Mobile Data, Who cares?
Jonathan Goldberg, Research Analyst for Deutsche Bank just returned from Mobile World Congress in Barcelona. He is moderating the TiE wireless panel that Tim Chang and I are hosting on March 3rd. He has also agreed to engage in a 1×1 dialog about his latest findings at MWC and emerging industry trends and forecasts.
Jonathan recently published “Digits #12 – Anarchy in Barcelona.” This report details his observations on Palm Pre, Mobile OS anarchy, Attack of AppStores, Science Fiction Features, Android’s missed opportunity, and then some. Here is a light-hearted piece from the report, published here with his permission.
After a week of days filled with twelve hours of back-to-back meetings, five miles a day of working to, from and around Barcelona’s Fira and endless cups of café con leche we felt fully immersed in all things wireless. We were in the Mobile Zone. In such a state it’s easy to lose perspective, so we were grateful for a chance to spend the last day of the week with friends who live in Barcelona.
For people in our industry 3GSM/MWC is THE event of the year. For the residents of Barcelona the show is hardly noticeable. It’s just a trade show on the far side of town. For residents of New York it’s pretty similar to the American International Toy Fair (you just missed it) or the NYC FIRST Robotics Competition (tickets still available) at the Javits Center. So over a leisurely lunch of the World’s Best Paella (we have already booked the location for next year’s client dinner) we asked our local friends what we thought of mobile data. This generated a lot of blank stares. After some explaining, it dawned on us that most people are vaguely aware of data cards, iPhone apps and smartphones, but very few have strong feelings about these things.
Our company at the table ranged in ages from 2 to 70, occupations included a web video IT admin, a few teachers, a biotech business development/marketer, a toddler, a writer and an unrepentant Marxist-Maoist (do not get him started on the Stalinists). Almost everyone had a cell phone and a laptop. Most were social networking enthusiasts with Facebook accounts. We even did an informal survey of the ~50 diners in the restaurant and found lots of Nokia, a bit of Sony Ericsson, a few iPhones and a surprising number of Blackberry Bolds. Other than e-mail and SMS, however, very few people at our table had much interest in mobile data. The whole idea was too abstract.
Now we are not making the case that mobile data is useless or boring. Instead, what surprised us was that this modern, tech-savvy crowd just had no ompelling reason to use their mobile phones for much other than talking. A few had tried out some mobile services, but found the experience too frustrating. For instance, one person had once owned a WinMo phone but gave it up after one ROM upgrade too many. No one other than ourselves had an iPhone, and most cited the cost of the data plan for staying away.
We relate this as a cautionary tale. Despite the recent surge in mobile data traffic, we think the industry’s growth rate could take two distinct paths. If consumers get very interested in the space we could see current exponential growth rates continue for many years. On the other hand, if we as an industry fail to find reasons for consumers to use mobile data then we think growth could slow over the next few years along with the overall global economy. If we take that path, we would expect a resurgence in growth in a few years as mobile data becomes more pervasive. We remain optimistic about the underlying trends, the key question for us will be the pace of adoption.
When we speak of mobile data, we have found that implicitly most industry participants are still looking for the super-compelling “killer app”. We have grown wary of the concept and skeptical we will ever find one. The killer app is dead. Far more important we think will be rationalization of carrier pricing plans and the software environment. The pricing front already shows sign of improvement, especially in Europe where all-you-can-eat data plans can be had for Euros 10 a month.
The software front, however, remains in limbo, which brings us back to our lunch party. In our view, a large part of this group’s ambivalence towards mobile data stems from confusion. This group was comfortable with technology and had gotten accustomed to a certain level of ease-of-use. This was lacking in the mobile world and it seemed to turn away people who would otherwise be target users. If the industry wants users to adopt mobile applications it needs to produce coherent user interfaces. Today’s hodge podge of user interfaces and operating systems fragmented brand by brand and model by model creates too much confusion. We think vendors would either rectify this or the growth in mobile data usage would slow as the technology slowly fills custom niches.
We offer up this anecdote as a cautionary tale. We are actually generally optimistic about trends, and we think the industry will get it right, but we think it’s important to keep in mind there are other alternatives.