Mobile awesomeness, innovation and disruption

The good people at MitchelLake recently asked me to write an article about mobile technology.

So I created a list of awesomeness, innovation and disruption, including topics such as ‘Mobile is big’, ‘Phones are getting better’, and ‘People pay for stuff on their phones’.

Here’s the full article; 10 awesome, innovative and disruptive things about mobile.

Mobile is an exciting sector to work in. It’s growing fast, and it’s being fundamentally disrupted from all sides, by all kinds of awesome innovation.

Here’s my current list of awesomeness, innovative and disruption in mobile. If this stuff sounds interesting, you should consider working in mobile. We need your help!

01. Mobile is big

You just won’t believe how vastly, hugely, mind-bogglingly big it is.

The global mobile phone subscriber base is 4.6 billion. By comparison, mankind owns a mere 800 million cars, 1.1 billion PCs and 1.5 billion TV sets.

Mobile phones will become ubiquitous within a few years as manufacturing costs drop as low as US$10 per phone.

Mobile internet is already bigger than desktop internet. Over 1 billion people access services using the mobile internet on their phone, more than the number of desktop internet users.

More data is consumed on the mobile internet than the desktop internet. Mobile data traffic will grow from 1 petabyte per month to 1 exabyte per month in half the time it took fixed data traffic to do so.

And mobile is big business. Mobile data services deliver more than US$200 billion of revenue, more than global desktop internet access and internet advertising revenues combined.

02. Phones are getting better

Long after mobile phones become ubiquitous, we will still buy them because of the continual advancement of hardware, battery life and software.

We are buying 1.2 billion new phones every year, gradually upgrading to smartphones (currently there are only 500 million) &/or 3G devices (currently only 1 billion).

At Myriad Group, we write a lot of mobile software to enable high-end smartphone features in lower price-point mobile phones.

03. People pay for stuff on their phones

The huge majority of desktop web users are either unwilling or unable to pay for stuff online.

But on mobile, every subscriber has a billing relationship with a telco, either prepaid or postpaid, that is suitable for micro-payments.

According to Portio Research, the market for mobile ringtones, wallpapers, games and other paid mobile content is US$85 billion, bigger that music, Hollywood and videogames combined.

04. App Stores disrupt paid mobile content

Traditionally, most of that revenue from paid mobile content goes to the telcos. However, the telco walled gardens are rapidly crumbling, and thanks to the emergence of the App Stores, revenue from paid mobile content is being redistributed.

By selling apps on iTunes, Nokia Ovi Store and Android Market, developers can now expect to keep around 70% of the sale price, with the remainder being shared between the App Store and possibly the telcos

Gartner predicts we will download 4.5 billion apps from various App Stores in 2010, spending US$6.8 billion.

Also disruptive to paid mobile content is GetJar, the App Store for free J2ME apps, funded by advertising, and currently bigger than Nokia Ovi Store and Android Market.

05. Mobile advertising is better

In times or places of information overload, a mobile phone can be an excellent information filtration device.

Mobile phones increasingly know who you are (and who your friends are), and where you are (even which direction you are looking), meaning that mobile advertising promises to become better targetted than other forms of advertising, including desktop web advertising.

Google recently spent US$750 million on AdMob, the biggest mobile ad network.

Personally, I believe that given enough local inventory, mobile advertising will eventually cease to be intrusive and will become useful local information.

Another innovation in this area is Google Latitude Proximity Alerts. By recognizing the patterns in your geolocation movements, Google can go beyond the ‘who’ and the ‘where’ and start to detect the why, or your intent, to better target its advertising inventory.

Gartner estimates mobile advertising revenues will leap from US$900 million this year to surpass US$13 billion by 2013.

06. Push Notifications disrupt SMS and MMS

Over 3 billion people are sending 5 trillion SMS messages per year. SMS is worth US$80 billion to the telcos, and MMS is worth US$27 billion.

Apple’s Push Notification Service, launched in 2009, allows an iPhone to receive similar short messages from a server controlled by an app developer. The cost to the sender reduces by a factor of 100, from an average of $0.10 for an SMS, to a few hundred bytes of mobile data, average cost around $0.001.

Why send an expensive SMS when you can send a Facebook message that will be pushed to your iPhone friends?

07. Open source

The mobile operating system, previously a competitive battleground, has recently been commoditized by Android, the open source mobile platform from Google and its partners, including Myriad Group, in the Open Handset Alliance.

Nokia has now also open sourced its Symbian operating system, the most popular on the planet.

Handset manufacturers no longer need to pay a license fee for an operating system; Symbian used to cost about US$4, while Microsoft charges about US$15 for Windows Mobile, so this represents a significant saving, especially for lower price-point phones.

By not being locked into a closed platform, handset manufacturers and telcos are now able to easily customize mobile phones to suit their brand proposition. This has shifted the competitive battleground to innovation in mobile software and cloud-based services, which will generate a lot of demand for mobile software engineers, and which will ultimately deliver more awesomeness and innovation to the benefit of subscribers.

08. Open contracts

Subscribers can also benefit from the flexibility of not being locked into a two year phone contract.

Since January 2010, subscribers in the US, UK, Hong Kong and Singapore can now choose to buy an unlocked Nexus One phone direct from Google rather than subsidized by a telco and locked into a two year contract.

Apple has also announced the iPad as an unlocked device.

This isn’t completely revolutionary. Already in many parts of the world, subscribers buy lower price-point phones directly from manufacturers and switch frequently between telcos competing mainly on voice pricing.

What’s different here is that smartphones consume as much data as 30 lower price-point phones, so we should expect mobile data pricing to become more competitive in markets with a high penetration of smartphones.

Elsewhere, the launch of mobile number portability in large markets including China, India and Indonesia will also encourage subscribers to switch and telcos to compete on voice and data pricing.

09. The Facebook Phone

The INQ Facebook Phone was launched in 2008 but it wasn’t a great user experience, IMHO because Facebook wasn’t deeply integrated into all the places on the phone that it should have been.

Nowadays, Facebook accounts for over 5.5% of all Internet usage, Facebook Mobile has 100 million monthly active users, and 40% of the UK’s mobile internet users are using Facebook.

These numbers reveal an emerging market of subscribers who might like to use Facebook as the Address Book and Inbox on their phone, caring more about a decent mobile social networking experience than who manufactures their phone or who is their telco provider.

Facebook works with many handset manufacturers and telcos to distribute their service, so will they have the courage to do what Google has done with the Nexus One and launch a phone to compete with those channels? You bet! I would expect Facebook to launch a phone within the next couple of years, probably built on Android, further disrupting both the handset manufacturers and the telcos.

Aligned with this prediction is the interesting fact that Facebook still does not expose friend phone numbers through its API, despite that being the most requested feature by third party developers. We should expect the Facebook Phone to leverage this data as an exclusive differentiator.

0A. Mobile Maps disrupts GPS navigation

There turned out to be more than ten things, so let’s continue the list in hexadecimal.

60% of the 421 million GPS chips sold in 2009 were put inside a mobile phone.

Google Maps Navigation is a killer mobile app with lots more features than the standalone GPS devices sold by TomTom and Garmin. And it’s free.

On 28 October 2009, the day when Google announced the app, TomTom’s share price fell 20% and Garmin’s dropped 16%.

Recently Nokia (which has invested heavily in geo, including its US$8 billion acquisition of Navteq) announced free voice navigation for its GPS smartphones, resulting in an 11% drop in the share price of TomTom, and a 5.5% drop in the share price of Garmin.

If you are still holding shares in TomTom or Garmin, be aware that Apple is also expected to launch free maps navigation.

0B. VoIP disrupts voice

Apple and AT&T have recently allowed iPhone VoIP calls to be placed over a 3G network connection, dramatically reducing the cost of voice calls, particularly long distance calls.

Previously this was only available over a Wi-Fi connection.

Fring was first to launch its iPhone 3G VoIP app. Skype is expected to follow in spades. And might it be a possibility that Facebook becomes a new entrant in the VoIP market?

And it’s not limited to the iPhone. Any phone with a data connection can potentially make VoIP calls if the telco is willing and able to support it over their data network. It will be interesting to watch how many telcos like AT&T are willing to cannibalize their own voice revenue in this way, and how they will re-shape their voice/data plans to align with this.

0C. Mobile web apps or native apps?

Native apps are great because they currently offer the deepest integration to the full capability of the phone, for example using device APIs to access Contacts, the Camera Roll, an Accelerometer, or the GPS chip.

On the other hand, emerging HTML5-based mobile browsers are aiming to standardise integration to such device APIs, starting with geolocation APIs; meaning that location-aware mobile web apps are now becoming viable.

The deciding factor for me choosing to build a mobile web app for GeoMeme rather than a native app was development speed. A mobile web app enjoys far greater code re-use from the desktop web version, and it is possible to push regular updates and improvements to users, without having to wait for iTunes approval or for users to upgrade.

Looking at recent evidence, mobile web apps are becoming more prevalent than native apps for mobile social applications, shopping and services, while native apps remain preferred for mobile games and entertainment.

It all comes down to the economics of mobile software development and the App Stores. For free apps, including all those funded by mobile advertising, while mobile browsers continue to advance with HTML5, reducing development costs will increasingly outweigh the marginal benefits of native apps. For paid apps, mostly games and entertainment, native apps will survive while the App Stores remain the only way for app developers to make money.

0D. Google Voice disrupts voicemail

Google Voice isn’t VoIP, but it’s still highly disruptive to telcos.

Innovative features include free voicemail transcription and visual voicemail, free SMS, cheap long-distance calls, and (very useful) call forwarding to multiple phones.

Apple controversially un-approved the Google Voice iPhone app, possibly under pressure from AT&T who were reportedly a little bit fed up with all this disruption.

Google has since released Voice as a mobile web app instead of a native app, thus bypassing the iTunes approval process. Touché! The only restriction I can see with the web app is that contacts from your iPhone need to by synced via GMail, because the iPhone Safari browser does not support the HTML5 Contacts API, yet.

0E. Dumb pipe or smart pipe?

One of the common threads here is that telcos are getting a rough deal at the moment, disrupted from all sides.

But the telcos are also busy innovating, adding value to mobile services to become a smart pipe rather than a dumb pipe.

Vodafone and Telstra are among the telcos who have announced App Stores, to leverage their existing billing relationships with subscribers.

And besides plugging an App Store into their billing systems, telcos can also fight back by providing access to their other network infrastructure and information, including subscriber geolocation.

Geolocation can be calculated by telcos even for lower price-point phones without a GPS chip, using triangulation of base station data. Exposing this geolocation data for app developers to build location-based services is a great opportunity for telcos, but also needs to be carefully controlled to avoid privacy abuses.

Another example: at Xumii our Social Stream product allows telcos to play a unique and valuable role in mobile social networking. Push notifications are sent to ordinary mobile phones using telco SMS capacity, and telco authentication systems are used to provide zero-click sign-in to all your social updates from multiple social networks including Facebook, Twitter, MySpace and Flickr.

0F. Hard bloody work

To all the technologists and engineers still reading this; building mobile technology is hard bloody work.

Getting software to run in a tiny memory footprint, with a slow CPU and constrained user interface, then getting the same software to work on 100 other devices, and then on an unreliable telco data connection, forces you to build efficient and elegant and innovative solutions. This is awesome, and mobile is a good place to work if you agree.

10. And there’s more…

Finally, check out WiMaxAugmented RealityGoogle Goggles, and Foursquare for more mobile awesomeness, innovation and disruption.

I hope this list has been of interest to those outside of mobile wondering what all the fuss is about.

To those already working in mobile, yes I know this list is incomplete, and biased by my own interests in mobile + geo + social, so let’s discuss what’s missing in the comments or via @hitching

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