ISBN: 0-471-41405 -0
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ow that we have gone through some of the essential building blocks of mobile Internet applications and feel prepared to face the world, it is appropriate to examine some of the related issues. While this book is almost exclusively dedicated to technical issues, the developer still faces many difficult business- and logistics-related challenges. This situation is even more complicated, however, because many of the technical decisions that need to be made are closely related to the choice of business model and other surrounding factors. For start-up businesses, this situation is natural because the borders between technology and business activities are very fuzzy, but some of the software powerhouses might find it very difficult. Other things to consider are how to actually get the application into the hands of users and how to keep them interested. In this chapter, we will touch upon these huge topics and find some general guidelines for developers to use. We will first look at some of the key success factors on the business side, then look at how you can get the products to consumers. Finally, we will stress some of the key features of the mobile Internet that we should leverage.
Having the best technology and the most skilled engineers is usually not enough to succeed in any business, and the mobile Internet industry is no different. You must know the roles that the different players have in the market and how to move smartly in order to leverage their knowledge and needs.
The Mobile Internet Industry
The business thinking being taught at universities for decades changed as a result of the Internet. The instant access to information across cities and nations has spurred almost as much innovation on the business side as on the technical side. Companies give away goods free just to access new customers, and companies fight about what we commonly call ‘‘owning the customer.” Getting people to pay for the services has proven very difficult, and customers are notoriously unfaithful (switching to a new site if the terms of the old one do not fit).
The mobile communications industry has (since its major breakthrough in the early 1990s) operated under totally different models. The mobile operator is the main interface toward consumers and sells subscriptions to the services. In these service packages, the user also usually gets a phone that is subsidized by the operator in return for a longer subscription commitment. The idea is that the subscriber should pay little when purchasing the phone and the subscription but then spend lots of money during the time of the contract. In other words, phones are sometimes sold for as little as $1 (or whatever currency is used in the country in question), which is just a symbolic fee that minimizes the barrier of entry. In the late 1990s, the number of users who bought prepaid subscriptions started to rise. With prepaid subscriptions, the operator discount on the handset is usually less, and the phone is loaded with money that can be spent on calls corresponding to that amount. This situation commonly leads to less-faithful subscribers, but people who have lower budgets are especially more likely to enjoy the lack of commitment of a monthly fee. This situation usually leads to a higher level of churn, which is the percentage of subscribers that change to a competing operator. The operator otherwise has a strong position toward the customer and can greatly affect the users' behaviors.
When the Internet and the mobile communications worlds come together in the mobile Internet, roles will change. Companies will have to evolve in order to succeed (and probably in order to survive, as well). Software companies, Web design houses, network companies, telecommunications operators, Internet Service Providers (ISPs), and many, many others are now in the same court and are trying to get as many pieces as possible from the available revenue “cake. ” The user will be offered a large number of applications and services, each consisting of a number of parts (such as wireless access, Internet access, service capabilities, and so on).
For the mobile network operator, this change is huge, and many operators will have to work hard in order to find new roles. Figure 15.1 shows how the revenue that used to completely end up in the hands of the operator now potentially will be distributed among a number of players. The operator might assume one or several of these roles in order to advance in the value chain and to increase the
Figure 15.1 Revenue distribution in 2G networks versus the mobile Internet
revenue per subscriber. This method sounds like an obvious choice, but the changes that an operator needs to make in order to become an ISP, for instance, are often substantial (and the chosen business case needs to be investigated closely). In the figure, the operator is viewed mostly as a so-called bit-pipe (in other words, someone who enables the transportation of bits over the air and over other networks). This role is one that will exist in the mobile Internet value chain, as well. Some operators are expected to adapt via the Pac-Man principle: acquiring other operators around the world in order to create a global mobile network where selling the wireless access is the main focus.