Exploiting the market for mobile Internet

In 2007, a survey carried out by technology research company Vanson Bourne suggested that two out of three students who had tried to access the Internet on their handset found it so unsatisfactory that they gave up. Given that students tend to be the ones who have both the time and the inclination to explore new technologies, the implications for the wider market are profound, although probably this does not come as a surprise for anyone who has first-hand experience of the mobile Internet.

However, despite the poor user experiences to date, 83% of respondents agreed that, as the web offers more social networking and online community activities, it is becoming increasingly more important to be able to access such content whilst on the move.

This raises two questions: 1) how did we get into this situation‾; and 2) how are we going to get out of it‾

The answer to the first question is well known: a combination of forces ranging from disappointingly low data rates to the diversity of user handsets (in most cases, content needs to be re-purposed); furthermore, there is a lack of transparency over the high cost to consumers and a restricted content (walled garden) approach adopted by mobile operators until recently. All this combined makes the mobile Internet a less than satisfactory experience.

The answer to the second question is more interesting and can be approached by first hypothesising how the mobile Internet would work ideally.

Put simply, the mobile Internet should offer easy access to a wide range of online content that is not limited either by mobile operators or by the need to re-purpose content for different handsets. The user interface should be simple and intuitive, potentially seamlessly integrating a handset's user interface with an on-device portal (ODP) and with the wider Internet. Billing should be straightforward and transparent, applications should not clash with each other and the mobile device should be synchronised with other devices (both fixed and mobile), as required.

Things do seem to be moving in this direction:

"¢ the iPhone is very well integrated with the .Mac framework, incorporating a user-friendly interface and slick applications to manage media such as music and photos;

"¢ Nokia's Ovi platform, due to go live early in 2008, is seeking to bring the .Mac/iPhone experience to PCs and handsets running Nokia's S60 operating system;

"¢ Google's Android is touted as the first complete, open and free mobile platform, involving more than 30 technology and mobile companies;

"¢ Qualcomm has offered a standardised mobile operating platform to application developers for a number of years, but it can only be used in conjunction with a code division multiple access (CDMA) mobile network, of which there are relatively few worldwide.

The jury is out on Ovi and Android - those that buy into these initiatives suggest that they will be transformational, while detractors suggest operators are participating in Android to gain free marketing, or point out that Ovi was announced one day after Android, suggesting that it amounts to little more than a knee-jerk reaction. Time will tell.

The overall direction in which the market is developing is clear and it is likely that the owners of other mobile platforms will develop similar initiatives: some degree of standardisation of operating environments, complimented by a cluster of well-designed applications.


The last question, of course, is: who will be best placed to "˜own' customers and extract value in this future environment‾ Nokia is reported to have a revenue-share arrangement with Vodafone for content downloaded from Ovi. If Ovi takes off, might Nokia then seek to bill customers directly and pay Vodafone a commission to cover data usage‾ This raises the possibility of the mobile web developing in the same way that the fixed Web has, with network operators becoming commoditised bit pipes, while content owners and aggregators extract the bulk of value from customer relationships.

The various protagonists in the mobile industry need to think quickly how they should position themselves as this market evolves.

Jim Morrish, Senior Consultant, Analysys