Thoughts on Mobile and Wireless

This was also published in Mass High Technology magazine.

I made one completely off-the-mark prediction for 2007 in my blog: “the iPhone would have disappointing sales”. I made up for it in a 2008 prediction: “Apple's greatest innovation in the iPhone is its browsing capability as a result the mobile internet will finally take off.” The mobile internet was predicted to take off in the late 90’s with over $1 Billion invested in startup companies back then. Ten years later, the iPhone, with its bigger screen and fabulous browser has finally made this prediction come true. M-metrics reported in March that smart phone users browsed the Internet for an average of four and a half hours per month in the U.S. and 80% of iPhone users were browsing the internet compared to 30% of other smart phone users.

 

So the mobile internet is finally here, right? In my opinion, browsing the internet will be a minor usage of smart phones. Just like the PC, I think we will see a mixture of client-only and client-server applications on the smart phone. Apple’s brilliant iPhone Application Store is a testament to this view. Over 1,500 applications are available from third-party developers since the iPhone Store was unveiled in February. These are either standalone applications such as games or true client-server applications. In fact I believe that client and client-server applications will be the dominant use of the smart phones for many years. Here is why:

• Smart phones, unlike the desktop PC, operate in an asynchronous environment, i.e.  wireless coverage is not ubiquitous and bandwidth will always lag wireline by a decade.
• All PCs have the same keyboard and screens at least 14 inches in size. Cell phones, even smart phones, have a multitude of screen sizes, orientation and keyboards.
• You generally use cell phones while engaged in another activity such as driving or walking.
• Cell phones have integrated sensors that only client applications can access: location, camera, voice, accelerometer, ambient light detection, etc.

 RIM, Microsoft and Nokia, the other incumbent smart phone vendors are scrambling to create their own Application Stores. Google is a new entrant with its much discussed Android smart phone operating system. I will go out on a limb and predict that Android will take a while to catch on just like Microsft’s Windows Mobile (finally taking off on version 7), since they are dependent on how well third-party device manufacturers deploy their software.

 

There are 3.5 billion cell phone users around the world compared to 1 billion PC users. Close to 1 billion are in China and India combined. While the majority of those users are not smart phone users, the iPhone has been a huge hit in both countries in spite of no 3G networks. Emerging markets have seen dramatic cell phone adoption but not PC adoption, resulting in many innovative uses such as mobile banking, using limited capabilities of entry level feature phones, such as SMS text messaging. Most emerging markets are hyper competitive with multiple wireless carriers in each country (China is an exception but the regulator there has pushed China Mobile to be innovative). As a result these carriers are quick to adopt new applications that give them an edge. Contrast this with the U.S. where we have an oligopoly of essentially three dominant carriers, Verizon, AT&T and Sprint who between them have about 75% of the market, with Verizon and AT&T increasing their market share by the month. Innovation is being forced upon them by the computer industry, Apple and Google in particular.

If you are thinking of starting a mobile application company I encourage you to: (1) think client-server and (2) think globally.