Seven Questions That Will Decide Mobile’s Future—Part One

2/18/11Follow @wroush

I always smile to think that we launched Xconomy on June 27, 2007, just two days before the original iPhone hit Apple stores in the U.S. That was a transformative moment in consumer information technology—as important as the launch of the Macintosh in 1984, Windows 3.0 in 1990, or Netscape in 1995. Thanks to Apple, the dam that had held back U.S. mobile innovation for a decade—the wireless carriers’ death grip on handset technology—was dramatically swept away, and Silicon Valley was eventually able to establish itself as a world capital of the mobile business.

As Xconomy has grown up alongside the iPhone and its companion iOS devices, not to mention the alternative universe of Android devices, we’ve naturally been drawn to write about companies exploiting the new free-for-all and making creative use of the amazing new smartphone and tablet platforms. We’ve also hosted a series of annual conferences showcasing mobile innovation and speculating on its future—in fact, the third one, Mobile Madness 2011, is coming up on March 9 in Cambridge, MA.

But our crystal balls are murky at best. There’s only so much we can predict about a business where the technology itself is evolving so quickly and dozens of powerful stakeholders are competing for dominance.

This is the 128th edition of World Wide Wade, and 128 happens to be 27. So here’s my list of seven huge, unanswered questions about mobile—one for each power of 2. In today’s column I hit the first three questions, and next week I’ll explore the other four. If you knew the answers to these seven questions, and you could go out and address the key market opportunities in each area, you could probably become the world’s first trillionaire. (Which actually makes a ticket to Mobile Madness a pretty good deal. For that event, we’ve recruited a stellar group of entrepreneurs and innovators from around the country to help us probe these questions and more.)

1. Who will be the new gatekeepers, and how much friction will they impose?

We know one thing: the stagnation of the early 2000s, when developers couldn’t get new software applications onto mobile handset “decks” without selling their souls to Verizon, Sprint, T-Mobile, Nextel, or Cingular (now AT&T), is over. We have Steve Jobs to thank for that. His exclusive deal with AT&T, though it may have cursed iPhone owners to three and a half years of dropped calls, bought Apple the flexibility to create the iTunes App Store, which opened the way for the Android Marketplace and the other mobile app stores, with all their glorious variety.

The questions now are whether the loosened rules around developer access to smartphone and tablet platforms will persist, and whether the tolls levied by the platform owners will remain reasonable. Apple keeps 30 percent of the revenue on every app, e-book, or subscription sold through the iOS ecosystem (that’s its operating system for iPhones and iPads). That’s a lot higher than its 10 percent margin on songs—but keep in mind that this market didn’t exist before Apple created it. Google also charges a 30 percent transaction fee for apps sold through the Android Marketplace, though it shares its cut with carriers. Microsoft, as far as I can tell, doesn’t charge developers anything to sell apps through the Windows Phone 7 Marketplace—in fact, in many cases it pays them to build Windows Phone 7 applications, as a way of catching up with the Apple and Google platforms. All in all, it’s a great time to be a mobile app developer, as long as you can figure out how to get your app noticed among the hundreds of thousands of others.

But over time, Apple or Google might decide to raise their fees. Or Microsoft might do something silly like banning Windows Phone 7 apps that use open source code. Or important new players might emerge in the mobile-app world, like HP (which hopes to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • androidlvr

    Mobile apps are like websites so on question one, I think we have to go back to the web days and ask: Who is the gatekeeper of the web? It’s Google, a search engine. Therefore, the search engine for all mobile apps will be the gatekeeper of the mobile internet.

    Thoughts?

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  • http://www.xconomy.com/author/wroush/ Wade Roush

    @androidlvr. Well, interesting question. I’m not sure I agree that the Web has a gatekeeper. I think various companies have *tried* to be the Web’s gatekeeper, such as AOL and Yahoo, but they all failed fairly early on, because the Web just wasn’t built that way. Google is the closest thing to a Web gatekeeper but the metaphor isn’t great, since you don’t have to go through Google to get to the rest of the Web. It’s an index, a compass, a guide. (I think Facebook is trying to build its own separate Web where it is the gatekeeper and toll-taker — they just call the it the ‘social graph.’ But that’s another question.) So, if we managed to get a Web without a gatekeeper, maybe it’s unnecessary to worry about whether the mobile world will have one.

    On the other hand, to the extent that users’ experiences of the mobile world are filtered through apps, then the mobile world may evolve very differently from the Web. Right now there isn’t a “search engine for all mobile apps” to use your words; there are seven or eight separate ones depending on what you’re counting (one for each major mobile OS plus a few independent ones like GetJar and OpenAppMkt). And I doubt that any one mobile OS will gain unassailable market share the way Google has in search. So, we’re back to my original question — who will be the new gatekeepers, plural? But thanks for your comment!