Mobile Portal Wars
By Jason Hertling, Tue Oct 03 00:00:00 GMT 2000
The story has been told before. It goes something like this: Imagine a world where personal devices really do help. Where information is easily retrieved when and where you need it. Having up-to-date grocery lists while at the store, on-line maps when driving to unknown addresses, or reviewing real-time account information when making large purchases, are all classic examples of what is to come in the future. And most likely the first generation of these services will be accessed using a mobile portal. The question then becomes: who will control these mobile portals?
Mobile portals are all the rage. Usually, mobile portals refer to wireless services - such as news and banking through WAP enabled phones, Palm devices, and Windows CE devices - that are aggregated and can be accessed from one central location. Mobile portals usually have a corresponding Internet site from which to control the information found from the portal, although this is not always the case. Some of the well-known portals are Vizzavi, Genie, Zed, T-Online and NTT DoCoMo (see related links).
Who has the best position in the value chain?
In the mobile world the value chain is simple; networks, devices, and services. Lately other players have been entering this market including, virtual network operators, PDA manufactures adding GSM or CDMA modules to their devices, and service providers who are collecting services under one umbrella. Mobile service providers need one critical component to build a successful service - network information. This information will take the form of location information, profiling information, and perhaps billing information. This is the information in which the network operators have, and only sometimes share, and what the service providers need.
For mobile operators, the situation is looking grim at the moment. For the most part, they have been spending money on 3G spectrums and on building up the networks. The big talk around the world is the combined 82 billion dollar investment in the UK and German markets for 3G spectrum. This is not including the investment needed to build the new networks. The critical question is then: are they spending too much time and money on a long-term investment when services are needed today?
Mobile operators do however have several advantages over other service providers such as AOL, Yahoo!, MSN, Lycos, and Excite, which by the way are the 5 largest Internet properties. Mobile operators can configure the default homepage of the mobile phone just like the Internet web browser configures the default homepage on an Internet browser. This is a powerful advantage since most users will only access the default settings.
The operators also have a customer relationship with a history of service and a monthly touch point via a phone bill. With this history, the operator has powerful profiling information that can be used to tailor services. The operators have also created strong brands and this will add to their strength in this new market.
How can operators recoup investments?
Voice revenue has been the bread and butter for the operators for the last several years. Now operators are adding data and services to the mix. Some of the new services and revenue sources that operators are depending on include multimedia, messaging, informational services, advertising, transactions, video telephony, data access, and subscriptions.
Allow me to briefly explain the three prevailing strategies from the companies offering mobile services.
Closed Model - All of the services live within the control of the service provider, currently this is the operator in most cases. Users are unable to access services outside this "walled-garden" of the operator, e.g., any public mobile site. This is a difficult model for some mobile operators because it requires a change of organizational focus, changing from operating a mobile network to creating a managing content. Most operators who are creating or managing their own content are creating different business units that are sometimes completely separate companies.
The closed model may have the effect of stifling competitive services because it is much more difficult for service providers to incorporate their services to the portal. Operators have chosen to share traffic revenue with the service providers while some operators have decided not to share traffic revenue at all.
Open Model - Many mobile operators are entering the market by only providing the 'pipe' to the service providers. This is the fastest way of providing a mobile service offering when there is a critical time-to-market. The portal offering will consist of links to 3rd party content and will pass little or no information about the user to the content provider. This model allows users to browse any public mobile site outside of the "walled-garden" as the increased traffic means increased revenues for the operator.
Enabled-Platform Model - Third party content providers, service providers, and other portals hook into the mobile portal and are able to access network information. Enabling access to this information would do a couple of things: 1) It would allow services to be created faster and better by application developers and 2) this would enable another revenue source for operators, and most importantly 3) transactions could be enabled by authenticating, providing security, and billing mechanisms to service providers. I compare this approach to planting a garden where network operators provide the seeds and, if nurtured, the services will grow.
What can we learn from history?
Back in the early 1990's when the Internet was just starting to take off, a race to provide Internet access was taking place in North America between AOL, CompuServe and Prodigy. When we look closely at the mobile portal battle of today and the Internet access war of yesterday, we find many similarities. Both battles are in essence providing the 'pipe', or i.e., bringing services to the end-user. Services are then the focus and the prevailing thought is: whoever has the best services wins. This is a good strategy; however, it is not the whole picture.
Enter the customer: and the battle then focuses around customer ownership. This is a concept this is flawed even down to the term itself. It is not about ownership, but rather, a relationship. This is a concept in which AOL has grasped but perhaps the mobile operators have not.
In the early 90's, AOL had a closed model similar to the operator models of today. They provided Internet connectivity but only to their proprietary content. Eventually AOL opened their network and took down their "walled-garden", effectively allowing Internet content to compete with their own. This forced them to maintain the very best content and services for their users. Moving to a flat-fee pricing model also increased the amount of time people spent online and increased the number of subscribers.
What does all this mean for you and me?
Mobile portals will play an increasingly important role in the mobile services market. The optimal mobile portal model will lie somewhere in between the closed, open and enabled platform models. The need to nurture service creation as well as the need to generate revenues will be the keys to success. We will see a combination of all of the models in the marketplace; however, we now see a strong favor towards the closed model where users can't access content outside of the portal. In the end, the winning strategy may be a surprise to us all.
People really want good services that add value to our lives. We want seamless integration of the devices we choose, whether the device is a data, voice, or any combination in between. We don't want more devices to walk around with because currently nothing can be synchronized with ease. The goal of technology and services is to make life easier, more efficient, so one can enjoy life more fully. Let's hope that this is the same goal for mobile operators and service providers.
Jason Hertling is the Director of Mobile Services for a leading web consulting agency. He is based in Helsinki, Finland.