The New, New Net
By David James, Thu Feb 14 00:00:00 GMT 2002

Move over, mobile Internet. Small, entrepreneurial application and content providers are building the mobile Datanet for a burgeoning wireless data industry.

This is the dawn of a whole new era for mobile communications, says Edward Nugent , author of the Mobile Metrix report, believes that a key characteristic of successful mobile service providers, apart from their staying power, is their ability to understand the needs of end users. To understand these needs, Nugent says that a provider should begin by segmenting users by their needs. The report presents an analytical model that applies two key criteria. One part of the model segments users who want to explore new offerings and those who want traditional offerings. The second part segments users who want lasting benefits and those who want instant gratification. Such an analysis, by demonstrating that different users have different needs, helps a provider better position its products and services, says Nugent.

Divergent stratagems

Collaborations and revenue sharing, among operators and several levels of developers in the value chain, are often a strategy of these successful companies. Mforma is paid a portion of the per-user fees received by its customers, and it shares these revenues with its independent developers. FunMail shares its revenues with its application and content developers. Cybird receives subscription fees from operators, after deduction of a collection fee, and passes on a portion of these revenues to independent content providers. End2End, the middleman, has key partnerships with Hewlett-Packard, Cisco and Nokia and with leading application and content developers.

According to Kazutomo Robert Hori , president and CEO of Cybird, mobile operators and device manufacturers could never successfully figure out end users interests and needs when it comes to applications and content, so they must collaborate with the developers. Work sharing and profit sharing is very important, he says.

Another aspect of the collaboration strategy for two of these companies, reminiscent of the DOS/Windows software evolution, is the empowerment of their development partners. Mforma provides a platform for which its partners can write applications. FunMail has an open Application Program Interface on which other developers can build content and applications.

In addition, these companies believe that geographic focus is very important. Our primary focus is Asia and Europe, says Lavine of FunMail. Of some 400 million data subscribers around the world today, approximately half are in Europe and one-quarter are in Asia, with Asia gaining ground. Bluhm of Mforma agrees. Mobile Datanet markets will develop much more rapidly in Europe and Asia than in the United States, he says. Mforma is already active in seven countries. End2End operates throughout Europe. Cybird has an affiliate in Korea and is providing solutions consulting in Europe and elsewhere.

Entrepreneurial energy

Entrepreneurs are only beginning to tap into the opportunities presented by the emergent mobile Datanet. The business models and strategies of the companies mentioned in this article provide an early roadmap for success, but the possibilities are hardly exhausted. Thats the wonderful thing about entrepreneurism in a new, unfolding industry. Entrepreneurs are often the first to see potential opportunities, take the necessary risks to realize them, and push innovation. Hori of Cybird, typical of many mobile Datanet entrepreneurs, ticks off the key elements of his companys success: One, be the first mover, get the first users, become stronger, have more users. Two, wait for the right time to execute anything. Three, move quickly. Four, do not hesitate to take risks.

The mobile service providers who scored well in the Mobile Metrix report are said to have staying power, with particular emphasis on strong sales and a good customer base. But the reality is that most of these companies are small and very young, many less than three years old. Its too early to predict who will have staying power, says Bluhm. The mobile Datanet is young. Its still building. But it will get bigger and better very fast as high data speeds become available.

At the dawn of a new era in mobile communications the mobile Datanet its the entrepreneurs who will make the sun shine brightly.

David James is president of Business Strategies International, a San Francisco-based consulting and venture-development firm specializing in technology business opportunities.