RWW Mobile Summit

20100507-_MG_2539.jpgI went to the RWW Mobile Summit last Friday where in the true unconference style the attendees defined the agenda and developed the conference content at the day transpired. While moderate in size, it was evident in the session proposals that the people attending were mobile insiders with intimate knowledge of the challenges and opportunities the mobile sector is facing.

Richard McManus opened the event with a run down of top mobile trends that, I believe, captured the major trends concisely and through the sessions that the audience layered on a much deeper understanding was achieved.

mobile_sumit_10_trends.jpg

Interestingly, from my point of view, there was very little discussion about hardware platforms, a traditional point of much debate in the mobile industry. In fact, the session on “iphone vs. android” had a grand total of zero participants, even the person who proposed the session failing to show up for it, which only illustrates a broader point that we intuitively understand this is not a winner take all market and are accepting of many hardware options providing the path for building applications on them is not fraught with complexity and peril.

There was quite a bit of discussion about HTML5 and Flash and a consensus emerged that HTML5 had achieved a tipping point moment. Not surprisingly the video guys were focused on this issue as it directly impacts them on the iPhone, where according to Justin.tv a full 1/4 of their new user signups are coming from; I’m not clear on whether or not this was all phone platforms or just the iPhone but either way it is a transformative shift for a company like this to realize a fundamental shift away from the desktop as your primary user experience.

Many of the sessions were focused on business models and revenue streams, and somewhat related to that the exploitation of mobile search and location capabilities for ad and online marketing objectives. I sat in on one session focused on online mobile marketing and was interested to learn how ad buyers still have not shifted away from pageview metrics for ad buying, in other words despite a sea shift in evolution in how consumers interact with online services the agency ad buyers are stuck in 1999. We can scoff at this or accept it and reconsider how mobile services that rely on ad driven monetization are pitched, I’d choose the latter.

A couple of sessions that I attended were focused on user interactions and how, to paraphrase, game system mechanics are gradually becoming a core function in new mobile services. This is most evident in the badging phenomena as represented by FourSquare’s point and badge system.

At their core these game dynamics are about increasing participation in a system through playing off human beings natural desire for recognition in social environments… it’s called social signaling and involves achieving some status relative to online peers. I always think of the success that World of Warcraft has achieved by building a system that involves individual status accomplished through successful gameplay, the advancing through levels and the rewards they bring, and perhaps more importantly the recognition for success through collaboration as part of the game play.

It is the collaboration part of WoW that ensures individual users are simply not cheating their way up the levels as being successful in WoW requires the individual user to work as part of a team (a “guild”). There are many successful ranking and rating systems that rely on individual and group competence, SAP’s Developer Network (SDN) builds in this concept through a point system where you accumulate points for participating and then more critically for how valuable your participation is being rated by your peers. Stack Overflow has a very similar concept and by all accounts these are very effective at ensuring the site not only attracts high value participants by also does not become spammy in the process.

Augmented reality was a very popular topic but unfortunately for me the tables were so full that I could not hear the discussion with the background noise. From what I gathered after the fact the core theme is moving beyond mobile web overlays but I’ll leave it at that and do some research to find out more specifically what was being discussed.

Lastly, the “sensorization” of mobile devices is a prominent theme with location capabilities, movement sensors (accelerometers), and RFID offering developers a whole new set of capabilities as a result of the dev platforms offering third party access to these sensor capabilities. Consumers don’t always think about these functions relative to desktop computing because developers do a good job of hiding the complexity in a “it just works” fashion. Red Laser is a great example of this, relying on the camera functionality to scan a barcode which is then used to drive a “best price” function online.

The emergence of RFID is very exciting for me as I have been following this space for many years and made an early stage investment in Retail Solutions (then T3Ci) which relied on the expansion of RFID in the enterprise. Unlike other many other hardware functions in a mobile device, RFID has no significant penalty in terms of power and mass as the technology is passive in nature. An RFID device comes alive when a proximity RFID transmitter broadcasts power to it or it in a larger device it assumes the broadcast role but does so in a highly frugal manner. The hardware is exceptionally small so mobile devices are a natural application.

RFID has many potential applications but perhaps none is greater than mobile payments. Coupons, prizes, and promotions that rely on RFID capabilities are foreseeable, as is the delivery of proximity advertising that lights up when you device passes nearby. This is very much overlapping into the augmented reality topic, such as with the billboards that use eye gaze scanning to detect when you are looking at them.

I’ll refrain from drawing any conclusions about the event last Friday other than to say it was a great opportunity to sit in a room with people representing diverse interest points who converge on the mobile topic with great enthusiasm and depth of knowledge. I learned a lot during the day and would recommend future RWW events to you on this basis alone.

More on this topic (What's this?) Read more on RFID, IPhone, Style at Wikinvest

Traffic or Device Sales, What Matters Most?

James wrote something yesterday that included this graphic:

admob_feb10_US_share.png

What caught my attention, as was the intention of the graphic, was the Android traffic number climbing from effectively zero to more than 40% in just a year and a couple of months. Obviously this was the intention of the graphic (note the green color of the line… designers use green to symbolize wealth) but given that it is published by Admob, which is being acquired by Google, I think you would have to take this chart with a healthy dose of skeptically driven “show me” before you accept it as fact.

The reason I suggest we have some skepticism about this is not because the data is fabricated but because it suggests something very specific that is different from showing Android is beating Blackberry, Windows Mobile, and Palm (although it is believable on the latter) in one statistic that matters, device sales, but rather that application usage on Android is achieving parity with Apple.

I downloaded the Admob Mobile Metrics Report and it is very clear, this chart is derived from an analysis of Admob’s network traffic, not mobile network traffic by device or by carrier. Admob, which serves ads into 15k websites and apps on iPhone and Android, analyzes their traffic and trends it according to the type of OS and type of handset (smartphone or feature phone), but also internet devices like the iPod Touch and the upcoming iPad.

Admob claims 10 billion monthly impressions, which no doubt provides a snapshot of trend data but one subject to a lot of interpretation as it does not include meaningful traffic from Windows Mobile or Blackberry devices as those markets have demonstrated less tendency to browse websites with their devices. Let’s set aside for a moment the strategic implications of this observation by agreeing that Windows Mobile and Blackberry have squandered a big headstart in this market which enabled Apple to brilliantly exploit web browsing as a core competency of the iPhone… and later apps (although as I have pointed out before, Apple was originally hostile to external developers building apps for the iPhone).

This leads me to the main point of this post, which is to ask the question what matters more, how many devices are sold or how consumers use them? There is no denying that the device sales underpin everything for handset manufacturers because that is what carriers respond to and where the handset manufacturers generate revenue, but there is no denying that despite impressive sales numbers by RIM and Microsoft (which isn’t a handset manufacturer but should be considered one for the purpose of this analysis) but at the same time each of these platforms has become less important in the consumer space as the iPhone and Android have dominated the consumer mindset.

I don’t have hard numbers to back this up but I think anecdotal observation is undeniable, consumers use the iPhones and Android devices in a fundamentally different way than their Blackberries and other smartphones. I do recall a statistic that I read recently which said the average iPhone user has 11 installed applications versus 3.5 for the average Blackberry user, and I suspect the divide is equally stark against Windows Mobile devices, and it’s clear that Android was developed to mimic the iPhone in this regard.

If we accept that the iPhone/Android markets are doing more than just reading their email and making calls, does this reflect better capabilities of the devices or a far more simple process for acquiring and installing apps on the iPhone/Android? The answer is clearly yes because the app marketplaces and extensive third party developer capabilities, as well as the unique aspects of the handsets, have resulted in a massively more extensive and vibrant market for mobile applications than on the Blackberry and Windows Mobile counterparts. No denying this.

Now here is where things get interesting. Carriers price their wireless plans with voice and data components, with data predominately offered as all you can eat pricing so with data consumption growing at over 100% annually the carriers are seeing growth in the one part of their network they can’t monetize while at the same time incurring significant capital expenditures for network build out. That data traffic has been surging creates a range of problems for carriers who by all accounts cannot expand their networks fast enough (or afford to when they can’t charge subscribers $60 or $70 a month for data), including degrading voice capability (which is profitable) to add to data network bandwidth.

The other problem that data presents is that it erodes a business that is super profitable for carriers, SMS which generates about 20% or $200 billion of global telco revenues. As apps increasingly provide notification capability and instant messaging, carriers will be put in a real quandary and I suspect we will see them throttle apps that infringe on their core businesses (like voice and SMS), as well as apps that are bandwidth hogs (like Slingbox for mobile).

There is a fellow by the name of Andrew Odlyzko that you should take the time to read up on if you are interested in these topics. Andrew is a Professor in the School of Mathematics at the University of Minnesota and by all accounts one of the most accomplished researchers who specializes in the economics of network consumption. Odlyzko believes that voice is seriously underrated as a market and carriers are making a strategic error by not improving the quality of voice and seamlessly integrating voice with data, but he also asserts that data traffic rates will fall from their aggressive growth rates to somewhere around 30%.

Where this brings us is full circle, if mobile network traffic does trend down then the lines on the network traffic graph provided by Admob would converge, or put another way, normalize. It’s not to suggest that Admob is wrong, only that you have to look at their data with a complex set of filters that put into perspective the limited solar system they are measuring. The other implication of all this is that all you can eat data is likely a phenomena that consumers will not enjoy in perpetuity, or access to mobile apps will be filtered according to the bandwidth they consume. I think it is also plausible to consider that mobile data pricing plans will be tiered according to the device the consumer is using, as in Blackberry users typically use less data therefore have a cheaper data plan than iPhone users.

Whatever the eventuality, one this is clear and that is the wireless market is getting much more complex.