Why Mobile Doesn’t Go Viral, As Told By Ontela’s Dan Shapiro

11/17/09Follow @gthuang

Google, Yahoo, Facebook, MySpace. Those companies’ products spread over the Internet like a virus. But why hasn’t there been a runaway hit like those in the mobile software world? Why does it take so much longer to build value, and a strong customer base, in mobile companies than in certain Internet startups?

Dan Shapiro had some entertaining thoughts on this yesterday, as he spoke to the Mobile Northwest 2009 crowd in Seattle. Shapiro is the co-founder and CEO of Ontela, a Seattle-based mobile imaging startup, and he’s a veteran of RealNetworks and Microsoft. I won’t do justice to his presentation, but here’s the gist.

Hotmail was one of the first examples of viral marketing. By appending the message, “Get your free e-mail at hotmail.com” (or some such) to the bottom of each e-mail, Hotmail helped pioneer a new method of promotion that was “basically free, highly measurable, and ridiculously effective,” Shapiro said. Its number of new subscribers jumped from hundreds to tens of thousands per day.

Maybe there’s something about the viral distribution model that doesn’t fly in the mobile world, Shapiro thought. In epidemiology, he pointed out, researchers use a parameter called the basic reproduction number to gauge whether a viral outbreak will spread or die out. The corresponding number in the Internet world tells you how many people a given user will “infect,” on average: Shapiro gave some estimates for Facebook (6), Gmail (5), MySpace (4), and Twitter (1.5). He argued that Twitter hasn’t been spreading virally; it has used more conventional marketing through word of mouth and the press.

“Heterogeneity in the target population is the best protection to keep you from being infected by viruses,” he said. That means some people have different levels of resistance, different behaviors, different types of contacts, and so forth, so not everyone will get infected by, say, the latest flu bug.

And that same kind of variety that makes individuals different is exactly why mobile isn’t viral, he argued. He cited some survey stats to explain how fragmented this market really is: There are roughly 500 different types of handsets, about 30 per carrier; about two-thirds of people (65 percent) don’t have a data plan; three out of four people (75 percent) are on a different carrier from you; almost that many (70 percent) don’t have a smartphone. And despite all the attention it gets, 98 percent of mobile users don’t have an iPhone. (iPhone apps are definitely not spreading virally, Shapiro said. He also argued that Tegic’s T9 predictive texting did not spread virally; it was pushed out by carriers and handset manufacturers in a dedicated partnership.)

“We will not see the Facebook, Gmail, or Yahoo of mobile until this changes,” Shapiro said. He added that he’s not advocating one standard mobile platform; he’s just saying how it is right now.

So his advice for mobile entrepreneurs and investors was:

—Be skeptical of anyone peddling viral marketing in mobile.

—Build a business model that doesn’t require big adoption.

—Pick a market segment that’s homogeneous. (Examples: BlackBerry corporate users, Silicon Valley techies.)

—Use ubiquitous technologies like WAP (Wireless Application Protocol) and SMS texting.

—Wait… (“Things are getting better,” he said.)

Afterward, Shapiro said he thinks “Europe holds the future of the U.S.” Over there, wireless carriers have influence, but only about half of consumers get their services directly from carriers, versus about 90 percent in the U.S. “I think you’ll see the carrier role diminish,” he said, when it comes to mobile software.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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