so there's a greater tolerance to some extent.
FierceMobileContent: And by looking at whatever pack users select, advertisers can target their ads, correct?
McGinnis: Absolutely. They know who has which pack and who's expressed some kind of interest in that brand or product. From a content provider perspective, there's a huge cross-merchandising opportunity here.
The app is still a very siloed experience--it's very hard to cross-promote other content and apps you might have. But look at somebody like [Electronic Arts] that can put multiple games in an experience or talk about multiple platforms at the same time, and now they have a captive audience within that experience. Or take a brand like [Home Shopping Network]--they have an opportunity to show various content they think folks might be interested in. It's a huge cross-promotion, cross-marketing opportunity.
FierceMobileContent: To extend that idea, I was speaking to Yahoo yesterday. I know they're somewhat unique in regards to the sheer volume of applications they have and the services they provide, but what intrigues me is the idea that when you have that many apps, you don't necessarily know which ones a consumer has downloaded to their phone, meaning you can't necessarily tie them together, and you can't do integrational things that would boost the relevance of all these apps if a particular piece isn't there. With [Sprint ID], content providers are effectively curating the experience the consumer is going to have, guaranteeing that all of the necessary apps are on their phone. That would seem to open up an enormous number of opportunities. Is that the expectation for where this can go--giving everyone a little more control over what's on a consumer's phone, without actually removing any control from the consumers themselves?
McGinnis: That's exactly right. We've raised the bar for the content provider now--it's really up to them, instead of us. What can you do with this palette now? There's a lot they can do. Some of the initial launch packs are short of what the possibilities are here. I think you'll see some of these content partners thinking through things like that--like "I have the ability to build an experience now, not just put some apps together."
There are two models here. One where a brand affinity leads the way: HSN, eBay, Amazon, Yahoo--the brand and the products within their portfolio. You've got another one where you might have an identity--the entertainment pack, the head-of-household pack, the small business pack. That's more about who you are than the brand you might identify with, and you see an aggregation opportunity to collect different brands within that pack. Some larger brands only have one app--they love the idea, but they would essentially have to break their app apart to create an experience. Or someone like Handmark can say, "All right, you're one app, with these eight other related apps."
Handmark, Motricity and Sapient are all our developer partners. Some brands need a third party to take their content and mobilize it for an experience like this--our goal was to introduce some developers into the ecosystem to say: "Go talk to these guys. They understand the platform and the capabilities." We'll work with those developers to provide enabling capabilities through our open strategy. This is more than just the content--if we really want an experience that matters, we as a carrier have to lend some capabilities that enrich that. It's that BASF effect: We don't make the content--we just make the content better.
FierceMobileContent: On the handset side, where does Sprint ID fit alongside the Android OEM user interfaces and other initiatives?
McGinnis: We see them as separate. When Android first rolled out, the 1.5 version UI was very vanilla. There wasn't much innovation on top of it, so the OEM took the lead in doing that. The issue with that is that the OEM has probably fragmented the operating system. They put some very heavy code on there.
Our approach with Sprint ID is to take this back to base Android, and allow innovation within the boundaries and rules of that base opportunity. We want to promote less fragmentation for the developers, less device development customization with the OEMs. We want to drive Sprint ID across the Android portfolio and across the OEMs. Wherever Android goes, then theoretically, Sprint ID should follow.