Making Money from Content

Verizon just made an announcement that they’re going to be offering free Skype-to-Skype phone calling on its 3G phones starting March, 2010. Even my lame Curve 8330 will be able to make those calls. Similarly, AT&T/iPhone has backed down in its argument against Google Voice and they’ve even opened up the platform for the SlingPlayer to stream video over the device.

Are we living in a topsy turvy world? Carriers are willingly allowing applications go after their core revenue model (phone minutes) or eat up their bandwidth (streaming video). For years, in the age of the “anybody can do anything” Internet, carriers have done an excellent job controlling their network: what goes on it, how people use it, and how they charge for it. With the proliferation of smart phones with direct Internet access that can use VoIP services, access to calling plans that undermines the carriers’ pricing (even free) is just an application download away.

In an app-enabled mobile world how long can carriers hold onto their old pricing mechanism for consumers? They can only block Google Voice and Skype for so long. You remember the old adage, the customer is always right? Well, in this new mobile world, the customer is calling the shots. And if you want to keep them, you better revise your revenue model.
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News just came out today from the Mobile World Congress in Barcelona that 24 mobile carriers from around the world are going to unite together to produce an international application store called the “Wholesale Applications Community.” It’s an obvious reaction to Apple’s iTunes application store which has a stringent review policy before any application will appear in its online store. For example, Apple has strict rules about pornography and profanity in its applications, but we’ve seen them relax those rules in certain cases.

Can this idea really work? Can 24 carriers along with three device manufacturers operate more smoothly than just a single device manufacturer?

My answer: Good luck.

I’m sure when the announcement was made there were cheers all around. Execs were slapping each other high five and saying to each other, “Watch out Steve Jobs.” And then as soon as everything calmed down, they all said to themselves, “Oh shit.”

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I remember attending a computer trade show years ago in Vegas (I believe it was Comdex. Gives you an idea how long ago) and seeing an endless array of portable video players. At the time, the Apple iPod had come out, but it had yet to release a video version of its digital player. I went to talk to a few of the manufacturers of the media players about their devices. After the obvious discussion of how big the hard drive was, the resolution, and the price, I asked what I think is the most important question with media players, “How do you get the movies onto the device?” Everyone I spoke to just said, “Oh, we have software for that.” Did they have a demo of the software? No.

It’s no surprise that none of those media players are around today.

Apple at that time had already proven the successful marriage of device (iPod) and application (iTunes). It was truly simplicity. I remember when I installed my iPod for the first time, I was blown away at the simplicity. It just found all my MP3s and sucked it into the device without any difficulty. It was the best consumer product experience I had ever had. Many competing products claimed, “Oh, you can just bring all your music into our device,” but it was far from simple.

Hey tablet PC makers, don’t let software be an afterthought

Lenovo Ideapad U1 Hybrid

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