14 posts tagged “wap”
It is more possible to become a stable, low-growth market. Therefore, it's no use being hasty.
[+] Will the advent of 3G lead to a reshuffle of WAP market?
Despite continuous setbacks since 2000, telecom operators have never stopped efforts in the mobile Internet market. Theoretically, Moternet, the WAP portal of the largest mobile operator in the world, China Mobile should have the heaviest traffic volume in the world. After all, it has such a huge subscriber base. This, however, is not the reality.
From an iResearch report, Handset-enabled Internet Activities in China in 2008, we can see that Sina, Baidu and Tencent are among the most visited WAP sites in China. There are even a few independent 3G WAP portals. Thanks to their huge PC-based user bases, traditional Internet players seem to have a chance to challenge telecom operators.
Will the advent of 3G lead to a reshuffle of the market? Despite the fierce battle for subscribers, New China Mobile, New China Telecom and New China Unicom have not changed their visions of transforming from "communication service providers" into "information service providers". Key to this effort will be WAP. Will other WAP sites score another goal along with the promotion of 3G?
What we might not have understood correctly is the fact that, with the advent of 3G, the WAP market might have a stable and slow growth, instead of a sweeping revolution. Therefore, it's no use being hasty. It seems that, at the present time, the conditions for a sweeping revolution are not yet in place.
[+] The development of the WAP user base is a long-term process
First, if the 3 new operators do not offer substantially lower WAP rates, there would be no momentum for WAP users to upgrade to 3G, as no major change is expected to the contents offered by WAP sites. There might be more video and mobile TV services, but the key to the acceptance of users is still the fee rate.
The problem is that only telecom operators could decide the fee rates. Other Internet players have no say in it. In view of the current competition picture, the operators are expected to cut 3G WAP fee rates to some extent. But as I said, only substantial cut in voice fee rates could significantly increase the 3G user base, which is essential for a sharp increase in 3G WAP user base.
Secondly, does a substantial increase of 3G user base mean the same for WAP user base? Experience of telecom operators indicates that a large portion of the first 3G mobile phone subscribers would be WAP users of the 2G time. In other words, as a 2G WAP user becomes 3G WAP user, there would be no increase in the total WAP user number in the market.
In the long term, with intensive 3G promotion efforts of operators, all users will eventually give up 2G (whether voluntarily or forced to do so). The process, however, might not be as fast as you and I have thought. Considering the WAP service, which might be offered as an accessory service, the development of the WAP market could be even slower. The key to the speed of growth is the fee rate, not the number of Gs.
[+] The pain in business models
Why have telecom operators not been able to make good WAP sites? Based on my 5 years of experience in an operator, I could see that the root of the problem is their business models. For telecom operators, there's no free service. Every service should generate revenue, which ideally should be collected from end-users with phone bills. One dollar from each user would add up to an amazingly large amount for the hundreds of millions of income.
WAP services are duplicates of those of the Internet, whose basic business model is to offer free service and gain revenue from advertising. Sharp conflicts are expected for the business model transformation, not to mention the difficulty of changing the mindset of staff in a short time. Telecom operators need to regard themselves as media players before establishing ad departments to gain ad revenue. For them, that's too much.
This business model would have nothing to do with the number of Gs. For WAP, if the business model were transformed to that of media in the 2G time, Monternet could have done it very well even without 3G. Now we are back to the basic question: which is scored "better", higher ARPU or advertising income? If the former, there will not be any change.
It does not mean that telecom operators have to give up fee-based music or image download services, which are, in fact, the revenue sources of the traditional Internet companies, too. Yet, if operators cannot think of anything else, their business growth would be limited. For example, Nokia is seeking cooperation with telecom operators even as it has its own advertising network.
Why didn't operators make the proposal first? Because they are still using the old mindsets. Any business you don't do, somebody else in the business chain would do. Nokia Advertising Network is a manifestation of the company's resolution to transit from the manufacturing industry to the service (particularly the Internet service) industry. Do New China Mobile, New China Unicom and New China Telecom have the same resolution?
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Prev : New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services
- Today in History
New Landscape in China's Telecom Market (8) WAP Sector Is Slowing Down - 2008/08/10
PDA in Siege (1) The Attack of Notebooks - 2004/08/15
3G value-added services will be cheap, but not so cheap as you have expected.
[+] The pricing of video phone service
As a result of the fierce battle for subscribers between operators, 3G value-added services eventually become a secondary role. In the long-term, however, mobile subscribers will gradually accept the services and use them more than they did in the 2G time. In fact, subscribers first switch to 3G because of attractive voice fee rates. Then they begin to use more value-added services because of faster Internet access speed.
Generally speaking, the most talked-about 3G services include video phone and streaming media. With video phone, you will be able to see the one you are calling. Of course, you can also dial a number to watch a live broadcasting program. Streaming media, on the other hand, enables users to watch audio/video programs via the Internet, mostly by logging onto portals of operators with handsets.
Voice service, video phone and streaming media, how should the three services be appropriately priced? First, as video phone consumes 4 times of bandwidth than general voice calls do, should it be 4 times as expensive? The answer is no, because 4 times is pretty scaring. Most operators offer rates ranging between 1.2 to 1.5 times.
Due to privacy and courtesy concerns, video phone is rarely used. Some people argue that operators should offer lower rates to increase use of video phone services. The fact is, however, low price is probably not sufficient to eliminate the privacy concern. Operators even believe there are reasons you have to use video phone (e.g., your wife requires you to). Is there any other chance of earning such easy money?
[+] The pricing for streaming media
Streaming media service, which enables mobile TV and movies, has been in a dilemma of whether to charge by traffic volume (e.g., RMB X for watching Y mega bytes per month) or by service time (e.g., RMB X for Y hours per month). Eventually, all operators chose service time-based fee rate models.
As most users are still not accustomed to traffic based models, while charging by service time also seems weird (nobody pays TV bills by minutes), the best solution would be monthly packages without time or traffic volume limit. Fearing that users might turn on their handsets 24 hours a day, which would result in considerable waste of wireless network resources, most operators dare not choose the solution.
If they choose to charge by service time, how much per minute would be appropriate? Streaming media service usually consumes twice bandwidth as much as video call does. Nevertheless, I suggest its fee rate be set similar to, or even lower than that of general voice calls. As streaming media service is delivered through IP-based packet-switched network, it could use network resources more effectively than video phone, allowing larger bandwidth for users.
That billing model encourages the use of streaming media to improve the efficiency of the network resources of operators. A challenge for operators is that they have to collect payments for content providers, which would increase the total cost of users. However, that seems to be a problem without solution, because content providers need to be paid, too.
[+] WAP monthly package and the pricing for mobile Internet access
In my view, WAP, the service that has been available since the 2G time is more profitable than mobile TV, which is wildly betted on because of the Olympic Games. Some operators have already offered WAP monthly packages without traffic volume limit. With the advent of 3G, they now face a problem: whether to raise or lower the package rates?
As the costs of operators are based on traffic volumes and 3G, with higher speed, will generate far larger WAP volumes than 2G, maintaining the monthly packages does not seem to be a good deal. However, in order to encourage 3G subscribers to use WAP services, it makes no sense to raise the price. But operators do not want to cut price. Eventually, the fee rates are usually kept at the same level of the 2G services.
As to the monthly mobile Internet access packages (via computers) for current China Unicom's CDMA network, no substantial change is expected because the speed of 3G service remains low (384k for WCDMA). However, as 3G has just been launched in mainland China, it would be well equivalent to the level of 3.5G (HSDPA) right from the beginning. As a result, the fee charging model would change.
For example, there might be packages of RMB X/month for the speed of 128k and RMB Y/month for 256k. Such a pricing model is similar to that of ADSL. Theoretically, the peak rate of HSDPA could be up to 14.4M (it is reported that 3.6M Internet access services would be available soon in Taiwan). Therefore, it is possible to introduce different fee rates for different speed.
[+] The fee rate of value-added services is not the key to attract subscribers
Why operators are so reluctant to cut fee rates of 3G value-added services? Because in the fight for subscribers, they have already cut prices of general voice calls. How do they compensate the loss? Through the above value-added services, of course. Will the value-added service fee rate level affect their subscriber base? Basically not. Then why not setting the fee rates a little bit higher?
Many consumers would consider switching to operators who offer lower voice rates, not the one who offer lower value-added service fee rates. The pricing of value-added service is not the key for operators to attract subscribers. With this user experience and such a mindset of operators, 3G value-added services will be cheap, but not so cheap as you have expected.
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Prev : New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan
Next : New Landscape in China's Telecom Market (8) WAP Sector Is Slowing Down
- Today in History
New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services - 2008/07/27
New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan - 2008/07/20
From Idea to Business (2) How to Estimate Your Income and Cost? - 2007/07/22
New Era of Online Advertising (2) from Exposure to Deal - 2006/07/23
Ultimate Mobile Device (5) Universal User Experience - 2005/07/24
As a matter of fact, Apple's understanding of Internet remains to be around computers, not handsets.
[+]The rises and falls of Apple
In March 2008, Apple, led by "legendary" Steve Jobs, topped Forbes Most Respected Companies in the United State, where Google ranked No.4 and Microsoft far behind - No.16. Being respected while making money is not an easy thing.
Nobody foresaw the company, once in its low, would come back in glory. Back in history, Apple was left alone in the cold due to the introduction of product platforms (open standard) and industrial platforms (labor division within the industry) built by the PC group led by Intel and Microsoft.
Apple's proprietary system throttled the enthusiasm of players in the industry to collaborate in the manufacturing of hardware/software and peripheral products, resulting in few applications usable, which, on the other hand, held consumers back from buying its products. Eventually, Apple was cornered by the PC group into a niche market.
Nobody would deny that Apple's computers had more elegant and appealing shapes. However, it was no rival of the Wintel legion, because they could dig deep into the personal computer market with the power of the entire industry after open standards were formed.
Remarkably, the first surprise Steve Jobs brought the world after coming back to Apple was iPod, which was launched in October 2001. Back at the time, iPod could only be connected with Apple computers through iTunes. Persisting on Apple's tradition for fashionable design, however, it was able to win the favor of its loyal users.
In June 2002, Apple launched iPod Windows version, and then the mid/low-end series, and successfully infiltrated into non-Apple users. Once mocked by its rivals as a "clumsy MP3 player with a mini-hard drive", iPod finally became an icon of imitation.
[+]Beginning to reap the benefits of a "platform"
iPod successfully built two platforms. The first one was a platform of peripheral products, with open interfaces allowing other hardware manufacturers to develop products compatible with iPod, e.g., plug-in FM radios, special voice record pens and digital cameras.
The second platform was iTunes, the one most talked about but none of the rivals could successfully copy. It was first introduced to enable users to synchronize music files with iPod and assist them to manage music files in their computers. Surprisingly, Steve Jobs used it to build his music stores.
The more iPods were sold, the more likely users would buy music. For the traditional music industry, iTunes turned out to be a platform to sell music products in the digital world. With the increase of users who chose to pay for digital music, labels found themselves tied more and more tightly to the platform.
So when Steve Jobs insisted USD 0.99 per song, the labels that originally planned for a price rise had no choice but to agree. Some labels did build their own music distribution websites, but failed to achieve the sales level of Apple.
The support of the admirable iPod sales is the key to the success of Apple, which offers the benefits of a powerful platform of hardware + software + Internet service - benefits which Yahoo! and other Internet players cannot offer. Maybe it is the reason that Google wants to introduce its own cell phones.
The platform can be further expanded. The first approach is to infiltrate into the film distribution market. Now that Steve Jobs has reached his hand into their pockets, film makers, however afraid of following the fate of the music industry, cannot afford to ignore the presence of the platform.
[+]Building a powerful platform with contents
The second approach is that iTunes, while adapting to the Web 2.0 trend, enables ordinary people to make music, broadcasting programs or even films themselves and move them onto Apple music stores. A wide range of PodCast programs are really amazing and of good quality. What's more, the rich contents have increased the confidence of iPod buyers in its value.
However, it is time to use the content platform to introduce new hardware. In June 2007, Apple launched iPhone, an unprecedented achievement through a partnership with AT&T. To use iPhone, users had to register an iTunes ID, and telecom operators share income with Apple.
Such humble operator was never seen before. If not for Apple's bargaining ability backed by the powerful content platform and the user number, the arrogant operators would never have given in.
Interestingly enough, it is said that the same cooperation model proposed by Apple was rejected by China Mobile. Apart from that the latter was the largest mobile operator in the world and hence even more arrogant, it also indicated that the platform was not powerful enough in China to offer a bargaining ability against China Mobile.
Will Apple, which was beaten in the PC market a decade ago, realize the importance of platform and open its iPhone? Currently, iPhone uses Mac OS X operating system. With the increase in sales, there would be more hardware/software and service vendors around the OS, and eventually, new platforms would emerge.
This, however, is not the style of Jobs. iPhone is a proprietary device. In each country, Apple would choose only one operator as its partner. In addition, Mac OS does not have many software service developers. Completely relying on itself, Apple is expected to sell only tens of million cell phones at most.
In terms of building a large cell phone-based platform, wouldn't Nokia, which has much larger sales, present a bigger chance than Apple?
[+]Continue to be proprietary?
Currently, Google is trying to build a series of platforms ranging from cell phone operating system to browser to online service, which it intends to offer free of charge. Apple is doing virtually the same things, but doesn't seem to consider to offer them free to other manufacturers.
The key is Apple does not regard Internet as its core business, at least as of the present time. Both Google and Yahoo! hold Internet as their core business. While the former chooses to develop hardware standards independently and offers them free of charge to the public, the latter chooses to be compatible with all hardware standards.
Other than its own online stores, Apple does not seem to be interested in any other Internet service. Unlike ordinary cell phones, which can only view WAP sites, the iPhone browser enables the viewing of HTML websites. Nor has Apple considered building a wireless portal for all iPhone users to make itself more popular.
As a matter of fact, Apple's understanding of the Internet remains to be around computers. A China Mobile executive once had a negative comment on Apple, saying that downloading music from a computer to a cell phone was not consistent with the experience of cell phone users, who were supposed to download music directly from portals of telecom operators.
Anyhow, Steve Jobs has successfully attracted the eye of the world. Although traffic volume or ad revenue-based profit model is beyond his vision of the Internet market, the success of iPod, iTunes and iPhone is powerful enough to shock traditional cell phone manufacturers.
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Prev : Great Changes in Wireless Internet Industry (3) Nokia's Strategy
- Today in History
Great Changes in Wireless Internet Industry (4) Apple's Strategy - 2008/04/06
The Mist of 3G in China (2) TD-SCDMA is a Hot Potato - 2007/04/08
The Mist of 3G in China (1) 3G Makes No Profit - 2007/04/01
Predictions on China Internet Market (6) Community Services - 2006/04/09
Media, Community, and Blog (5) The Power of Media - 2005/04/03
3G Time Comes (4) Video Phone - the Killer Application - 2003/04/06
What's the difference between Yahoo! MDP and Google Android?
[+] Isolated and multi-standard industrial environment
If you have developed a PC-based website, what you are most concerned about would be how to attract users, instead of whether your web pages fit the sizes of your users' screens. With regard to browser brands, you only need to consider a few versions for the program you use to build your website.
You don't have to bother about what operating systems your users use, or whether your users access the Internet through ADSL or Cable, or via which telecom operators. However, with a mobile Internet environment, all these are issues you have to think about.
Providing value-added mobile Internet services via handsets is extremely painful. For example, Yahoo! has a searching box on an operator's WAP portal. It wasn't launched until passing telecom network test, value-added platform test, billing platform test and handset compatibility test.
If it wants to cooperate with another telecom operator, it will have to do these tests all over again, as each operator has its own telecom network and platforms. Just consider how many telecom operators there are in the world? Such a service deployment speed makes it almost impossible to duplicate the Internet revolution on handsets.
In the world of mobile communication, each industrial leader wants to develop its own standard. Leaving alone the various platforms of telecom operators, is it possible to have a uniform software development environment in the first place to make it easier for the developers to support a wide range of handsets?
Now we have a crowded market. In addition to Symbian and Windows Mobile, there are the reverend Java and Qualcomm Brew, joined by new comers like Adobe Flash Lite. Even Yahoo! has introduced Yahoo! Mobile Developer Platform.
If you are a handset service developer, what would you feel at the sight of so many standards you have to support?
[+] Handset operating systems are getting increasingly unimportant
These development platforms have everything from operating systems to software deployment environments. Now that none of the handset operating systems could monopolize the market, all will have to seek survival in the long run. What consumers care most about are only services, not operating systems. It would be increasingly unimportant to fight for market shares of handset operating systems.
In my view, therefore, the key to the success of platform development is not the operating system, but the software deployment environment. As a matter of fact, Java, which is best positioned to build a terminal-independent development environment, has not been able to achieve its vision of "write once, run anywhere".
Flash Lite, a product of Flash that holds an admirable share in the computer-based Internet market, is another development environment irrelevant to operating systems. Theoretically, any handset, regardless of its operating system, could use the environment so long as it supports Flash.
If it could really enable "write once, run anywhere", the development platform will be embraced by developers. Yahoo!'s Mobile Developer Platform (MDP) could be regarded as a development platform similar to Flash Lite but more irrelevant with operating systems.
Simply speaking, website operators that write Widget in accordance with the development specifications (simple scripting, instead of binary codes) will be able to deliver existing services of their websites to handsets, so long as these handsets have installed Yahoo!Go.
The goal of Yahoo! is to get Yahoo! Go into every handset, so that more and more websites would support MDP and join Yahoo! This, of course, would include Google's phone - if GPhone has built-in Yahoo! Go.
[+] The Mobile Internet needs a common leader
Any Internet player that plans to provide handset-based service will have to face a variety of handset operating systems, the special functions of different brands, the different browser brands in the handsets and the different telecom operator platforms.
Such a complicated environment would often be a headache for small Internet companies. Investing resources to solve all the problems is, obviously, not in line with their economic interests. Large Internet companies could make such investments and get economic benefits, but then they will have to fight a battle all by themselves.
Computer-based Internet is a large eco-system. Unless there is a platform that enables all Internet companies to deliver their services to handsets, the entire eco-system would not be able to bargain with telecom operators, who control user resources.
So there appears the mainstream requirement for an open platform different from existing software development platforms such as Java or Flash. The former is a development tool customized for small Internet companies to address the compatibility of different handsets.
In addition to compatibility, the platform should be supported by an industrial leader powerful enough to deal with telecom operators or handset manufacturers. In other words, the mobile internet needs a common leader with a sufficiently large user group.
The key is who the leader will be? Yahoo! and Google, both with large user basis, have chosen different approaches. Ignoring other standards, Google chooses to develop its own platform. Yahoo! chooses to co-exist with other standards.
[+] What's the difference between Yahoo! and Google?
What's the difference between Yahoo! MDP and Google Android? Simply speaking, Android is a platform that includes everything - from the operating system to the software deployment environment and even the browser. Leaning more toward handsets and developers, it hopes to build a brand new underlying technical platform in the mobile Internet industry.
Google does not care what operating system is used on a handset, or what impact the browser has on the presentation of web pages, because it has prepared its own. It wishes to persuade handset manufacturers, Internet companies and software developers to use its standards and get rid of all others.
Yahoo!, on the other hand, focuses more on the provision of a front-end environment to enable existing website operators to deliver their services into handsets easily, regardless of underlying technologies. To achieve this goal, however, Yahoo! has to overcome compatibility problems itself.
To be applicable in every handset, Yahoo!Go must be compatible with all handset operating systems (including, of course, the operating system of Google). It has to adapt to handsets or browsers of different manufacturers to ensure normal functionality and display quality.
With all these pains-taking efforts of Yahoo!, medium and small Internet companies will be able to provide handset versions of their services on their websites easily. No more fuss about standards, just follow the leader.
Both players are trying to become the leader, although with different approaches. Who's got the better chance? As of this point of time, we can only say that Google is taking a bigger bet. It will have a big success or a big failure. Both, however, have chosen the approaches best fit themselves. We can hardly imagine Yahoo! to develop a platform like Android.
However, they are not the only ones aiming at the leadership. Nokia has noticed the trend, too.
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Prev : Great Changes in Wireless Internet Industry (1) Google's Strategy
Next : Great Changes in Wireless Internet Industry (3) Nokia's Strategy
- Today in History
Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy - 2008/03/09
Great Changes in Wireless Internet Industry (1) Google's Strategy - 2008/03/02
Predictions on China Internet Market (2) Subscriber Number Is King - 2006/03/05
Media, Community, and Blog (1) The Beginning of the Story - 2005/03/06
Stop Internet Marketing (1) All Market; No Marketing - 2004/03/07
3G Time Comes (1) What Is 3G? - 2003/03/09
Success or not, Google has made a smart move to bid for the license.
[+] The conflict of mindsets of two industries
Rumors about Google's introduction of GPhone have been flowing around for quite a long time, but never confirmed. Nobody had any idea about how ambitious Google's blueprint was until it announced to bid for FCC 700MHz spectrum and to launch the Android mobile platform.
Mobile operators are in a fortress that Internet players have been unable to conquer so far - largely due to the gap between the basic business modes of the two industries. In the mind of telecom operators, there's nothing to be offered free. Once launched on a telecom platform, any service would entail a cost and should generate an income.
Therefore, when the ringtone download service is released on WAP portal, telecom operators charge the users two types of fees, one for data transmission and the other for use of the content. While the former is most likely to be integrated into monthly packages, the latter is actually collected for content providers.
For a long time, telecom operators have no idea about how to deal with Yahoo! or Google search boxes at WAP portals. Unlike ringtone download, this is a service that you cannot charge users for. If the search boxes are put up by Internet players for marketing purpose, should they pay telecom operators for that?
So when the webpage you get using Google on your cell phone shows an ad, your telecom operator will share a portion from the advertising income. This cooperation model turns Internet companies into a secondary role. What else can they do since the telecom operators control the Internet access?
There are two ways to force telecom operators to recognize their status: either from the upper stream or the lower stream of the industry. One case for the former is Google's bid for wireless spectrum to assume the role of a telecom operator; and that of the latter is Apple's introduction of iPhone - bound music to reach into the pocket of consumers.
[+] Google's overall deployment
Google' s bid for FCC 700MHz wireless spectrum is far more important than its launch of Android mobile platform. Previously, Google had urged FCC to accept a yardstick that "all bidders for the spectrum should offer open access."
The request got the support of FCC. Essentially, it demands that the winner of the bid should have the ability to provide access to any terminal device connecting to networks of the spectrum. Instead of discrimination, the operators should treat all terminal devices equally.
FCC is a neutral party. Its mission is to facilitate the development and effective competition of the communication industry. To open the industry wider to more players is, obviously, in conformity with this mission. As Google stood out with the proposal, telecom operators, who had been accustomed to stand-alone business operation, were at a loss for even not knowing how to rebut it.
However, how could it be possible to allow so many different terminal devices free access to the Internet? So Google, along with the 34 founding members of Open Handset Alliance, introduced Android, a device-independent handset software development platform..
Why were the 34 companies, including heavy-weight players such as Motorola and Qualcomm, and even telecom operator T-Mobile involved from the very beginning? Had Google not announced to bid for the license and urged FCC to accept the Open Access standard, they wouldn't be there so fast!
Google made a smart move. The result of the bidding is yet to be announced, and the open handset platform would have to stand up to existing rivals such as Symbian and Windows Mobile. Nevertheless, it is a good beginning. Nobody could afford to ignore the power of Google.
[+] The license bid is critical
The next step of Google might depend on the result of the license bid. In the first place, if Google wins the bid and becomes a new telecom operator, it would be able to integrate the entire industrial chain, from the upper stream to the lower stream, with the assistance of Open Handset Alliance. The most optimistic prospect would be a performance multiplier.
Google will be able to foster the basic customers for its own handset platform, while its allies would target client groups for their handsets and services, and terminals introduce closer-knitted services with Google. With economies of scale, more investments can be made for R&D to eventually build a healthy cycle.
Of course, it will take Google a lot of money and time to learn about the trade. Telecom is a century-old industry and won't be so easy for Google to understand in a short time. Head hunting might be a good option, but conflict with Google's existing business culture would be possible.
If the learning curve is too long, Google might be mired in the new business. Telecom is a capital-intensive business that takes a lot of initial investments. Google's financial statements would not look so pretty by the time.
More troublesome, in this industry, successful business modes cannot be duplicated. Google might be able to get the wireless spectrum of the United States, but it has no way to get those of all countries in the world. Telecom is a highly localized industry, which means that Google is unlikely to duplicate or export business modes to other parts of the world.
The only viable way is M&A, or financial takeover of local telecom operators just like other transnational telecom giants have been doing. This, however, won't happen before Google's telecom business becomes profitable. How can a money-losing business sell its business mode? Where does it get the money needed?
[+] The Android platform turns out to be a headache of developers
In my view, it would be better for Google not to get the wireless spectrum license. It would be too much to raise cows just for drinking milk. Even if Google doesn't get the license, Open Handset Alliance and its Android platform would still be valuable assets.
As Open Access has been accepted by FCC as a requirement for all players, Google could use the alliance and the platform as its chips to cooperate with the telecom operators that win the license. By abandoning the quest for a telecom operator, Google would be less as a threat to other operators, which would be helpful for cooperation.
By taking the highland to show its determination for the license bid, to create a powerful pressure and facilitate the establishment of Open Handset Alliance, Google has made a really smart move, regardless of the result of the bid.
Of course, there will be challenges. For Google, the biggest is how to attract more telecom operators into the alliance and to boost the enthusiasm of handset manufacturers to develop GPhone. Its rivals will include the formidable Symbian and Windows Mobile.
Handset manufacturers and software/application developers, in the meantime, are frowning at the platform. On the open Internet, Google is undoubtedly the leader. In the field of handset development platform, however, it is just one of the options.
What the developers are concerned about is, if the Google platform is not powerful enough to take the loin's share of the handset market, it would turn out to be one more standard that the developers would have to support. For them, the existing platforms are enough to be painful about. And here comes another.
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Prev : Web 2.0 Finale (3) Finally blended in Web 1.0
Next : Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy
- Today in History
Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy - 2008/03/09
Great Changes in Wireless Internet Industry (1) Google's Strategy - 2008/03/02
Predictions on China Internet Market (2) Subscriber Number Is King - 2006/03/05
Media, Community, and Blog (1) The Beginning of the Story - 2005/03/06
Stop Internet Marketing (1) All Market; No Marketing - 2004/03/07
3G Time Comes (1) What Is 3G? - 2003/03/09
If so, telecom operators would be shut out of the mobile TV market.
[+] The past experience of cell phone manufacturers
From the tide of WAP-based Internet accessing in 2000 to the crazy bid for 3G licenses, and then to the bet on MMS for promoting sales of camera phones and music phones that enable music downloading, and finally to 3G phones with audio/video services, cell phone manufacturers have had thrilling experiences over the years.
The world cell phone market started to show signs of saturation in 2000. To maintain their growth, manufacturers had to motivate consumers to replace their phones with newer products. All of the thrilling experiences in the past 7 years seem to be a quest for what really are the selling points. Fortunately, the result so far has been satisfactory.
In summary, there are a few observations:
1)Mobile Internet is a hard-to-handle concept. The key is consumers tend to compare their expectation for mobile Internet with their PC-based Internet experience, which, in most cases, ends up in disappointment, as cell phones are not so easy to handle as PCs. Mobile Internet has been successful in Japan, only because of the low PC penetration rate there.
2)Telecom operators wish that new cell phones be bound with particular services, so that they could benefit from their sales, instead of being un-paid sales reps of the manufacturers. However, it turns out that consumers buy camera phone only because they can use it to take pictures, and anyone seldom uses MMS service.
3) There's no concern for the shortage of content accessing channels. Despite the hot sale of music phones bound with download service offered by telecom operators, most users choose to transmit music from their computers to cell phones, instead of downloading them from the WAP portal provided by telecom operators. Although it is more troublesome, but it is free.
4)3G audio/video services, including IP-based audio/video streaming and video phone, have not brought satisfactory user experience. It is a very simple concept to allow both parties of a phone call to see each other. However, due to privacy concerns, it has not been able to become a killer application.
[+] Telecom operators might be ignored
With the above experience, cell phone manufacturers finally realized that their business is to make and sell handsets. The simpler their products are the better. There's nothing simpler than the concept of mobile TV.
Consumers no longer have to bother whether the TV programs are downloaded from the Internet, nor cell phone manufacturers to care about whether their phones are bound with particular services offered by telecom operators, so long as they free themselves from the troublesome 3G audio/video experience.
In fact, a hi-tech company in mainland China has developed a sort of chip, which can be built in cell phones to receive traditional analog TV signals. In other words, with such a chip, you will be able to watch wireless channel with your cell phone, regardless of its specification or standard.
The only shortcomings are the mobility and fidelity. As analog TV signals are not intended for mobile environments, the fidelity cannot be compared with that of digital programs of mobile TV. However, it would be good for some people, if the programs are played on small-screen cell phones.
In most cases, however, people watch mobile TV on static environments, e.g., bus or subway stations, or in offices. It explains a fact that cell phone manufacturers will be able to sell their products without binding themselves with telecom operators.
The only thing that those manufacturers have to worry about is where programs would be, once new standard-based mobile TV is launched? Will telecom operators become content aggregators as we discussed in the previous section? If not, they'd better establish connections with content providers right away.
[+] Charging or not, it's a matter about the structure of the industry
The high production costs of movie/TV programs turn out to be a big obstacle for traditional value-added service providers to produce contents themselves. Imaginably, a big part of contents for mobile TV will come from traditional TV stations.
An interesting cooperation mode is that after consumers buy a mobile TV-enabling cell phone, they will get a set of passwords from TV program providers. Upon activation, the cell phone will be bound with the passwords to enable watching programs. The fee is charged each month through the phone bill from telecom operators.
That mode is designed for charging fees. If mobile TV programs are offered for free, and program providers depend on ads for their incomes, the passwords and the additional lines in the phone bills of telecom operators would be unnecessary. If so, telecom operators would be shut out of the mobile TV market.
With regard to the mobile TV services, the only way for telecom operators to gain the favor of cell phone manufacturers is to persuade content providers to charge fees, in which case, they would become the largest content aggregators and channels for charging fees. Otherwise, they would be easily abandoned in the game.
In addition to traditional TV stations, will website operators (e.g. Yahoo! and Google), which are gaining influence in the mobile Internet sector be able to get a share in the market? Those players do not have program-producing ability themselves. However, through audio/video content sharing, they will have some opportunities.
Audio/video content sharing sites, such as YouTube, has a lot of interesting programs. In spite of the low fidelity (as most programs are produced by non-professionals, after all), such programs might be good enough for cell phone-sized screens.
Currently, the mobile TV market is still a virgin land for a lot of players, including telecom operators, cell phone manufacturers, traditional TV media and emerging Internet media. The future will be interesting and full of expectations. Eventually the biggest winner will be consumers. The distribution of audio/video contents will be fast and convenient as never seen before.
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Prev : Mobile TV Market (2) the Subtle Role of Telecom Operators
- Today in History
Mobile TV Market (3) Terminal Manufacturers & Content Providers - 2007/12/02
Great Future of Wireless Broadband (4) WiMax, 3G and 4G - 2006/12/03
Internet and Books (1) Dilemma of Online Publishing - 2005/12/04
VoIP (2) Who Depends on Whom - 2004/12/05
VoIP Gives out the First Cry - 2003/12/07
Many telecom practitioners believe that mobile phone will become the "fifth media" in the age of 3G. But that won't come true without telecom practitioners' intended guiding.
[+] Looking for killer application
Is there any kind of service that can attract large group of existing 2G customers to upgrade to 3G? If this is the so called killer application, it barely exists for telecom operators, because no application can help them to rapidly attract a lot of 3G subscribers.
Many killer application services of this kind have been tried by 3G operators all over the world. For example, the European Hutchison Telecom who started to operate 3G many years ago mainly promoting video phone and mobile email services at the beginning. However, the growth of subscriber number was extremely slow.
In short, from the perspective of telecom operators, the only killer application to rapidly obtain 3G subscribers might only be the "lower voice service calling rate". For consumers, that is a simple and clear reason for using 3G. Once they use 3G phone numbers, they will start to use its value added services.
I joined one of large 3G operators five years ago and started to do 3G market planning. I used to hold high expectations on value added services. However, as time went by, I found out that there was no big difference between 3G and 2G (especially GPRS) value added services.
MMS and WAP have already been realized on 2G, not to mention SMS. Even the hot Instant Messenger (IM) service can also be realized without 3G. Those won't become the reasons for consumers to upgrade to 3G services.
The advantage of 3G is its speed that is faster than CDMA and much faster than GPRS. However, it is not enough to bring an essential difference, because consumers can hardly feel any speed difference when browsing WAP on the small screen of mobile phones.
[+] The possibility of the fifth media
There is an embarrassing situation for sales people. Imagine that if you are a sales person of a telecom operator, when you try to persuade a 2G customer to upgrade to 3G, you fail to answer the customer's question when asked "what's the major difference between the two services?"
The reason why 3G fails to attract a large number of subscribers through its value added services is that there is no major difference from 2G. The only difference: speed, however, is hard to be felt by consumers immediately. After purchase, customers usually will have only a slight feeling after some time. How can we sell this kind of product?
Eventually, our hope inevitably falls on several services that show evidently the speed of 3G: video telephone, streaming media and download. Applications including mobile TV, video on demand, music download, which consume large bandwidth can reflect the difference of 3G more evidently.
However, will consumers upgrade to 3G just by telling them that they can watch TV and listen to the music on 3G phones? Yes, they will. Some technology manic or first adopters will be tempted to upgrade to 3G. But those people only hold a very small market share. Most people will tell you that it seems to be never used to watch TV on the mobile phone.
Especially when they find out that the price plan of watching TV on the mobile phone is calculated by time, they will resist more apparently. The billing model that is quite natural for telecom operators (for example, billing in seconds) drastically violates the general payment habit for TV services: free or paying monthly.
Many telecom practitioners believe that the mobile phone will become the "fifth media" in the age of 3G. But that won't come true without telecom practitioners' intended guiding, especially with regard to the price plan. Monthly unlimited mobile phone TV service itself will arouse drastic arguments inside telecom operators.
[+] The way to survival for free WAP sites
It has been spread for a long time that telecom operators will act against free WAP sites. Each time telecom operators carry out a new policy, this topic is heated up again. Especially recently it is said that telecom operators plan to set the rates of their own WAP sites to be different from those of external WAP sites.
It is the common practice for telecom operators all over the world to "design and enrich their own WAP sites, keep users in their own walled garden, and make content providers bend their knees". Although free WAP sites are very hot, they fail to keep from telecom operators' threat.
To be honest, there is no relation between that market situation and 3G. I don't understand why some people think that such obstacles will disappear after China's entry into 3G. Telecom operators always keep their leader's attitude and control over subscribers and content providers regardless of 2G or 3G, don't they?
However, there is probably a market breakthrough point here. Never forget that China has a self-developed standard TD-SCDMA. Telecom operators who have obtained this license are relatively less aggressive (or will become so after suffering from market stagnation). It is possible for free WAP to collaborate with them.
Telecom operators' practice on WAP is called "The Walled Garden" in the industry. Users can enjoy enriched content services within the garden, but they can never go outside. The more powerful telecom operators are, the more they want to do so. Cooperation can only start from relatively weak operators.
The next phase of development is quite obvious for SP (Value Added Service Provider) or CP (Content Provider) and free WAP site operators. For example, videophone dating, mobile phone movies on demand or download, live music or download, etc. The content is becoming more and more important. As a result, many SP have started to integrate resources from the media.
[+] Conclusion: It's true that telecom operators will beg consumers to use 3G
My insights of 3G telecom services in the past four years can be concluded into one sentence: it is true that telecom operators will beg consumers to use 3G. Because there is no obvious difference between 3G and 2G, while the major difference can not be experienced immediately, the sales of 3G are very difficult.
The difference can only be experienced after a period of usage. However, sales people can barely wait users to gradually find out the difference, because they can not bear the slow sales progress. Thus, they are forced to attract users to upgrade to 3G with lower voice service calling rates first.
But users are more accustomed to use value added services on 3G than on 2G. Therefore, the fifth media is expectative. The point is whether telecom operators invest resources on user experience and services, and whether the design of rate plans fits in with users' expectations.
Finally, the key user group of 3G is labor workers in big cities in addition to residents (primarily students) in second-tier cities in China. Those people will bring large amount of WAP and streaming media usage. Of course, the elite people are the sales target, too. But the total amount of elite users can barely meet the demand of telecom operators.
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Prev : The Mist of 3G in China (3) Low-End Customers Are King Next : Web 2.0 Think Again (1) It's All about Relationships
- Today in History
The Mist of 3G in China (4) The Way to Survival for SP - 2007/04/22
Predictions on China Internet Market (8) War of Instant Messenger - 2006/04/23
3G Time Comes (7) 3G Is Nothing to Do with WLAN - 2003/04/27
3G Time Comes (6) Phones Don't Need to Be Smart - 2003/04/20
It's not wise for telecom operators to sell 3G only to the elite who are extremely small groups of the billion populations.
[+] The first stage of 3G in China
The previous articles by me are not to look down upon 3G value added services or to support the voice service. Instead, I am trying to point out that telecom operators are industrial leaders, what kind of strategies they will take on 3G decides in what kind of strategic thinking value added services will be placed.
An SP (Value Added Service Provider) probably can live on 3G with only millions of value added service users. However, for a telecom operator, it is far from enough if the number of subscribers attracted from value added services (which are the primary selling points of 3G) is just the same. The two points of view are different.
However, it is the general atmosphere to hold high expectations on value added services in China's 3G market. Including telecom operators, there is a stir of emotions in related industries including SP, CP (Content Provider), and even the Internet industry.
The common opinion is, in such a big market, not only can we define system standards, but telecom operators are also able to define mobile phone specifications. According to the successful 3G development experience in Japan and Korea, customized mobile phones can increase telecom operators' revenue by optimizing the user experience with value added services.
Therefore, at the first stage of China's 3G market, we will see a lot of TV ads promoting value added services, telling you that you can watch movies, listen to music, play games and access the Internet anytime anywhere via 3G.
With TV commercials, you will see the elite image of a middle-aged man in a nice suit that has a successful career holding a 3G phone; the cool image of young people watching movies or listening to music on 3G phones; or the touching image of family members seeing each other from the video phone.
[+] The second stage: use the voice service as the bait
The four telecom operators who will have obtained 3G licenses will boost value added services to a considerable height. As previously stated, operators who obtain WCDMA and CDMA licenses are based on the best interests of their own. While the operators with the TD-SCDMA license do so just because they do not want to believe their doomed fate.
With multi-functional and high-price mobile phones (probably the customized mobile phones provided by telecom operators), low-price data service rate plan (the voice service rate remains the same with 2G) and the TV ads promotion, 3G service will immediately attract a group of customers through its eye-catching value added services.
These users are just like the characters in the TV ads - business people and young white-collars. However, the number of that user group is limited and increases slowly. When the stacked mobile phones and value added services can't win more 3G subscribers, the loss from the price reduction of handset together with the telecom equipment amortization charges will drive operators mad.
Shortly after, the price war of voice service rates plans and mobile phones will start. The reality will stop us from dreaming. Do not forget that there are hundreds of millions of mobile phone users in China. Most of them are not elite or young white-collars. They don't want to understand 3G. What they want are immediate benefits.
But have 3G value added services been sentenced to death? No! The fact is that those 3G users attracted by the low voice service calling rates use value added services a lot! I conclude the 3G telecom operators' actual operating experience in the past four years as below:
- It's much faster to attract 3G users by offering low voice service rates plans than promoting value added services.
- To make up for the revenue loss from the voice service, operators have to highly invest on value added services.
- Even those 3G users attracted by low voice service rate plans will use value added services a lot.
- The premise is that user experience with value added services must be made good. Some degree of handset customization is inevitable.
[+] The outlook of China's 3G market
China's 3G market will show several features:
1) The 3G mobile phones with simple functions. Fully functional 3G phones may mean higher prices, especially for the TD-SCDMA system. To be simplest, a mobile phone that can make phone calls and support WAP is enough. Other functions such as camera, video, etc. can be left out at the initial stage.
2) Promote packages of low-price mobile phones and cheaper voice service rates plans (of course, WAP service rate is the key point as well), leading to a situation of rapid sales at cheap prices. It was difficult to do so several years ago, because the cost of 3G phones was still high and price reduction meant that telecom operators had to pay a lot of subsidy.
But when China's 3G market starts, the cost of WCDMA and CDMA 3G phones will be largely reduced. Bulk purchases by telecom operators will make the price even lower. With the help of smuggled mobile phones in this market, it is not difficult to buy cheap WCDMA and CDMA 3G phones.
3) Rapid sales at low prices means that 3G users will quickly turn to low-end customers, who are different from the elite or young white-collars in our imagination. Users of 3G value added services at this stage will be workers in big cities in addition to residents (primarily students) in second-tier cities.
Those people's standard of living is relatively low, so they can not afford high-end entertainment. They spend a lot of time in Internet cafes because that is the entertainment they can afford. Those who don't go to Internet cafes will use mobile phone WAP. They are willing to pay for value added services because a single mobile phone can meet their demands for communication and entertainment at the same time.
They are the primary users of 3G value added services, even though they adopt 3G services just because of the cheaper voice service rate plan! This is the outlook of China's 3G market in my expectation. It is not wise for telecom operators to sell 3G only to the elite who are extremely small groups of the billion populations.
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Prev : The Mist of 3G in China (2) TD-SCDMA is a Hot Potato Next : The Mist of 3G in China (4) The Way to Survival for SP
- Today in History
The Mist of 3G in China (3) Low-End Customers Are King - 2007/04/15
Predictions on China Internet Market (7) Web 2.0 Economy - 2006/04/16
How to Sell an Apple: A Classic Case of High-tech Marketing - 2005/04/10
3G Time Comes (5) Content - Killer App of Video Phone - 2003/04/13
Ultimately speaking, the community service is just a show business.
[+] The relation between the content and community
In the previous sections, we have discussed the first pillar of the Internet: content. Now we are going to talk about another two pillars: community and communication. Before we start, it is necessary to get a clear view on the relations between the three pillars.
First of all, reading (or watching or browsing) is one of the most fundamental activities of human beings. It is also what most Internet users do. Because of the massive information volume, there is a requirement for searching ability to get what one needs rapidly. Most people are just readers.
The "a-few-elites-write-for-the-mass-readers" model of the traditional media and even the so-called Web 1.0 web sites is changing along with the development of the Internet. Photos, articles and other kind of contents that users create and offer to share in chat rooms, forums and even blogs are known as new emerging contents.
However, even on the so-called Web 2.0 websites, which are known for the interaction among users, the model of "a few people writing for the mass readers" has not changed substantially. Only the "a few people" of the Web 1.0 era has increased many times for now. After all, only a small portion of people would take the trouble to create things or initiate interaction with others.
[+] The first step to initiate interactions: Have good writers create good contents
Reflected in the CNNIC annual reports on China's Internet market over the years, it is not hard to find that, among Internet applications, data searching and online news reading have always maintained heavier weights than community services, including the forum/BBS, chat room and blog.
Obviously, human beings are not active participants of interaction by nature. We cannot expect everybody to write his/her blog. A simple truth is that there are always less blog writers than blog readers. Therefore, the first step and key to trigger interactions is to have good writers create good contents.
Recruiting, training and retaining good writers are critical to the quality of community services, and will affect the pageviews and the subsequent advertising revenue. Suddenly, it gets crystal clear that the so-called Web 2.0 web sites need to be aware that they are doing business with minority groups on the Internet.
By providing contents and search services, portals do business with the majority, while the so-called web 2.0 web sites deal with the minority. One is expanding wider, while the other digging deeper. Both can survive and co-exist so long as the market is large enough, for both reading and interaction are the needs of human beings. The difference is only the number of users: the need of reading is stronger than interaction.
[+] The relation between communication and community
The interpersonal communication has been a demand since ancient time. In the Internet time, the most frequently used tool is email. Later, there appeared IM (instant messenger) applications such as ICQ and more recent VoIP software such as Skype.
Most communication tools are used among acquaintances. For example, most people use telephone to contact their family and friends far more frequently than they do to strangers. However, one thing appears along with the use of new internet communication tools: "the desire to communicate with strangers." That is a community service, a side effect of communication tools.
Chat rooms, forums, BBS, and even QQ are such kind of community service. A group of people are busy talking with one another with stranger IDs, not caring that at the other end of the line is someone they have never seen. In this world, there are always some people that want to know strangers via communication tools. It is already prove to be true for the early telephone-based friend making services.
We should not forget that although most people are able to use communication tools, only a small portion is willing to take part in interactive communication with strangers, regardless the tools. Within the group, even less are willing to pay. They are the base for profits.
[+] The community service is just a show business.
Now the profit model of the community service is very clear: to make money from heavy users who are willing to pay for additional opportunities and room to show themselves, to know more people, or to enjoy the interaction. It is a group of people that would pay for the applause of others.
The so-called Web 2.0 web sites are often labeled with the sign "share": share diaries, share photo albums, share bookmarks, and even share social networks. Maybe sharing really brings pleasure. However, the sharing activities of those heavy users will not last long without applause.
If a blog writer only has two to three readers for each of his/her articles, it will not be long before he/she gives up. If the photos in an album have raised only a few eye browse, someone would start to post pictures of pretty girls or sexy women to get the attention of readers.
This is the ultimate concept of the community service: show. There are people who are willing to pay for virtual Avatar items, or for larger storage photo albums. Anything that is directly linked with "possibility of getting more applause" could generate revenue. For players in this industry, what they need to do is to create applause. The community service is just a show business.
[+] Back to the basic: making money by content and communication.
Nevertheless, those who have the impulse to show are always minority. For the remaining majority, they are here to watch. It proves to be difficult to get those people to pay, however large their number is. Once you start to charge, less people would stay and watch the show. Without enough audiences, the actors would go away.
The only role of the large amount of audience is to increase the pageviews to generate advertisement revenue. There will be companies to pay for advertisements so long as the audience maintains its large base. In fact, the advertising model is the most fundamental profit model of online contents.
The following figure shows that, as the community service partly belongs to the content service and partly to the communication service, it is only natural to inherit the profit models of both services. In addition to the advertising model, there are also incomes from communication fees.
Many people are asking if there is a Web 2.0-exclusive profit model. I have never believed there is such a model. Even if there is one, it would have no significant difference from that of Web 1.0. Some sources are quite obvious for revenues from the communication service, such as content subscription thru SMS or WAP, web based friend making service charges via paid telephone, etc.
[+] A war for getting excellent performers
Currently, most of the so-called Web 2.0 web sites are still in a desperate drive for visitors. Thanks to their attribute of high interaction, community web sites have been able to secure higher pageviews than content sites (e.g., online news). However, except a higher bandwidth cost, it does not mean anything.
If someone just leaves a word such as "digg this", or a sentence like "blamed by boss, sad" on the blog, will the web site operator wish him/her better not to write anything, as it only increases the bandwidth and storage cost?
To attract high-quality audience, you need excellent performers. None of the so-called Web 2.0 web sites has realized that this is a war for getting those high-quality performers. Some web sites have tried to attract eyeballs with the help of those movie or pop song stars for short time. Yet it is not a sustainable approach, because a single pillar is not strong enough to support an entire building.
As a matter of fact, some blogs charge the writers for publishing their works. That would stimulate the writers to creat better contents. (With the money paid, they would care more about the quality of their works). It seems that we need to think more carefully about the human nature revealed by free and charged services brought by the community service.
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Prev : Predictions on China Internet Market (5) Search Engines Next : Predictions on China Internet Market (7) Web 2.0 Economy
- Today in History
The Mist of 3G in China (2) TD-SCDMA is a Hot Potato - 2007/04/08
The Mist of 3G in China (1) 3G Makes No Profit - 2007/04/01
Predictions on China Internet Market (6) Community Services - 2006/04/09
Media, Community, and Blog (5) The Power of Media - 2005/04/03
3G Time Comes (4) Video Phone - the Killer Application - 2003/04/06
The home server will not be so marvelous as manufacturers have imagined.
[+] Mistake an industrial demand for the consumer demand.
Marketing staff in high-tech industry often have this headache: when a new product is introduced, it might create user experience which consumers never had before. How do you know that consumers will accept and buy it?
Because of that, however, the development of high-tech products is full of fun (of course, for manufacturers involved, it might be a tormenting life-and-death bet). Whatever it might be, the least a manufacturer should not do is to mistake a demand of the industry itself for the demand of consumers.
One example is the WAP Mobile Internet in 2000. In the midst of the dotcom tide, telecom equipment and handset manufacturers, in an effort to stop their sales from further declining, successfully persuaded telecom operators to enter the mobile Internet market. Eventually, an industrial demand is disguised into the demand of consumers, who won't come to pay the bill.
Today, another industry-hyped high-tech sector is about to move. The sector is called digital home, whose mobilization has extended to the hardware/software manufacturing, as well as the media sector, and caused the opposition and alliance of the traditional consumer electronics industry and the IT industry.
While manufacturers involved believe firmly that the vision is eventually going to become true, there are arguments about how it looks like. Here I would like to warn once again: it is dangerous for businesses to mistake their own demands for the demands of consumers. It is impossible to get a look at the real picture of the future development without knowing the difference of the two first.
[+] Now, the demand for the digital home is just from manufacturers.
The origin of the digital home sector is very simple: the slowdown in the market growth of the IT hardware and software industry. The practice of driving the market performance with product functions, which was effective in the past, is at a standstill, at least for now.
Consumers are no longer desperate about the CPU speed or upgrading software. A desktop with Windows XP would be good enough for at least two or three years, so long as it could enable Internet access and offer Office software.
Manufacturers, however, are trying to create space for consumers to buy their second computer, for example, a desktop at home and a notebook for use on the move. Essentially, the digital home is an attempt to create a market segment of a second computer in the sitting room.
For traditional consumer electronics manufacturers who have been tied to sitting rooms and kitchens so far, the market has been saturated for a long time. If, in this new digital home tide, they could booster their sales, or even introduce new changes to the long-stagnant sales rank list, that would be a good opportunity, wouldn't it?
For every additional computer installed in the sitting room, Intel will be able to sell one more CPU and Microsoft one more Windows system, not to mention all the other suppliers—the graphic card, sound card, hard drive, and memory manufacturers can all benefit from a share.
[+] Does the digital sitting room need a control center?
Hence the concept of the home server is proposed, holding that, in the future, all digital appliances will need a host computer, which can not only access the Internet, but also connect all the appliances (through wired or wireless links), store and deliver digital contents. The home server, of course, will allow remote control.
Obviously, this seemingly inevitable vision is a demand of manufacturers. The question is: is it a demand of consumers too? So far, there has been such user experience of connecting all other appliances into one, which is the TV set (it connects the audio system, the DVD player and the game player).
Is the home server going to take the place of the TV set, or becomes a peripheral product of the latter, or to turn the TV set into just a display panel? If it is the first case, the home server must have a built-in TV. So far many products have been introduced with the aim of integrating the TV with the computer, but none is successful because of the problem of the operating interface.
For the second and third cases, the home server is nothing but a network hub plus a keyboard. It doesn't matter at all whether it is placed at the sitting room or not. Let's take another viewpoint. It is better to connect the computer in the study with the TV in the sitting room through wireless links, isn't it? If so, there's no reason for consumers to buy a home server.
In addition, we all believe that digital appliances should be networked. Yet there is another scenario: the digital appliances are networked, but not through a host. In other words, if there's a standard that enables the networking and data exchanging among the digital appliances, there's no need for a host.
[+] The imagination of a digital home
IT manufacturers have made a lot of efforts to make the computer an essential part of the sitting room. In the first place, the interface is reduced to contain only icons. And then the keyboard and mouse are replaced by the remote controller, in an assumption that this would be easier to use and fit better with the habits in the sitting room.
Yet underneath this mindset is a fundamental contradiction: to become the control center of the household, the home server should have powerful function, far more powerful than what a remote controller could handle. Too simple to enable the complicated functions, remote controllers have become a big trouble for digital appliance users.
One crucial challenge is the fact that the user will have to handle the computer two meters away, which makes it difficult to read things on the screen. I tried such a product before and was very eager to throw away the remote controller and grab a keyboard. But I found soon that I had to look down at the remote controller and up at the screen two meters away again and again. That is enough to drive the user mad.
There are two possible solutions. The first is to move the host back into the study, give it the keyboard and mouse back, keep it at an appropriate distance from the screen and get it wirelessly connected with other appliances. The second is to make a full-functional remote controller with a keyboard, a wheel (to replace the mouse and be handled with a finger), and a LCD display, as a mini-sized PDA.
In other words, consumers may control other digital appliances by looking at the display of the remote controller. As a matter of fact, we have seen such remote controller interface on air conditioners, and they fit perfectly with consumers' experience of using the appliance. The key of the digital home is the remote controller in consumers' hands, not a host at a remote end.
The home server will not be so marvelous as manufacturers have described. They will be nothing but a carrier capable of storing digital contents. It does not matter where they are placed. If digital appliances could be networked without a host, what consumers hold in their hands would be the real control center with preliminary computing powers.
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Prev : It All Boils Down to Brand Names Next : Google's Choice (1) Lessons for Portals
- Today in History
The Web 2.0 Revolution (7) Death of the Intermediaries - 2006/10/15
Another Picture of Digital Home Market - 2005/10/16
Corporate Website a Handful (3) Strategic Alliance Why? - 2003/10/12
