Making money in a Mobile 2.0 world
Entrepreneurs and service providers are finally finding ways to make money from mobile devices, writes Ajay Jain.Updated: Jan 16, 2008 00:30 IST
For nearly a decade now, the mobile has been promising to deliver much more than just voice and text messaging – only to have its true potential always being two years away. So while the operators have been having it good with over three billion subscribers globally, democratisation of this platform has not been possible in the true sense allowing other application and service providers to make inroads and make money. But this may finally be changing. Welcome to the Mobile 2.0 world, offering commercial opportunities in a way even the old desktop Internet could not.
Why is this sounding possible? To put it simply, the dots are getting connected to make a pretty picture for all involved. This is how:
Applications for mobiles, not on mobile
The first rule of cracking the mobile space? Develop applications for the mobile; don’t just try to replicate those for the PC. Says Ojas Rege, Vice President, Global Mobile Products, Yahoo, “We realised the need to overcome the PC mindset and develop applications for the mobile independently; we would be limited in what we can do otherwise.” The success of the Yahoo One Search and Yahoo Go, two applications designed exclusively for the mobile space, may seem apt justification for such a strategy. Besides other unique features, these throw up highly contextual search results and are designed for ease of use on a mobile screen.
To see a ‘mobile only’ strategy pay off big time, one can look at Softbank Mobile’s success in Japan; the company came in as a market disruptor after taking over Vodaphone Japan and changing the rules of the game, taking on incumbents like NTT DoCoMo in the process.
“We see mobiles as a lifestyle enabler covering services like m-commerce, identity management, GPS, credit and other financial services and more; we may be lagging behind some countries like Japan, but we have a clearly charted roadmap to help us catch up over the next 2-3 years,” says Bharti Airtel’s President and CEO Manoj Kohli.
Ease of use and discoverability
WAP (wireless appliation protocol) enabled mobile devices to allow Internet access have been around for years but have yet to take off. “It has been too complex to use, with the settings not easy for a lay person to understand. This has resulted in its limited use by most users. We have kept this in mind while developing our mobile applications,” says Yahoo India’s Director Mobile Vishal Maheshwari.
And then there is the discoverability factor: How does a user get to the desired application in minimum steps? The surest way to lose a customer is to make him go through a maze to get there. In Japan, Softbank created a key on mobile handsets to give a single point access to Yahoo Japan.
The likes of Google and Yahoo are partnering with mobile operators in India for mobile search, believed by them to be the “monetisable” feature on the mobile Net. “We improve the discoverability factor of these services through such tie-ups. It also means operators can increase sales of consumables like ringtones and other premium offerings by highlighting these in the search window. This also improves viability of paid data services,” says Yahoo’s Rege. Implication: the more people use the net on the mobile, the greater the scope of making money.
Entertainment: The big revenue earner
The biggest money spinner in the mobile space could well be entertainment going into the future. “The revenues from music on mobile have already crossed what are generated through traditional channels in China,” says China Mobile’s Chairman and CEO Wang Jainzhou. “The propensity of Indian customers seeking entertainment is as high as telephony. We anticipate music sales in India to follow the trends in China. We also see the convergence of the three screens – television, computer and mobile – all offering the same content,” says Kohli.
This would surely be music to the ears of publishers of music and other entertainment forms who naturally get to share revenues when such sales happen. And they can only feel bullish in the future too. “At the GSM Association (GSMA), the global body of over 700 GSM operators, the number two economic priority is music after micropayment. And Asia is the biggest music market currently even as Europe and USA are fast catching up,” says Warner Music Group’s chairman and CEO Edgar Bronfman, Jr.
Cracking the advertising code
One only needs to look at a mobile screen – and there are hundreds of different ones going around unlike a standard PC screen – to imagine the challenge to advertisers wanting to tap what is projected as the biggest ever advertising medium in the future. But there are those who have already bet on the possibilities: UK telecom operator Blyk is even offering free mobile telephony to be supported fully by advertising.
Advertising on mobiles would take a very different form from that on a PC though. “For one, these will be highly contextual and location based – pointing you to businesses in closer proximity to where your current location is. Cellular technology allows this. What this also means is the mobile will help the bricks and mortar business by directing you to the advertiser; on a PC, we saw a whole new category of e-commerce being created independent of traditional channels. It will also allow advertisers to track promotion budgets as a mobile as the identity and usage patterns of a user can be determined unlike on a PC,” says Rege.
Money to help make money
The day is not far when telemarketers will be calling you to sell a credit card – on your mobile. With security and identity features built in unlike on a PC, the mobile is readying to be the next battleground for financial services providers. The SIM card in the mobile would be like a mobile wallet, credit card and debit card all rolled into one.
“We have partnered with the GSMA and Western Union to enable money transfers over mobiles starting next year. At over $40 billion a year, India sees the highest levels of remittances in the world,” says Airtel’s. Kohli.
Partnerships coming of age
Mobile operators may have had it good so far, keeping most of the voice and SMS revenues to themselves. But making money in the value added space can be possible only if the various stakeholders collaborate. And this is happening. “We are actively working with partners to connect to the audiences with our marketing message. The eco-system is too complex for anyone to make a go of it all by themselves,” says Yahoo’s Rege. Yahoo’s partnership with Indian operators entails, amongst other things, a sharing of advertising revenues.
No doubt the road to mobile riches is fraught with challenges, but none so grave that can’t be overcome. There is the massive fragmentation of platform and form factors of the mobile devices themselves.
Networks in countries like India are still constrained, although Kohli says this will not come in the way of value added services being rolled out in the coming years.
The mobile space is still untapped territory in many ways; it is time for the enterprising to make their move and mine the waiting riches.
(The author publishes technology blog, techgazing.com)