I was sitting in a meeting with a senior executive of a large telecommunication operator who is looking at open and not-so-open handset platforms and application environments, such as Apple’s iPhone SDK, Google’s Android (or better: the Open Handset Alliance‘s Android), Yahoo!’s Mobile Widget, AOL’s Open Mobile Platform, openmoko, Funambol, etc. — you get the picture. Other focus areas this operator is currently looking into are new media, advertising business models, and personas / identity management.
So I made a case how the ongoing initiatives and existing results from the later areas could be leveraged for open handset platforms, and quoted a discussion with Gian Fulgoni, CEO of ComScore:
When it comes to branding and maximizing advertising effects: search, video, 1:1
Follow The Money?
You can clearly see the money trail in the Silicon Valley for video in advertising and social networking — just look into the recent deals of March:
These are just a few examples from different industry sectors, but it clearly shows that the video market is buzzing. However, the question is: will these applications be the first to come to the mobile handset, extending their existing reach; will they be rather followers; or will they develop different applications?
At the SxSW in Austin, Texas, the CEO of Rock You, Lance Tokuda, said:
Over time some sort of business relationship between the application developers and the platforms will have to evolve [...] We’ve found that mobile is more about one-to-one communications and a lot of the apps we build are about one-to-many, so it’s sort of a different model.
There are two important points in here: A) I don’t really see how Android is establishing a business relationship, unlike Apple’s SDK approach and AOL’s open mobile platform. B) Yes, the applications are probably portable to mobile handsets, but the business models and communication concepts behind the applications aren’t. Maybe we have to look at another first mover…
Hardware Vendors and the Digital Living Room
In the past, hardware vendors such as SanDisk had the same problem as the good old CD: They have a pretty good understanding of the shopping experience up to the conversion, but then the device is sold and they never see it again, not knowing how users are using the device, or if there is an upselling or cross-selling potential. In the worst case, users don’t even register their device, so the customer is actually owned by TigerDirect, NewEgg, or CircuitCity. Too Bad.
Steve Jobs kind of solved the CD problem partly with its iTunes store front, but he is actually not sharing user behavior information with the original content owners, and too much content is coming in from the side via MP3 blog search engines such as skreemr or The Hype Machine. SanDisk knows of course that yet another music store is crap, and there’s already so much content out there. So they came out with a neat idea: TakeTV.
TakeTV is a device you plug into your TV. A memory stick goes into your PC, downloads and aggregates videos from your favorite portals such as YouTube, Metacafe, Windows Vista Home recordings, etc. You then plug the stick into the TV thingy and watch the shows on your TV.
With the Sansa Player from SanDisk, user’s main problem is to get shows in an actual decent quality onto the device — or at all, if you are not a power user. Excitingly, there are a few new developments on the codec front, and RipCode will come out with a new box soon that will not only do its just-in-time transcoding thingy, but also with a new methodology to compress H.264 and ON2′s V6/V8 VP6 for Flash 8 codec [2008-03-24: bob_ahblah at Yahoo! Finance kindly pointed out that I used the wrong codec names. While the names are beyond the point, our internal project is called "VP6 for V8" or short "V6/V8", which I unfortunately referred to] more efficiently, so that outstanding movies can be encoded under 1.5Mbps at a 1024×576 resolution with awesome stereo sound.
Why is that so important?
the run for nomadic and mobile user ownership
Hardware vendors are clearly competing for user ownership in the digital living room. Samsung is building TV sets with Internet Access to get content from Yahoo or Amazon, LG and Panasonic are doing the same. Now Samsung is hireing plenty of people in their mobile R&D center in San Jose, LG and Panasonic are doing the same, and soon we will begin to see the run for nomadic and mobile user ownership. Why wait until operators figure a way out to exclude them?
For SanDisk, for example, you will see a personal video aggregator based on Adobe Air flying around, that sits on your desktop and downloads on-the-fly converted awesome video quality onto your device. Sure, you can do that conversion in a computing cloud, but ripcode’s appliances are so much cheaper, cost and energy efficient. That’s why MySpace spent $22M for upgrading their plant.
As written earlier in Digital Entertainment Evolution – TiVo Gets It., we will soon have high quality content on TV, also from long tail and specifically from fat tail content (more later on the fat tail). And latest when Apple comes out with a higher resolution screen (much discussion about that) or people get the Meizu M8 instead with a 720×480 resolution, consumers what according content. So why again shouldn’t SanDisk make phones in the future, based on open mobile platforms?
DVB-T and DVB-H
If that is not enough, the European Commission just made DVB-H the official standard for digital video broadcast TV in Europe. Yes, I know, DVB is different from WiMAX or 4G (LTE) and not bidirectional, but how about cost efficient video delivery? And how about communicating the currently viewed program back to the operator via 3G/4G to get some additional goodies?
Handset uptake rate looks good, and I can think of many applications that could sit on top of DVB-x to create added value for consumers. The news releases on the DVB-H startpage are coming in steadily: ICO Global Communications, sitting just around the corner from my office, is planning to start a satellite on April 14th and will start the Alpha trial for DVB-SH shortly after. The so-called ICO mim offering will integrate three types of service: Entertainment (10-15 live video channels with premium content); Guidance (interactive location-based services with GPS navigation); and Assistance (emergency calling and messaging). ICO recently announced that NBC Universal has agreed to provide video content for the alpha trial.
The license to build and operate the DVB-H network in Germany has been awarded to T-Systems. The license to operate the mobile TV platform has been awarded to Mobile 3.0, a company jointly owned by Mobiles Fernsehen Deutschland (MFD) and Neva Media.
In Austria the media authority KommAustria awarded a license to Media & Broadcast (German-based, formerly T-Systems Media&Broadcast), a subsidiary of TDF, to set up a DVB-H network in Austria. Austrian mobile network operators ONE and 3 Austria are likely to partner with Media & Broadcast in offering mobile TV services using the DVB-H network.
Both Germany and Austria are planning to launch the service for the Soccer EURO 2008 Cup June 1st. Austria is targeting a coverage of 55% of its population by the end of 2008. So how about a digital broadcast channel pre-loading 4GB cache of my 16GB phone with most popular YouTube videos and other things, like a mobile version of Building B?
So What Has That To Do With Google’s Android?
Deep communication function integration or quick application deployment?
For operators the question is which of the open handset platforms has a deep enough access to communication functions to either build a walled garden or implant enabler functionalities into phone releases that are based on the Android SDK, but in a way that application service providers cannot hijack or abuse them, or in a way that they are completely transparent and provide valuable consumer behavior for the operator who is not owning the application anymore.
For hardware vendors outside the mobile handset space and for software service providers such open handset stacks provide the opportunity to enter the one-to-one advertisement and communication market without knowing much about mobile handsets or mobile communication. A widget and plugin market for a mobile MySpace and Facebook (hello AT&T), I can hardly think of a better way to reach users with personalized information and updates.
While Android will be interesting for operators though, software developers might turn to easy and fast deployment with Yahoo!’s mobile developer platform, and soon all these Flash programmers might be playing around with Windows Mobile or be putting Flash applications on Apple’s iPhone (or not, see Flash In The Phone).
Back to the drawing board…
However, I must have made a shitty presentation of the case, because the senior executive said:
I would underwrite all points you made in the presentation, but I don’t really get your point, your connection of new media and Android. I don’t believe that video will be a killer application on the handset. And do you really think that mobile search makes sense? It is so hard to enter a search term over these tiny keyboards…
Well, back to the drawing board for me, I will have to make a better case then and communicate more clearly. Fortunately a colleague of mine made a better case for mobile search, especially with the navigation and discovery of Yahoo!’s OneSearch, Yahoo! Go.
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