Business ignores mobile Internet at its peril

location based services


Forget the personal computer. By 2010, the dominant device will be the 3G smartphone and all internet content will be formatted for the cellphone. So says internet guru and telecommunications consultant Tomi Ahonen, who was speaking at a First Tuesday event in Johannesburg this week. First Tuesday is non-profit organisation that hosts forums about technology, innovation and policy in 18 countries. Locally, the Communication Users Association (Cuasa) and the electronics Industries Federation count among its supporters. The facts speak for themselves. SMS revenues outstrip those from e-mail 14 to 1 ($70bn from SMS versus $5bn from internet messaging), and there are 1,4bn SMS users compared with 680m e-mail users on the globe. “The SMS business generates more revenue than the music business ($30bn), Hollywood ($20bn), and video gaming software ($20bn) businesses combined,” says Ahonen. While there are 750m PCs and laptops on the planet, costing an average $750 a unit, says Ahonen, there are 2,1bn cellphones (half of which are GPRS or 2,5 generation), which cost $300 a unit or $50 if subsidised. Mobile users are young (downloading mainly music and games) and willing to pay for their mobile content, while internet users are mainly adults looking to access content for free (the most popular content is pornography and gambling). Ahonen says the PC is a transitional type of device – much like the Zeppelin was when air travel was first introduced – and that the mobile phone is the platform that the internet will be designed for in future. “Just because the first type of technology gets users does not mean it will always dominate that form,” says Ahonen. What we see as the future is already happening in the Far East, especially South Korea. Ahonen says 30% of the Korean population maintains a blog from cellphones (called mobile blogging, or moblogging); 14% of videogaming has moved to the mobile phone, and 95% of TV interactivity (for example, voting on reality TV shows) is done via cellphone, not the PC. The cellphone has become so inextricably linked to people’s lives, that 60% of cellphone users take their phone to bed with them,” says Ahonen, citing a suvey conducted by advertising consultancy BDDO in April 2005. It has become the ultimate access device: people can access information, listen to music and radio programming, watch TV shows and movies and interact with others – all while the are on the go. “It is the first personal mass media, first always-on media, first always carried media and the first with built-in payment channel,” says Ahonen. “Nothing else has such an intense relationship with us as the cellphone.” Herein lies the beauty of the system: while it is difficult to bill fixed-internet users, billing mobile internet usage is easy as the systems are almost “built-in”. Why would users want to pay for something when there is a free alternative though? Ahonen provides many examples of where people are opting to pay: we buy books and magazines and get them delivered to our homes rather than go to the library; we buy bottled water rather than drink from the tap. “Web access, and thus web use, is not free. Broadband costs do become significant. Also, content is increasingly becoming billable, and companies are looking at ways to bill for usage of applications that used to be free, e-mail like Hotmail.” Business has to understand the digital community Ahonen says 49m people maintain blogs – web diaries where others get to comment on what has been set down on virtual paper. Theses are very well-read, says Ahonen, with 27% of internet users reading the blogs written by 5% of users. The power of digital communication – encompassing blogs, online forums where people discuss anything from local politics, cooking recipes and how to fix washing machines, and always-on options SMS – has resulted in the formation of “digital communities”. These have become a force to be reckoned with, with Business Week labelling them as “the biggest change since the industrial revolution” – a strong statement, given electricity and flight only happened afterwards. People are able to keep government, news organisations and business corporations in check with the power of their digital network. Ahonen gives the example of respected lock manufacturer Kryptonite, which has a reputation for making impenetrable locks. The company was almost bankrupted after the true story spread on the web that its new lock could be picked by cheap plastic pens. After countless denials from Kryptonite, somebody filmed the process of picking the lock and uploaded the home movie onto the web for the world to see. Computer company Dell also has a story of a digital faux pas to tell. “For over a decade, Dell had cultivated a user forum, where Dell users could help each other,” explains Ahonen. ”In August 2005, Dell cancelled the free user forum, because there were too many "negative" comments. Where are those passionate Dell users today, helping other Dell users? On Hewlett Packard’s site!” It’s not just Ahonen who sees the future as mobile. The editorial in the July 29 edition of The Economist reads: “There is no question the PC has democratised computing and unleashed innovations; but it is the mobile phone that now seems most likely to carry the dream of the "personal computer" to its conclusion." The new head of internet darling company Google, Eric Schmidt, was quoted by the Financial Times in May as saying: "Mobile phones are cheaper than PCs, there are three times more of them, growing at twice the speed, and they increasingly have internet access. Mobile is going to be the next big internet phenomenon. It holds the key to greater access to everyone – with all the benefits that entails.” When we think of SA, “these experiences are not yet relevant because there are not high broadband penetration rates, but it is in the future. It’s just a matter of time,” says Ahonen.