This week has been Mobile World Congress in Barcelona. As events go, it is by far the largest I attend, with around 1,500 exhibitors spread across nine halls and an estimated 70,000 visitors. This year I got a sense of panic, chaos and bewilderment in an industry that seems befuddled by conflicting standards and an inability to rejig itself for the 21st century – at least in the developed world.
There were no blockbuster announcements but a heck of a lot of upbeat yap. There was a mass of innovation, mostly among the small vendors. There was a lot of talk about how opportunities in Africa are leading to amazing new business models, and especially around mobile finance. There was emphasis on the smart city enabled by mobile devices, applications and infrastructure. But scratch beneath the surface and you quickly find a lot of confusion.
For example, I met with Deutsche Telekom which has a partnership with IBM and SAP for the connected public sector. Each provides a great brand name. Each brings special skills and technology to the party. But ask who leads the deals and you are met with blank stares. DT think they do because they already have the customers. Ask IBM and you get the same answer. Ask SAP and they are darned certain they lead because of the applications. But in reality, nobody really knows and they have as yet to figure a way of collaborating sensibly in the deal space so that everyone wins.
Contrast that with PHB Development, a tiny mobile financial services and microfinance outfit based in Belgium that spent the last year or so building out mobile payment technology in Nigeria for Orange. There is a video to come but it is a great story of how financial services and carrier companies could not figure out how to reach the unbanked. PHB worked it out for them.
Then there are the carriers. I have a special interest in Vodafone because as far as I can tell, their service is going from great to garbage at a fast clip. I went on their stand to find out if it is possible to aggregate routers as a way of cranking up my bandwidth. The answer? The folk I needed were all at lunch. ‘Come back in an hour.’ And this on a stand consuming acres of space.
Meanwhile, Volubill based out of London was talking about systems that help carriers to create tailored offers for consumers based upon predictive analytics. The system can provide a policies based scenario in less than 15 minutes, saving the carrier millions in consulting and custom code. It’s going down a storm in developed countries but is almost impossible to make work in developed countries. Why? The carriers cannot get from underneath their fixed rate plan mentality.
Monetising for the business world
The biggest problem however remains in the area of monetisation as it relates to mobile services that address business issues. It seems to be finally dawning on the application vendors that making money from mobile applications per se is unlikely to lead to any pots of gold. Instead, value will be derived from the services that create and enable new applications plus some sort of fee for connected devices. That makes sense in a world that is far removed from the 99 cent Apple Store. Why is this the case?
Talking to a number of vendors, the consensus is that pricing per app was commoditised by the Apple App Store long before business application vendors came on the scene. That meant there was no real way to price in the enterprise environment on a basis with which they are familiar. However, you can establish benefits for particular projects and then price accordingly. It is a fair way to approach this problem but it is still very early days.
The carrier problem
As I went around listening to carriers, developers, appliance makers, infrastructure people and service providers, it became clear that those with the biggest problem are the carriers. Data is exploding around them. YouTube decides to make some new HD video facility available and the carriers have the headache of matching bandwidth needs at ever increasing cost. How do they solve that today?
In the developed world it is all about nickel and diming the customer with complex plans that cannot keep up with the needs of consumers or business. In my own case, simply browsing, checking GMail and floating around on Twitter and Facebook for less than two weeks and I consume 500MB of data. Want more? Sure – but pay for it in chunks I may or may not use. Want to use VoIP? No chance. That service gets throttled, driving me back to voice – the legacy cash cow the carriers are desperately trying to cling onto.
Even so, I got a sense of panic among the carriers who are finding that not only are costs out of their control but customers are unwilling and unable to pay the exhorbitant prices the carriers want to charge. As they see millions of users switch to the virtual operators, the mainstream carriers are left with few cards to play, ending up in a double bind from which they cannot extricate themselves without wholesale rejigging the business model. No-one wants to be the first one to blink.
My sense is that it will take significant pressure through social channels for the carriers to come up with alternative methods of pricing that satisfy demand yet preserve their EPS. But change may happen sooner rather than we think. The imposition of new European rules around roaming charges in 2014 means that the carriers will see their premium pricing for roaming disappear to a large extent. They will no longer be able to impose bill shock. It will be interesting to see their response.
Another response might be to pay closer attention to those who are working on ways to make the delivery of rich media more efficient and less consuming of bandwidth. We met with Kontron, a specialist development company out of Canada that is talking about technology it can embed inside Intel chips and inside server racks that helps crunch down the requirements for high quality video. They anticipate selling into content delivery network providers who in turn can then offer better services at lower bandwidth consumption levels.
The developer angle
Mobile development for business is still in its infancy. One organisation we met said that most of the ‘shops’ they come across consist of a handful of developers. Bringing them into large application ecosystems is a tricky business because as outlined above, the business models going forward cannot realistically be developed along the lines of the Apple App Store or Google Play. It is also expensive, requiring a significant upfront investment that isn’t easy to justify at a time when the models are unclear.
I suspect that the likes of SAP, Infor and others will start to figure this out over the coming year. Simply making the comparison to consumer App Stores and then deriding them as poor cousins fails to recognise the reality for everyone involved in the value chain.
There were some truly interesting application scenarios on show. One that I will return to in a video looks at the whole supply chain for vending machines. It doesn’t start and stop with using the mobile device as a payment mechanism although that is cool in itself. They’re looking at dynamic pricing based upon numerous variables like the weather, time of year and so on. They’re also thinking about tying sales of soft drinks to suggestions for snacks delivered as push notifications and alerts to mobile devices. They’re talking about using the data that comes back to feed into replenishment systems. That in turn leads to intelligent routing information that can be fed to delivery fleets. It’s heady stuff.
Mobile is one fo those areas where the imagination can run riot. The possibilities are truly astonishing. Sensor information is now taking on significant importance as the business of mobile monetisation moves to the machines as in machine-to-machine communication of the kind implied in the vending example above. It is an exciting future and one that will stimulate important discussions between lines of business and technologists. That is a good thing.
Curiously, it is the kind of development I believe will help to drive transformational value in ways we can barely see today but which will be vital to economic growth and success in the future.