Archive for the ‘Operators’ Category

The operators’ “secret” plan to destroy Google. Yeah, right.

Tuesday, February 6th, 2007

By now you’ve probably seen the reports that six European mobile operators plus AT&T are planning “secret” talks to set up a mobile search engine to rival Google. The Telegraph reported that the secret seven might team up with an existing search engine, or might set up their own shared search engine and advertising sales team.

The idea is for the operators to capture the majority of advertising revenue from mobile web search.

It’s possible that the report is false, but the Telegraph had some quotes and details that sound credible. (Besides, if it’s not true then there would be nothing for people like me to posture abut online.)

As you’d expect, the report is already attracting a lot of commentary online. I won’t bother repeating what everyone else is saying, but I’d like to make a few quick observations:

1. Have any of these high-profile operator consortia ever been successful? It’s a sincere question, not rhetorical. I can’t think of any of them that lived up to their hype. But maybe I missed one. Please post a comment if I did.

2. I don’t think the threat to create their own search engine is credible. The investment in infrastructure is too large at this point. So the real play would be to partner with one of the current search companies and squeeze money out of it. Let’s see, who’s desperate for search share and has a ton of cash? Hello, Redmond.

3. Who starts secret negotiations by leaking the fact that they’re being held? Only someone who’s inept, or is posturing to create leverage in their discussions with Google.

4. All of this presupposes that the operators can continue to maintain closed gardens, preventing users from going to whichever search engine they like. That worked soooo well for AOL and MSN, didn’t it?

5. Why can’t these guys negotiate with Google the traditional way, by threatening to sue them?

6. I hope eventually someone will realize that unless we figure out how to make mobile browsing a lot more useful and compelling, there isn’t going to be any pile of riches to divide from mobile search.

Copyright 2009 Michael Mace.

Posted in Google, Operators, Search | 1 Comment »

How the mobile industry sets itself up for failure in mobile data

Tuesday, January 30th, 2007

I saw a great example recently of the problems caused when mobile companies don’t understand the structure of the market for mobile data. A report by Research and Markets gave a somber view of the current status of mobile data in Europe:

“Only about 14% of subscribers use MMS/picture messaging, and only 10% of mobile users across Europe who have access to mobile Internet make use of it….In areas such as mobile TV, successful trials have not yet translated into general consumer acceptance.”

This led to very skeptical commentary at Muni Wireless, where Esme Voss pointed to horror stories about European mobile users who accidentally compiled monthly bills of up to 10,000 Euros by misunderstanding the billing on their mobile data plans. “A complete failure” was how she described mobile data in Europe.

I think Esme’s right about the data charges, which is why Europe’s new flat-rate plans are a step forward. But I think the biggest problem isn’t the data charges. It’s the industry’s misuse of the word “only.”

If you expect a single mobile data application to conquer the entire mobile market, anything less than overwhelming adoption is going to be viewed as a failure. Getting “only” 14% or “only” 10% of the market is a crushing disappointment.

But as I discussed in a recent post, the mobile data market is heavily segmented. It’s very hard for any single solution to appeal to more than about 12% to 15% the population, because that’s the maximum size of each market.

The problem isn’t necessarily with the services, it’s with our expectations. Let’s rewrite that Research and Markets report based on the real structure of the mobile data world:

Mobile companies in Europe have successfully pioneered several new mobile data segments. MMS messaging has rapidly saturated virtually everyone who’s willing to pay substantial amounts of money to send low-resolution pictures to their friends. Mobile browsing is establishing a solid niche, with as many as ten percent of people who were given an Internet-capable handset using it to access online content. Meanwhile, mobile TV trials have tapped into the segment of mobile users who are willing to pay to watch TV on a screen the size of your belt buckle.

Doesn’t that feel a lot better? It’s also a lot closer to reality.

There are several lessons to take away from this if you work at a mobile-related company:

Think small. If you’re building a new service or product, make sure it’ll be cash flow positive even on a small user base. It doesn’t necessarily have to pay back all of the sunk cost all at once, but if you need to get 20% penetration of the user base in order to break even on your day-to-day operating costs, you might as well start preparing your resume now, because you are going to fail.

Set realistic expectations. Make sure your management chain understands that there are no killer apps in mobile data. The market’s made up of narrow segments, and getting five percent of the users to be passionate about something is actually quite a success. Cable TV programs thrive on that sort of viewer base all the time; that’s the type of world you’re operating in.

Learn on someone else’s nickel. Since 5% of the market is a success, that means you’ll need to run a lot of experiments in order to get a portfolio of successful services. Rather than funding all those experiments yourself, it might be a lot better to allow a bunch of software developers to make all the mistakes, and then you participate in the billing for the most successful ones. An open garden is a method for you to minimize your risk.

Copyright 2009 Michael Mace.

Posted in Mobile Data, Operators | 3 Comments »