TECH TALK: Mobile Internet: PCs and Mobiles

The Personal Computer celebrates its 25th year. With more than 700 million users worldwide, it is one of the most important technological inventions of our time. The PC, together with the Internet, have for many of us become indispensable. As we look to the future, I believe that it will be the mobile-based Internet which will have an even greater impact on our lives. The promise of the mobile Internet has been there for long – but only now are the pieces starting to come together.

Before we look ahead, let us begin by looking back. The Economist recently carried an article celebrating 25 years of the PC, and added:

Although the PC has its merits, it also has its faults. Its flexibility has proved to be both a strength and a weakness: it encourages innovation, but at the cost of complexity, reliability and security. And for people in the developing world, PCs are too bulky, expensive and energy-hungry. When it comes to extending the benefits of digital technology—chiefly, cheap and easy access to information—to everyone on the planet, the PC may not be the best tool for the job.

Look on the streets of almost any city in the world, however, and you will see people clutching tiny, pocket computers, better known as mobile phones. Already, even basic handsets have simple web-browsers, calculators and other computing functions. Mobile phones are cheaper, simpler and more reliable than PCs, and market forces—in particular, the combination of pre-paid billing plans and microcredit schemes—are already putting them into the hands of even the world's poorest people. Initiatives to spread PCs in the developing world, in contrast, rely on top-down funding from governments or aid agencies, rather than bottom-up adoption by consumers.
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There is no question that the PC has democratised computing and unleashed innovation; but it is the mobile phone that now seems most likely to carry the dream of the “personal computer” to its conclusion.

Take India for example. The 18 million installed base of personal computers compares with 100 million mobile phones. Mobile users are growing at nearly ten times that of the computer base. The dream of the broadband Internet in India still remains that for the most part. As a result, the benefits of the Internet for most people in India are still limited. Even though 40 million are believed to use the Internet, my estimate is that three-quarters of this user base spends only a few minutes a day on the Internet – from cybercafes. In this situation, it is very difficult to rely on the PC-based Internet for one’s information, communication and transaction needs.

At the same time, the mobile Internet isn’t yet there. For the most part, mobiles are still used for voice and text-based messaging. There are only 3 million or so GPRS-enabled handsets in India. So, what makes me believe that India’s Internet will be more mobile-centric than PC-centric? To look to the future, one needs to peer into the past.

Tomorrow: NTT Docomo’s i-mode

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TECH TALK: Mobile Internet: NTT Docomo’s i-mode

The digital infrastructure in Japan in 1999 was somewhat similar to the urban Indian market of today. There were more mobiles than computers. It was a somewhat saturated market for mobiles. Broadband infrastructure was not very good. It was in this context that the largest mobile operator, NTT Docomo, launched its I-mode service in 1999. Wikipedia has more: “In contrast with the WAP standard, which uses WML on top of a specific protocol stack for wireless handheld devices, i-mode borrows from fixed Internet data formats such as C-HTML based on HTML, as well as DoCoMo proprietary protocols ALP (HTTP) and TLP (TCP, UDP). It became a runaway success because of the well-designed services and business model, as well as the strong demand for mobile email services which are part of i-Mode.”

Business Week (Jan 17, 2000) wrote about the technological underpinnings of I-mode and how the ecosystem approach made the service click:

With packet systems--as opposed to circuit-switched phone networks--there is no need for each user to receive an exclusive radio channel. That means many users can access the network at the same time. The packet model also reduces costs, since charges are based on the volume of data sent and received.

Takeshi Natsuno devised the business model to make this system work. First, he dictated that i-mode should serve as a portal site and lined up content providers that users could access directly from i-mode's menu bar. Then he set up a billing method whereby DoCoMo would reap a commission for the services rendered by this first tier. Other content owners would be encouraged to code their Web pages for i-mode as well. But only those belonging to the licensed first tier could be accessed by the menu bar. ''People say the Internet has to be free, but we're charging for it,'' says Natsuno, 34. ''This is a model for the mobile Internet that others now want to emulate.''

Tachikawa, president and chief executive since 1998, insisted on a cheap pricing plan to guarantee the widespread adoption of i-mode. Subscribers pay about 4 cents to send a 250-character message, and half that to receive a message of the same size. Tachikawa also insisted that the functions be as simple as possible. ''I can access DoCoMo's share price in just two clicks,'' he says.

Asiaweek wrote about i-mode in January 2000:

DoCoMo has discovered a formula for making money off the Internet, something few companies have achieved. That's partly because the company has managed to get Japanese, and particularly Japanese teenagers, to pay for specially-tailored wireless content — even if it is only a few dollars a month for the right to use a cartoon character. Some i-mode sites provide crude online games, some sell horoscopes, others stock quotes. There are news services, e-mail, virtual-reality girlfriends. There is even an i-mode language, a growing collection of on-screen symbols called emoji — Japanese for "picture words" — meant to convey messages to other users in a keypad stroke or two.

DoCoMo charges a monthly subscription fee, which gives users access to myriad free sites. The carrier also charges for the amount of data a customer receives, not according to airtime. Users are always connected to the wireless Net as long as the phone is turned on — an advantage over clunky Wireless Application Protocol (WAP) services offered elsewhere that require customers to dial up sites and then wait minutes for connections to be made. Another big reason for DoCoMo's success: it eliminated the sticky issue of online payment that has slowed the growth of e-commerce on the wired Internet. The phone company keeps track of purchases and simply adds them to customers' monthly bills.

Tomorrow: NTT Docomo’s i-mode (continued)

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TECH TALK: Mobile Internet: NTT Docomo’s i-mode (Part 2)

Docomo put together an end-to-end solution to provide services on the go for mobile users. By using CHTML, it provided a language that was easy for content providers to use. It shared 91% of the content revenue with the provider – while keeping the data access charges to itself. It also took care of billing for the various service providers. For end users, handsets came with an i-mode button which made for easy access. I-mode succeeded because its openness created a thriving industry of service providers. Docomo succeeded in using the open principles of the Internet and applying it in the mobile context.

Mike Gauba thinks that i-mode’s was an accidental success. He said in an interview (Sep 2005) with i-mode strategy:

A superficial success analysis of i-mode may conclude that it was the right thing at the right time and at the right place, hence the success. i-mode was an initiative to develop new revenue streams in a saturating voice market. Mobile Internet was a good solution for a market that lacked fixed Internet infrastructure. Japan has high adoptability for technology so much so that even the toilet seats are digital, rapid adoption of technology was not an issue. Japan is also a thickly populated collectivist society, where the "must have" "mass" phenomenon could be very strong.
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In European markets, Internet was well entrenched when i-mode was first introduced and thus the challenge at that time was to migrate users from applications on Internet or other technology platforms to i-mode.

After discussing with a couple of i-mode service providers and also from the media reports, I gather the factors like low notional thresholds, technology disruption and network effect had not been considered for designing the value proposition of the service. If these factors came into play by themselves in Japan that does not mean that this will also happen in other markets too.

This is in fact my basis for calling it an accidental success.

To date, Docomo’s success with i-mode has not been replicated elsewhere. The mobile Internet, for the most part, remains something which is a mirage. Mobile data services are restricted to services provided by the operators. The walled gardens do not encourage independent service providers to come in. India, along with most other countries, is in the same boat.

So, what makes me think that things will be different going ahead and that India has an opportunity – and the environment – to replicate i-mode’s success.

Tomorrow: India Scenario

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TECH TALK: Mobile Internet: India Scenario

There are six reasons why I believe the time for the mobile Internet is coming.

First, users will want more than just voice and SMS on their phones. Ringtones and games are a good start for the value-added services, but there’s a lot more to life than that! I think of life as having a mix of ‘empty moments’ and ‘know-now’ moments. In both of these moments, the mobile is there with us and can be the window to a wide world of services.

Second, the mobile data infrastructure is very good. It may be hard to believe this but I think India’s mobile data networks across operators are amongst the best in the world. Even though the focus of the operators is in customer acquisition, the technology to support data services exists. This is probably true not only in India but also in other emerging markets.

Third, the mobile phones themselves now come equipped with data capabilities. Compared with 2000, the phones of today are affordable and data-capable. The screens are much bigger and support much higher resolution. The phone’s multimedia capabilities are also driving the desire to create and share content – which in turn needs data services.

Fourth, mobile operators will need to focus more on value-added services in a world where there isn’t much growth coming from voice and SMS for the existing user base. For the next couple of years, they can get away with market expansion, but these users come with much lower ARPUs (average revenue per user). There will be a need to target the top-end of the users with new services – and I don’t think the killer services are going to be visual radio or voice SMS.

Fifth, there are two technological disruptions which will accelerate the arrival of the mobile Internet. Even as 3G will being higher speeds to the phones along with always-on connections (much like what i-mode’s underlying technology infrastructure was), there is WiFi on mobiles lurking in the background. As WiFi hotspots proliferate and mesh networks envelop entire neighbourhoods, mobiles equipped with WiFi will be able to bypass the traditional operator networks for data access. WiFi on mobiles will also impact operator revenues as voice moves over WiFi networks.

Finally, I don’t think the PC-based broadband Internet is going to happen quickly and for large numbers of users in India. Most of the investment that the government-owned telcos (BSNL and MTNL) are doing is in the mobile space. Their control over the last-mile into homes remains tight but without large investments into DSL and low-cost devices, the broadband Internet will happen very slowly in India.

Taken together, these factors create the right environment for the mobile Internet to take-off in India.

Tomorrow: Views

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TECH TALK: Mobile Internet: Views

There are many differing views on what the mobile Internet constitutes. Is it the existing Internet shrunk to the small screen of the mobile? Is it a new Internet with content and services created entirely for the mobile? What about mobile operators – unlike on the PC-based Internet, the access to the world outside the walled gardens is still not a given. Will users really pay for things they get on the mobile phone? If not, what are the alternate business models? What is the equivalent of search and contextual advertising in the mobile space? Do users really want the Internet on the mobiles – or would they prefer the entertainment options like music and TV? Who will be the Yahoos and Googles of the mobile Internet?

Docomo’s i-mode succeeded because it took an end-to-end approach and focused on building the ecosystem. It was, after all, the mobile operator with an existing large user base. Japanese users are also known to be tech-friendly. So, can the ideas that made Docomo succeed in Japan really be translated to other countries? After all, I-mode services in other parts of the world where Docomo has expanded haven’t really done very well.

Questions aplenty. As we go about addressing these questions and pondering the future of the mobile internet, let us begin by looking at what others have to say.

Walter Adamson wrote, in a post entitled “The Mobile Internet should be pronounced Dead”:

We all know, or perhaps we all don’t, that a mobile phone is not a lounge room viewing experience, it is not a communal experience, it is not an Internet (PC) experience – it is personal, personalisable, private, intimate, interactive and integrated with lifestyle.

“Mobile Internet” as a whole is a failure – growth is a hard slog, there are no killer applications, consumers have become chilled because of previous bad experiences and failed expectations, and there is complete confusion between “access” and “services” and “applications” and open garden and Internet. Hence the reasons that the sales process, the retail conversations at the sharp end, are also in complete confusion and hence revert to the lowest common denominator – price. And price for voice services at that.

We have to declare the Mobile Internet dead in order to be able to move on. The mental baggage of the Mobile Internet is a killer application – a killer of commercial success.

Of course there have been successes, but these tend to prove the failure of “Mobile Internet” as commonly conceived.

Walter quotes Mike Gauba, an experience consultant on 3G and value. Mike believes that the Internet and Mobile Commerce are reverse paradigms.

The Internet expanded horizontally and then started witnessing some vertical growth, where as mobile commerce will first experience a vertical growth, which then will diffuse to become a horizontal market.

Mobile Internet is a fallacy in the short and medium-term.

Let us look from this perspective, that mobile solutions address the needs of those on the ‘go’. The needs on the go are very specific and hence limited. These specific needs will drive vertical applications.

When the mobile commerce active user market penetration reaches 60-80%, one will witness, hundreds of these applications addressing the different needs of different users. There will be a significant overlap of these applications and it is at that time, the market starts becoming horizontal.

Next Week: Mobile Internet (continued)

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TECH TALK: Mobile Internet: Views (Part 2)

Tomi Ahonen is one of those in the opposite camp who believe (like me) that the mobile internet is absolutely going to happen. “The best content will also migrate to the mobile phone-based internet because the money is there. It is very difficult and clumsy to charge for content on the traditional internet. You need Paypals or credit cards or other work-arounds. But every mobile phone can handle payment directly, at a click. In fact mobile phones, through premium-SMS payment, are already used in various internet applications to gain access to micropayments.”

In another post, he elaborated:

The mobile phone can replicate all services that the traditional PC based internet can do. Yes, the screen is smaller, but that is no absolute obstacle. But everything else we had on the web, including its interactivity, is also available on the mobile phone.

But an internet on the mobile phone delivers four elements that don't exist on the fixed internet. First of all, a mobile phone based internet is totally personalized. Our PC is often shared - such as a university campus computer, or a family computer, or the PC owned by the employer with its limitations and at times access by the IT department etc. But our mobile phone is totally personal.

Secondly the mobile phone is always on. It means that any alerts, urgent news etc can be delivered. With laptops we need to find our access, connect to a WiFi etc network, but mobile phones are always connected and can for example be reached via SMS text messaging for alerts at any time.

Thirdly the mobile phone is always within hand's reach of its users. No other technology is so close to us physically at all times. We don't take our computers to bed with us (well, most don't do that), but over 60% of all mobile phone users take their cellphone physically to bed with them at night. We notice we've lost our wallet in 26 hours. But we notice we're missing our mobile phone in 68 minutes.

Finally - and most importantly - the mobile phone offers a built-in payment mechanism. The PC based internet does not have that. On the traditional internet we need to set up a payment system like Paypal, or we need to submit credit card info etc. But on the mobile phone we can (if our carrier/operator has enabled it) handle any payments at the click of a button.
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There are three times as many mobile phones as PCs. Twice as many people use SMS text messaging as use e-mail. Users on the traditional PC based internet expect content to be free, but mobile phone users expect mobile content to be paid-for. Collecting money on the traditional fixed wireline internet is very cumbersome. Collecting money on the mobile internet is built-in. The world's biggest internet company by revenues is not one of the internet darlings - Google, Yahoo, eBay, Amazon or AOL. It is Japanese mobile operator NTT DoCoMo's domestic mobile internet arm, i-Mode. And i-Mode alone makes bigger profits than the five internet darlings combined. Where will you put your best content? On the mobile internet of course.

Tomorrow: Views (continued)

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TECH TALK: Mobile Internet: Views (Part 3)

Jason Fry wrote recently in the Wall Street Journal: “Too many of the Internet's more-advanced functions still aren't truly mobile. Sure, the Net is exploding with wonders and is increasingly good at offering local information -- but for our purposes those wonders remain largely caged in PCs and laptops. Sit at your computer and you can study up on bars in the West Village, Revolutionary War landmarks in lower Manhattan or Chelsea antique stores. But take that knowledge out into the real world and you'll probably be stuck with scrawled notes or a sheaf of printouts -- which instantly become useless if there's a change in plans or you come across something unexpected in your travels. After researching and planning online, being cut off from the Net is painful: It's as if your home and office PCs are air pockets you wind up swimming between, hoping you can hold your breath long enough.”

This is what the International Herald Tribune wrote in December 2005:

The mobile Internet - or, the World Wide Web that you can get on your cellphone or handheld device - has had an incredibly lengthy and labored gestation. Around the turn of the century, it was widely heralded by the telecommunications industry, only to be widely derided by consumers for being slow, cumbersome and generally useless.

Today, it is still sometimes slow and occasionally cumbersome, but the portable Internet is no longer useless. On a recent-model mobile phone, you can navigate to almost any Web site at an almost-reasonable speed and a not-too-outrageous cost, once you sign up for a data plan with your phone company. You can get and send e-mail from your regular accounts. For consumers, it is convenient and cool; for business users, it can be a critical mobile tool.

But it is still a far cry from using the Internet on a personal computer.

Carlo Longino provides insights on how to build the mobile Internet: “First, users should be empowered to access whatever they want. This means no walled gardens, and powerful browsers that can access full HTML sites. Second, operators should focus on adding value to users’ internet experiences by recognizing that mobile browsing is different than browsing from a computer and add to (not replace) the open access with more customized services and sites for users that want them. It should be an additive strategy that takes full browsing capability as a starting point, then builds on top of it, not a plan that throws the Internet that people know and love out the window, then opens up tiny holes to let only particular content through.”

Tomorrow: Views (continued)

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TECH TALK: Mobile Internet: Views (Part 4)

Marek Pawlowski suggests that users on the mobile don’t search, they locate: “Users are even more ‘mission-based’ in the mobile environment than I first suspected. They are using their handsets to accomplish very specific objectives - in this case, finding a particular brand with which they have an existing affinity. This is in contrast to the more generalised ’search, explore and browse’ model employed in the desktop environment…Mobile services should be designed to help users achieve the objective they’ve already specified rather than lead them off at a tangent. This is the key difference between mobile and other mediums : advertising on the desktop, TV and radio is based around distracting and generating interest among users; mobile services should be invisible channels which help the user accomplish their mission.”

Scott Shafer wrote on his blog:

More Internet traffic will come from mobile devices than personal computers (PC).

You must accept that mobile devices will:
---- outnumber PCs for web access
---- be “the PC” you have with you all day
---- be able to access a greater number, and different type of hyperlinks that a PC can’t

There will be TRILLIONS of hyperlinks that can only be accessed with a mobile phone.
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In order for mobile phone handset manufacturers and wireless carriers to become “Internet Companies”, they must define what the mobile Internet really is.

They must also ask how you will get to it, and what you will get from it.

The mobile Internet is NOT the PC Internet.

Phase 2, or the mobile Internet, is when every physical item in the world can, and will be connected to the Internet. It will have a different kind of “phone number”, or hyperlink.

It will have A Physical World Hyperlink

The mobile phone won’t be just a mobile device for communication, but it will be a “remote control” or the “mouse” that can link objects in the physical world to the Internet.

Scott elaborated on his idea of the physical world hyperlink in the context of mobile search:

Now that the hyperlink owner has a direct connection to his site using a 2d code, outside of advertising, where is the need for search engine optimization? You are already optimized!

So now every barcode on every can of Coke, 2d code on a movie poster, becomes a hyperlink, or direct connection to wherever Coke wants you to go.

4 Billion websites and hundreds of billions of physical objects have now found their own way to direct traffic without using a search engine.

Companies wont give out websites to go to, they will advertise using 2d codes and get a direct connection, bypassing a search engine. They will put a code on a poster, or magazine ad, or a short code on the tv screen. When any user types, scans, texts this code, they will be directed to the specific site that company wants you to go.

Tomorrow: Views (continued)

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TECH TALK: Mobile Internet: Views (Part 5)

Howard Rheingold: “Inexpensive phones and pay-as-you go services are already spreading mobile phone technology to many parts of that world that never had a wired infrastructure. In terms of the people who had been left behind by previous technology revolutions, the mobile phone has already reached more people from more different walks of life than the PC or Internet did. As chips grow more powerful, even the least expensive phones will become cameras and Internet terminals…The most important benefit of affordable PCs, phones, and bandwidth is encouraging the growth of literacies in the use of ICTs for the purposes of the poorest people in the world. The diffusion of the physical technologies is already being driven by the market.”

Opera CEO Jon von Tetzchner (via MobHappy):

von Tetzchner is quick to point out that while operators might have to give up something in the short term, empowering users’ net access with a full browser and open service leaves them much more to gain in the long run — though it requires a fundamental change of view. “Instead of trying to lock people in, entice them to stay,” he says. Operators can offer services that make use of a full browser, whether on a subscription basis, or as a tool to fight churn. Directing mobile users out on to the internet doesn’t mean operators are suddenly out of the picture. They can offer different service plans to cater to different needs, as well as utilize existing infrastructure to provide services like third-party content billing.

Much of operators’ approach to the mobile Web has been predicated on a closed strategy, whether by blocking access outright to anything outside the portal, billing for it at ridiculous rates, or setting things up in such a way that they’re a necessary gatekeeper and technical expert for anybody that wants access to their customers. This strategy is outmoded and ill-advised; operators stand to gain far more by opening up, and allowing users to get what they want, and making it easier for content providers to give it to them. von Tetzchner and Opera’s contention is that this is best achieved by using standard web technologies rather than mobile-specific ones, allowing content providers to simply serve mobile users, and allowing those users access to everything they want. “People just want the internet,” he says, “not to look at it through a keyhole.”

Google CEO Eric Schmidt (via Tomi Ahonen): “Mobile phones are cheaper than PCs, there are three times more of them, growing at twice the speed, and they increasingly have internet access. What is more, the World Bank estimates that more than two-thirds of the world's population lives within range of a mobile phone network. 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."

Sun CEO Jonathan Schwartz (via ZDNet, Oct 2005):

The threat to PCs is twofold. Not only are services moving to the network, Schwartz said, but PCs won't be the way people use those services--particularly in poorer areas of the world that have risen higher up Sun's corporate priority list. Instead, that access will come through mobile phones.

"The majority of the world will first experience the Internet through their handset," Schwartz said.

When it comes to aiding developing regions' digital development, "Our collective generation believes the desktop PC is the most important thing to give to people. I don't buy that. The most important thing to give is access to the Internet."

Tomorrow: My Earlier Writing

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TECH TALK: Mobile Internet: My Earlier Writing

I wrote about the mobile Internet as part on an earlier Tech Talk series in Feb 2006.

The mobile industry started off with a killer app already available: the desire of people to communicate. Compounded with the fact that for various reasons, the phone was seen as a luxury in India, the mobile gave people in India an independence and freedom that that they had hitherto not experienced when it came to interactions with others. The entry of Reliance Infocomm helped spark off a price war which has led to rocketing growth in the industry.

In India, ringtones, ringback tones, wallpapers, games, voice-based services and SMS infoservices have done very well so far. But they still address a very small segment of the market. There is an opportunity to grow the usage of mobile data (or mobile value added services) beyond the 2G to the 2.5G domain (WAP, MMS and Java) and 3G (streaming services). In India, the mobile has the potential to become a credible alternative for accessing the Internet given the slow growth of connected computers. But for that to happen, a number of things will have to change. With regards to content and value added services, there are three challenges facing mobile businesses: closed publishing systems (“walled gardens”), operator revenue shares for content providers and mobile data pricing.

The walled gardens that mobile operators run limit the options for publishers. They have to go the operators directly or work through intermediaries who have the operator relationships. While the walled gardens are good for operators who can maximize their revenues through the services, it limits the options that users have and, over time, it will also limit the revenue-generation potential.

In India, the content providers get a much smaller fraction of the transaction and subscription fees paid by users compared to that in other markets such as China and Japan. While the operators have a great advantage with their billing relationship and platform, they tend to keep a very high percentage of the revenue thus limiting what content providers keep. In Japan, NTT Docomo’s i-mode pays out 91% to the content provider. In China, the mobile operators pay out 80-85%. In India, the content providers tend to get 10-30% of the revenue only.

Mobile data pricing in India also needs to be reduced dramatically. For example, one of the leading operators charges a fee of Rs 49 ($1.10) per month with an additional charge of 10 paise/10 KB. This works out to about Rs 10 (22 cents) per megabyte of download. This encourages more one-time download applications rather than online usage. In addition, in the GSM world, activating mobile data (GPRS) is also not easy. (By comparison, most CDMA handsets come pre-configured for data access, even though they are limited to the operator walled garden.)
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From the mobile data perspective, what is needed is an open publishing environment which encourages thousands of microentrepreneurs – much like what i-mode enabled in Japan. Operators should open up their walled gardens – they will make for the money lost with far greater data traffic because in India the mobile has the potential to become an alternative device for Internet access.

The Internet and mobile will thus play a complementary role – the small screens of the mobile offset by the full-sized input/output capabilities of the network computer, and the fixed nature of the computer offset by the portability of the mobile phone. India can be the role model for other emerging markets in creating a digital infrastructure which brings information access to hundreds of millions. This is what will change lives. Entrepreneurs will thus have the opportunity to do good and do well.

Over the past year or so, we have been working on a number of ideas relating to the mobile Internet in my company, Netcore. The focus has been on doing the mobile Internet right. I will write about our work and ideas next week.

Next Week: Mobile Internet (continued)

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TECH TALK: Mobile Internet: A Pyramid

For much of my Internet life, I have been a PC person. Access to the Internet has been from the computer – either at home or at work. About twenty months ago, I first started using the mobile Internet – and it was a revelation. At that time, the ability to read my Bloglines RSS feeds on the move was extremely exhilarating. Suddenly, I could make use of ‘life’s empty moments.’ That was the start of a journey – an exploration of how the mobile Internet experience can be made better. This is the story of that journey.

My interest in the mobile internet is an anomaly. I have a PC person all my life. For much of the mobile era, I ended up using phones mostly for talk and a little for SMS. I preferred emailing to SMSing. Over the past couple years, though, I started using the mobile a lot more – and that has made me understand the device and its potential a lot more. This has caused me to rethink my notions of the PC-based Internet in the context of emerging markets like India.

I think of the device-using India as being split into three. The top of the pyramid has about 10 million users for whom the desktop computer with a reasonably good Internet connection is the link to the connected world. Their access is from home or work, or both. Their digital life is built around their computer. They all have mobile phones but usage is somewhat limited to its use as a phone and texting device. At times, the mobile serves as a modem on the go – to be connected with the laptop. This segment is akin to most users in the developed markets. Think of this as a “PC First” segment.

The middle of the pyramid has about 30 million users for whom Internet access is primarily via cybercafes. Access is, on average, limited to a few minutes a day. Because of the lack of continuity in access, usage of the Internet is limited – email, chat, jobs, matrimonial sites being the primary destinations. This audience is much younger than the top of the pyramid. They all have mobile phones. The consumption of mobile content (ringtones, wallpapers, games, ringback tones) is high in this segment. For this segment, the mobile is the key to the digital life. The ‘buddy list’ resides not on Yahoo or Microsoft’s IM services, but on their phone. SMS, rather than email, is the preferred way to interact with buddies. Think of this as a “Mobiles First” segment.

The bottom of the pyramid is about 60 million in India. For this segment, there is no access to a computer – in some cases by choice (like my parents), but in most cases, because of economic reasons. They cannot afford to own or access a computer. For them, voice communications via the mobile is their primary way to connect to the world. SMS usage is still limited because of language barriers. This is the segment which is now growing rapidly in India as the mobile user base grows. This segment is almost entirely pre-paid. Think of this as a “Mobiles Only” segment.

Tomorrow: The Middle

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TECH TALK: Mobile Internet: The Middle

The top and middle segments are the ones who are the right candidates for using the mobile internet – with the middle segment being the one for whom it is going to be much more critical. Over time, the middle segment of 30 million will expand as users from the bottom of the pyramid move upwards to better phones.

So, from an audience perspective, there is a fairly large potential user base. But it is easy to get carried away with the numbers. In India, we get excited about the Internet user base of 40 million users – forgetting that for most users access is via the cybercafe and therefore patchy. Sure, the Internet user base will grow to 100 million in the next years, but the question that also needs to be addressed is how much of a utility the PC-based Internet will be in India.

Similarly, the 100 million mobile users (growing at about 5 million a month) seems like a great big market for value-added services until one realises that for a majority of this segment, the killer app will remain voice for the foreseeable future.

My belief is that the real opportunity for the mobile Internet will be in the middle of the pyramid – at the 30 million users who have access to both the mobile and the computer, and whose digital lives are being built around the mobile. These users are less likely to live in South Mumbai than North Mumbai – and perhaps even more likely to be in tier 2 cities in India. For them, ubiquitous PC-based Internet remains a distant dream.

[As an aside, I think what will change the balance is the combination of three innovations: network computers, city-wide broadband wireless networks and a business model which makes computing a utility. These are some of the ideas that we are working on in Novatium.]

For the middle of the pyramid, the ability to access the Internet via their mobile phone will open a new world of opportunities. Whether it is making use of life’s empty moments or getting answers in life’s know-now moments, the mobile Internet will become an integral part of their lives in the coming years.

In India, the mobile data infrastructure is excellent. I have travelled across Western India and have been able to access GPRS almost everywhere. The speeds are quite good and reminiscent of the early days of the Internet. Over time, the devices will become faster (improving the speed of rendering pages) and so will the networks. What will, however, not change dramatically is the input-output capabilities of the device. Those limitations are essential because the phone is something we carry with us all the time.

Tomorrow: Mobiles First

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TECH TALK: Mobile Internet: Mobiles First

Given this background, the mobile internet seems like something which should have taken off a long time ago. In fact, the idea has been around for long – since 2000, when the world of WAP first come to life and subsequently with the 3G spectrum auctions in Europe. The vision of the mobile as a networked device opens up huge possibilities. Yet, over the past few years, the mobile internet offtake has been very limited. Operator walled gardens are only partially responsible for this. The bigger issue, according to me, is that, like the network computer, the mobile internet has been targeted in the past at the wrong markets. The real opportunity lies in the emerging markets where there is no alternative rather than the developed markets where a broadband connection and a computer is never too far away.

Emerging markets – like India – are the blue oceans, the uncontested marketspaces. They are tomorrow’s big markets. But they require very different thinking. It is not going to be easy for companies in the developed markets to create solutions for the users in the middle and bottom of the pyramid in developing markets. I believe that the solution providers will be home-grown companies who understand the realities of these markets – and actually live the life. Companies which can address the challenge of bringing the Internet’s benefits to users in these markets will be the next giants in the technology world. I have strongly believed that the next Cisco or Microsoft or Google will come from the world’s emerging markets – specifically, China or India.

To understand the mobile internet opportunity, it is necessary to take a wider perspective. In tomorrow’s world, all info and services will reside in the cloud. Users will connect to this cloud via two possible devices – a mobile phone [or laptop computer] which they carry with them all the time, and a desktop computer with a bigger screen and better input capabilities. Both will be connected devices – and in that sense, ‘thin clients’ to the thick servers that reside in the cloud with near-infinite computing and storage capabilities. Connectivity can be via DSL or cable in the wired world, or via WiFi, WiMax or mobile operator data networks (2.5G and higher).

The essential difference from the PC-centric developed world users is that this user base assumes the presence of the network and is therefore comfortable with keeping the information in the cloud, knowing that access to it will be available anytime and from anywhere. In the PC-centric world, there is still a legacy of local applications and storage which fragment a user’s information – and life. This lack of legacy is what can be used to advantage by service providers in the emerging markets. The goal should be to create network-centric services which are accessible from both the mobile and the PC – but primarily focused around the mobile. The mantra needs to be “Mobiles First.”

Tomorrow: The Incremental Web

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TECH TALK: Mobile Internet: The Incremental Web

To make the mobile internet a reality, one has to look at two webs – the reference web and the incremental web. Think of the reference web as the one that has already been created for the PC world – and for which Google has become the window. This web has been created for the big screen of the PC. The incremental web is about the present and future – it is the real-time web. This is the web which will be increasingly built more for mobiles – because it is a device through which access can happen anytime and from anywhere. Suddenly, it makes sense to create real-time information because there are users with two-way devices which can access this information with near-zero latency. I think of the incremental web as being about “now, near, new.”

The challenge for building the mobile internet is two-fold: repurposing the existing reference web content so that it looks good on the small screen of the mobile phone, and providing a capability for accessing the incremental web. The former can be accomplished by transcoding as many mobile ‘proxy servers’ and browsers do. They take the existing sites and make them much more readable for the phone. But the reality is that as sites created for access on a PC become richer (because our PC browsers have more capabilities), making these sites accessible on a mobile phone will be harder, not easier. But it is important that this web is not invisible to mobile users – this is, after all, our existing library of information.

The exciting part is going to be about enabling the incremental web – because that is where the mobile shines through. This is a world which will be increasingly created out of RSS and microcontent. It is a world centred around publish-subscribe. Users will have the tools to publish easily. Those interested in this content can set up subscriptions – just like we do for blogs in RSS aggregators (also called feed readers). In a sense, RSS is made-for-mobiles. Its ability to deliver incremental content can enable relationships between content creators (publishers) and consumers (subscribers). The mobile is a device on which our tolerance for spam is zero – considering the limitations on screen size and the fact that we will be paying for the downloaded data. This is a world which will, therefore, be built not around search, but subscriptions.

The interesting thing in emerging markets like India is that the reference web has barely been built. So, we can think of doing it right – keeping both mobiles and PCs in mind as potential access devices. This will mean keeping websites reasonably simple so that they are viewable on mobiles also. It will also mean focusing more on the incremental web – where the tools for both publishing and subscribing are already there (think RSS aggregators). The elements are there – but they need to be aggregated to make it seamless for businesses and consumers.

Tomorrow: Imagine

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TECH TALK: Mobile Internet: Imagine

Let us peer into the future and imagine what a world with publish-subscribe capabilities via the mobile would look like.

There is a bookstore near my house. To know their specials, I have to actually go to the store – or pass by it so I can look at their banners. I am keen on knowing when they have business or children’s book sales, and about new arrivals. At the same time, I do not want to give them my email ID or mobile number because I am worried that they will spam me. What I would like to be able to do is to subscribe to one or more RSS feeds from the bookstore. Subscribing puts me in control.

The bookstore would simply publish the ‘incremental’ information periodically – and subscribers like me would receive it on email, SMS or via an RSS aggregator on the PC or mobile. If the bookstore starts spamming me (indirectly) by publishing items that are not relevant, I can simply unsubscribe. I also want some static information from the bookstore – like store location, timings and phone number. This information should be easily publishable by the store without the need for an intermediary.

Let us take another example. I am travelling and stuck in a traffic jam. I should be able to share the location and real-time information about the traffic from where I am. People who would have set up subscriptions to receive traffic alerts would immediately know about it. That all of us have mobiles makes it easier to publish and receive the information.

Here is a third example. My sister’s children go to a Montessori school near our house. On rainy days, the school may decide to shut down. This is a decision made about an hour or so before the school starts. The school today tries to call up parents and tells them not to send their kids to the school. There has to be a better way to do this. Imagine if the school can publish the fact that the school is closed for the day, and parents can receive this info in a few minutes of the school publishing it.

There are many other examples from day-to-day life that we can think of. The key underlying point is that the combination of publish-subscribe and the mobile web can create a world where the latency between events happening and people knowing about them can be reduced. India can be at the forefront of the creation of this world.

Next Week: Mobile Internet (continued)

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TECH TALK: Mobile Internet: Publishing

Over the past few weeks, we have seen how the mobile Internet can be a very compelling opportunity in emerging markets like India. There are three challenges that need to be addressed: publishing, viewing and the business model. We will discuss each of them this week.

Publishing is important because there is a paucity of content that is mobile-friendly. Unless the creation of the content is addressed, it will be hard to get users. This is similar to the challenge faced on the Web in its early days. The use of HTML and proliferation of publishing tools created a cottage industry for content creation. Something similar needs to happen around the mobile.

Publishing for the mobile can be split into two – making available static content (which doesn't change often) and dynamic content (the incremental web, as we discussed last week). Static content will either need to be repurposed for the mobile if it already exists or it will need to be created. In the first case, the combination of creating a sitemap which is easily navigable on the mobile with links to the HTML pages transcoded for the mobile is the way to do. In the second case, publishing tools like a blogging platform, a wiki or an outliner can be used to create content for the mobile. In both cases, the publishing is likely to be done via a PC rather than a mobile.

The dynamic (or incremental) content can be published via a blogging tool. This creates RSS which users can subscribe to. The advantage of using a blogging platform for the incremental content is that it is makes publishing easy. There are other ways to publish – SMS or multimedia from the phone itself can be thought of as the incremental content. In all cases, the use of a blogging platform as the backend can help in organising of the incremental content.

There will also be the need to take deep databases (eg. in finance, cricket, yellow pages) and make them available on the mobile in a manner that makes navigation easy. The good thing is that a lot of this content is already available for the PC-based Internet. Content owners should consider creating mobile versions of their sites. We have seen some newspapers and magazines create mobile sites – a lot more needs to happen rapidly.

The next step will be to enable the creation of user-generated content, and foster communities. The MySpace of India will need to be built around the mobile rather than the PC. The time that the youth have with their mobiles is significantly greater than the time spent on a PC. Mobile communities will help accelerate the uptake of the mobile Internet.

Tomorrow: Viewing

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TECH TALK: Mobile Internet: Viewing

So far, the viewing experience of content on the mobile phone has left much to be desired. WML was a hard language to create content in, and the wide variety of implementations in browsers made for looks that weren't necessarily consistent or as desired by the content creators. This is changing with the emergence of XHTML and CSS. Most phone browsers now support XHTML pages. That will increasingly become the standard for mobile phones.

Mobile viewing is very different from that of a PC. On a PC, a user has tens of links equidistant on a large screen. The mouse can easily select one of these links. On a mobile, this is not so. Links necessarily tend to be sequential and thus the links lower down on a page need scrolling to get to them. Thus, designing pages for the mobile requires a much deeper understanding of what the user is likely to do.

Publishing is much more than just creating XHTML pages. Given the small screen size, a lot of thought needs to be given to navigation and context. Navigation is about getting the user quickly to the information desired in the fewest clicks possible. Context is about understanding what the user is likely to want. For example, for a TV Guide, instead of showing the entire set of programmes for the day or week, only those programmes that are currently under way or likely to start in the next hour should be shown.

An interesting way to look at News and RSS feeds is the River of News. Originally coined by Dave Winer, the River of News view is about showing the newest items organised by source. In this view, the assumption is that there is a steady stream of items that are coming in, and the user is shown the newest items from across the sources. The River of News combined with 'subscriptions' (what the user chooses) can be especially powerful for the mobile.

Subscriptions is a form of Personalisation. Subscriptions can be thought of as relationships with future content (as opposed to Search, which works on the past). Subscriptions are to the incremental web what Search is to the reference web. As publishing becomes easier, we will see a proliferation of 'real-time' content. This is where subscriptions will come into their own. Subscriptions will need the equivalent of an RSS aggregator to provide the right viewing experience. It will need the ability to track what items (and feeds) a user has seen – and not seen. The aggregator will, therefore, need to optimise the user's attention – which at different times could range from as little as a minute to as much as an hour. For static pages, Personalisation will take the form of Bookmarks – very similar to that what we see in browsers.

Tomorrow: Business Models

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TECH TALK: Mobile Internet: Business Models

What are the avenues to make money on the mobile Internet? I think there will be three options: ads, alerts and relationships.

Advertising on mobile internet sites is not likely to be very different from what we see on PC websites. The limitations of the mobile will mean than ads need to be used carefully. The standard approaches of banner ads and pay-per-click ads will be complemented with click-to-call ads. One point to keep in mind in countries like India is that for brand or transactional ads, it is key to have mobile websites. Considering that most businesses in India still do not maintain websites or have websites with outdated information, creating publishing tools which enable easy management of mobile websites will be critical.

The second potential revenue source is via SMS alerts that can be sent on demand to users. These can be for specific events. For example, a user may want to receive an alert a few minutes before a TV program. Another user may set up an alert when a stock price crosses a high or low watermark. A third user may want to receive an alert when Tendulkar comes out to bat. SMS alerts can be set up while a user browses the mobile Internet. In India, users would be prepared to pay about a rupee or so for every incoming SMS.

The third, and perhaps the largest, opportunity is around enabling relationships. One can think of this as permission marketing, but it is much more than that. In this case, the information communicated by a business to a user isn’t advertising but is akin to editorial. The relationship is built around incremental information – the “what’s new.” Mobiles are the perfect devices to both create and consume this incremental information. Relationship-driven marketing is, according to me, the next big thing beyond contextual advertising. It puts the user in control by enabling the user to subscribe or unsubscribe at any time. It also reduces the cost of marketing for businesses.

With every new medium comes a new form of interaction. The Internet made searching the reference web easy – and advertisers have flocked to put ads based on the content that users are searching for. The next step is, according to me, where users define their interests via subscriptions on future content. In emerging markets like India, given the limitations around the installed base and the usage of the PC, the mobile will emerge as a key marketing channel.

Tomorrow: The Bigger Picture

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TECH TALK: Mobile Internet: The Bigger Picture

The mobile Internet needs to be put in context with other communications channels. We have one-way broadcast media like newspapers, TV and radio. The PC-based Internet, SMS and voice-based access via mobiles are the modes of interactive access. Over time, I believe that the mobile Internet will dwarf them all. The PC is not available to us all the time. SMS has an inherent limitation in the size of the message (160 characters). Voice-based access is great for request-reply type interactions. The mobile Internet in emerging markets will be equivalent to the PC-based Internet in the developed markets from an information access and transaction perspective.

In India, the sweet spot is in the middle of the pyramid – the 30 million audience which today goes to cybercafes to access to the Internet. They all have – or will have soon – GPRS-capable mobiles. A combination of two technologies will transform their lives.

The first is the mobile Internet as we have discussed in this series. What the users will need to do is to activate GPRS on their phones. The current high tariffs of operators will give way over time to pay-as-you-go pricing (as Hutch as done in India with its 5 paise per 10 KB plan) and to reasonable flat-rate data plans (Rs 50 per month is likely to be a reasonable figure). This, combined with a proliferation of mobile publishing, will make the mobile Internet come alive.

The second technology is network computer, which becomes the big screen in the lives of these users. The network computer brings computing home – with the server grid at the telco. The network computing should be available at a one-time cost of Rs 5-7,000 and a monthly payment of Rs 500-700 (for computing, connectivity, storage and applications).

Taken together, these two technologies will make the digital world a reality for India’s youth. They will be always connected – via the mobile Internet. And they will have access to a big screen computer at home for education and entertainment. In both cases, their information will reside in the network cloud, providing them access to it anytime and from anywhere. This will serve as the digital foundation for a new India.

India grew from a few million mobile users in 2001 to over 100 million users currently. Users accessing the mobile Internet are just a few million. Also, broadband is where the mobile industry was in 2001. We have just over a million broadband users. It is possible for India to grow both its mobile Internet and broadband user base to 50 million in the next 4-5 years. India’s lack of legacy can be turned into an advantage. The building blocks to enable both are there. What’s needed is a mix of vision and will to make this new world a reality.

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TECH TALK: Mobile Internet: Comments

There have been some excellent comments from readers of the Mobile Internet series. As part of this last post, I have summarised a few of them below.

Harish Mallipeddi:

In reference to the point about mobile operators launching non-voice based services, I think things will not change until the data transfer rates become really cheap. And my basic understanding is that the mobile operators do not want that to happen anytime soon because if that happens then their situation will be pretty much like the ISPs - their service becomes a commodity and there will be other mobile-2.0ish companies offering their services on top of their networks. You can see how much ISPs hate this sort of a scenario from the whole net neutrality debate in the US.

Even though this is how things should be from the point of view of the consumers, I think the mobile operators look at the mobile space pretty much like how AOL used to look at the internet in the beginning - "walled garden". For them, the web subsists within aol.com and anything outside is a loss of revenue.
Without the third-party services, the mobile web is never going to scale up in terms of the quality and the variety of services it can offer to meet the needs of all kinds of people. I do not see any single mobile operator launching wide range of services catering to the needs of every single customer. It is a very wide userbase and it is not the job of the mobile operator to provide content and services.

Will an Indian mobile operator ever open up his/her network (and by that I mean drastically reduce the prices of the data plans so that the mobile platform becomes very attractive to independent software developers)? Part of the reason why iMode succeeded I think was because NTT decided to split the revenue 90%-10% giving away huge chunk of money to the service provider inorder to make the iMode platform attractive to the consumers. I do not see this happening in any other country - I'm told that mobile operators are extremely greedy when it comes to such deals.

Indraneel:

I agree that push services have a bigger probability of winning in the mobile space than search. Blackberry is a great example. But that's an enterprise application in most cases.

The question is what would be the willingness to pay for such services. I don't think it will be high unless the service is revolutionary.

I think MMS and snack clips broadcast can be huge if priced really cheap and if they are easy to access. Imagine cricket highlights being pushed on the phone with some ads thrown in (ads can pay for the MMS). I am sure a lot of people would be interested.

The other service can be an SMS type of service combined with a social networking application that is easy to browse. It can be a huge success in the teenage and younger generation.

Ashish Tomar:

What would it take to narrow the digital gap for the bottom of the pyramid?
I believe, the real innovation in mobile internet will only come, once mobile carriers become "smart pipes" for applications and content that may be available from the Internet. I also believe that innovative services over SMS, are the shortest (no pun intended) route to digital connectivity for the bottom of the pyramid.

Also, Prashant Rai has put together a mindmap for the series.

In this context, this post by Veer Bothra on zero-rental GPRS makes interesting reading. “A pay per use model will lower the monthly cost for most users as there is no minimum commitment. Another advantage is that users can feel free to try out things and evaluate the mobile web without having to commit a one-time entry fee. The monthly rental acts as a hurdle to acceptance of the service since most users can’t imagine its value to shell out that fee. Provided that there are compelling content and services, this can spur usage as many more users will be willing to experiment with GPRS. It can be a positive feedback loop, in which as more users start using GPRS - more content and services are created for it and so on.”

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