Telepocalypse

Lock-down screw-up

From Russel Beattie comes this gem

Okay, about the Motorola i730: It's a really cool phone, but... you can't put your own apps on the phone even with a cable unless you get a special application approved by NEXTEL Moto has this program called the Java Application Loader (JAL) but only "JAL Lite" is readily downloadable and it won't load any application that uses the network classes. So even though I bought the cable and ran that app, I still couldn't test our map-based J2ME client here at work on the phone (which was the whole reason to get the phone in the first place!). I've submitted an application to NEXTEL to get the full-featured JAL and I've been Googling for workarounds. Stay tuned on this subject.

The PC is an open architecture, and Windows is open in the sense that Microsoft doesn't control what apps can run on it. (Although if you make too much money doing it, watch your back!) These PCs are all wired up via an open network, the Internet. The result was a stunning success.

Cell phones have been locked up from the get go. The architecture is closed. The carriers control which applications go in their portal, and how applications are signed and what APIs they can access as a result. The result has been mediocrity.

The one big mobile applications success has been iMode and its imitators, which created a pool of "official" branded content whilst also positively encouraging a primordial soup of innovative new applications. The technology was made as un-proprietary as possible within the constraints of the device.

Prediction: open systems will continue to crush closed ones. Why? The obvious reason is that open ones are fitter in an evolutionary sense. An application that almost hits the mark is easily superceded by one that scores a bullseye. In many ways, that's the core concept of end-to-end or the stupid network.

There's a less obvious reason, too. It's what I would call the openness ratchet effect. The easy, zero cost way of differentiating yourself from your competitors without incurring product development costs is to be a bit more open. Someone will always make the jump.

Funnily enough, in the music business they're busy trying to lock down the entire system. But the harder they fight to lock it down, the more boring and corporate the music has become, and the lower the sales. People have been substituting their entertainment dollar for other less restrictive and more interactive products.

The music industry relies on legally granted power over its customers to perform price discrimination. For the music industry, they want to charge a vastly increased amount to play a 30-second clip in a TV advert compared to you playing it on you iPod. Copyright is the mechanism to do that.

For telecom, the price discrimination control may be:

• technical (e.g. firewalls, signed applications),
• contractual (e.g. Comcast don't allow VPNs on their home broadband service, and Time Warner don't allow servers), or
• regulatory, e.g. by the extra charges that get tacked onto a phone bill as "FCC Subscriber Line Charge". Nobody goes to prison for fraudulent advertising because they're allowed to not disclose the true price of the voice product. No other communications service is allowed to be misrepresented this way.

In many ways the primary purpose of an old-fashioned telco isn't pipe provision but price discrimination. Smart networks to classify, filter and meter traffic. Complex pricing plans and megamillion dollar billing systems for contractual confusion. And an army of lawyers. Price discrimination of service use is the core competence.

The trick to survival in the long term is to forget about piracy or disintermediation, and think only about profit. Get a smaller slice of a much bigger pie, rather than try to grab the whole pie for yourself. Unfortunately, the music business and communications corps keep backing themselves into a corner. New value creation will ultimately route around your toll gate, like it or not.

Posted by Martin Geddes at 4:48 PM

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» Telepocalypse: Open systems will continue to crush closed ones from Lance Tracey

Prediction: open systems will continue to crush closed ones. Why? The obvious reason is that open ones are fitter in ...

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Tracked on April 13, 2004 9:02 AM