This chapter is from the book
This chapter is from the book
This chapter is from the book
Nokia and DoCoMo Versus the Old Guard
Mike Hill, general manager of IBM’s Global Communications business, described for us the changing climate in the wireless carrier space. "Voice revenues (as an application) are declining as far as the price point, but the volumes are going up. Cell companies have to continue to provide voice services, but the costs for providing them are increasing. How will they recover that revenue and grow? By offering new applications, most telcos are gearing themselves up for this new opportunity landscape." A market that has more than 170 million subscribers in the United States alone—nearly every American adult—is an attractive market opportunity for additional services.
But it’s not so straightforward. First, there are two competing approaches. Some device manufacturers, such as Nokia, want to build more intelligent devices that run a number of applications locally (i.e., with much of the application processing done by the cellular device or PDA itself). The other camp favors a "thin-client" model with minimal processing at the consumer end of the connection and more processing at the service provider end, resulting in lighter-weight (and cheaper) handheld devices. "We’ve seen such pendulum swings many times in the regular computer industry. Typically, as speed and ubiquity of communication infrastructure increases, services migrate back to the center and allow for thinner clients. We’re seeing wireless speeds and coverage soar, so we’re likely heading for service provider services," extols Hill.
Hill goes on to explain that the adoption rate of any new cellular service is highly dependent on availability of a wide range of extremely easy-to-use applications available for it. We saw that the success of the PC in the 1980s was driven largely by the broad availability of applications made possible by Microsoft’s development model, which encouraged a multitude of small software companies to write application software specifically for MS-DOS first and Windows later on (far unlike Microsoft’s rivals of the period). However, playing out a similar scenario would be more problematic for the U.S. cell industry. As Hill puts it, "The only model our telcos know is a world where they own everything." In contrast, DoCoMo in Japan is fabulously successful because it has recruited 80,000 software vendors (ISVs) to write applications for its infrastructure. "The DoCoMo model succeeds in Japan partly because they have crafted a win-win model between themselves and the application and content providers, which allows many firms to develop services on a profitable basis. That is a lesson that all service providers should learn from," continues Hill.
Why is this interesting to us as hunters of Inescapable Data incarnations? The apparent rigidity of old-line telcos is currently a barrier to a wider adoption and wider penetration of wireless data connectivity for those interested in crossing the connectivity divide. In the interim, the only people crossing the divide are those who are sufficiently attracted by the limited number of applications available. Thus, the "have nots" presently outnumber the "haves." In time, the logjam of have nots will loosen and break free as more compelling applications bring ubiquitous wireless communication services to all who will embrace them.