Wireless 2.0: Vicious to Virtuous?
In the mid 1990s, three on-ramps led us on to the information superhighway: AOL, Prodigy and CompuServe. For a monthly fee, users were served up a customized version of the Web offered by one of these network providers. They took a walled garden approach, offering applications only through their services and limiting e-mails within their networks. For a while, it worked. But soon, consumers and application developers alike were clamoring for more—and, fortunately, the walls around the World Wide Web came tumbling down. Untethered from these artificial constraints, developers created innovative Web-based applications, sites and services available to all—regardless of their provider—and consumers began logging onto the Web in droves.
The subsequent Internet boom that took place is well known. It’s hard to imagine where we would be now if those walls had remained. The Web 1.0 movement showed us that technological innovation flourishes when markets are open. Yet despite the lessons learned, we find ourselves repeating history in the U.S. mobile marketplace. With so much hype about the “mobile Internet,” did you ever wonder why we have yet to see a mobile start-up grow to the scale of an Amazon, Google, Yahoo or Facebook?
Clearly, the innovation and growth of Wireless 1.0 was led by Europe and Asia. The question is whether the U.S. will lead the Wireless 2.0 era. While our European and Asian counterparts understood and embraced open mobile networks early on, closed markets here in the U.S. constrain progress. Consumers here can’t buy just any mobile device with any software and use it on any network. The carriers argue that this level of control is necessary to ensure network “quality.” AT&T made the same argument about the quality of the landline network before the 1982 divestiture. But as of this writing I’m still unaware of anyone who bought a landline phone at Target, plugged it in at home and thereby brought down the AT&T landline network.
From 1999-2007, we saw an explosion of wireless innovation in Europe and Asia, where mobile devices weren’t limited to one network and developers could build and distribute wireless applications to virtually any mobile consumer. Japan had wireless Internet through NTT DoCoMo’s i-mode as early as 1999. Meanwhile, in Europe, the introduction of the open GSM standard created an environment where early interoperability and network openness were standard.
During this same time period, U.S. mobile innovation was largely sluggish, stuck in the walled garden model. While you could argue this was acceptable during that time period because our technology had not caught up yet, we only need to look at the iPhone and BlackBerry app stores to know that we are now capable of more. Apple—and the ecosystem that has surrounded it—has shown the world that an innovative company can create a great product with a direct-to-consumer path to market.
Smart phones (such as BlackBerry phones and the iPhone) are built on open technology by default, and carriers cannot block access to these devices. Apple has proven that a friction-free ecosystem can be built to allow independent software vendors (ISVs) to address this market. But alas, smart phones account for less than 25 percent of the market, and won’t exceed 50 percent for several years—an eternity in high tech. So for the foreseeable future, the vast majority of the U.S. mobile market will be comprised of feature phones, which only run software approved by the wireless carrier.
Herein lies the problem and the solution. What kind of innovations would emerge in the U.S. market if we could replicate for the 200 million feature phone users what Apple has created for the iPhone? I’m not talking about the iPhone’s elegant form factor or usability. Rather, I mean … Next Page »