Mobile Sands

June 6, 2009

Smartphones may Herald the Golden Age of Internet Radio

Though Internet Radio has been around since the mid-nineties, it has not seriously challenged good-old FM radio (“Network radio”) in the same way that Internet video (YouTube, hulu and others) have challenged Network/Cable TV.  The reason – over 60% of radio listening is done “on-the-go”. And of the 40% of radio listening that is done at home, most is done while doing other things around the house – not when the listener is on her PC.  Well,  3G-capable smartphones change all this.  

Pandora, NPR, Y!Music and more

Pandora, the web-based service that let users create their own radio station, is the #1 free music application on Apple’s App Store, and is ranked #20 among all free apps.  Other personalized streaming audio apps on the iPhone include Slacker and CBS-owned Last.Fm.

Interestingly, network radio has been quick to enter the smartphone radio market.  NPR makes 300 of its stations available through the Public Radio Tuner app, ranked #5 among all free music apps.  Clear Channel, the largest owner of FM radio stations in the US makes some of its channels available through iHeartRadio.  Many CBS stations can be heard via AOLRadio.  Yahoo! Music launched an iPhone version of their service few months ago, and one can listen to thousands of radio stations from around the world using apps like Radio, ooTunesRadio, allRadio and WunderRadio.  

Many Internet Radio apps are quickly making their way to other smartphone platforms as well.  Slacker offers a Blackberry App. Pandora has been available on Blackberry, Windows and over 50 feature phones for a while but it recently made a  conscious choice to focus on Palm Pre as its second major smartphone platform. As a result, Pandora comes pre-installed on the Pre.  Mumbai-based Geodesic is focusing on Blackberry and Symbian phones instead with its Mundu Radio application.

Unlike mobile video, carriers are not blocking Internet radio

Wireless carriers are not blocking Internet radio applications because its bandwidth requirements are in line with 3G.  Internet radio stations use streaming rates between from 28.8 kbps to 128 kbps, speeds that can be easily supported even over moderately loaded 3G networks.   Someone who commutes for 2 hours/day for 22 days a month and listens to Pandora at 128 kbps would download around 250 MB of data – not a very large amount, and definitely within the data caps imposed by most 3G providers.  

Time for 3G carriers to challenge Satellite Radio

The main value proposition of satellite radio has been that one can listen to hundreds of radio stations, without the hassle of searching for the right one when crossing over from one metro area to another. Well, now a listener can do exactly that and much more with Internet radio on her mobile phone. She can listen to thousands of radio stations from around the globe or even better, listen to a station completely personalized to her tastes.  And do all this without paying anything over and above the price of the a 3G data plan.  

Though 3G carriers are not actively promoting Internet radioon phones  and challenging satellite radio, they should, and make a play for the dollars that are going to Sirius/XM today.  Sirius/XM charges $9.99 – 19.99 for its multiple radio station services and had 18.6M subscribers at the end of Q1’2009.  If these 18.6M subscribers were convinced that they could get the same selection of radio stations (or even better – personalized radio stations!) on their 3G phones – in addition to email, web and more – it would be easy for them to sign up for a $30/month plan.

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May 15, 2009

On MIT NextLab and Mobile Ventures for the Next Billion Consumers

Filed under: Mobile Apps, Netbooks, New business models, Smartphones — AJ @ 7:16 pm

Yesterday, I attended the “finals” of MIT NextLab, a social entrepreneurship class that aims to “launch mobile ventures for the next billion consumers”. It was heart-warming to see how ubiquitous connectivity (via SMS) and low-cost mobile computing devices (smart phones) can be used to make a huge difference in the lives of poor people in developing countries. Still, the premise that somehow these socially beneficial projects could be turned into self-sustaining ventures without expanding the addressable market seemed a stretch.

MIT NextLab and the Next Billion Network Project

The NextLab course is offered as part of the Next Billion Network (NBN) initiative at MIT Media Lab. NBN’s goal is to encourage grass-roots level development using cell phones in developing countries. The program was founded by Telmex’s Jhonaton Rotberg little over two years ago. Telmex, its mobile arm America Movil, Nokia and Bank of America are the primary sponsors of the activity.

 Like most good entrepreneurial ventures (or successful IT projects), NextLab projects start with the end-customer. Each student team is paired with a NGO, corporation or some other representative group in a developing country who has a problem that needs to be solved. Projects are typically designed for a 1-year team period, encompassing two semesters, and MIT’s winter and summer breaks. At least one project started in this class (MoCa) has continued for almost two years, while few others have been taken over by local partners or are stand-alone ventures.

 Videos of this year’s projects are worth checking out. These projects address problems like making healthcare accessible in remote rural areas (MoCa), enabling people without bank accounts to do basic financial transactions (Dinube), making the life of truckers in Colombia easier (Hammock),  creating an even-playing field for small farmers in Mexico (Zaca), fighting crime in large cities via crowdsourcing (Civirep), and spreading adult literacy in India (CelEdu).

 Freemium Model for Social Enterprises?

 Most student teams claimed that they could somehow create a business by selling to the customers they are currently working with.  Though laudable, in my opinion,  it is very difficult to build businesses that cater ONLY to people who have very little or no money. Proponents of creating such businesses argue that they can make up for low gross margin per customer through scale. Alternatively, social ventures try to sell to governments or well-financed NGOs.  However, but for a few exceptions like Bangladesh’s Grameen Bank, success stories are tough to find.  

Take the One-Laptop-Per-Child (OLPC) initiative as an example (also, see Wikipedia link). OLPC was launched in January 2005 at the World Economic Forum with a singular focus of bringing a $100 laptop to the poorest children in the world and with a business model of selling these machines to governments and NGOs. It was not until late 2007, when the original business plan was not working out, that OLPC (half-heartedly) decided to sell its machines in the US via its “give-one-get-one” program. By then it was too late. OLPC’s XO was never designed with US consumers in mind and most consumers who got one were disappointed. By mid-2008, netbooks stormed the market and there were few takers for XO. But this does not mean that model of leveraging technology developed for the poorest to meet needs in more affluent markets is flawed.

One way to create viable ventures would be to gain scale by selling to poor customers in developing markets but earn profits by catering to more affluent customers in developing and developed markets. Such a business model would be similar to the freemium (free + premium) model used by many Web2.0 companies.

One company that is following such a model is AssuredLabor. This company started as NextLab project in the fall of 2007 with a local partner in Brazil, and that is where they built their prototype. In mid-2008, the team decided to turn the project into a stand-alone venture, with Boston as their first pilot market in the US.  Technology commercialized and developed here could be applied back in Brazil as well as other developing countries.

Many current NextLab projects hold similar potential. Hammock’s SMS-based logistics management system may be useful for small delivery companies in developed markets. CelEdu’s mobile games could be used to teach foreign languages. MoCa could play a role in connecting clinics in rural America to hospitals in larger cities. And, at the same time, these ventures could keep on providing technology to their NGO partners in the developing world at affordable prices.

March 28, 2009

Open Access Makes Networks Valuable Platforms – Not Dumb Pipes

Filed under: Android, App Store, iPhone, LTE, Mobile Apps, New business models — Tags: — AJ @ 2:13 am

“Open” is in the air 

Recently AT&T chief Ralph de la Vega talked about open development platforms with FierceWireless. In his view, handset platforms are not open if they use proprietary APIs to access handset capabilities and he stressed the need for open APIs within handsets. A friend at Verizon reminded me earlier this week about Verizon’s Open Development Initiative (ODI) which allows third-parties to get hardware certified to work on Verizon’s network and Verizon’s upcoming 4G innovation lab

Among handset vendors, Nokia wants to open-source Symbian and Google is already doing so.  Google’s Android, in particular, is widely regarded as open. In contrast, many industry commentators, including FierceWireless editor Sue Marek, call iPhone and Blackberry closed because Apple and RIM will not license their OS to other handset vendors.

 Defining “open”

 If we are willing to accept the Internet as the gold standard of openness, the more a system resembles the internet, the more open it is. Therefore an open system is one that

  1. Anyone can access on equal terms
  2. Anyone can build content and applications on equal terms
  3. Anyone can distribute their content and applications on equal terms

Based on this definition, Apple’s iPhone provides a remarkably open platform for application developers and consumers, even while Apple keeps its OS closed to other hardware manufacturers. In a sense, iPhones are a similar to Sun Servers that power large parts of the Internet – a proprietary hardware/software combination that is available on equal terms to users and developers.

 “Open” does not mean “free”

Since the terms “open source” and “free software” have been used interchangeably, it has created the impression that free means open. This is not true in general. For example, free broadcast TV is actually a closed system.

On the other hand, two of the most valuable “open systems” we all use – the electricity grid and the phone system – are not free. However, they are open because everyone can access them on equal terms. Anyone can create applications and end-points for them (cordless phones, answering machines, refrigerators) and can distribute these applications. Technical standards that require patent holders to contribute IPR under a FRAND regime are open in the same way.

 The “dumb pipe” misnomer

Whoever came up with the term “dumb pipe” did a tremendous disservice to the mobile industry. Imagine how people at facebook would have feel if they were dubbed  “that dumb online directory” for offering open access to application developers. Instead facebook have been celebrated as a “platform”. In the same vein, the right way to describe a network that provides open access on equal terms is not “dumb pipe” but “platform.”

Once network providers start thinking of themselves as platforms, they will see the benefit of allowing huge number of third-parties to create applications on their platform.  Most of these applications will fail, but the applications that succeed will not only make the developers who creat them rich, but will also make the network  incredibly valuable for consumers, and for the investors who own the network.

 

February 17, 2009

Dividing the Mobile Apps Pie – Nokia, Apple, Google, RIM and others

Filed under: App Store, eBooks, Mobile Apps, New business models, Ovi, Smartphones — Tags: , , — AJ @ 3:45 am

Dividing the Pie – Ovi Style

Nokia launched it Ovi mobile application store today.  I read the developer agreement posted on Nokia Ovi’s website.  Like Apple:

  • Nokia is offering developers 70% of the selling price, less applicable taxes.  
  • Nokia has the right to review all applications and decide which applications get published
  • Nokia will not distribute applications that compete with Ovi (so don’t expect an Amazon Kindle store here!)

Nokia allows “Operator Biling”

However, unlike Apple, Nokia plans to offer operator billing.  This is a huge differentiator for Nokia and clearly one of the things they are uniquely qualified to do. With this option, customers who do not have credit cards or who have do not want to be bothered with entering their credit card information, can still buy applications. This can significantly increase the market size of apps, particularly in the developing world, and on low/mid-end phones.

However, from a developer’s standpoint – there is one catch in operator billing. With this option,  a developer does not get 70% of the selling price, but 70% of what the operator gives Nokia.  It allows operators to potentially get a very large cut of the mobile app revenue by mandating operator billing as the only acceptable payment method.  

Nokia and Apple vs. RIM and Google

In comparison to Nokia (and Apple),  Android and Blackberry offer more attractive terms – to both operators and developers.

Palm, Samsung, PocketGear and Handango

The cut taken by Apple, Nokia, RIM and Google pales when compared to the 50% that Palm is asking. Palm uses PocketGear (previously part of Motricity) to run its app stores.  Since Samsung is using PocketGear as well, I expect them to offer the same deal. 

Of course, the revenue share offered by all the phone vendors is better than the 70% that Handango charges developers who have sales over a million dollars! 

Microsoft’s Plan?

Microsoft  has not  disclosed  how the pie will be shared on Windoes Mobile Marketplace. Going by Microsoft’s record, I would expect their revenue share plan to resember Nokia’s or Apple’s rather than Google’s. 

And of course, we will just have to wait and see what Vodafone and China Mobile have up their sleeves!

February 13, 2009

An Amazon App Store?

At MWC next week, Nokia, Samsung and Microsoft are expected to either showcase their mobile application marketplaces (“app stores”) or at least share detailed plans regarding them. Google has announced that its Android marketplace will start supporting paid apps next week. Blackberry  and Palm have already joined the race to build app stores. The one company that has every right to be in race, but has been conspicuously quiet is Amazon.

An “App Store” is a store

Handset vendors rushing to emulate Apple’s success may be forgetting that Apple was one of the world’s leading online retailers of digital content – long before it launched iPhone or its App Store.  Apple, in fact, launched iTunes “jukebox” in Jan 2001, 10-months before the first iPod hit the market.

Apple’s experience in selling music and video online is evident in the way it organizes mobile apps in the iTunes store, from creating top-10/top-50 lists in a wide range of categories to highlighting notable new apps and providing automated and staff recommendations.  Consumers have shopped with iTunes for years. How many handset companies have this kind of expertise?

So, why not partner with Amazon?

In coming years, for a handset to succeed, it will need a rich set of applications. People will not only buy a handset for how it looks or what it costs, but for what it does. Applications will be source of stickiness for both handset vendors and operators. Operators and handset vendors who will not have access to a large ecosystem of application developers will lose subscribers, market share and profits. See my previous post comparing Verizon and AT&T’s performance in Q4’2008.

Not only is Amazon trusted by millions of consumers and has the technology to sell in a compelling manner, but it also has demonstrated that it can succeed in selling digital content. It started a digital music store in Sept 2007 that, in 14 months, became the #2 digital music store. Still far behind Apple, but way ahead of Microsoft. With Kindle, it has shown that it can not only sell lots of DRM-free MP3, and but also work with a large number of publishers and create a profitable, new market.  Can Nokia claim such success with N-Gage?

I am all for the creation of mobile application marketplaces and wish that the new entrants succeed. I just have a nagging feeling that these attempts will look similar to the attempts of dozens of bricks-and-mortar retailers to enter the online retail business in mid-1990s.

Place in the sun for Third-party App Stores

Thankfully, all handset-platform vendors other than Apple are allowing third-parties to create marketplaces. This has allowed companies like Handango and PocketGear to be built, and is allowing Samsung to launch an app store. This keeps the doors open for Amazon to build an app superstore in the future, or for other customer-focused niche marketplaces (think Zappos) to appear.

 

February 10, 2009

Marvel creates comic books that speak, but what about comics that let you speak?

Filed under: eBooks, games, iPhone, Mobile Apps, Smartphones — AJ @ 7:02 pm

Comic books that speak

 According to a story on RWW, Marvel plans to release a series of “motion comics” via iTunes.  As the Marvel-produced video on RWW shows, motion comics are a hybrid between animation movies and comic books.  It is an innovative use of smartphone platforms, and an improvement over the iPhone comic books and Manga, such as ones offered using iVerse Comics reader, that use traditional panels with balloons.  Marvel’s motion comics actually reminded me of an iPhone children’s book called “Buddy the Bus” created by iOrbi (using its AppInHand software), though Marvel’s version is more dynamic.

 Now, What about letting users record the dialog?

I would be surprised if anyone in the comic business would ever make it this nook of the blogsphere and read this post… but Marvel, iVerse and others –  What about letting readers read out the dialogues in comic books, create their own versions of “motion comics” and upload these version to a server?

Readers who chose to record could follow the same story line or transform it. When a new customer downloads a motion comic app from iTunes, the app could connect to the server and offer the new customer with a wide range of available voiceovers.  A user could pick the default created by the comic book producer or hear voice overs created by her friends on Facebook or Gaia.  Doing so, would be leveraging the capabilities of mobile internet devices to the fullest.

 Labor leads to love

 In these gloomy days of ecomomic winter, who doesn’t need some love? One of the ideas in Harvard Business Review’s list of  “Breakthrough ideas of 2009” was that customers love a product more if they have contributed some labor to it.  The authors, Michael Norton, Dan Ariely and Daniel Mochon call it the “IKEA effect”.  Of course, the labor required cannot be so much that most customers are unable to complete the product (so, comic book companies should not ask readers to illustrate books!).  If Marvel allows customers to recod the dialog in these motion comics, they may love Marvel some more, and love from readers often equates to dollars. Ka-ching!

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