Archive for June, 2008

Russians, tennis and cultural phenomena

Thursday, June 26th, 2008

One of my favorite functions of user-generated content and one of the things that confounds traditional media is the often internet-based cultural phenomena of an incredibly viral piece of content that for a time becomes a media icon. Examples are many and varied: You may remember “All your base are belong to us,” Mahir Cagri, (I kiss you!) or dancing hamsters.

It would be very valuable to certain interests if such a thing could be consistently created and leveraged for some specific purpose, such as for a product or idea or presidential candidate, but mostly when these things flare up, it strikes a nerve (or more often a funnybone) with such a wide swath of the public that it would seem impossible to predict the whim of the people.

Today I was sent a quote via text message about which I am 100% certain is going to lead to such a cultural phenomenon, and may even rise to the level of Saturday Night Live skit. (If Tina Fey was still at SNL, I could practically guarantee it.)

I am referring to this quote from ALLA KUDRYAVTSEVA, who upset Maria Sharapova by handily beating her at Wimbledon today:

“I don’t like her outfit,” Kudryavtseva said. “It was one of the motivations to beat her.”

Oh snap. Instead of a sportswoman-like, “She played very well, it was a great match and I am very pleased with my performance against such an able competitor,” we got the humiliating vitriol, “I don’t like her outfit. It was one of the motivations to beat her.”

Truly awesome. What makes this a cultural spark worthy of massive imitation and distribution is the sheer audacity of it all. It wasn’t enough to beat her. She had to shame her.

Read it again with a Russian accent:
“I don’t like her outfit. It was one of the motivations to beat her.”

Yes, comrade, that makes it a little funnier.

This woman is a literal caricature of unsportsman-like behavior. It is funny because someone ELSE said it. Someone ELSE crafted this beautiful example of ridiculousness that had never existed in the lexicon of professional sports, which gives me the ability to use it with impunity. And I will. Whenever I beat anyone in my life from now on, you can bet I am going to shame them by lowering my voice, assuming a very serious countenance and saying in my best Russian accent, “I did not like your outfit. It was one of the motivations to beat you.”

Yes, I am officially replacing the time-honored Mortal Kombat “Fatality” with this much longer insult. When I win at golf, “I did not like your outfit.” When I win at Quake, “I did not like your outfit.” Even when I successfully call shotgun and beat you to the front seat on the way to lunch, “I did not like your outfit. It was one of the motivations to beat you.”

It occurs to me that, while very funny coming from Alla, it will be even funnier coming from Will Ferrell. Can you imagine him in a tennis dress, being interviewed and delivering this comment with deadpan precision. Or for a more contemporary example, how about Chad Vader? Or how about the thousands of creative examples that the creative consumer base will come up with. Someone will even do a song, and it will be funny. I want to see ALL of these in one place, right now. I want to accelerate the development of the wave of creativity that is going to be unleashed and I want to see it all organized and ranked in terms of funniness and popularity.

And if I owned one of the world’s largest traditional media companies, I would also want to capitalize on the creativity that is going to be unleashed, because this is so obviously what the media company of the future is all about. It is less about producing the right content and more about being able to accelerate the distribution of the right content that perhaps you didn’t produce. I think there is a huge role to be played there, which is just a different version of the model that media companies have already figured out – give people what they want. (This is true even when the people have created it.)

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T-Mobile, Bebo and Piczo launched

Thursday, June 19th, 2008

Yesterday T-Mobile UK officially announced that Intercasting Corp is their social networking category manager with Bebo and Piczo headlining its impressive group of popular social networking providers. (We have been “soft launched” for a few weeks, but now it is official.)

We are obviously very happy to be working with T-Mobile and their set of chosen social networking sites, which we expect to grow over time. There are a few things about this deployment that are notable:
- The My Social Sites link off the main menu of T-Mobile phones goes directly to the ANTHEM white-labeled interface
- Discoverability is high due to this preloading and low friction for consumers
- Consumers see a “dashboard” view of their favorite social sites, making it easy to check messages from multiple providers
- This thick-client approach enables PIM and Camera integration, which empowers consumers in a way that is not possible with WAP

This brings up a good point about WAP: To us, WAP is an important element of any mobile strategy. In fact, the entire ANTHEM solution is agnostic of any presentation layer, which means we can (and do) deploy the social networking category for our carrier partners in WAP, as well. However, the limitations of WAP make it best suited in the social networking vertical for mostly “read-only” deployments. Think of WAP as the widest part of the funnel to provide social networking users with a mobile experience. The more a mobile user centralizes their social networking experience around their mobile device, the more important it is to provide enhanced functionality, which is where a pre-loaded Java or BREW interface comes in.

As more mobile social networking users become “super users,” demand for greater functionality will increase. We see it happening now as we look at our server logs, btw. The more functionally complete sites enjoy higher usage and greater customer satisfaction and lower churn. Mobile social networking is on a path to become as addictive to a certain set of consumers as mobile email has become for a certain other set of consumers, and a better interface can make a big difference.

I feel like I should discuss an important point regarding the deployment of social networking on mobile carriers: There is a divergence of interests between carriers and social networking providers.

The wireless telecommunications industry is NOT optimized for deployment and management of mobile data applications. This is a slow-moving industry with long development timelines and high friction to reach consumers. BUT, once you reach those consumers, they are worth their weight in gold.

Social networking sites are web-based companies that owe much of their success to their speed of execution and high-leverage model for deploying services.

When the two industries try to come together, the result is sometimes frustrating for both sides only because they are promoting different agendas. A social networking site may say, “We only want to support WAP because the development effort approximates our web-based model, making it easier to reach as many of our consumers as possible and we do not have the bandwidth to deal with each carrier individually.”

This agenda, while certainly sound, may be at odds with a carrier, which may say, “We want to bring social networking to our users in a way that integrates it as closely as possible into the native handset experience, which requires more effort and longer deployment timelines, but ultimately is better for our consumers.”

Both sides want what is best for THEIR consumers, but the truth is they are sharing the same consumers since the overlap of “social networking user” and “mobile phone user” is significant. These two parties are not at odds with each other in that regard, and the best outcome comes from working together.

We have found that the best solution is a multi-faceted approach. Offer WAP because that appeals to a certain segment of the user base, and also offer applications and device integration to address other user segments and further position social networking as a highly discoverable and usable feature.

The bizarre observation here is that preloading and device integration are incredibly significant value drivers, and instead of begging for this kind of placement, certain social networking sites have in the past pushed back, not understanding the high value and perhaps assuming the level of effort is not worth it. To that, I can only say that no matter what the effort is, it is worth it. But that is where the ANTHEM platform comes in anyway: A social networking site with mobile plans but not a dedicated mobile development team integrates once and then rides the coattails of the carrier’s plans to deploy the category deeply into its user experience. This is a complete win/win. Both sides benefit tremendously.

Many carriers are now asserting that their strategies for serving the mobile consumer are as important as a social networking site’s strategy for serving their web-based consumer in the mobile environment. They do this by making sure that WAP is an important part of the consumer offering, but also by providing a more feature-rich interface that encourages long-term use, and integration that drives discovery.

T-Mobile is a carrier that fully understands the value of providing a comprehensive consumer offering and we are proud to be serving them. With their commitment to T-Mobile through ANTHEM, Bebo and Piczo have also illustrated their understanding of the importance of a complete offering in the mobile space that engages their users almost as fully as they do on the web, and we are happy to be serving them, as well.

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The Rule of Three in the U.S. wireless industry

Friday, June 6th, 2008

One of my favorite business books is Jagdish Sheth’s The Rule of Three – Surviving and Thriving in Competitive Markets.

It basically states that markets mature to support three big “generalist” players, leaving the niche markets to more focused “specialists.” The mid-sized generalists get forced out one way or another.

Mature markets end up looking sort of like the structure of the modern American shopping mall, with the big department store anchors at the ends and a bunch of specialized stores in between.

You know this intuitively across many industries:
American Airlines, UAL and Delta
Experian, Equifax and TransUnion
GM, Ford, and DaimlerChrysler

Sheth indicates the four forces that affect market evolution toward efficiency:
- industry consolidation
- government intervention
- establishment of de facto standards
- shared infrastructure

It is a brilliant book, and you should buy it and read it.

So, Verizon Wireless is buying ALLTEL, driven by a desire to further consolidate the industry. That leaves:
VZW, AT&T and Sprint
…as the three big generalists.

That leaves T-Mobile, which just crossed the 30mm subscriber mark, and U.S. Cellular as the mid-sized generalists. Virgin, Boost, (yes I know they are technically Sprint) Leap, metroPCS, Tracfone and a host of regional players are the niche specialists.

If the rule of three is correct, logic would dictate that T-Mobile and U.S. Cellular would now get pulled into play, with AT&T as the most likely suitor for T-Mo, and VZW or Sprint as the most likely acquirer of U.S. Cellular, given the respective GSM/CDMA standards. (I do not think Sprint is feeling spendy at the moment, though putting everything else aside, they almost have to buy U.S. Cellular.) Logic would further dictate that if those deals are going to get done at all, and if government intervention (or lack thereof) is a driving force in the Rule of Three, they are going to get done during the Bush administration. But whatever, that’s not what I want to talk about…

Let’s assume for a moment that the middle players do, in fact, get consolidated and we are left with three generalists. Then what? Maybe Starbucks. Let me explain. Quoting from Sheth’s book:

“In 1987, the Big 3 in coffee – General Foods, Procter & Gamble and Nestle – controlled about 90 percent of the U.S. Market. But Starbucks appeared on the scene, creating a market for upscale coffee that dramatically challenged the Big 3 and the commodity-like nature of their offerings. All three had produced canned, ground coffees that were made from the inexpensive beans of the robusta coffee plant of West Africa. Competition between the leaders was based strictly on price, since the tastes of their products were virtually indistinguishable.”

So who is the Starbucks of the mobile telecom space that will challenge the eventual Big 3? The sands are shifting, for sure, so it is not entirely out of the question that it could happen. Also, like circa 1987 coffee, basic wireless voice service is virtually the same among the various carriers, in as much as I cannot tell a difference when someone calls me from a particular carrier or phone. On the other hand, the competitive dimensions are certainly different in this case.

If “wireless service” today is the “West African robusta plant” of 1987, then what is the wireless equivalent of the “Peruvian-Sumatra organic hand-picked sustainable micro-farmed espresso roast”?

Some would argue that in the landline space, Skype (or VoIP, more generally) was the new coffee to challenge the incumbent long distance carriers. By that logic, maybe WiMAX/LTE will be peddled by a Starbuckian challenger.

Or maybe that aspect of the consumer experience is not where the opportunity lies. Maybe the future opportunity lies outside the network. Here are some thoughts:

With all the talk about “openness,” it is possible that wireless carriers start to look more like utilities, or maybe closer to the current internet “backbone” that is really a cartel of tier-1 ISPs. That structure is interesting to me because the cartel reinforces margins while keeping competitors out via tacit price collusion. (The consideration of connection to the PSTN clouds this possibility a bit, I know, but even without a true closed free peering arrangement, the U.S. carriers can certainly approximate “pipes” or “backbones” or whatever you want to call them.)

This structure will create the greatest opportunity for two major players on the consumer value chain: Device Manufacturers and Media Companies, and both stand to win big over the next few years.

Let’s start with Device Manufacturers, which are on their own path to consolidation, btw:
Nokia, Samsung and Motorola (generalists)
LG, SonyEricsson (middle players)
RIM, HTC, ZTE, Apple (niche players, and I should note these are some large and growing niches)

Nokia is embracing a Software and Services strategy, and the rest of the OEMs will be fast followers down this path. This makes perfect sense: As the carriers are ironing out their business models, functionality is shifting to the edge of the network. No wonder the smart phone market is finally taking off. The bigger the pipe, the more horsepower I need in my phone to process the data. Nokia could be the Starbucks of the mobile industry by shifting consumers’ expectations of what their phone is and does. No longer are the lines between hardware and software clearly defined. The discreet address book on your phone will soon be a “social address book” that maintains live linkages to your friends on MySpace or Bebo. Your phone’s camera, originally built for 1-to-1 transmission will soon include one-click and no-click upload to your favorite photo hosting or social networking destination. Location will finally be meaningfully integrated horizontally across services on your device, opening the door to new data services such as grid-based always-on directory. That a device manufacturer would endeavor to increase competitive advantage by presenting the BEST device-integrated service offering is a logical evolution of that industry segment.

The media companies also have a chance of being the Starbucks in the wireless telecom industry. Google has made no secret of the fact that it wants to own the wireless consumer, as does Yahoo, Microsoft, AOL, News Corp, Viacom, NBC Universal, Vivendi, CBS, and many others. As we move into the mobile media era, there is a requirement to redefine what “media” is and make sure that you have a strategy for capturing audience with the right media that people want to consume. For instance, I don’t think any traditional media company would consider “location information” to be “media,” but in the mobile space it absolutely is, making Nokia’s acquisition of Navteq a fairly brilliant stroke.

I know firsthand that many media companies have a sense of what the redefinition of media means for them and the critical role the mobile audience plays in their future. I just re-read The Highwaymen. People like Redstone, Murdoch, Turner, Gates, Malone and Diller are not likely to sit idly by as the mobile media opportunity grows to billions of dollars. Or I may be wrong and they will sit idly by and watch people like Yang, Schmidt, DeWolfe and Zuckerberg divide the pie. The very fact that the media collective as a whole comes from outside the wireless industry may be reason enough that any one of them could evolve into the Starbucks of the wireless telecom industry.

In any case, consolidation (perhaps counter-intuitively) has historically created opportunity for various reasons, and I think the coming opportunity in the mobile space is huge, particularly for those few companies that are positioning themselves early.

In summary, as the lines blur between hardware, software and services, creating a Venn diagram with a sweet spot in the center, I believe we will see each of those three dimensions collapse in toward that sweet spot. When subscriber growth stabilizes and consolidation commodifies the basic service offering, the value to the consumer will shift to complementary services, creating the next opportunity in the mobile space.

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