Dumb providers of dumb pipes

The Financial Times reports that European mobile phone operators plan to hold a meeting next week in hopes of charging content providers for delivering data traffic. As the paper so dryly put it:
told the Financial Times that there could be “no free lunch” for the content providers.

Franco Bernabè, chairman of the GSMA, the mobile operators’ representative body, told the Financial Times that there could be “no free lunch” for the content providers.
…
Mr Bernabè, who is also chief executive of Telecom Italia, Italy’s leading telecoms company, highlighted how fixed-line and mobile operators were spending billions of euros upgrading their networks to cope with the rapid growth in internet video traffic.

He complained that content providers were “heavily using our networks but just don’t contribute to the development of our networks”.

I understand that operators resent the failure of their walled gardens and are in denial about being consigned as commodity providers of dumb pipes.

If it’s too expensive to provide network access, why don’t they charge more? OTOH, if they start reaming people for data access, who in the heck do they think is going to pay to use their networks?

Perhaps in some of the countries a cozy duopoly holding two-thirds of the market hopes to forestall competition by striking a common position against content providers and consumers.

However, in most countries there is usually one desperate challenger seeking market share who will do what they can do to gain a foothold. There are also operators hoping their LTE networks will provide new traffic and revenues, as well as Wi-Fi and other substitutes available.

Finally, there’s this little matter of the mobile Internet — as the iPhone proved, it’s the whole reason people buy smartphones in the first place. So if people can’t get access to the free Internet, why would people want a smartphone? Goodbye free Internet, say goodbye to ARPU.

In short, this plan of the operators is a dumb idea. I wonder how quickly it will take for the operators, content providers, regulators, consumer advocates or the business press to figure this out.

LTE: end of all you can eat

The FT reports this morning on Verizon Wireless’ plan to unveil its LTE network this Sunday. By covering 39 markets and 60 airports, the footprint is equivalent to a POP of 110 million — slightly less than 40% of the country. It’s bad news for AT&T: it will have to stop bragging about the “fastest” data network in the US, and pundits say the iPhone LTE is just around the corner.

Although the ITU says LTE and WiMax are no longer “4G” standards — even though they were clearly developed as same — this will be the second major carrier to offer 4G service in the US and the first (unlike Sprint) to follow the global 4G standard. At "up to" 12 Mbps, the new service is 10x as fast as existing 3G service. So perhaps we can call these 4G- as opposed to T-Mobiles faux 4G that is 3G+.

What’s strikes me is the pricing of the data plans. On the one hand, Verizon is offering 4G data bundles at the same price as comparable 3G ones. The VZW LTE plans are $50 for 5gb/month or $80 for 10gb/month. Each additional GB (or fraction thereof) is $10. On the other hand, the new rollout marks the long-predicted end of Verizon’s $30/month unlimited 3G plan, following AT&T’s lead. Now $35 only gets you 3gb/month.

This is both a threat and opportunity for Sprint. Sprint surcharges owners of 4G (WiMax) by $10/month over its 3G users, and that surcharge may no longer be sustainable. On the other hand, Sprint still is promising unlimited voice and data services with its $100/month plan ($110 for 4G).

Today the $40/month unlimited 3G data for the Virgin Mobile hotspot or USB modem is now looking pretty good — a real market opportunity for the Sprint division. If I were sending a college student away to college, that would be the no-brainer option.

Update, Friday 7am: InfoWorld offers an overview of the strange anomalies in the pricing of the various carriers’ data plans.

Some dumb pipes worth more than others

A longstanding concern of telecommunications carriers is that they will be reduced to the providers of “dumb pipes.” While demand for the Internet — and particularly the mobile Internet — continues to grow, they may find profit margins squeezed to commodity levels if they are merely providing commodity services.

The near-term role of mobile operators was the key subject of discussion at the inaugural CEO Summit of the Mobile Entrepreneurs Forum Monday in London. In part, it was because the first keynote speaker was Vodafone cofounder (and longtime board member) Dr. Mike Walker, OBE. In part, it was because the European carriers were prominently sprinkled among the audience at the 11 discussion tables.

Thus it should not have been surprising that — framed by a sunny operator keynote — that most of the tables took an optimistic view of the first discussion question of our breakout session: “what role will [mobile] operators play in five years’ time.”

Everyone agreed that the future of mobile data usage is the mobile Internet. Even for Vodafone, the era of walled gardens is ending, and users expect access to the best content available, whatever access method they have.

The optimistic view argues that carriers can offer a seamless experience, that they are a crucial nexus of the mobile ecosystem, or that by buying exclusive rights to key content — such as a big soccer tournament — they are becoming media companies. Several tables (including ours) also noted that the operators are sitting on a wealth of individual consumer usage data — which Google can only dream of — that they might figure out how to monetize some day.

A few also suggested that operators could play a role in selling billing services. Apparently among the Europeans present, no one had heard of NTT DoCoMo, which mastered that model with i-mode a decade ago.

However, the operator at our table was a no-show and we had two Americans, so we took a much more pessimistic view about their future. Existing operators face three types of threats: increased commoditization/competition among existing rivals, possible new entrants, and ways of capturing value (iPhone App Store, Android Market) that bypass the operator.

The end of flat rate mobile data is both an opportunity and a threat. Operators will be able to charge the data hogs what they are really costing, but at the same time, it will reduce the attractiveness of 3G networks relative to wired and hotspot alternatives — particularly for American teenagers addicted to watching YouTube.

Consolidation — reducing directly rivalry — might be a hope for operators to moderate some of these pressures. However, based on the past 30 years of telecom regulation, I think few countries will allow the number of operators to drop below three — exactly because healthy competition is needed to keep honest the would-be oligopolists.

Our group concluded that the near-term prospects for US operators were not good, as the bypass threat posed by Apple and Google were already quite strong. We thought that in the near term, European carriers would continue to milk their market power — although one other table noted that two French DSL carriers are stitching together roaming across millions of WiFi hotspots to form, in effect, a new mobile Internet network.

Certainly in China the operators remain a chokepoint, and another table suggested this was true in Latin America. So the geographic variation remains considerable — some pipes are more scarce (and thus more valuable) than others.

However, what was striking in retrospect is that the mobile phone companies are almost in exactly the same boat as the US cable TV companies. The cable TV companies have the advantage of mindshare providing entertainment content, albeit less growth. Both, however, may end up being just “dumb pipes” by which users access the open Internet, to use content provided by those who didn’t have to pay to build the pipes.

Smartphones for the developed and developing world

On Monday morning (Sunday night PDT) I gave a presentation on the evolution of the smartphone market via a videoconference to the Telecom Regulatory Authority of India, that country’s answer to the FCC.

For a half-day workshop organized by Rafiq Dossani of Stanford, I was one of two remote speakers from Silicon Valley (the other being Greg Rosston of SIEPR, talking about a FCC-funded study of broadband adoption). Four other speakers were live at the TRAI headquarters in New Dehli.

The talk drew upon my iPhone study, the Symbian study, and the (currently underway) study of Android. The slides are up on SlideShare if anyone wants to see them.

A few slides might be new to blog readers. I quoted Cisco’s prediction that mobile data traffic is doubling every year from 2010-2014. As smartphone share rises to 65% — according to Tim Bajarin — of new US sales (2012) and global sales (2015), networks will be straining to keep up.

As Irwin Jacobs said at CTIA on October 8, there are no significant spectral improvements coming after 3G, so remaining mobile Internet capacity increases will come from more base stations or more spectrum. The alternative is to shift traffic to Wi-Fi (as European carriers do) or reduce demand by variable-use pricing. (Paul Jacobs wants people to use MediaFLO instead). Still, it’s hard to see how the mobile bandwidth can keep up in the next decade with both the increase in home broadband speeds and the increased supply/use of online video.

In considering the big five cellphone vendors and their attitude towards Android, Motorola (#4) is clearly enthusiastic, Nokia (#1) is opposed, and the other three are in between. For now, I think Samsung’s (#2) infatuation with its own Bada platform makes it unlikely to do more than dabble in Android, while both LG (#3) and Sony Ericsson (#5) could join Motorola (and HTC) as Android promoters if it gets sufficiently popular (or their situation gets sufficiently desperate).

My conclusion was that at least four smartphone platforms will survive for the next five years: BlackBerry, iPhone, Android and whichever platform Nokia uses (Symbian S60 or MeeGo).

While researching the talk was instructive, I learned more from the questions from Dr. J.S. Sharma, and the other TRAI officials and guests. I was asked whether 4 platforms was too fragmented — to which I reiterated my earlier blog post that platform competition is a good thing. Three or four is a good number, providing competition but enough critical mass. Two (and certainly one) is not enough to engender competition.

Another question is about the spread of smartphones to India — which felt really odd, given that I’ve never set foot in the country. (Unlike Japan, China, Germany, U.K. etc.)

However, to me the issue — the open source Android — is the availability of a cheap, high-speed main CPU. The minimum for a decent Android phone seems to be about 600 MHz, so when such CPUs get down to the price of existing featurephone chips, then India-market smartphones should become common. (Will Apple chase this smartphone market? Nokia?)

The last question came from Anil Kripalani, a former TIA chairman and Qualcomm senior VP turned entrepreneur. He asked what would the impact be of the iPad and other devices upon US mobile data demand and capacity.

I had to admit that I’d not considered that. Today’s book readers (e.g. Kindle, the Android-derived Nook) don’t do full-motion video, but the iPad will. Such devices will be much more practical way for teens and young adults (and sports addicts) to watch Hulu, YouTube and other video clips. Perhaps this traffic is even more likely to be shifted to Wi-Fi hotspots. If not, it will further exacerbate bandwidth shortages in the US, given that (IMHO) any further reallocation of spectrum for mobile use is very unlikely in the near term.

In praise of dumb pipes

Last week, our research-oriented faculty gave 20 minute PPT presentations about how they spent their summer support money. (Mine was about an ongoing research project comparing open, user and cumulative innovation).

On Friday, listening to a talk by colleague Subhankar Dhar about his forthcoming CACM paper on Location Based Services business models reminded me of how far the US has come in just three years both in adopting data services, and also transforming mobile phone carriers into operators of commoditized dumb pipes.

Five years ago, there was an assumption by the carriers that — unlike in the wired Internet — they controlled access to content on their networks. The “deck” (cellphone opening screen) was tightly controlled, and the only applications and content that would make it on-deck were those that made it through their 3-12 month review and paid them a big piece of the action.

This was true not just for applications like games and for streaming content, but particularly for e-commerce. Thinking about the talk on LBS, I realized that If you looked at a paper on m-commerce from the period 2001-2005, they all assumed that such operator control of handsets, pipes and monetization was an inevitable thing.

Of course, such centralized bureaucratic control was hardly a recipe for innovation. But that was where we were stuck until the iPhone came along.

Apple was highly controversial for wresting control away from the carriers of the right to determine applications and content for the mobile Internet. Now it’s clear that it has blazed a path for making the innovation (and adoption) of the mobile Internet as open as it was for the wired Internet 15 years earlier.

This success has, in turn, allowed its onetime ally (now frenemy) Google follow the same path of promoting a platform and proliferating applications for mobile Internet users. I recall that when the iPhone was announced in 2007 (with Google maps), Yahoo was then doing the most interesting stuff on mobile and the idea of Google as a mobile powerhouse was nascent at best.

As Morgan Stanley analyst Mary Meeker put it last December:

It’s notable that, after years in the backwaters of global mobile development, American companies (led by the likes of Apple, Facebook, Amazon.com and Google) are becoming mobile internet innovation pacesetters.

Of course, this wresting of control and transformation of the mobile Internet is entirely in these firms’ self-interest. And this leadership by the WWW pioneers may only be temporary.

Still, I think almost any analyst would agree we’re in a better place than 5 years ago, because these firms have forced the carriers to relinquish their desired role as tollkeepers on the mobile Internet to become operators of dumb pipes.

Leading the mobile revolution — for now

Feb. 22: see the updated artwork below.

As I’ve remarked before, the Silicon Valley hometown crowd seems convinced that this is the best possible place in the world and will remain so until the end of time. Like onetime Stanford prof Andy Grove, my view is that it’s better to run scared.

So to my eyes, the headline in Friday’s SJ Mercury (over an AP story) seemed to veer onto the dangerous side of triumphalism:

Cell Phones
Wireless Turf Fight
Valley giants Google, Apple moving in on carriers

By Peter Svensson
Associated PressBARCELONA, Spain—Silicon Valley is looking like a winner in the tug-of-war with wireless carriers over who will control the new world of Internet-connected phones.

I’ve remarked on the Merc’s excessive optimism before, which earlier this year included overstating the influence of our still-small local cleantech industry (when clearly China is dominating key high-volume, cost-sensitive segments like solar panels.)

The sidebar — which appears nowhere on the Merc website (or the web) — is even more upbeat because (I’m guessing) it was written by a Merc editor:

Score One for the Valley

What's happening: Developments in the wireless world are playing into the hands of Silicon Valley's PC- and Internet-oriented industry, led by Google and Apple.

The opposition: Wireless carriers see Web companies reaping revenue from add-on services such as Internet searches and downloaded applications, and ned to figure out how to profit in an Internet-dominated industry.

For consumers: Internet-oriented smartphones provide more choice and freedom. But the way we pay for wireless service is likely to change, as data becomes more important than voice minutes.

Sure, claims made 5 years ago that the US is irrelevant to the mobile industry now appear foolish. And the success of Apple and Google also show how the value proposition of the Mobile Internet owes more to the Internet companies than the Mobile ones, and that carrier power has been eroded by their success. I remarked on all three points in my forthcoming iPhone paper (now available at Telecom Policy)

And, in fact, a later AP article by Matti Huuhtanen in Helsinki conveys the concerns of the industry’s longtime leader:

Nokia Chief Executive Olli-Pekka Kallasvuo concedes the Finnish company is under pressure. "There is no doubt the center of mobile innovation has shifted from Europe to Silicon Valley. We are working to tap into this innovation," Kallasvuo told analysts earlier this month. He said Nokia had installed more than 3,300 employees in North America to redress the balance.

Certainly in the near term, Google’s mobile platform bet seems like a sure thing — since for mobile search revenues, they have a “heads I win, tails you lose” bet on any platform with a decent web browser. But all the local tech companies know they can be dislodged — with names like Sun Microsystems and Netscape to remind them that market share in IT (unlike sugar water) is highly transitory.

Overall, I doubt many established SV companies are coasting on their laurels. Meanwhile, the small ones are a long way from having the option of coasting, trying to survive the second VC “nuclear winter” scenario in less than a decade.

Update Monday 8:30am: From England, David Wood comments on a similarly triumphalist article in Fast Company, and in response quotes this Steinberg-inspired poster by Rubicon Consulting (7 miles from where I sit) that suggests such boosterism is chronic in the Valley.

Note to readers: Normally I’m reluctant to comment on the local paper, but I keep getting emails from readers elsewhere in the US and world — including one this morning from Hyderabad (via Philadelphia).

iPhone, Android ride the rising tide

The latest AdMob statistics show that the iPhone share of global mobile web browsing has risen from 33 to 40%. Interestingly, its share in Western Europe (67%) and Oceana is higher than in North America (52%).

By eyeballing it, the iPhone’s impact is diluted due an impressive 13% share here for Android. (Android is only 6% in Western Europe). Since February, Android has jumped from 2% to 7% worldwide, in part due to the new HTC myTouch (Magic).

Palm’s webOS jumped from 0 to 4% in the same period, or 9% in North America, which suggests that North America is 45% of the sample.

GigaOM and others have analyzed the data. Here’s a few points I haven’t seen.

First, market share data doesn’t capture the effect of growing the market. Windows, Symbian and RIM have lost share, but I don’t think this means fewer Blackberry owners are surfing the web. The AdMob data said that mobile web page requests grew 9% from July to August, translating to a 180% annualized growth rate.

After many years of hopes and predictions, the mobile Internet is growing rapidly, and that growth is coming from the most exciting devices — the various incarnations of the iPhone, and the more recent (and more limited) Android and webOS choices. As others have noted, the latter two platforms seem to have lots of potential for growth.

This reinforces the point that Mike Mace and I made two years ago — that the iPhone found a way to deliver the mobile web that everyone was waiting for). Apple got their first, by recognizing the failings of early offerings (see: WAP). By the way, this cements the dominance of WebKit — these three hot platforms are all WebKit, and when you add in Symbian (mostly WebKit S60), that’s 85% of all mobile web browsing in this samle.

The data are somewhat distorted by the fact that these three growing platforms are being sold (at least in the US) with a bundled data plan at an additional $40-50/month — while it’s still possible to buy a Nokia or Windows Mobile (or Treo) smartphone without such a data bundle. There is a selection effect: the only people who buy these devices are those who expect to use the Internet enough to make that cost worthwhile.

The US carriers will eventually run out of people who want to permanently increase their phone bills $600 a month, so they will either have to loosen up on tethering (allowing 20-somethings to cancel their cable or DSL), cut their prices, or expect a cap in the growth of their growth in 3G data usage.

In fact, one place where Android (so far) is not playing is the PDA market. The iPod Touch is about 40% of the total iPhone OS market share, and while they’re not being used to surf the web out in the national parks, they can be used to surf the web at home, work, a college campus or public library. The Zune HD has won good reviews — will this bring up the share of Windows Mobile more than any phone?

Finally, what is the future of Flash for the mobile web? Apple remains adamantly opposed, even if most of its rivals (save RIM) have embraced Adobe’s ubiquitous multimedia platform.

Personally, I’m hoping Apple wins this fight. At least as implemented by Adobe and used by web designers, Flash is an abomination — the single worst thing about the Internet. A computer, web browser and cable modem that would otherwise zip through the web suddenly grind to a halt because of some idiot’s self-centered effort to create catchy graphics in a futile hope of distinguishing their website. Phones have even slower connections and processors, so the last thing we need is to waste that limited bandwidth on websites that benefit the website owner rather than the web visitor.

iPhone success: browsers, then apps

Last month, I visited the Quello Center for Telecommunication Management & Law at Michigan State University. I was invited to speak by center co-director Steven Wildman, who I met last summer while presenting at a USC-sponsored telecommunications conference.

We debated what I should present. In the end, I chose to present iPhone paper I’ve been working on with Mike Mace, because it’s almost done and the visit would act as a forcing function.

It was a great choice: we had 35 people in the room — a few faculty, but mostly students. I was told was the most ever for a Friday lunchtime talk (but perhaps because some students were behind writing up seminar reports.)

I’ve posted my slides at SlideShare.net — my first posting there ever. (I joined the site after I saw speakers use it at the O’Reilly Web 2.0 conference in March.)

Since readers can see the slides, let me just summarize the argument in short form. Most people think of the iPhone as a success because of the app store. However, the app store was part of iPhone 2.0, and the success of iPhone 1.0 was based on a simple core idea: deliver the “real Internet.”

There are plenty of anecdotes to show that the iPhone succeeded in changing how people think about mobile browsing. Clearly iPhone users browse more than owners of other smartphones (at least in North America), as Google discovered in December 2007, and as AT&T is finding as it seeks to keep “all you can eat” from destroying its 3G network capacity. We are trying to come up with more systematic data.

I gave the talk the day after Apple reported that it had achieved 1 billion downloads at the app store. For my talk, I tried to briefly classify the most popular applications, but I was tentative because it not clear whether Apple’s “top paid apps” and “top free apps” were worldwide or US. (Tech Crunch has Mobclix data that is a little more useful here).

Clearly the top 20 paid apps are all games or other forms of entertainment. The iPhone/iPod Touch is a hot gaming platform with has many satisfied developers. The iPhone scores points both for an easy-to-use SDK and also for its convenient distribution channel. This is mostly the “kill a few minutes” casual gaming audience — such using mom’s iPhone as a video pacifier. But the units are rapidly gaining on the Sony PSP if not the Nintendo DS.

Some are concentrating on the direct revenues to Apple, i.e. from paid apps. A lot of estimating the number of paid downloads depends on the assumptions of the ratio of paid to free downloads, as the Apple 2.0 blog at Fortune noted last week.

(I thought I saw an article around April 23 that noted actual unit sales for some of the top 20 apps, but I have been unable to find the article. Does anyone have such an article.)

However, what I found interesting was the free apps. Sure, there are some freemium offerings in game and entertainment. But there were also iPhone versions of some of the most popular wired Internet apps — Facebook, MySpace, Google Earth, the Weather Channel.

If the iPhone is heavily used for the same thing as the wired Internet, that means it will make progress on substituting for the wired Internet. I’m not ignoring all those motion-sensitive games (or location based services) designed just for the iPhone — only concentrating on evidence where the iPhone is compelling enough to get people to drop (or ignore) their PC.

But making it up on volume

Martin Peers of the WSJ’s “Heard on the Street” column reports today that data suggests that Cingular AT&T is losing money on iPhone customers:

Users of iPhone download games, video and other Web data at two to four times the rate of other smartphone users, according to comScore. Yet AT&T charges iPhone subscribers the same fee of $30 a month for data that it levies on other smartphone customers. And aside from restricting certain activities, like file sharing, AT&T doesn't limit how much data can be downloaded.

Peers estimates that iPhone 3G users (from July 11 to March 28) are 7.5% of all AT&T subscribers.

While everyone knows that iPhone users love to surf the web, the bad news is that (based on data compiled by Lucent) web browsing (surprise!) takes 16x the bandwidth of email. Web browsing is 32% of the usage but 69% of the bandwidth, while for email it’s 30% and 4% of the bandwidth. (Web browsing is 1.9x data intensive per minute as P2P). Or, as they say, AT&T is losing money on every unit, but making it up on volume.

While the supply of iPhone applications is a classic software positive network effect, use of the network is a negative externality. As my friend Rudi Bekkers wrote in his book on 3G networks:

Negative network externalities, for instance, when a telephone or computer network becomes congested or overloaded and the value of that network for an individual users decreases.

Peers argues that for AT&T and Verizon Wireless, the only solution is to abandon “all you can eat” data plans for cellphones, the way they have for laptops. The only problem is that there are cracks in the oligopoly:

With competition, the temptation to discount will be hard to avoid.

That competition will be from Sprint (trying to stem its sliding market share) and T-Mobile (still trying to gain share).

American consumers are used to “all you can eat.” They long enjoyed it for wireline voice communications, and forced it upon AOL for dialup ISPs. The wireless voice business is moving in this direction, with $50 unlimited service plans niche carriers like Metro PCS and Leap, as well as Nextel’s seven-year-old prepaid division, Boost Mobile.

All-you-can-eat (possibly with some sort of reasonable cap) is the only way that American consumers will adopt the mobile Internet. The iPhone users have shown there’s a pent up demand for mobile web browsing, but if it means the risk of $100 data bills, they won’t do it: instead, they’ll wait until they get back their wireline Internet.

So if the Big Two aggressively price data services, they may get too many users (shades of AOL’s excess demand for unlimited dialup services). If they charge too much, they’ll lose customers to smaller carriers, or to WiFi hotspots, or people will stay with their wired Internet.

One possibility (as suggested by GigaOM) is congestion pricing: give away megabytes of download bandwidth only when it’s unused, and charge a premium when everyone wants it. In the extreme, it would be like the cellphone (voice) pricing strategy of the 1990s: free night and weekend minutes, but expensive minutes on weekdays and at rush hour.

In the short term, the numbers don’t work for 3G unlimited data plans. In the long run, plans to build 4G networks assume high levels of usage, and proponents claim that LTE networks are 2x-4x more efficient than their WCMDA counterparts. I’m not sure that even that is cheap enough bandwidth to support all-you-can-eat.

I think it’s long past time for American carriers (as do European like Orange and T-Mobile) to embrace WiFi as a complementary service to their mobile networks. Much of the Internet browsing occurs in coffee shops and similar locations, so now that people are starting to embrace the mobile Internet, there’s no reason why phones can’t be programmed to prefer the high-capacity (and easily expanded) hotspot over the scarce 3G bandwidth.

Here, AT&T and T-Mobile are well positioned with their existing hotspot networks, with AT&T growing its network last year when it purchased Wayport. Meanwhile, Sprint has been selling hotspots, and presumably it hopes that its WiMax network will obviate need for 802.11 hotspots. To catch up, Verizon would have to buy Boingo; rumor has it that it will soon announce a partnering agreement.

Google knows everything

One of the major fears about Google’s march towards total world domination is that it increasingly knows everything. As SJSU professor (and Google chronicler) Randy Stross wrote on page 10 of his recent book,

In 2006, an unknown person at Google prepared a PowerPoint presentation that included an offhand remark in the slide’s comments that Google at that point had collected only 5 percent of the information it seeks. Another slide’s comments emphatically added: “We plan to … get all the world’s information, not just some.”

(Although the slides were quickly removed, Stross’s footnotes helpfully note where the slides were archived by blogger Paul Kedrosky.)

Or, as Stross put it a month ago, “ this is a company that will know more about us than any entity — public or private — in the world.”

Normally we think about this information gathering in a personal sense, i.e., that of consumer privacy. So when I edit this (or another blog), I have to log on with my Gmail ID, and Google keeps me logged in — matching my searches to my personal ID — long after I’ve finished editing. (In fact, after a while I’m logged in for search but must re-login for blogging).

There’s another way that Google’s all-knowing is scary: its unlimited ability to gather market research in a way that no firm ever has — research where the data is all free, and also is entirely proprietary to Google. Data is not only addictive for business researchers, but academic ones, which is why economist Hal Varian left Berkeley for Google to become their chief economist and data miner.

On Friday, my friend David Wood of Symbian blogged about a presentation by Google manager Sumit Agarwal last week at a mobile phone conference in San Diego. A Google search suggests that Wood has the only coverage of Agarwal’s talk on the web, by either a journalist or a blogger.

The upshot? From its search and maps and other applications, Google knows what mobile users want — even better than the carriers. This is consistent with Google’s empirical, data-driven approach recounted in Stross’s book, the Varian interview, and many public speeches by Google managers and researchers.

For mobile phones, consumer wants and desires are not yet clear — handsets and mobile web browsers are just becoming good enough to provide (unlike in the WAP days) a good quality web experience. Thus, information about where mobile phone products and services are going is very scarce and valuable.

Google has all the data, and has concluded (according Agarwal via Wood) that mobile users seem to want pretty much the same information (at least in search) as static users.

However, through reverse IP lookup, Google knows how the wants of consumers differ by carriers, allowing it to observe the relative effects of the competing carriers strategies in a way that the carriers never could. One example was that when one operator instituted free data weekends, Google saw a huge spike in mobile search engine usage (that gradually increased weekday usage).

Wood summarizes other aspects of the information that Google shared on mobile phone users, and its implications for the industry. This is obviously only the tip of the iceberg, since Google has information that only it has — and will largely keep private for competitive reasons. Perhaps Google is willing to institute a commercial market research division to sell some of this information to the rest of us peons.

For someone who worries about Total World Domination, it seems like there are two bright spots. First, Yahoo got to mobile before Google and it still should have enough information to draw similar conclusions. Because that information is valuable, it could develop the same information — even if it only has 30% as many mobile users. What it would need is a smart, research-driven partner (not worrying about layoffs) of which only one company comes to mind.

The second encouraging tidbit was that Agarwal did his demo on an iPhone and a BlackBerry in addition to an HTC G1, even though he’s the product manager for Google’s mobile division. Even though the gPhone is shipping, Google remains client platform agnostic. (Wood obviously would have liked to have seen a Nokia N95 running Symbian OS 9.1, the preferred smartphone for much of Europe.

If Google will continue to emphasize the use of its services by all web-capable clients, that means that it is less interested in “tying” across its value chain than previous IT monopolists like Microsoft and IBM.

Yet another mobile browser

On the Mobile Monday mailing list and various website, Skyfire this week advertised to grow their marketing staff.

Skyfire is the Mountain View startup that’s garnered $18m in VC to put yet another browser on cell phones — competing with WebKit (on iPhone, S60 and Windows Mobile) and of course the venerable Opera. Until the job ad, I’d never heard of the mobile browser software company, which is supporting WIndows Mobile and someday Symbian S60.

Skyfire is based on Mozilla’s Gecko rendering engine. Its claim to fame is that it (unlike say the iPhone) delivers the full desktop browser experience — complete with Flash, QuickTime, Silverlight, AJAX and other goodies not available on the iPhone and other mobile phones — either because they conflict with platform strategies or because of a lack of horsepower in the mobile device. Providing these also gives full access to YouTube, Hulu and other media sites.

Skyfire not only has lots of features, but is also very fast. Of course, there’s a trick — they render the pages on Skyfire’s server and then push bits down to the device. The server-side tricks mean that you need to subscribe to a (presumably paid) service to get the benefits, providing a revenue stream in an era of commoditizing web browsers. Its pending patent could even protect this unique business model.

The problem is, server-side rendering seems to address a temporary (and closing) window of opportunity. As Clay Christensen observed, technology improves faster than customer needs, so low-end solutions display high-end soltuions.

If the Pentium II/Pentium 4 transition is any indication, today’s 300 MHz smartphone will sport a 2 GHz processor in 3-4 years. By then, some will also be multicore, well suited for rendering web content on one processor and doing the remaining computations on another.

Silicon Valley pundit discovers mobile Internet

OK, so this is old hat to my European friends, but …

At last, the year of mobile computing is near
By Chris O'Brien
Mercury News

I can't tell you how many mobile trade shows I attended where the refrain was exactly the same: Next year is going to be the year when the mobile Internet becomes huge! Of course, that next year never seemed to come.

Until now. The mobile Web is here, and it's huge.

More important than its size, though, is the impact it is having and will have on our lives. While Web 2.0 companies get a lot of buzz in the valley's echo chamber, and green technology has been getting some much-deserved hype, I think the greatest area of innovation occurring right now in Silicon Valley involves mobile computing.

We have moved into an era of constant connectivity. And with that comes the expectation that all of our information needs and wants will be instantly gratified.

Because of where we live, we sometimes fail to notice when such trends finally grab hold of the mainstream. This region is thick with road warriors and early-adopter types. And for more than a decade, this crowd has been shelling out big bucks for first-generation devices and services that allowed them to remain hyper-connected at every moment.

But mobile computing has finally outgrown the niche crowd and crossed over into the lives of mainstream users. A survey released earlier this year by the Pew Internet and American Life Project revealed that 62 percent of Americans access mobile data either through a phone or laptop.

I don’t quite get the recent news hook for a March 5 release by Pew. I’d ask the Merc columnist personally — O’Brien and I have been trying to hold a get-acquainted meeting for several weeks — but our meeting today got postpone a second time.

Looking at the original Pew numbers, the 62% figure is a bit misleading, because it includes using a cellphone for just about anything (58% use it for texting or taking a picture), as well anyone who’s used a laptop (or PDA or cellphone) to access the Internet away from home or work (an airport, the library, Starbuck’s). So this is not 62% of America or even 62% of all celphone subscribers paying through the nose for a dataplan.

To illustrate his column, O’Brien talks about his dependence on his Blackberry, and in particular on the navigation services of Sunnyvale-based TeleNav. This highlights another important point: there are so many entries into mobile navigation — standalone, cellphone, car-based — at some point with growth slows down, we know there will be a brutal shakeout and consolidation phase with only a few left standing (and maybe a few others retreating to niches).

Wireless data revenues are still growing rapidly in the US, but the carriers are not reporting wireless data subscribers. Given that wireless is 19% of total — and wireless plans are as much or more than voice plans — that implies a penetration rate of around 15-20% so far. This means we’re entering the early majority, high growth phase. If I had to guess, I’d say we’re 2-4 years away from 50% of cellphone owners using the mobile Web, but falling consumer confidence may push that off by an additional 1-3 years.

Nokia don't get no respect

On Tuesday my friend David Wood of Symbian published a passionate rebuttal to a Forbes article about how the iPhone has won the hearts and minds of Silicon Valley, while Nokia has failed.

The article by Brian Caulfield aptly portrays Nokia as the Rodney Dangerfield of the cell phone industry:

Welcome to the kangaroo court, Silicon Valley style. Nokia may sell a phone somewhere on this planet every 18 seconds, but among the digerati in the Valley, that doesn't get the Finnish handset giant much respect. Here, the natives are all toting iPhones and BlackBerrys and raving about new horizons on the mobile Web.
…
Tech blog impresario Michael Arrington [said] "I believe that Nokia and Symbian [the software that powers its smart phones] are irrelevant companies at this point," he pronounced from the stage.

Quite a verdict, considering that Nokia sells close to half of all smart phones worldwide (and 40% of all phones) and has 9,200 applications written for its phones. In early July it plunked down $410 million to buy the portion of Symbian it didn't already own.

Unlike David, I think the article is pretty fair — at least from an American standpoint, which is all it claims to be. The article notes Nokia’s global dominance and calls the verdict a “kangaroo court” (i.e. completely unfair).

However, the point of the article is Nokia’s failure to have much of an impact in North America, either with the tech industry or with consumers. Lord knows that it’s trying, by moving its CTO to Palo Alto. It’s also clear that Nokia as the most aggressive US university outreach program of any mobile phone company, with multi-man year efforts at Stanford, UCLA and MIT. But its handset share and mindshare are almost off the radar.

So it’s indisputable that Nokia’s (and with it Symbian) so far has lost in the US market, including the high-end smartphone market that they dominate in the global market. The iPhone and Blackberry are winners and Nokia is an also-ran. The question that the Europeans (and Japanese and Koreans) are asking is: so what?

The so what is that before the iPhone, efforts to kickstart the mobile Internet have largely failed, at least in the developed countries. Operators and manufacturers come up with all sorts of technologies and businesses but they’re not getting adopted.

The iPhone is getting used and is getting the mobile Internet adopted. It’s also winning the hearts and minds of third party software and services — both for the cool factor, but also because it has users that will try these technologies. I know both geeks and housewives that swear by it, just as the Mac is gaining share on Windows in the desktop.

Ease of use is a big deal, and Forbes gets it even if Nokia doesn’t. I will probably never own an iPhone until they end the Cingular exclusive. However, I do own a Nokia E65, which is a pretty good phone, a mediocre PDA and a useless web device. Overall, the S60 user interface lacks the consistency and regularity of the iPhone or even the early Palm PDAs.

The iPhone-like design is certainly the way forward in North America. It’s possible (but by no means certain) that it’s also the way forward in Europe and Asia.

In a standards war, we assume that winning third party developers feeds the positive feedback loop driven by network effects. However, winning third party developers is no guarantee of success. The Mac had cool apps in the 1980s and 1990s but later got crushed by Windows 95. In Symbian, the UIQ APIs had far more apps but S60 sells more than 80% of the Symbian phones (and thus UIQ is being phased out in favor of S60). Palm did a great job of winning ISVs which did nothing to solve its long-term slide in new products (and thus market share).

Most marketing problems have a basis in fact. Successful companies usually assume that marketing problems are because the market isn’t getting their message (NB: Microsoft, Intel) — but often it’s because they’re not listening to the market. Nokia (and its soon-to-be subsidiary Symbian) can continue to shoot at the messenger, or they can respond to the iPhone challenge by making their products easier to use and more compelling.

My hunch is that Apple has at least another year or two before Nokia gets its software act together. (And if Nokia doesn’t, then Microsoft, RIM, LG or Samsung will). So, as when it faced Windows 95, Apple better have something up its sleeve to further advance innovations when competitors catch up to its first mobile phone act.

Starbucks helps commoditize mobile Internet

One of the topics that I have to cover with my MBA tech strategy students is about related diversification, vertical integration and cross-subsidization. Thirty years ago, SV startups made money selling a product, but clearly over the past decade synergies and economies of scope have brought a major change to all aspects of SV life: exit strategies, monetization opportunities, and (alas) the prevalence of competitors.

I made my post this morning about the challenges of getting 3G mobile Internet in competition with wired Internet, and then ran off to a few meetings with two friends who are running mobile startups. Since the majority of the party are coffee addicts, when the tiny sushi-ya wanted their table back we ended up at the Starbucks down the road. (Since I don’t drink coffee, I only end up at Starbucks to do a meeting.)

One thing led to another, and my compatriots explained to me what the Starbucks free Wi-Fi (announced in February) really means. Sure enough, I went to the website, which explains:

Complimentary Wi-Fi for Starbucks customers When you register your Starbucks Card and use it at least once a month, you'll receive two consecutive hours a day of complimentary Wi-Fi, courtesy of AT&T.

This is the ideal division of labor for our household. My wife drinks one or two $3 cups of coffee a month that she was going to drink anyway, and I get free Wi-Fi without having to go to a library (as I am right now).

The network connectivity is provided by SBC (which then provides free access to SBC DSL customers). SBC replaced T-Mobile, which this week sued the-company-that-pretends-to-be-AT&T for advertising the affinity card deal (begun June 3) before T-Mobile is completely gone from Starbucks (but they settled the suit yesterday).

So not only do the 3G carriers have to compete with people’s home, work and school Internet, they also have to compete with free Wi-Fi at 6,800 US Starbucks locations — subsidized by sales of double-mocha nonfat lattes, coffee mugs, and music by Dylan Filsand has-been boomer stars (to pick two examples from today’s coffee shop branch). And, in at least one town, by companies subsidizing citywide Wi-Fi for its own purposes.

Add to that, the increasing number of midsize airports are providing free Wi-Fi. So far this year, I’ve seen it in San Diego, Las Vegas, Denver and now San Jose.

With competitors (or substitutes) like these, no wonder municipal Wi-Fi and WiMax never stood a chance. Among the wreckage is MetroFi, once the Bay Area’s great Wi-Fi hope that is a week a way from going dark.

Will mobile broadband dominate?

The Times of London yesterday published an article entitled “Mobile to displace fixed-line internet 'within two years'”. To quote:

The mobile phone network may replace the copper wire as the principal method by which people connect to the internet in as little as two years, broadband experts predict.

Increased sales of laptops - which can be connected to the internet via the owner's mobile phone connection - the widespread roll out of high-speed mobile networks and the falling price of connecting to such networks have all contributed to the uptake of mobile broadband, they said.

One person in ten now regularly accesses the internet on a computer via a mobile phone connection, despite such services only having been on sale for less than a year, according to research released this week by You Gov. Of those, up to a third now connect their computers to the internet solely through the mobile network.

"This trend is as significant as the shift from home to mobile phones that took place in the mid Nineties," a spokesman for Top 10 Broadband, a price comparison site, said. "We predict that by 2010, mobile broadband will overtake home broadband as the default way to access the internet in the UK." A similar claim was made by Broadband Expert, another comparison site.

(It is not clear why they published an article this month based on a February press release by Top 10 Broadband).

It is interesting what the Times did not say. It did not claim that people would be giving up their 15" laptop screens for a 2.5", but instead that 3G dongles would supplant DSL as the primary consumer Internet access. (I also have two much larger screens at home and work, but obviously I could use them with a dongle connected to the same laptop). For my own use, both screen and keyboard size are key elements of the Internet value proposition (as when I research and post articles in this blog).

I don’t have any firsthand knowledge of British broadband (or the British broadband companies). On the one hand, I admit that in the past I have consistently underestimated mobile phone uptake in Europe. In 1996, I did interviews at Nokia and Ericsson and talked with my Finnish co-researchers and didn’t quite believe what they were telling me — including that penetration would go above 100% as some professionals carried two phones.

While I am willing to believe this will happen someday, the two year time horizon seems a little optimistic for several reasons.

One is shared broadband that is relevant to the majority of households: it makes sense for mobile singles, but does it apply to families? Three of us all use the same broadband subscription here at home, and of course we have friends who are families of four or five that also share their DSL or cable modem with the kiddies. Will people buy 3? 4? dongles and 3-4 subscriptions?

The second is the assumption that the wireless vs. wired technical capabilities will soon be at parity. One part of this is that mobile carriers can deliver ITU-claimed speeds over the air to a large number of users at the same time. shared bandwidth on a wireless network will deliver the ITU-claimed speeds. The other is that the wired rivals will sit idly by, and be unable to deploy 20, 50 or 100 mbps fiber to the home (as is happening in Japan, Korea and the US).

The third is that mobility is valued by people enough to switch from their fixed Internet line to their mobile line. This seems applicable to people who spend a lot of time in their coffee shop — or can get a 3G signal to surf the web during a long above-ground train commute. But does it apply to a large number of people who spend most of their day in two places, home and at work?

The argument does appear consistent with the marketing pitch that Verizon Wireless is making in its latest ads: Wi-Fi is a prison that holds you in a very small cell, but their (EV-DO) 3G dongle will allow you to use the Internet anywhere. I don’t know how successful their pitch has been.

But this brings me to my main point. Internet access is a commodity — I don’t care what route my bits take, as long as they get to my computer (or other device) quickly. Commodity services are, well, commoditized: people shop based on price. Mobile phone penetration in the US and Japan went nowhere until there were more carriers, more competition and much lower prices.

So unlimited data plans at $50/month per person are not going to fly at our (admittedly lower middle class) household. A family plan of data service for all of us at $50/month looks attractive. Then we’d just need to find a carrier that has coverage for us here up against the mountain. (The mountain shown at the top of my home page).

American consumers, leaders in mobile Internet!

Thursday the Merc had yet another article about Nokia trying to establish a toehold in the US market. Perhaps it has to do with their research center and CTO being down the road in Palo Alto.

This particular article was about trying to get Europeans, Asians and Americans to use more data services. The Finns were surprised to learn that Americans were the highest end users of the mobile Internet:

When Nokia compared keystroke usage by European users to a U.S. group, it got a surprise: Some Americans were using non-calling services and applications at a much heavier rate than the Europeans. That flew in the face of long-held assumptions about Europeans (and Asians) being ahead of Americans in using mobile phones for more than calling.

In the European research, Nokia put users in three categories, based on how many megabytes of data they were sending or receiving per month for activities such as e-mail, picture mail, Web browsing or downloading customized features (ringtones, for example). Usage was divided as 0-to-2 megabytes per month, 2-to-4 and more than 4.

In the United States, Nokia planned on using the same categories. But it had to redefine the one measuring the heaviest data traffic. That's because it found the top-end users typically going over 8 megabytes a month. There also were indications, based on applications that Americans downloaded in addition to the ones pre-installed on the phone, of a greater willingness to experiment and customize than Europeans showed.

I agree with the analyst quoted: this is not all that surprising.

The reason the mobile Internet will have a problem in the US is that we’re well conditioned over the past decade to do lots and lots and LOTS of stuff with our PCs on the Internet, and it will be hard for a little 2.5" screen and T-9 keyboard to replicate that. OTOH, once we have a good mobile Internet device — and a reasonably priced data plan — we will do all that stuff with our cellphone at Starbucks or in a library and not just on our laptop.

Seems to me that's the secret of the sudden success of the iPhone — a mobile device from a PC company that’s most closely replicated the desktop/laptop Internet experience. But the article on Nokia was too polite to make this link.

When "unlimited" isn't

Among the most famous legal spectacles of the 1990s were the two most powerful Bills in the world, testifying under oath about things like what the word "is" is.

Today The Register posts a story (lifted from the Globe and Mail) about a Calgary twentysomething who found that his $10/month "unlimited" plan actually cost $85,000. Upon appeal, Bell Mobility made a "goodwill gesture" and reduced it to $3,243. (Heck, that's only $3,176 in real dollars).

Set aside for a minute the legalistic response of the telco, and the various plans and price discrimination strategies that Bell Mobility is likely using to maximize ARPU for data plans. Saying something is "unlimited" when it isn't — with or without a footnote — is misleading on its face, if not false advertising. I suspect BM will be getting a call from Industry Canada or the Attorney General's office.

This points out the problem with using mobile data as a full substitute for wireline connections: the bandwidth is too expensive, even though Bell Mobility is using the most efficient cellular data approach available today.

Back in the 1990s, the "Negroponte shift" was proposed by the MIT Media Lab co-founder (and little brother of the famous diplomat), in which TV would go over cable and voice would go over the airwaves. But what about Internet bandwidth — delivered by cable TV or phone companies — which is several orders of magnitude required to deliver voice? Yes, we'd like connectivity everywhere, but clearly the consumer trend is towards fiber optic speeds (multi-gigabit). While mobile voice capacity was solved a decade ago, it's hard to see how airwaves can provide gigabit bandwidth to millions of consumers in an urban area any time in the next twenty years.

Who's ready for the mobile web?

In January, Mike Mace and I both had an intuitive feel that the iPhone was going to change the mobile phone industry. Four months after the first iPhone shipped, I think our intuition has been born out to a greater or lesser degree.

Aided by very satisfied customers and the consequential word of mouth, Apple sold nearly 1.4 million iPhones in the first 94 days. This is AT&T's top selling phone (at 13%) and 4th overall in the US. Of course, Apple is not #4 overall since most vendors sell dozens of models.

In particular, one thing came through loud and clear last week at the CTIA Wireless IT conference (the premier mobile web conference in the US). Admirers and rivals admitted that Apple finally did a mobile browser right, and that accounts for much of its success (an advantage emphasized by their current advertising).

Web browsing solves the fragmentation of the US market, and provides a least common denominator between desktop and cellphone. If all app developers, content providers, cellular operators and mobile phone makers all agreed to use the web -- based on W3C and IETF open standards -- then the mobile Internet couldn't be any more open than that. This openness and ubiquity would eanble all sort of positive network effects to spur adoption, and leverage off the installed base of the wired Internet. Another factor for openness is that Apple's iPhone browser is based on WebKit, the open source project Apple created (from KHTML), which in turn reduces the barriers to imitation for its web browser. (In case web apps aren't enough, this month Apple adddressed the criticism about a "closed" iPhone by announcing it will release formal software development kit for native apps in February.)

If Apple establishes the browser as the key enabler of the mobiler Internet, how well situated are the major handset vendor? Based on Q3 2007 sales estimates, here's the list and my prediction:

• Nokia (38.6%). It ships more smartphones than anyone, owns S60 and the largest share of Symbian Ltd. It has been taking more risks with software than any other cell phone company, including its Maemo web tablet platform. Even if we worried about Nokia falling behind, they are already ready to match Apple by porting WebKit to S60.
• Samsung (14.7%). Has a wide range of software strategies, including Symbian S60, Windows Mobile and its own OS. Historically the Koreans don't grok software, but S60 will have a good browser and Windows Mobile could too (assuming Mobile IE is a fully compatible browser) -- so it may depend on the mix of software platforms they are selling.
• Motorola (12.9%). Like Samsung, Motorola has a mix of platforms: Windows Mobile, Symbian UIQ and its own solution (now shifting towards mobile Linux). Although in principle Linux should have a great browser, Motorola once said that the browser choice was up to the carrier.
• Sony Ericsson (9.0%). SE's smartphone strategy is tied to UIQ -- a Symbian OS layer that it used to own but is now going to share with Motorola. Since UIQ 3.0, UIQ has depended on the Opera browser, which has yet to inspire the enthusiasm of WebKit.

Any others? I think HTC will do well, because it thus far has made its impact with Windows Mobile, but now also has the prospect of the Google phone. On the other hand, while RIM has always understood software and has done well with e-mail, it is not known for its browsers.

Of course, this is a very US-centric view. For Europe, I expect browsers to be important too, but the smartphone market is much less fragmented than the US and much of the market can be reached by writing a native S60 application. Meanwhile, in Japan, the mobile Internet (as Jeff Funk as noted) is whatever DoCoMo says it is.

Will mobility revolutionize Web 2.0?

On Monday, I moderated a panel at the Smartphone Summit, held in San Francisco as part of this week's Wireless IT & Entertainment conference. The main conference is organized by the CTIA (the main US cell phone trade association), while Monday's "Summit" was privately organized and heavily sponsored by leading mobile phone companies (notably Symbian).

The session I moderated was called "Smartphone Interactivity (Social Networking & Personal Communications)," one of two parallel sessions that closed out the summit. The claim of the program was that:

In today's world, MySpace, YouTube, Facebook, and many other social networking experiences have made their way into everyday life around the globe. The next natural extension of the social interactive experience is to the wireless smartphone device. With the capability to run audio and video along with GPS locating, there is no limit to the type of social interactive applications that could be deployed over smart mobile devices. Join the pioneers taking social networking wireless for an in-depth look at the implications of this technology, including how it may be monetized for ROI of those enabling these experiences, as well as security of the experience.

WIth only a few minutes to present, I focused on two goals. One was providing a preview of the study by my graduate students (Eduardo Sanchez and German Benitez) who are doing their theses on social media business models for the mobile phone industry. The other was to provide an overview of what's going on in the industry, based on what I know from working with Eduardo and German, reading the trade journals/websites and going to industry events (particularly last month's Mobile Monday event).

In my slides, I joked that the buzzwords "Social networking" or "social media" or "Web 2.0" seem to be used interchangeably, so it was a relief to hear that a morning panel had been unable to agree on a definition of "Web 2.0." (Tim O'Reilly claims to have invented the term "Web 2.0," but people seem to use his buzzword more than his definition.

I saw people taking pictures of my slides with a cameraphone (you can download them free from my website). I didn't think the slides were particularly insightful because I was rushed between two conferences and a backlog of grading (which I've been working to clear today).

I had a chance to attend a few earlier sessions, and what I heard confirmed most of what I'd prepared. "Social networking" (or "social media" or "Web 2.0") business models seem to be driven by two major trends. One is user-generated content (like this blog), and the other is taking advantage of the value created by direct network effects, i.e. the N x (N-1) possible linkages of a population of N users. (This is called Metcalfe's Law, but researchers last year showed that it grossly overstates the value of a network due to the long-known distribution of value via Zipf's law. In fact, this power law describes many of the interactions on the Internet.)

Obviously the strongest possible business models are those that combine both. While both Facebook and MySpace are about allowing friends to stay in touch, MySpace also plays a major role in spreading word-of-mouth for members' favorite music. (Jason Ling of MySpace was up from the fires in Los Angeles to speak on the panel, but his prepared slides were left behind when Delta lost his luggage.) However, in visiting a booth at the trade show Tuesday, someone showing Nokia's download site there is a difference between organizing around social networks like Facebook (I want to see people who I know) and around content as with Flickr or YouTube (I want to see a video of the latest politician's gaffe).

One of the unresolved questions regarding mobile social media is whether there will be mobile-only and PC-only networks, or whether the successful sites will support both. (I almost said "platform agnostic," but with 500 different phones out there, developers of mobile applications have to do a lot of work to be platform agnostic just within the mobile space.) Of course, it takes considerable work to turn a PC website into a good cellphone website, which is why everyone was excited to see how well Google Maps works on the iPhone.

I think such dual PC/mobile content drives a related trend that I picked up on at the Summit, which is the rising use of web-based applications. One reason is that developers need to span not only the PC and phones, but also the various platforms within each. The other reason for web-based apps is that it's finally practical: the iPhone has one of the first decent phone-based browsers, but Nokia (and others) are going to make sure that it's not the last.

This led to the only heated argument on our panel, in which Faraz Hoodbhoy (CEO of PixSense) said I was wrong. Perhaps I didn't make myself clear, or he wasn't listening clearly, as I never said web apps are the be-all or end-all. My point about mobile web apps is that they're a least common denominator which are getting more practical and will be good enough for many of the Google-, Yahoo- and MySpace-type applications that are already designed for them.

There are plenty of apps that require offline access, or low latency, or persistence, for which a native app will be a much better solution. There's many things you can do on the native Google Earth application that you can't do on Google Maps. I don't know what the relative mix of the two approaches will be -- and even web apps have to be tuned for the different form factors -- but I think mobile web apps are here to stay.