It’s been fifteen years now since the Global Mobile Commerce Forum launched in 1997, at a hotel in Heathrow Airport. They talked about “the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless technology” and “a retail outlet in your best customer’s pocket”. In a rather quaint and rare example of a forecast that was horribly understated as the dot com boom got underway, they even predicted that there would be as many as 150 million mobile telephony users by the year 2000. Ah, we were innocent then!
I came across this advertisement for Magners Pear Cider (Ireland), in which the comedian Mark Watson describes his purchase of a new cell phone compared to the simplicity of his cider. He makes the wonderful quote when describing his new phone.
“plug and play, break down and cry more like”.
While the advert is obviously about selling cider (quite good I have heard) it does point out the fact that for a lot of people the complexity of today’s modern handheld super duper phone is just a bit too much.
In an interesting juxtaposition, there is an article in the Guardian (U.K.) which describes the new Vergatorio phone launched by Hugo Chavez the president of Venezuela. The phone is priced at $15, 25% of the actual manufacturing cost. It has a camera, WAP Internet access and an FM radio as well as MP3 and MP4 music and video players. The initial production run is quite ambitious at 600,000, rising to 2 million in 2011 when the Venezuelan government expects to export the model to the Caribbean. As a point of reference there are approximately 27 million mobile subscribers in Venezuela.
This got me thinking. Here we have a phone full of features for $15 which by its very nature will be complex and more difficult to use. While there is expected to be a surge of orders for the new phone given the price and Chavez’s endorsement, in the long run will it be successful if they haven’t solved the ease of use issue? Will we be seeing adverts in Venezuela in a couple of years pitching the local alcoholic beverage of choice as simple choice compared to the Vergatorio?
The March 21st-27th 2009 issue of the Economist has both a leader and article on Silicon Valley and the potential for another “nuclear winter” as startups vanish into thin air. The global economic crisis has exposed the free at first, grow fast, establish niche dominance and then make a killing selling advertising business model . The result is like a retelling of the fairy tale, “The Emperor’s New Clothes“ but with roles reversed. With the exception of Google (the Emperor above), no other company has been able to build a sustainable business model based mostly on internet advertising – (although LinkedIn may come close).
So what does this mean for the mobile Telcos, where so much is riding on the success of mobile advertising to make up for the commoditization of their core voice business. While the jury is still out, I believe that mobile advertising is fundamentally different from internet advertising. It is not an alternate channel but a different tyoe of business in its own right. and there are some very unique aspects to mobile phone advertising. For example, it can be very targeted (location being an obvious example), the delivery and receiving mechanisms (2.5G, 3G ~ smartphones) are in place and the ubiquitous of the mobile phone means a critical mass audience already exists. As such, the mobile Telcos are well positioned to truly make mobile advertising a core component of their go-to-market business model, but it will not be easy as this is outside their core competence (delivering bits) and will take a major re-think of how they should approach the marketplace.