The Gadget that Ate EverythingMobile phones as the convergence platform

Mark Donovan

UW CIS Talk 4.14.05

Plan of this talk

Please interrupt with questions, I talk quickly and might be a bit random—apologies in advance.

Introduction

Mobile phones as the convergence device

Industry context

Pssst! It’s all about money

Case study: The curious rise of camera phones

“Consumers” are pesky creatures

Q & A

UW CIS Talk 4.14.05

Introduction

Mark Donovan

PhD Political Science, UW’98

Former Director, UWired

Director Mobile Strategy/Services, RealNetworks

VP Products + Senior Analyst, M:Metrics

M:Metrics

Pioneer in mobile measurement

World’s largest, most granular dataset on mobile subscriber consumption of content and applications

UW CIS Talk 4.14.05

Questions & Themes

Who is in charge of (or throttles) innovation?

Carriers? Technology providers? Content providers? Individuals?

What does freedom and privacy mean anymore?

Intrusion v. exposure

Surveillance (Big & Little Brother)

Openness & Access?

Commercial interests / public good

Walled Gardens v. open commons

UW CIS Talk 4.14.05

Two Ways to Think About the Mobile Phone

Mobile phones are best understood as ubiquitous personal data terminals. These devices disrupt sociability in unexpected ways, enable new means of communication, expression and coordination, and are increasingly at the center of a converged digital world.

Mobile phones are a product of a corporate ecosystem designed to sell consumers crap. These gadgets disrupt entrenched business models, enable unprecedented personal surveillance, are filled with features no one asked for, and are increasingly at the center of a converged digital world.

UW CIS Talk 4.14.05

Mobile Phones Are Ubiquitous

25% of world’s population has a mobile phone today

2B+ mobile subscribers expected by ’06 (1/3 of humanity)

Primary means for connecting to Internet in many countries

60% of US population has a mobile

176M mobile subscribers in the US today

7% of US mobile subs have disconnected their landline

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There’s More to Mobile Than Just Talk

40%

34%

14% 13% 13%

58%

0%

10%

20%

30%

40%

50%

60%

70%

% o

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58% of US mobile subscribers do something with their phone in apart from making voice calls.

M:Metrics, Inc: Quarter Ending January 31st 2005, n=35,381

UW CIS Talk 4.14.05

Understanding Convergence: Technology

NETWORKS

Broadband wireless data networks

Alphabet soup:

GSM: GPRS/EDGE/UMTS

CDMA: 1XRTT/EVDOWiFi

DEVICES

Better, faster, smaller microprocessors

Better batteries

Color screens + cheap camera optics

Converged mobile phones are

Messaging devices: text, media, IM, voice

Entertainment devices: games, TVs, music players

Fashion statements: ringtones, graphics, ringback tones

Content creation devices: cameras, video recorders

Web-connected information nodes

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Mobile Phones Available Today

sad

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Mobile Phones Today

Satellite TV receivers (Korea)

Wallets (N. Europe, Korea, Japan)

Marketing (worldwide)

Merchandising (QR codes in Asia)

Political activism (Philippines, UK, others)

Economic development (Africa)

UW CIS Talk 4.14.05

It’s Not Just Like the PC

Internet Mobile Web

Network Public Private

Terminal Platform Homogenous (Windows) Heterogeneous (300+ handsets)

Access Tied to location Ubiquitous & mobile

Regulation Minimal Substantial

Billing & Charging Overlay systems layered onto network (Credit cards, PayPal)

Built in billing & charging

Device/Access Network Coupling

Low Very High

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The Business Context of Convergence

Mobile operators (Sprint, Cingular) Commoditization of voice drives carriers to seek other revenue streams

Carriers don’t want to be a “dumb pipe,” they want to be cable companies and much more

Investments in next gen infrastructure demands a return

Device Manufacturers (Nokia, Motorola) Handset manufacturers seek to avoid hardware commoditization (see:

Microsoft)

Manufacturers need to maintain average price—they are locked in a Cold War-like détente with carriers

Publishers (Warner Music, Disney, Jamdat) New markets, more $$$

Tighter, more personal brand connection

UW CIS Talk 4.14.05

Key Features of the US Market Trends

Dual Technology Path

GSM v. CDMA (unlike Europe, Korea)

Consolidation

By EOY 3 carriers will control 70% of the market

Segmentation

“MVNOs”—Virgin Mobile, ESPN, SK/Earthlink, Ampd

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Curious Case of Camera Phones

Very Popular

Very Disruptive

Not what industry initially expected

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Evolution of Image Capture

Cameras/video cameras have become Smaller, more powerful, and connected

Time from image capture to publication has been reduced to near real-time

Film-basedCameras

1900

Camcorders

mid-1980s

DigitalCameras

mid-1990s

DigitalVideo

Cameras

Late-1990s

CameraPhones(Photos)

2002

CameraPhones

(Vid Clips)

2003

CameraPhones

(Live Video)

2005

?

UW CIS Talk 4.14.05

Camera Phone Explosion

2003 47M digital cameras sold*

45M camera phones sold*

2004 Camera phones outsell all other types of cameras

2005 28M+ camera phone owners in US**

2006 Est 40% of all phones will have cameras*

That’s around 600M camera phones*

* IMS Research , 2004** M:Metrics, April 2005

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What’s a Camera Phone For?

Industry: “For sending multimedia messages” (MMS)

People: “Uh, maybe not so much” Snapshots

Blogging

Citizen journalism

Crime fighting

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Camera phone usage skews young.

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

13-17 18-24 25-34 35-44 45-54 55-64 65+

Took Photo Sent to Another Phone

M:Metrics, Inc: Quarter Ending January 31st 2005, n=35,381

UW CIS Talk 4.14.05

80% of camera phone owners take photos,

but less than 50% send them over the mobile network.

M:Metrics, Inc: Quarter Ending January 31st 2005, n=35,381

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Took Picture Sent PictureAnywhere

Sent to Email orWeb

Sent to Phone

US

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UW CIS Talk 4.14.05

Camera Phones in the News

Student caught using camera phone to copy exam (AP, 5/12/04)

Locker room camera-phone bullying on rise in Scandinavia (DMEurope.com, 4/14/04)

Camera phones, internet aiding paedophiles – charity (Dmeurope.com 2/13/04)

Congress moves on camera-phone porn (Reuters, 5/12/04)

Snap-happy MLAs lead to camera-phone ban (CBC, May’04)

Candidate warns of high-tech vote buying (TNA Jan’05)

Appeal for bank raid phone photos (BBC, April’05)

UW CIS Talk 4.14.05

Questions & Themes

Who is in charge of (or throttles) innovation?

Carriers? Technology providers? Content providers?

What does freedom and privacy mean anymore?

Intrusion v. exposure

Surveillance (Big & Little Brother)

Openness & Access?

Commercial interests / public good

Walled Gardens v. open commons