Mobile Computing Systems vs. Service Endpoints
Although of course the lines get more and more blurry all the time, there are two main classes of devices in terms of mobile solutions. I was thinking about this the other day as I was moving around the slew of devices I have sitting (mostly unused) on my desk at home. There are some devices that are meant to be general mobile computing systems: the Palm devices like the Treo650, Nokia smartphones like my 6680, the GP2X, the Nokia 770. And then there are the devices that are meant to be endpoints for some service or controlled channel: the Apple iPod, BREW phones, the Sony PSP, and the NintendoDS.
I tend to call the devices that function as service endpoints “pipe extenders”, because they are generally meant to serve as a way for someone with an existing distribution channel to extend their channel beyond the sedentary devices they already control. The iPod is the way to make music purchase online compelling by allowing the online store to stretch beyond your desktop/laptop, the PSP and DS are ways for Sony and Nintendo to fill up your leisure time when you’re not in front of the tube. In general devices from this class tend to be rather strict about the formats they accept for data and media, they tend to be unabashedly coupled to their upstream connection, and if you can install new apps on the devices they tend to be signed or controlled in some way.
General mobile computing devices are meant to serve more as open platforms. In general they tend to support a variety of formats for the media they operate on, they allow for installing applications by the user, and a motivated individual can create their own applications for these devices without resorting to hackery. Interestingly enough, this is not a new class of devices. The PDA market in general has fallen into this category for years, which is perhaps why that market has never really hit critical mass. Currently these devices tend toward the geeky, tailoring more to expert users than the novice. This doesn’t have to be the case I don’t think. But without someone controlling the channel to the device there’s just little reason for it to be otherwise.
I’m not saying this is the model to dictate everything, but it is a useful model when looking at the cellular industry. Cellphone carriers for a long time had pipe extender devices on their networks. A cellphone was a device which allowed the connection of voice communication when the user was away from their desk or home phone. However as the devices became more complex and gained data functions they started to look more and more like mobile computing systems. If the cellular carriers hadn’t been asleep during this phase they probably would have realized they were missing the opportunity to control the pipe for data services as well as voice services, but it’s my belief that they both didn’t value the new channel and didn’t care about it.
Recently they have started to care about data services. The traditional cash cow of cellular voice services is being threatened, and carriers would like to control the data channel as well. In many cases however, they just don’t have the background to do so. The data channel is mostly a media channel, and the cellular carriers just don’t have the content necessary to fill that pipe. So in general they’ve taken to strangling off that pipe so that no one can use it. Wondering why it is that smartphone usage in the US is still so low even though the ARPU numbers say that smartphone users are great customers and carriers should be pimping smartphones to raise their revenue per user? Wonder why when you walk onto the floor of a carrier store in the US there are normally very few smartphone models and they’re often tucked into some corner? Because I think they know that smartphones break the channel they’re hoping they can eventually control.
There’s a wildcard in there with the MVNOs however. In many cases they do have an existing channel, and they would like to extend it to mobile users but they don’t have a pipe to do it over. If the MVNOs can generate enough off the data services that their share with the carriers is larger than the revenue the carrier would get from supporting a general computing device the carrier should win out. However there are a few big “if”s in there. When the carriers controlled the voice channel they did so because it was the only communication available, and federal regulation said that another alternative network couldn’t be set up. However with data communication it’s much easier for a third party service provider to disrupt the carrier/customer/MVNO relationship with an alternative offering. The carriers really need to keep a hold of the platform and restrict the activity on their networks in order to make the environment appealing to the MVNOs.
So how does this play out long term? Even without the carriers working against smartphones and general mobile computing devices, I think those devices have generally been ill suited to use by the casual user. It’s starting to look more and more like a setup where the high end traditional offerings from entrenched players like Nokia, Motorola, Sony Ericsson, etc. are ripe to get picked off by inexpensive handsets from small manufacturers that mix in just slighty more than bare functionality and support the point-solution needs of both MVNO and carriers without overshooting. Because overshooting in this case means not just wasted costs, it willfully introduces competition for the MVNO who makes the decision to carry the handset. Ooops, that doesn’t sound like a nice environment at all for us users. Maybe we’ll have to count on 802.11 to save us.
802.11 has tons of problems: licensing, quality of service, capacity, call handoff, etc. That’s the funny thing about disruption though. It often starts out as something not good enough for the current environment, but it evolves into something sufficient while the current environment is tying itself in knots trying to serve a less and less significant portion of expert users. That’s why I think Nokia offering the 770 isn’t just technically interesting, but a great strategic move. Makes me wonder if someone over at Nokia ran some scenario planning and decided to take the “what if 802.11 does actually solve the current round of issues?” question seriously. They say now that the 770 is a different market than their handsets, but I think long term we could see that change.
