Will Carriers Finally Get Their Piece of the Apple Pie?

“Better coverage… fastest network… fewest dropped calls…” Which mobile carrier am I talking about?

ALL OF THEM

There is a huge gap in the current capacity and the demand that is being created by new high-bandwidth mobile devices like the iPhone, iPad, RIM smart-phones, Androids, Nokia Nxxx’s, MiFi/RocketStick 3.5G/4G devices used with laptops/netbooks, and Kindles. This capacity gap is inspiring another internet arms-race, just like the catastrophic that contributed to the ‘.com bubble burst’ of 2000/1. All of these competing wireless carriers are upgrading their wireless network capacity many-times over (10-100x+). The main difference –this time– is that demand exceeds supply… for now.

Right now, customers are very much choosing carriers based on the phones available, but this will soon change as cachet devices like the iPhone are made available on multiple networks. Then people will start switching from one to another because they are dissatisfied with the service (probably because a carrier is picking up high bandwidth users faster than their network engineers can deploy capacity). Then we will reach an equilibrium…

Then What?

Well, until recently, the answer would be –like any commodity market– a race to the bottom. The raging ‘red ocean’ of the wireless market would lead to the survival of the cost-cutting fittest. Just like pork-bellies, barrels of oil & even computer RAM, the winners will be those that produce a common unit for the lowest cost. The only people making real money (margin anyway) in this scenario will be those who can create differentiated products: handset makers & those that own the content (Apple and Apple respectively – I kid).

But then ‘net neutrality’ & the FCC got a big kick in the nuts courtesy of Comcast.

People who don’t care about FCC regulations (probably 99.99999% of you) may have missed the recent ruling in favour of Comcast on their ability to control how their customers use the internet (whether they were ‘neutral’ or could treat data from different sources differently).

Comcast, by challenging the FCC’s right to control neutrality, has now set a precedent that would allow carriers to be less ‘neutral’ when providing these over-the-top services (particularly those that make it hard to identify the source of all the bandwidth, like BitTorrent, etc.). This could potentially mean that they can have more control over the internet experience the user has. They could treat websites preferentially (higher speed) that agree to do revenue sharing, or block/restrict the bandwidth to those they don’t like.

The wireless and wireline carriers now have another way to differentiate from each other, aside from the “Better coverage… fastest network… fewest dropped calls…” mantra they all currently drone.

The internet experience could end up being VERY different from one carrier to the next, with an infinite combination of content/carrier/geography relationships possible. A very basic example would be a carrier winning business based on allowing BitTorrent traffic to your cell phone vs. one that does not allow it.

Things just got a whole lot more complicated… will carriers finally get a piece of the Apple pie?

The Media Buffet – At One Reasonable Price

Early adopters experience new market opportunities before the rest of the market. By trying something new, they get the benefits of a new service or technology earlier than the rest, but they also experience the gaps that are inevitably created by the new thing.

We will soon have the iPad to add to the already large number of means to experience media that includes:

• eBook readers like the Amazon Kindle and Sony Reader
• Digital audio players like the iPod and Zune
• Smart phones (Blackberry, iPhone)
• Desktop & laptop computers
• Internet capable set-top boxes (AppleTV, PS3, XBOX, Wii)
• Traditional print media

Here is the gap: I am sure many other early adopters are finding it useful –but expensive– to purchase all the various potential forms of a piece of work.  For example, I may purchase an audio-book to determine if I like the work (and it allows me to read it quickly), then purchase the eBook version on a Kindle because I want to be able to highlight the material and look at diagrams, and even purchase the printed copy of the book if I want to share it with others.

Hopefully there soon will be a time where a content publisher will offer the “One Price Media Buffet” where one price is paid to access to the media regardless of the desired format.  Alternatively, an initial price can be paid, with small incremental fees for alternate versions.

You might wonder what is in it for the content publisher? Unfortunately, the current attitude of many people towards DRM (digital rights management) is quite confrontational. Users don’t see the DRM as a way to protect the artists that produce the media, but rather a cash grab reminiscent of the music business who would release a new format every 5 years to get you to buy the Beatles White Album again. This confrontation allows people to rationalize making illegal copies of media. This is money lost for publishers and artists alike. There is no DRM that yet exists that can keep motivated hackers breaking it, and the internet makes it very easy for hack to be propagated to less-tech savvy users that feel enough frustration to make illegal copies.

Here is a new opportunity for content owners to develop a more positive relationship with their customers and their artists by offering new innovative solutions instead of more complexity and frustration.

Is it possible? I can see at least one company who could offer a very good start at this: Amazon. They already offer content via audio book, print and eBook (which includes access via PC & iPhone, and in the future likely the iPad & Mac).  The only reasons for them not to offer the ‘Buffet’ would be existing contracts with rights holders (good reason) and the opportunity to charge their customers multiple times for the same content (not so good).

Come on publishers, surprise we early adopters in a GOOD way for a change! There is a WIN-WIN scenario.

This is Gonna Be HUGE!

This started off as a comment on Kneale Mann’s blog, but then I realized that a lot of my regular readers are probably expecting me to weigh in on the iPad, and why not! Ironically, Kneale’s post is about all the free publicity that the iPad is getting.  :)

There are a lot of people griping about what the iPad doesn’t have, and its name:

iTablet was the obvious (good) choice IMHO, but it breaks the ‘two-sylabble rule’ of the Apple naming conventions, and the recent predilection for the use of the letters ‘iP’ at the start (iPod, iPhone).  Complaints about the name are missing the real story here:

All the coverage I have read misses just how much this device is going to revolutionize everything! Apple has created a huge developer community and worked them into a lather over the potential of becoming rich, famous, or rich & famous developing the next multi-million-downloaded iPhone app.  Now they provide those same developers a new platform to innovate on.

Lots of analysts seem to think that this is about Kindle vs. iPad, but that misses the point too.  The Kindle is a very well executed specialized reading device which will continue to do well in the segment of eBook readers.  The iPad provides the opportunity for innovations of much greater scope.

Expect big revolutions in:

• Medical charting and visualization
• Marketing
• Gaming
• Graphic design
• eBook technology
• GPS & mapping
• Education
• Human interface design
• How you enjoy video and music
• Point of sale enablement
• Retail displays
• …

Just as an example: imagine you go into the local car dealership, and instead of being handed the usual marketing glossies you are handed a iPad with an interior and exterior visualization of your new car with all the interior and exterior features & colours, exactly to order.  The same could be applied to making all the selections for a new home, where colour and material choices can be visualized in a 3D rendered world navigated by intuitive screen gestures and/or movement of the whole device.

The tablet itself is a nice piece of work at a compelling price point (especially compared to the capabilities offered by netbooks), but the real monster unleashed here is the rabid pool of developers who now have a completely new form-factor to innovate on. In 6-12 months, the folks at Apple will look like geniuses (again).