3G guru Tomi Ahonen thinks that…
[By 2020] the “free” non-Mobile phone based “old-fashioned” internet has all but vanished.
What do you think? Sounds like he’s forecasting a complete victory for IMS and that a whole generation will suckle at the teat of the mobile carriers — regardless of the cost and Soviet economic outlook.
What do you think?
UPDATE: Tomi has written back in response, and rather than let his comment languish in obscurity in the comments section, I’ve upped it into the extended section of this post, deleted the original comment, and appended my further rambling observations.
Posted by: Tomi Ahonen at June 14, 2005 08:03 PM
Dear Telepocalypse,
Its funny you would pick up on that point on my 20 year forecast (which was focused on the future of the cellphone, not the internet or IT industry). But yes, I did say that by 2020 the “free” internet model will be extinguished and confined to the heaps of history.
This is no new point by me, and in fact strongly endorsed by many who bought my second bestseller - the world’s only book on the business of advanced cellular telecoms, m-Profits (global bestseller in October and December 2003). I clearly stated back then that this trend was inevitable. There are more users on the (paid) mobile internet. There is no built-in payment mechanism on the fixed (free) internet (ie you have to use a credit card etc) but there is built-in payment on the mobile internet. And the users on the mobile internet are totally agreeable to paying for content, while on the free internet the content owners are beggers.
Let me see? More users. A built-in payment mechanism? And the users are willing to pay? Of COURSE all best content migrates to the mobile internet as soon as the mainstream population gets “smart phones” that allow that use.
Note first on the “communist” model - it is the EXACT opposite of what I posted. The current free internet model is the closest thing to communist ideals - having all content and all applications free, shareware, etc. Just like in the defunct Soviet Union, if nobody pays for it, nobody maintains it. Services disappear and websites are often loaded with obsolete content.
Consider this. In Japan and Korea today, more users are on the mobile paid content internet than on fixed “free” internet. 84% of Japanese cellphone users already PAY for news content on their cellphones. 30% of Japanese use cellphone services while watching TV. And if you think blogging is the future, think again. MOBILE blogging is the future. In Korea already 5.6% of all cellphone users are active mobile bloggers. In America only about 1% of all fixed internet users are active bloggers.
No, it is not at all my point that a communistic view is approacing. The EXACT opposite. A robust, money and profits based, fully commercial internet is coming. Not through IPV6. No, it is already here, in the form of the advanced wireless internet. And that future exists only in Korea and Japan today.
So yes, by 2020 I am certain the last vestiges of the old fixed internet will be turned off, just like today nobody uses Gopher and nobody talks about the Arpanet. There are almost 2 billion cellphone users already today. They replace their phones every 24 months. In only a few years these all will be very advanced 3G and 3.5G smartphones with fast access, color screens etc. With built-in payment, of course the best content will also be there.
I know it is difficult for Americans to accept that the future of the cellphone is not run by American companies. Yes, the cellphone was invented in America, but Japan, Korea, Finland, Italy, Israel, Hong Kong etc are 5 years ahead of you. Visit those countries and see the future.
Or read one of my books. I recommend my latest, Communities Dominate Brands, available at Amazon.com and any major booksellers.
And visit our blogsite for more of this future at www.communities-dominate.blogs.com
Thank you and keep up the excellent work
Dominate !
Tomi Ahonen :-)
Tomi
Wow! That was quick! Thanks for the reply. But I beg to differ in several — but not all — aspects. Critically, I see the world through a connectivity/service divide, rather than a fixed/mobile one.
It is possible we are using the word “Internet” to mean wholly different things. I see it merely as a service-agnostic connectivity layer. Do you really believe that in 20 years we’ll still need the permission of a cellco to get the features we want on a handset, be able to run the applications we desire, and send whatever data we need without being price discriminated to death? I think not; which implies there’s an ability to make unmediated connections between peers, who can choose to communicate any messages of their choosing. That’s the Internet in anything but name. Granted, it will have to evolve from the current one which is a lab experiment that escaped before the trials were finished.
The “free internet” model you refer to must be one solely at the service/content layer; the connectivity is happily paid-for by the users on a capitalist basis. When you use the term I believe it refers to both service and connectivity, with implicit cross-subsidy. My contention is that this model will unravel.
The power of billing is indeed a strong attractor. But that the power of commercial providers of connectivity — and their consequent ability to bill — will be preserved across the next twenty years seems suspect on several counts. Services will be billed for, but by whom is a more open question.
In the early days of mobile connectivity, with paging, the connectivity was the vast bulk of the value being delivered. The service — of storing and forwarding small strings of text — required little IT infrastructure or intellectual effort. Thousands of cell towers and trenches needed a lot of work.
By the time of 2G cellular, little had changed. The network was optimised for one simple duplex audio-stream application. The great majority of the value still came from the connectivity provision, effectively rented on a call-by-call basis.
Now we’re seeing two things happen that are turning the tide. I’m calling the apogee of the model you describe.
Firstly, the value of the services is starting to rival and exceed that of the connectivity. The connectivity is becoming ever-cheaper because of technological progress; the services represent both a claim on human intellect and entrepreneurialism — which doesn’t follow Moore’s law — as well as access to certain well-defended economic assets (e.g. the eBay marketplace) which can charge high rents.
The service providers are therefore unlikely to be willing to be fleeced by the carriers who in turn wish to turn themselves into banks with huge free cash floats bearing zero interest. That doesn’t mean the handset won’t be a payment token – it will – but that the carrier is not dead certain to be the mediator of those payments.
Indeed, we may start to see “reverse-subsidy”: services like Skype, with whom you have a billing relationship, will partner with connectivity providers like Boeing Connexion. $30 for unlimited Wi-Fi on you flight, but use your Skype account and only pay $5/hour for Skype access. Companies like Yahoo! will likewise aggregate large numbers of services and do deals with telcos and hotspot aggregators to hide the access charges in the service fees. Superficially this looks the same, but the locus of power has moved a huge distance.
The second driving force is that the connectivity you describe as arriving in 2020 and beyond is likely to be delivered in radically different ways. The 5km haul to the nearest tower is going to be replaced with 30m hauls to your nearest Wi-Fi (or technology successor) access point — at least when you’re in the “home” and “work” domains. By 2025 we can expect mobile mesh networks to be common in the “other” domain, again reducing the power of network operators. (Check out Microsoft’s R&D in this space as a precursor for how Windows PC will effectively create a “WinNet” — access fee to B Gates Esq., Redmond, WA. How long till we see MotoMesh and NokiaConnect as rival public networks?)
This is simply a matter of physics and economics — faster speeds are easier over shorter ranges; free unlicensed spectrum is noisier and only allows shorter range anyway; and broadband in the home and office is becoming a norm already, providing a ready-made back-haul. Thus the connectivity becomes fragmented in its supply. Those who build and operate networks are not guaranteed to be the ones who assemble the cross-network provisioning or do the billing and retailing. Concurrently, we are likely to see a significant growth in municipal or sub-divisional open access networks; personally I believe self-interest in rising property prices will drive people to vote and demand these.
We’re already seeing horizontal layers emerge where companies focus on simply doing one or two layers of the stack well: Boingo and Wayport doing provisioning across networks, plus retail; cellcos offering more and more MVNOs, and being left to do only network build-out and provisioning. I do not believe that attempts of cellular operators will be able to achieve a “reverse takeover” of all these landline connections that are used for local mobile connectivity.
There are also some external forces at work that argue against the cellcos being your bank: companies with whom you have an even stronger financial and customer intimacy bonding (e.g. Tesco in the UK); banks, who are unlikely to be passive in watching their payments business get eaten away from underneath; and governments, who may come to heavily regulate money-taking by telcos (and already do; see California regs on third-party charges on telephone bills).
I also think the power of the operators will be eroded by the “Skyping” and “Craigslisting” of the Net. Most of the value to users comes from interaction with close friends and family – not from glugging media content. Once you’ve paid for connectivity, the service element is trivial; so trivial you can give it away for free – like Skype. Even the “meeting places” that are left – many of which used to have entry fees – may get replaced by nearly-free alternatives. Thus the power of billing is again weakened; the story is really of a vast consumer surplus being generated from mostly peer-to-peer interaction. Because by definition this isn’t monetized, wheras much of the media content is, one can be distracted into watching only the money and assuming that’s what is driving the user behavior. Instead, you need to watch the gleam in their eyes as they use tools like Skype.
If you drop the price of “idea capital” by three, six or nine orders of magnitude, even a few motivated commies can keep a lot of people fed!
Your comment on mobile blogging is entirely correct. Indeed, it’s unfortunate that “word blogging” and “event blogging” have got confused; we can use a pen for writing and drawing, but they’re distinct activities. (I can’t do the latter at all!) Mobile blogging fits Douglas Galbi’s presence model of “being there”. It lets you share the experience, unlike MMS which merely allows a technocratic sending of a picture.
As a British national and resident who lived in Kansas City for a while (“an island city surrounded by nothing but hundreds of miles of land”), I’m cautious of extrapolating from isolated cultural groups.
In summary, I think the forces that are separating service and connectivity for fixed access, and severing the cross-subsidy, will also apply to mobile access. The same crises will unfold, only slower. The answer will be new ownership and financing models for connectivity. And yes, that connectivity will be global, service-agnostic, and cheap – just like the Internet. Even if the cellcos manage to sustain the role of billing agent – which is uncertain — it doesn’t automatically follow that they will be able to cross-subsidise connectivity. And if they can’t, the business outlook for mobile operators is as sick are wireline’s is today, certainly over the periods you were asked to foresee.
And yes, I’m going to keep reading your blog (already well established in my reading), commend it to my readers, and look forward to posting some reviews of your books in the future.
Subserviently and long-windedly,
Martin
TrackBack URL for this entry:
http://www.telepocalypse.net/cgi-sys/cgiwrap/mgeddes/MT/mt-tb.cgi/505.
To attempt to study the market without studying man is as impossible as to study light without studying the eye.
"But yes, I did say that by 2020 the “free” internet model will be extinguished and confined to the heaps of history."
"There are more users on the (paid) mobile internet. There is no built-in payment mechanism on the fixed (free) internet (ie you have to use a credit card etc) but there is built-in payment on the mobile internet. And the users on the mobile internet are totally agreeable to paying for content, while on the free internet the content owners are beggars."
I wouldn't agree with the first point.
"There are more users (who pay for content) on the (paid) mobile internet.
But here comes the point:
"What is content, what is good content?"
And besides:
How can he be so sure to know the Future?
To be able to predict the future you must consider parameters that he doesn't.
1) The Present
And very likely the future, at least the far future (because 2020 is very far for technology) won't be like the Present.
"Everything must change, so that everything is always the same"
What never changed and never will change is what goes under the name of "Human Nature".
History, at least the history of humanity was made by men and History ALWAYS repeats itself, because man always repeats himself (or herself in the case of women).
Mobile phones are very successful today, even too much and THAT is why in a very near future they will disappear, leaving the place to something "new" and "different".
They are not a necessity, they are not something you cannot live without.
They are a fashion and as a fashion someday, somebody will decide they are "OUT".
2) What is content? What is good content?
"Ask a toad what is beauty...he will answer that it is a female with two great round eyes coming out of her little head, a large flat mouth, a yellow belly and a brown back..."
Certainly very far from what WE would define beauty.
The same applies to "content".
3) Free
That is a magic word, so magic that people haven't understood yet that there is nothing really free.
Even on the Internet.
And it looks like HE didn't understand it too.
4) Communism
That is a theory that works perfectly on the paper and doesn't in reality.
Because Human Nature is not "communist" in its substance.
All men think they are different, and as different, they want to prevail, and wanting to prevail kills the communist theory.
Besides, it even goes against the "Survival Instinct" which is the one that drives men's life, so not only is anachronistic, it is also against life.
Communism has very little to do with the Internet, I would see them as two opposite. (even if in both the word "free" has the same meaning "something to catch people and better fucking them")
"A robust, money and profits based, fully commercial internet is coming."
In that I agree.
But why should it be on a mobile phone?
In an Era where the tastes are getting so sophisticated, where a Plasma screen is getting obsolete even before becoming widespread, in an Era where the size of the screens is getting everyday bigger, because virtual reality will be the only real reality, DOES STILL SOMEBODY THINK that people will like to read a Blog, to watch a football game, to look at a movie, to listen to good music, on a small, lousy screen, with small lousy earphones?
Yes, the screens are getting better, the earphones are getting better, but at the same speed the OTHERS, the big, normal size, are.
Who is going to win?
Quality or NON Quality?
I bet on the first.
Patrizia
PS Virtual reality will be the only reality for many of us.
Isn't it better to enjoy it on a big screen, with the best Dolby surround, may be sipping a good drink?
And the content?
It is good WHAT you think is GOOD.
Dear Telepocalypse and Tomi
you guys should discuss more often :-)
I am going to have a lie down now.
and Patrizia dear, mobile phones are NOT fashion. Prada and mobile phones do live in the same context I am afraid. But I love your poetic philosphical approach to life.
Don't believe me, go and read Timo Kopomaa's book "the city in your pocket", anyone of Tomi's, our book communities dominate brands, or, Howard Rheingold's "smart mobs."
Alan
Posted by: at June 15, 2005 08:50 AMAlan,
just because I CANNOT resist commenting...
Good markteting is not Filling needs, but Creating needs to be filled.
And that was the case of portable phones.
And they are not only a fashion, they are a very unhealthy fashion.
It is true, the phone in itself is not dangerous, but the microwave oven in which we are living is NOT a good enviroment.
And sending data in addition to all the craps we are sending now, won't help it.
How many out of 100 calls are worth the money they cost?
Of course viewed on the users' side, not on the side of the Telcos'.
But this too is a stupid question, philosophically speaking, a call is worth as much as the caller believes it is...
Patrizia
Posted by: at June 15, 2005 02:11 PMDear Martin and others
This is a wild discussion and we could write volumes of books just on these topics. Some of the issues covered here I have covered in my previous books and public presentations. Still there are so many that I must group the replie(s) and deal in parts.
So first, I will only respond to Martin's initial long reply. Cool, thanks, I find very good thoughts and we probably intially already agree on more than we disagree. I hope to raise some new issues. (For all readers, I will also link from our blogsite www.communities-dominate.blogs.com and summarize this discussion there as well. Any readers of this thread will find plenty more fascinating recent postings at our blogsite and in the book Communities Dominate Brands.)
A few general observations we probably can agree upon. We are talking about the future of the internet. We also discuss services and apps on the internet. The access methods and devices. The money side of the internet. Obviously my interest is looking at it from the more recent and still emerging mobile telecoms/cellular phone/wireless internet side.
With that, it is clear that the world leader in the penetration, use, maturity of the "fixed wireline based" and "free" internet (both broadband and narrowband) is the USA. Canada, Korea, Sweden, Finland, Hong Kong and Singapore are close behind. By contrast the USA is one of the most seriously lagging countries of cellphone penetration and any cellphone based services from SMS text messaging to ringtone sales to mobile gaming to ticketing to banking to cellphone-TV etc. Here the world undisputed leader is Korea, with Japan, Finland, Italy, Israel, Singapore, Sweden, Norway and Austria close behind.
If we look at a country like Finland or Korea, where both fixed wireline and free internet penetration, and cellphone based wireless internet are both high, we can learn some lessons. If we look at a country where cellphone based internet is exceptionally high but fixed wireline internet penetration is low - eg like Japan or Italy - then we are easily misled into over-estimating the impact of cellphone based wireless internet? We agree on this? If so, then by the exact same logic, if we compare the two, and use the USA (or Canada) as our country of analysis, we are easily misled by an over-estimating of the impact of the fixed wireline (and free) internet model.
This is a vital starting point. I speak to American IT and telecoms audiences regularly, and we always have to start with this. In the USA the IT/telecoms experts and press and analysts all are exceptionally excited about their vantage point. They over-emphasize Blackberry, i-Pod, WiFi and WiMax, etc. It is like discussing the future of road construction for a major city, and getting the experts to come from China where bicycles outnumber cars 1000 to 1. The Chinese experts would over-emphasize all the things we need to consider with bikes, but probably not think of the automobile needs..
My point with the above is, that if you the reader, are based in North America, please consider these issues I raise with a most open mind. You might be the "Chinese bicycle planner" designing a modern car-filled city. I don't mean I am always right, but I ask for your open consideration and especially look at the facts as they emerge in markets where there is no bias one way or the other (eg Korea, Finland, Sweden, Singapore etc)
But I digress. To our points. On the internet content and applications. I return to my early argument that the basis of the internet services and apps model is that close to the philosophies of communism. A hippie-like philosophy. That all should be free, that all should be shared. That we should all contribute to a common good. I was there when we moved from the TCP/IP based networks to suddenly the "internet" when it was on the cover of Time Magazine in 1994. I worked for the first ISP on Manhattan at the time. Nobody wanted commerce on the internet. Nobody wanted ads there. No money, no billing..
That free model has outlived its shelf life. It got several jolts of artificial respiration to sustain itself with the advent of internet advertising. So what do application owners and content owners now want from us? Payment. Hotmail will kill your contacts and stored mails in the free account if you were inactive for 30 days. This is subtle tactics to try to get users to upgrade to the paid form. At one point there were free newspapers on the web. Now increasingly we get only free access to this week's content, if you want older content? Pay.
So the principle that once ruled the "fixed wireline and free" internet - that all content and apps are free, is slowly shifting to a payment model. Habbo Hotel is an excellent example of how cellphones are now used as the payment mechanism to deliver small value content to fixed internet services.
Furthermore we are seeing the shutting down of content and applications that used to be free or maintained by advertising revenues.
So then lets look at internet advertising. This is growing fast, no doubt. But. By far the biggest growth? Is not banner ads. It is the sponsored search on Google. This is the goldmine in internet advertising. You can do it if you are google. You can't get the sponsored links ad revenues it if you are Disney, CNN or the Economist Magazine website.
My argument is that the free content model for the internet is unsustainable. There HAS to be money coming in from somewhere. Early on the internet banner ads etc have brought in some revenues if you had enough eyeballs. But that is now also going through serious rethinking.
So Martin, to the connectivity and content layer point. I hear you and I have heard that argument a lot. I disagree on some of the fundamentals. Consider this. Connectivity in the wireline fixed internet space is a near-commodity. There is little in terms of technical barriers to deliver connectivity in the fixed wireline space. There is enough fibre pulled across America, and the technical ability to fit ever more capacity on those trunks. Fine. But on the cellular network, we are on a tightly restricted natural resource, the available radio spectrum. Forget data apps. Purely on voice, in all the leading cellphone penetration countries, in all major cities, from London and Paris to Tokyo and Hong Kong, the existing 2G cellular networks are beyond capacity. Dropped calls during drive time. Network congestion. It is physically impossible to dramatically increase the throughput of voice calls on cellular networks.
Note that I am not talking about unlicensed spectrum for 802.11 WiFi phones or their evolution, and 802.16 WiMax and 802.20 and other evolutions of the W-LAN (802. family) concept. With 3G and IP, the next evolution of cellulat telecoms, as they have had for over 3 years in Korea and Japan, and that over 30 million people already use around the world, the spectral efficiency for voice is an initial improvement of about 2x, at best 4x the spectral efficiency of voice in 2G.
For the non-techies, in laymans terms. Even if all cellphone users upgrade to the latest handsets and use the new 3G networks, there can only be 4 times as many voice calls on cellular as today. Thats it. There is an absolute limit to the available radio spectrum. We are looking at a scarce natural resource. To use an analogy, It doesn't matter how fast you make your airplanes, if my airport has only one runway, then there is a strict maximum of how many take-offs and landings I can have any given day.
(I will leave the WiFi WiMax etc discussion for later, no doubt someone will lead us to it ha-ha)
Now, on the fixed wireline and free internet, there is almost unlimited capacity to use, to deploy things like Skype to deliver "free" voice calls and various free services. Cool. But on cellular networks, if my network cell can only support 16 simultaneous connections and there is more demand than supply, then I will keep on charging for those connections.
This is the guiding principle why I am convinced the price of connectivity - on cellular networks - will not diminish to near zero.
Ok, so now an American angle. Several "wake-up calls". In Finland and Sweden, where internet penetration (broadband and narrowband) matches USA but cellphone penetration is double that of the USA, already 40% of all households have completely abandoned the fixed wireline telephone line to the home. 40% !!!!! For these households if they want the internet, they use their cellphone, or they go the internet cafe or the office or the library. But a solution like Skype will never sell to those households because there is no fixed wireline connection.
And you think its because of strange pricing? No. The voice calls on cellphones cost more than equivalent calls on fixed wireline phones. Yet young people are so addicted and committed to the cellphone that they have no use for a fixed wireline phone. A study in Italy showed that 80% of all cellphone calls are placed within reach of a fixed wireline phone (with cheaper or free calls) yet people use their cellphones. Similar stats from Japan.
People are lazy. If I call you on your cellphone, its easier to hit dial on that cellphone than start to punch out the numbers on a landline.
Another alarming stat. e-Mail. A study covering Singapore, Hong Kong, Thailand, Philippines, etc, among young users who have access to both e-mail and SMS text messaging - and note that for all of these the e-mail is essentially free, while each separate SMS text message costs per message - the user preference is SMS text messaging. Even though e-mail is free.
A third example. Chat. In Finland most people have easy access to internet and could go to any number of free chat rooms. Yet they run SMS-to-TV chat, to participate in TV chat rooms, where EVERY message sent from the cellphone costs 81 cents (Euro cents, thats about 1 dollar). Imagine. Every separate short sentence you send to the chat board costs a dollar, and there is a free rival at your PC. These services are spreading like wildfire, in Finland generating 1000 messages per hour on each of the three commercial TV stations running all night 365 days a year.
The cellular phone is addictive. Even if we give the equivalent service at much lower cost - or even for free - then intelligent people all around the world will prefer to consume that service on their cellphone.
On the issue of banks. Just briefly, Korean mobile operators have partnered with credit cards. They take all kinds of payments directly to your cellphone, from paying gasoline to buying groceries. In Norway (Europe's leading m-Commerce market) Telenor does the same. You can buy ski resort lift tickets, airline tickets, buy flowers whatever, and pay for the phone, and select if it is charged to your telephone bill, or to be paid from the cellphone-connected credit card (assuming you qualify for a credit card, obviously, ie kids have cellphones but not credit cards)
This is a long and meandering rant.. Let me try to finish it off. I think we have many areas of at least near-agreement. In North America, the wireline model of the internet, increasingly on broadband, will live long and prosper. The youngest users in America are today becoming addicted to cellphones ie SMS text messaging, ring tones, cellphone based games etc. It may take longer, but when these grow up, their preferred tool is a very smart cellphone, not a laptop or PDA.
In Europe and Asia the smartphone penetration is way ahead of America. The 3G phone penetration is way ahead. The revenues earned by content providers are robust and significant. Cybird the ISP in Japan, Financial Times the website in the UK both became profitable in 2001 due to the revenues generated not by the subscriptions to their websites, but the massive revenues earned by their wireless internet sites on cellphones.
(hey, the battery to my laptop is about to die, am using a 3G connection at a cafe here in London. Gotta end now, will post more in a little while).
Dominate !
Tomi Ahonen :-)
Posted by: at June 15, 2005 04:33 PMI'm back, ha-ha..
Got to my power supply.. So back to Martin's long posting.
Martin you summarize saying (and please correct me if I paraphrase you wrongly) that content delivery will become increasingly inexpensive, AND that the cellular telecoms carriers will struggle to establish themselves as and maintain a billing relationship with content.
Very good point(s) and delivered again with clear focus from an American experiences viewpoint. However, consider these items.
The carriers in Asia and Europe are already becoming the preferred payment method for internet content, for TV-interactivity, and for paying citizen content providers to newspapers, magazines, etc. Cellphones are being used to pay for videogame content and for even accessing WiFi 802.11 hotspots.
EVERY carrier is deploying mobile payment solutions today. In leading countries check out these stats: in England 20% of the London congestion charge is paid by cellphone. In Finland 20% of the lottery is paid by cellphone. In Austria 20% of a sold out stadium rock concert was paid for by cellphone. In Finland 40% of busses, trams and subway trains in Helsinki are paid for by cellphones. In England 43% of a charity collection was paid by cellphone. And in Croatia 50% of parking is paid for by cellphone.
All this achieved by a technology innovation that is literally 5 years old. Credit cards did not achieve this level of cannibalization in 10 years, let alone 5.
Major Western content brands like Disney, CNN and MTV are on cellphones in Japan and Korea and making massive amounts of content revenues. The reason they are not in Europe and America, is that the carriers have been too greedy with the revenue-sharing arrangements. This is changing.
Finally consider the paid content by type. 70% of fixed wireline internet paid content worldwide is in these three categories: adult entertainment (ie porn), gambling and advertising. But on cellphone based wireless internet, 70% of the content revenues are from music (including obviously ringing tones as the biggest single source), gaming and information alerts. Which content model is more "mature" and more "evolved" and more "sustainable" over the mass market?
Today worldwide there are 1.8 billion cellphone users. All of them are personal. All of them can handle messaging (SMS text messaging) and all can handle mobile commerce ie ticketing etc examples as above.
Worldwide there are about 950 million "internet users". A part of those use shared computers eg internet cafes, university computer labs, employers' computers, and family shared computers. Over 100 million of these internet users in Japan and Korea access the internet via cellphone. So in reality there are less than 850 million "fixed" wireline internet users.
PCs are replaced about every four years. Cellphones are replaced every two years (in Hong Kong, Japan, Singapore and Korea every 9 months). Young users have a clear overwhelmingly stated preference of the cellphone over any laptop or PC.
More users. Easier billing. Customers willing to pay for content. The future of the internet is migration of the best content to the cellphone based, paid, wireless internet. As less and less free content remains on the free internet, and that becomes less and less maintained and up-to-date, there will be a mass migration of users to the wireless internet. I am certain of it. Young people all over Asia and Europe are literally voting with their dollars today proving that trend.
Dominate
Tomi Ahonen :-)
Posted by: at June 15, 2005 05:17 PMPatrizia
What a wonderful lyrical posting !
Many good points. First you ask how can I be sure. Obviously if you read my actual forecast posting at my blogsite (or were there in Ottawa to hear me) you'll see that I clearly state that I expect these forecasts to be wrong. All forecasts are wrong. You try to minimize the errors. But nobody can know the future.
And for what its worth, I was invited by the Canadian cellphone industry association (CWTA) to predict 20 years into the future. The reason they invited me is that I am the acknowedged global guru in this space, from chairing the various forecasting conferences to authoring the first business book on this topic to lecturing on the busines of cellphones at Oxford to my previous frequently sited famous predictions and forecasts for the industry, ranging from the 3G revenues forecasts to the global 3G association (UMTS Congress) and how services evolve from 3G to 4G which I was invited to do at the CTIA in New Orleans by the IEEE. So yes, I know these are guesses as much as those from anybody else, but I do have a history of being more right than wrong on my cellphone related forecasts in the past.
Item 1 - what is the present. I agree totally with you. The future will change MORE in ways we cannot anticipate than in any projections of trends from today. Even so, we can make many useful projections using Moore's Law, emerging technologies, disruptive business models etc.
Item 2 - What is content? What is good content. Patrizia, to save space I refer to my previous posting comparing fixed internet paid content and wireless internet cellphone paid content. I argue the cellphone kind is way better..
Item 3 - free. You state that "He didn't understand it" which I assume you mean is me, that Tomi Ahonen didn't understand free. First, I am totally a business and money person (all of my books have that as its guiding principle) and believe fervently in that there is no such thing as a free lunch. What is provided on the fixed wireline internet "for free" is not sustainable. If the content or service is sponsored or paid for by advertising, then it is not truly free. By truly free I mean shareware, freeware etc. That cannot sustain itself. But yes, advertising can sustain business, as we see in American TV, radio, newspapers etc. Of course. And I try to make it clear when I talk about truly free and when mean free inside quotation marks, ie "free".
I did discuss the free vs paid content and services again in great detail in the previous two replies to Martin, I trust you and I, Patrizia, can agree that I am not that ignoarant an Economist that I would propose free business models. And that my thread throghout all these postings is to seek actual payments (ie mostly via cellphone) rather than free.
Item 4 - Communism. Probably not really worth getting into a discussion of this mostly discredited economic model?
Next item (not numbered) on "commercial internet is coming... but why on a cellular phone". This actually is a very good point, and in my last two books and in most of my public speakerships I have repeated my theory of the bi-centric convergence. We have two convergence points. The battle for the pocket - already totally won by the cellphone. And the battle for the home living room - where the battle is only now being joined by Microsoft, Playstation, TiVo, the cable companies, the PC, the TV, etc.
Like I've been saying for three years, we have 30 minute tasks and 30 second tasks. Any 30 minute tasks we plan in advance, we do seated ie we want a confortable chair, we want a large screen and good keyboard (or control) etc. But 30 second tasks come interrupting our lives, we often multitask with them (ie drive car), do it standing, walking, on the small screen, in a hurry, with the avaiable tools meaning tiny keypads etc. Both will co-exist easily for the next 5-10 years. One will not subsume the other.
Not until we get projection ability from the cellphone (and thus large screens) and overcome the user interface (10-15 years into the future) can the cellphone take over from our plasma screens..
But again - my key point. THE MONEY will migrate to the cellphone. Check out Habbo Hotel and SMS-to-TV chat (and while you are at it, also Oh My News). These are all case studies in my latest book, Communities Dominate Brands. The cellphone becomes both the interactivity tool of preference and the payment tool of preference.
Dominate !
Tomi Ahonen :-)
Tomi,Martin, others,
i am an intellectual jellybean so please view my comments in that light...its most interesting following your discussions...
my problem with 20 year predictions is that it is based on current knowledge. 20 year predictions do not allow for technology we have no knowledge of today and hence cannot factor in.
if i am right it was only a decade back that Bill Gates said that 100kb(or some such figure) of memory was sufficient for any computer user!
for all we know, 20 years down the line a mobile phone as we know it may not exist. it may well be reduced to the size of an earpiece. we may access the internet over holograms.
and blogging may die out due to excess content
hmm... Tomi, you did say you expected your forecasts to be wrong, so what am i going on about!
let me go back to hibernation.
yadu
I am an Italian, I live in Italy and I still have good eyes and good ears.
What you mostly hear, wherever you are, is an infinite miriade of ring tones and people talking about stupidity, not caring who listens and hears.
I begin to be really concerned, because on TV you just see Spots of this or that cellular provider promising this or that.
The reality is that they want, and they will be succesful with all the tools they have, is to drive the telephone traffic from fix to mobile.
It is exactly what they did in the last 50 years with cars.
Since Fiat and the other cars manufacturers had to sell cars, they neglected the public transportation in favour of the private transportation.
We have arrived to a point where traveling is getting a nightmare, because our towns are mostly 500 years old and more and our roads are made for pedestrians and carriages, while they have to handle so many cars.
Parking is getting impossible.
In addition we had the Mont Blanc closed for several years and the Frejus had a big fire some weeks ago and will be closed for several months.
They do not know where to put all the trucks and with the holidays season it will be better stay home.
Exactly the same will happen to the mobile industry.
I insist it is a fashion, because nothing is so important it cannot wait a few minutes necessary to find the nearest fixed phone.
The real emergencies are much less than what you can forecast.
But they built the infrastructures and they are enormously profitable.
So much that nobody talks about the possible danger to health.
Nobody knows for sure.
And that means many know it is not healthy, but the money behind is so huge it is better to ignore the subject.
I do not say that the cell phones are not useful or nice to use.
I say that when it is too much, it is too much.
And I also say that everything in life has a beginning, a middle and an end.
Also what looks ethernal.
All the nice things in life, to be really enjoyed, must be sipped.
Sex included.
Thanks for listening (even if not mobile)
Patrizia
PS And the Future? G.O.K.
That stands for:
God Only Knows
Posted by: at June 16, 2005 07:11 AMTomi,
what a good practical posting!
In principle I guess we look at the same thing, we see it in the same way, but you see one part (the money revenue) and I see the money revenues and the machine behind the money revenues.
I remember we sat on a Turkish cafe' and we sipped a nice coffee.
When we were leaving we also saw the kitchen.
If we had seen it before, I am sure we wouldn't have enjoyed the coffee that much...
I am an Italian, I live in Italy and I still have good eyes and good ears.
What you mostly hear, wherever you are, is an infinite miriade of ring tones and people talking about stupidity, not caring who listens and hears.
I begin to be really concerned, because on TV you just see Spots of this or that cellular provider promising this or that.
The reality is that they want, and they will be succesful with all the tools they have, is to drive the telephone traffic from fix to mobile.
It is exactly what they did in the last 50 years with cars.
Since Fiat and the other cars manufacturers had to sell cars, they neglected the public transportation in favour of the private transportation.
We have arrived to a point where traveling is getting a nightmare, because our towns are mostly 500 years old and more and our roads are made for pedestrians and carriages, while they have to handle so many cars.
Parking is getting impossible.
In addition we had the Mont Blanc closed for several years and the Frejus had a big fire some weeks ago and will be closed for several months.
They do not know where to put all the trucks and with the holidays season it will be better stay home.
Exactly the same will happen to the mobile industry.
I insist it is a fashion, because nothing is so important it cannot wait a few minutes necessary to find the nearest fixed phone.
The real emergencies are much less than what you can forecast.
But they built the infrastructures and they are enormously profitable.
So much that nobody talks about the possible danger to health.
Nobody knows for sure.
And that means many know it is not healthy, but the money behind is so huge it is better to ignore the subject.
I do not say that the cell phones are not useful or nice to use.
I say that when it is too much, it is too much.
And I also say that everything in life has a beginning, a middle and an end.
Also what looks ethernal.
All the nice things in life, to be really enjoyed, must be sipped.
Sex included.
Thanks for listening (even if not mobile)
Patrizia
PS And the Future? G.O.K.
That stands for:
God Only Knows (in every sense)
I didn't get to the end of Tomi's second (or third) posting as it became clear that he did not get what Martin was saying.
Tomi, you have to look for the paradigm, not the particular instances! (see Plato and Aristotle, but I'm too lazy to post a link).
There are countless reasons why the mobile market is more compelling right now, but I think everyone believes that the last 'mile' will be mobile in the future. The backbone is not so certain, could be wired or wireless, though capacity/cost is currently favouring fixed (but see mesh networks - too lazy again).
To take Tomi to task on 1 point, related to the number of fixed replacement mobiles in Sweden/Finland; What happens when the Nokia N91 comes out, and there is a public Wifi/wimax net in Stockholm (or even just Kungsholmen) and these people suddenly have (at least the potential) to access internet using a different access technology, not controlled by TeliaSonera (or whoever)? What distinguishes these people from the fixed internet model that you were deriding? They have access - it really doesn't matter how, and they can use Skype and they don't have to use the mobile operator for payment, they can use Visa, or Paypal, or e-gold or whatever suits them.
The service is not dependant on the connection and that's why it's a waste of time and money for the telcos to try and bundle it all together as though they are actually good at media delivery (you have probably met at least as many telco execs as I have, how many of them would you put in charge of a programming at a TV station?)
Your runway analogy was very unfortunate, given Martin's other posts relating to Ryanair (http://www.telepocalypse.net/archives/000702.html). When you restrict access, business finds a way around it, i.e. moves elsewhere.
I admire a lot of what you say, Tomi, and the work on communities especially, but on this you are definitely too focussed on the particular and missing the general.
Hi Patrizia
Yes, to enjoy things in life (including sex ha-ha) we should sip them and enjoy them with time. I totally agree.
However, the cell phone is a tool for the fastest access to services, communication, money and time. While we may want to enjoy life, unfortunately in most cases for most people life is going on too fast. And in that need, the cell phone is the tool to address those needs.
I like the analogy of the cars in Italy (and rest of the world obviously, like here in the notoriously congested English roads and cities). But I think there is no point - with nearly 2 billion mobile phones, close to three times the number of PCs and laptops - to hark back to an older time of less speed and hurry. Mankind's number one favorite gadget is the cell phone, and trying to argue against that is like Don Juan attempting to fight the windmills..
I share your values, I really do. But regardless of how you and I feel about it, the cell phones are here to stay and will continue to grow with their importance and relevance to our lives.
Dominate
Tomi Ahonen :-)
Posted by: at June 18, 2005 04:17 PMHi Paul
I honestly am not sure what it is that you argue on behalf or against. You seem to suggest the future of access will inevitably be mobile (whether that is cellular telecoms or wireless is not clear) and/or do you argue that voice calls will be cannibalized by Skype and other VOIP methods or what.
My argument is that the history of the internet was first mainframe computers (2000 nodes in 1985). At that time the data access method was Gopher, and the users were government and universities. In 1995 there were over a million web users on desktop PCs with slow modems, and the access method was the early web browsers, Mosaic and Netscape. By 2005 the majority of the digitally connected users are already on cellphones (nearly 2 billion of them, vs only a third that amount on PCs and laptops). The vast majority of the money generated in this space by content and applications revenues is already coming from cellphones - eg 50 BILLION dollars on SMS text messaging alone. The change-over from PC based "fixed wireline and free" internet to the paid model is a global trend obvious to all except North Americans. The world's largest ISP by subscribers is a mobile ISP - China Mobile. The world's wealthiest ISP is another mobile ISP, Japan's NTT DoCoMo. What more do you need?
On the Skype/VOIP/Sweden example, I did say early on that I didn't really want to get to the WiFi/VOIP voice argument. But since you did bring it up, here is my synopsis of my view of that argument - and yes, I frequently am invited to participate in the debates on this issue such as chairing the VOIP-3G debate at Pulver's VON last year in London.
I think VOIP/WiFi based voice calls will be a massive threat to fixed wireline telecoms. It will be an obvious evolution path for corporate business customers for their voice calls (and integration). I think it will be a huge growth opportunity for the IT industry.
However, for cellular telecoms, VOIP/WiFi/Vonage/Skype etc will be a nuisance at best. Most WiFi hotspot operators in Europe are - surprise surprise - the incumbent major telcos already. Telia (ie TeliaSonera) in Sweden, Sonera (ie TeliaSonera) in Finland, Telenor in Norway, Siminn in Iceland, etc. They will manage that opportunity and balance the need, between their existing subscribers on cellular networks. There will be no free WiFi mesh network for all to use to match/compete with cellular. Utter nonsense and blatant disregard for business realities.
If you want to migrate current cellular telecoms traffic to WiFi networks (or WiMax), there is no level of hotspots that could handle that. Each hotspot region would face congestion. The traffic nature of voice calls is dramatically different to web browsing that is typically done at hotspots. But even if it could be technically done, who is going to deploy a commercially robust viable voice network on the unlicensed spectrum to replace cellular. Nobody. Try the math, it is impossible. You'd have to deploy WiFi hotspots at the ring roads and highways and all kinds of areas, who is going to pay for that?
Now, let me be clear. Yes, WiFi phones, VOIP, Skype, Vonage etc WILL BE BIG. It will be relevant to those who are desperate for free calls or low cost calls, like students etc. But we've had VOIP totally free calls for over 10 years. Look at the MOST THREATENED businesses - ie long-distance and international voice calls. Even those are still viable today globally, ten years after this technology was introduced. So don't tell me Skype will suddenly kill cellular. Not for the economic duration of the 3G licenses. Yes, maybe in the 4G or 4.5G converged area, but then again, the deployments will be with the cellular carriers, not Starbucks..
But Paul, I was not sure what you wanted to argue? Did you mean we will have the internet migrate to the mobile phones, or not? And my main point, that totally free content and totally free applicaitons will be a thing of the past, that was my forecast. Do you agree with that?
Dominate
Tomi :-)
Posted by: at June 18, 2005 04:36 PMWhat I like about discussions is that at the end both parts have the same ideas as in the beginning.
And one thinks:
"How can somebody be so stupid as to insist on this?"
While what he says is:
"I really understand your point of view, but this or that..."
Because one doesn't want to look stupid or which is even worse, antidemocratic... you have to give others the chance to say what they think, even if you already know they are wrong...
Discussing is really mostly just reorganizing one's own prejudices.
That is why Blogging is so much better.
It's like a monologue, "it saves time and prevents arguments".
And that is also why there is a button called "comment" which nobody presses.
People have since long understood the difference between a dialogue and a monologue.
Let's come to a compromise:
There will still be "old minded people" who prefer a "normal-no-stressy-life" and the others...
The good thing is that you can choose who to be
Patrizia
http://woip.blogspot.com
Hi Tomi,Patrizia,
I wouldn't do without debate, a monologue becomes very dull if there is no reaction!
Also, when we are talking about the future, there are no rights and wrongs, just opinions. I've been wrong in the past, I'll definitely be wrong in the future.
What I was trying to say, Tomi, was that the cellphone is a 'particular' and the 'general' is a mobile access terminal. If I have a wireless router in my house and a DSL connection, most of my devices (even currently) will be mobile, and a good number of them will be able to run Skype to make VoIP calls. A lot of them will be able to access the same content & sevices that are delivered to 3G cellphones. The key point here is that the future of SERVICES will not be dominated by the current 3G operators. If they are quick, and smart, they might manage to be big players in the access market but there are so many ways to get internet access these days, it is hard to see the 2G/3G operators having the same level of control as they do now.
There are many reasons why their downfall will come about, partly due to their trying to control the hardware manufacturers to get branded mobiles (Vodafone) and partly because they are slow(inept) to recognise when their customers are upset.
To paraphrase Michael Powell, FCC chairman, 'When I tried Skype on a PDA over Wifi and the quality was fantastic, and it's free, I knew it was over'
I have already stopped ALL roaming calls, I NEVER use my mobile when abroad, because people can call me on my SkypeIn number and it can find me wherever I am in the world, maybe on a fixed line, maybe in Starbucks over Wifi. Losing a major chunk of roaming revenue would be more than an irritant. Have I stopped roaming because the operators are blatantly ripping me and millions of cellphone users off? That's definitely a big piece of it (try sitting down and justifying the call rates for international roaming calls, you can't).
The point is that Voice is just a service and it's independent of the network access method. With the right 'cellphone' I can make a call over 3G or VoIP over 3G or VoIP over WiFi.
You could take the argument that people don't really want all this low cost service, they are prepared to pay for the 'quality' provided by the big operators. I would have to point you to Martin's other article on Ryanair and the Germans....'[low prices, people] will crawl bollock-naked over broken glass to get them' - Mike O'Leary (http://www.techcentralstation.com/060205E.html)
You are right that free access is not sustainable, but neither is ripping off your customers. Free services is a different matter altogether.
The dominance will shift from the network to the access equipment with many different options for connection. E.g. PDAs with 3G capability or the Nokia N91 (cellphone??)
I think that in the major conurbations around the world there will be choice of access, some of it even free. I counted 8 Wifi networks within range from my hotel room in singapore last night (though only 2 were open, and I had already paid for in-room broadband).
Will the internet be on mobile devices? Yes.
Will totally free SERVICES be a thing of the past? No, so long as people (or governments) are paying for ACCESS.