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First Reviews of Tomi T Ahonen tenth book The Insider's Guide to Mobile

"When it comes to stats, case studies and insights around mobile – there is only one
main man in the Global industry..and that is Tomi Ahonen. This incredible book is
a comprehensive overview of mobile telecoms and smartphone business
opportunity, from end-users to service and apps and from handsets to the business
of mobile."
Jonathan MacDonald, Managing Director JMA, co-founder This Fluid World,
Every Single One of Us and Human Dialogue, UK

"If the word "mobile" is mentioned anywhere in your LinkedIn profile, this is a
must-read"
Clo Willaerts BNox Blog Belgium

" The unsurpassed guru of mobile phones, Tomi T Ahonen, has released his latest
book, which is an invaluable guide to anyone in the mobile industry. It is smart,
funny, useful and a hugely important tome for anyone in the industry."
Terence Eden CEO Shkspr Ltd UK

"Tomi has yet again demonstrated the reach and breadth of his expertise across the
vast array of services & offerings that 'the mobile phone' encompasses now,
historically and in all of our lives moving forward. Seriously folks; Who else can
give you such a comprehensive non-biased insight into 'mobile' on planet earth
today?"
Henry Sinn, Australia

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


The Insider's Guide
to Mobile
The Customers, Services,
Apps, Phones and Business of the
Newest Trillion Dollar Market

By
Tomi T Ahonen

TomiAhonen Consulting

Copyright © 2010 TomiAhonen Consulting


www.tomiahonen.com

This eBook is available for free download Tomi T Ahonen


Copyright ©2010 TomiAhonen Consulting
issue date 20.10.2010
Published by
TomiAhonen Consulting
119-120 Connaught Road
Central
Hong Kong
e-mail: info@tomiahonen.com
www.tomiahonen.com

THIS IS THE PRE-RELEASE EDITION

All rights reserved. No part of this publication may be reproduced, in any form or
by any means, electronic, mechanical, photocopying, recording or otherwise,
without the prior permission of the authors.

Although great care has been taken to ensure the accuracy and completeness of the
information contained in this excerpt document, neither TomiAhonen Consulting
nor any of its authors, contributors, employees or advisors is able to accept any
legal liability for any consequential loss or damage, However, caused, arising as a
result of any actions taken on the basis of the information contained in this
document.

Phone model on cover is Samsung GT-I8520 Galaxy Beam, the world's first pico-
projector smartphone, used with permission from Samsung.

Certain statements in this document are forward-looking. Although TomiAhonen


Consulting believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations will
prove to be correct. TomiAhonen Consulting undertakes no obligation or liability
due to any action arising from these statements. All third party brands and
trademarks belong to their respective owners.

ISBN (tba)

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


Contents i

Contents
(to be completed)

Foreword (tba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page v


To the reader . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Chapter 1 - Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Everything you ever wanted to know about mobile (but were afraid to ask)

Chapter 2 - Size of Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


Newest Trillion Dollar industry
Essay 1 - Telephone Houses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Chapter 3 - Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
And the input myth
Myth 1 - Input Myth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Case Study 1 from the UK - Fanta Mosquito Noises. . . . . . . . . . . . . . . . . . . . . . 43

(Sample chapter from book Communities Dominate Brands)

Chapter 4 - 7th Mass Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45


And the screen size myth
Myth 2 - Screen Size Myth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Case Study 2 from Japan - Tohato Snacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chapter 5 - 8 Unique Abilities of Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61


And the myth of location-based services
Myth 3 - Location-based Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Case Study 3 from USA - Blackberry Pocket Cop . . . . . . . . . . . . . . . . . . . . . . . 85

(sample chapter from book Mobile as 7th of the Mass Media)

Chapter 6 - Handsets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
My phone is my best friend
Essay 2 - The Nokia Decade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


ii My gift to you

Chapter 7 - Smartphones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105


Supercomputer in your pocket
Essay 3 - Golden Age of Photography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Chapter 8 - Mobile Messaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133


And the myth of MMS being a failure
MYTH 4 - MMS being a failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Case Study 4 from Finland - Finnair Mobile Check-in. . . . . . . . . . . . . . . . . . . . . . 151

Chapter 9 - Media Content on Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153


Information and Entertainment
Case Study 5 from China - Puma Racing Adver-game. . . . . . . . . . . . . . . . . . . . . . 164

Chapter 10 - Mobile Social Networking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165


Empowering digital communities
Case Study 6 from UK - My Art Space. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

(Sample chapter from book Pearls Vol 2: Mobile Social Networking)

Chapter 11 - Mobile Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175


Mobile will replace cash
Case 7 from the USA - Iron Man 2 m-Tickets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

Chapter 12 - Beyond Reality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187


Augmented, Virtual and Improved Reality
Case 8 from Japan - Axe Wake-up Girl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

Chapter 13 - Mobile Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199


And myth that nobody wants ads on their phones
MYTH 5 - Nobody wants ads on phones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
Case Study 9 from Japan - Girlswalker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

(Sample chapter from book Pearls Vol 1: Mobile Advertising)

Chapter 14 - Digital Footprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219


Digital communities and Web 2.0
Case Study 10 from the UK - Tesco Shopping Assistant. . . . . . . . . . . . . . . . . . . . . 233

This eBook is available for free download Tomi T Ahonen


Contents iii

Chapter 15 - Convergence and the Cannibal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235


And the smartphone apps myth
MYTH 6 - Smartphone Apps are good economic opportunity . . . . . . . . . . . . . . . . 245
Essay 4 - Before iPhone, After iPhone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264

(Sample chapter from book Digital Korea)

Chapter 16 - Internet and Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267


And the myth that WAP is crap
MYTH 7 - WAP is crap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Essay 5 - Mobile First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281

Chapter 17 - Economics of Mobile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285


Digital klondyke and the cyber eldorado
Essay 6 - The 5 Trillion Dollar Race. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

Chapter 18 - Digital Divide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305


The next 4 Billion mobile subscribers
Case Study 11 from India - Mobile Radio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322

Chapter 19 - Mobile Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323


And the saturation myth
MYTH 8 - Saturation myth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328

(Sample from book TomiAhonen Almanac 2010)

Chapter 20 - A Short History of Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335


There was mobile before the iPhone
Essay 7 - 10 Things that Changed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344

Chapter 18 - Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347


You ain't seen nothing yet

Humorous Interlude: 2G vs 3G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

How does someone get from there to here? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


iv My gift to you

APPENDIX:

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371

Good Websites and Blogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373

Who to Follow on Twitter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375

About the author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379

Other books by Tomi T Ahonen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381

This eBook is available for free download Tomi T Ahonen


Contents v

Foreword
In 1999 I joined Nokia Networks as a Product Marketing Manager. In those days we
were selling GPRS networks to operators, showing them a future full of data services.
These exciting promising data services were the very reason for me to switch from retail
to telecom (as we called it in those days). The first phones I got from my employer
Nokia were the Communicator 9110 and the Nokia 7110 (the first WAP phone). Both
phones showed me the future of mobile. The Communicator already then made it
possible to install apps on your ‘phone’ and the 7110 showed me KPN’s operator portal
with actual published mobile content. Already in the very first year in the existence of
the mobile internet, all major use-cases for mobile services that are now so very popular
on current smartphones, were identified. We talked in those early days about dating,
friendfinders, local search, (LBS) games, social networks, content sharing, etc. Looking
back, we basically worked the past 10 years on removing barriers for the successful
uptake of the mobile internet. In these last 10 years we have all learned from a
tremendous amount of start-ups that tried to find the right proposition in one of those
hot service categories. Many entered the market too early, or something in the
product/market equation did not work. Most of the time this was related to either the
lack of location information, limited bandwith or huge costs for data. I believe it is
important to recognize that the current success stories in mobile are built on the
'remains' of many failed businesses and their legacy of learnings.
I realized in 2007 that nearly all barriers for succesful mobile services had
been removed. After having worked at the infrastructure, hardware and operator side, I
saw that the time was right for the uptake of mobile internet services. The foundation
was, so to say, completed. So I left KPN, from my post as Principal Innovation Manager
at the time, and decided to enter the game of mobile services as a freelancer. In that year
together with some other mobile enthusiasts we also launched Mobile Monday
Amsterdam. We felt that this networking initiative was the right platform to fuel the
development of mobile services. It brought together people from all parts of the
valuechain to discuss how and what to build on this foundation of infrastructure,
hardware and bitpipes.
Basically now we have entered the third wave of mobile. First was
Communication, second was Content and now the third is Context. We are barely
scratching the surface of this third wave. Context is restructuring mobile services so,
that it utilises contextual datapoints to optimize the service experience for the users.
Contextual datapoints are for example location, proximity to objects, proximity to
friends, the user’s viewing angle, actual time, your direct surroundings and much more.
Most of these contextual datapoints are gathered through mobile phone sensors such as
GPS, Accelerometers and NFC readers. The exciting stuff is happening in the middle,
between the organized data in the cloud and the actual 'dumb' sensor information. In the
complete history of content we have never been confronted with creating sensor based
dynamic services that fit the context of a user. The design principles for delivering these

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


vi My gift to you

kind of exciting services have yet to be written. Areas of attention for the creation of
these services are; implicit versus explicit service offerings, vertical integrated solutions
versus horizontal platforms that are build on top of the sensors and the balance between
utilitarian short service exposure and addictive user engagement. I consider this phase in
mobile to be the phase where we will see the true face of this medium.
Currently I am CEO of Layar, the world’s leading Augmented Reality
platform. We have created a horizontal platform on top of sensor information like GPS,
camera, accelerometer, gyroscope and compass that delivers Augmented Reality
experiences created by thousands of developers to millions of users around the world.
Our mission is to bring impactful Augmented Reality experiences into the everyday
lives of people. We believe that a platform that not only uses all the sensor input to
design a service experience but also offers the possibility to integrate this service
experience in real life can create experiences that have a much deeper impact on users
than anything we have witnessed in the digital field until now. In a sense Layar is
adding a digital layer to reality. Our thriving developer community has developed
thousands of layers fitting an endless amount of use-cases across the world. From layers
that show you restaurant reviews when you are standing in front of them to exciting
massive multiplayer games right in the streets of your city. The use-cases to create
digital experiences are literally endless. We started Layar in 2009, currently over 50
people work at Layar. We have received over 12.5 million euro in funding and Intel
Capital is one of our investors. With this company we are building the foundation for
the distribution of the next generation of contextual services that are experienced in the
real world through Augmented Reality.
At the time that I worked at KPN somewhere end of 2006 I read the book
Communities Dominate Brands and started reading the associated blog. I was an instant
fan of Tomi and Alan Moore. Every blogpost was an absolute eye opener and the
volume of interesting facts and case studies was overwhelming. Their book and blog
really contributed to widening my vision of mobile and showing me the potential of
social services. Tomi continued to be on top of market trends around mobile ads,
gaming, social networking. His vision as Mobile as the all eating 7th Mass Media is a
great example of his strong vision. As he was a true source of inspiration for the Mobile
Monday Amsterdam team we invited him over to present his thoughts about mobile at
one of our sessions. Amsterdam has fallen in love with him from that day onwards. His
charismatic and unique presentation style together with his strong vision and volume of
useful facts and case studies makes him a unique individual and thoughtleader in the
mobile space.
I can recommend this book to anyone that wants to have a complete overview
of the current mobile landscape. It touches all aspects of the mobile value constellation.
It’s absolutely packed with facts and casestudies. It brings the current mobile landscape
into context by going back in history and by comparing it to other industry
developments. After reading this book you know mobile!

Raimo van der Klein


CEO Layar

This eBook is available for free download Tomi T Ahonen


To the Reader vii

"In a connected age, sharing information is power"


Tomi T Ahonen

To The Reader
My gift to you

This is my tenth book and to celebrate several milestones, my publishers and I


decided to make this book totally free in its ebook version.
So to start off, there are three versions to this book on a 'freemium' basis. The
total book, its full text and all graphics and data, are in an ebook edition which is
totally free to download by anyone, available at Lulu. The 'freemium' part means,
that in this free edition, there will be some 'advertisements' - mostly of my other
books, but also of books by other authors that I warmly recommend, and some
shorter advetisements about my consulting business. The relevant point is, that
there are lengthy (chapter-long) excerpts of six of my most recent books. The ads
are part of 'sponsoring' this free edition, as I trust some who read this book will be
interested in my other books. Meanwhile, as the ads are mostly excerpts from my
other books, I trust you, the reader, will find the ads also of 'valuable information'
and not being too 'intrusive'. The ads are clearly marked with blue or yellow pages.
This free ebook edition may be freely forwarded and fully shared with anyone,
with the two requirements, that this pdf file document is not edited in any way, and
that the full book document may not be saved online for sharing. You may not edit
the text, the illustrations, nor the formating of the ebook. You may share the pdf file
electronically via email, but you may not save the ebook online at a website for
distribution. The online distribution has to go through my publisher which in this
case is Lulu and their website http://www.lulu.com.
There are (currently) two paid editions of this same book. If you want the
printed 'traditional' hardcover book version, there is a paid printed edition. Typical
of 'freemium' principles, if you buy the print edition, it will not be encumbered with
the advertising. The print edition is available at all major booksellers like Amazon
etc. (It will be released a few weeks after the original free eBook edition)
Furthermore, if you want a smaller, condensed version optimized for
smartphone reading, there is a paid mBook/smartphone version for your iPhone,
Blackberry, or whatever pocketable device you might want. The mBook edition
also will not be encumbered with the advertising, and will be made in a file size
significantly smaller than the free edition, to help those who save the mBook on a
smartphone that may have limited storage space. The mBook edition has the

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


viii My gift to you

illustrations in color to help see some graphics more clearly on the small screen.
The mBook version will be sold via selected ebook/mbook outlets like Lulu,
Amazon, iPhone App Store, etc.
As I mentioned, this is my tenth book. It celebrates several milestones for me
in 2010. I am now in my 20th year in technology/telecoms and this Autumn, I am
starting my 10th year as an independent consultant. My blogsite,
www.Communities-Dominate.Blogs.com passed its millionth page view
milestone in July. I have personally been seen now at over 250 conferences on all
six inhabited continents, with a cumulative live audience of over 100,000 people. A
very special recognition of my contributions to our industry, is how my peers take
my writing. And it truly humbles me, that I have now passed the point where over
100 books by other authors make reference to me. That is a milestone I never ever
in my wildest dreams had thought possible. I think its fair to say that I am one of
the most published authors, and one of the most seen speakers on topics of mobile,
as well as one of the most trusted authorities of my field by my peers.
So this is my gift to you, my loyal readership and my fans. You have been kind
and generous enough to me, to buy 9 of my past books, so this is your reward, my
tenth is free. This book collects everything that I know about the fundamentals of
the mobile industry that I could hope to fit into one 'general' volume, that does not
deal with a specific focus areas like my more recent books. In many ways its my
'best of' stories, my favorites showcasing often the commercial excellence but also
at times just a quaint little unknown story from a particular market. These are my
favorite stories (and lessons, and insights) that I would like the world to know about
our industry: mobile. And this book deals with the 8 most common myths still
plaguing this industry. At the end of each chapter, I have also added good additional
sources of information to read, which is not just my books, but those books by my
peers that I think are exceptionally good in a given area covered by that chapter.
In this book I have written several new chapters that are based on earlier works
like some of my popular 'Thought Pieces' over the years. This book also includes
several 'essays' on some given topic, often based on articles that I have written for
my blog. I have added several 'Pearls' from my vast collection of real commercial
services launched on mobile.

I hope you enjoy this book and if you do, that you will forward it to a colleague.

Tomi T Ahonen
aka the 'HatRat'
www.tomiahonen.com
twittering as @tomiahonen

on a hot, sunny summer day in Hong Kong


August 2010

This eBook is available for free download Tomi T Ahonen


Acknowledgements ix

"Laughter is the shortest distance between two people."


Victor Borge

Acknowledgements
Ten books. I always loved books, yet never in my wildest dreams did I imagine growing up,
that I could be privileged to be allowed to write ten books for my industry. I have loved
every minute of every sentence and every paragraph and every chapter; and every edit and
every review and every comment. Every new book has been a thrill, and my best memories
of my life are those, when I have had the pleasure of meeting fans who had read a book of
mine. I truly live a blessed life.
As this book is a celebration of my ten years in telecoms consulting, I do want to go
back and really thank those all who have influenced my life and enabled me to get here with
you, my readers. So it starts with a love of language and writing. For that, I thank first my
English teacher in Helsinki's The English School, Sr Renée Brinker, who also taught me
History. Of my youth, three other major influences were my step-father, Jan W Brans, who
taught me to love books and shared with me his passions for gadgets and technology; my
scout master with Toimen Pojat scout troup, Tapani 'Tipi' Leppala, and my favorite aunt and
greatest fan and supporter, Tepa Lundgren, who after the passing of my step-dad has become
my closest elder relative and certainly is a surrogate mother to me.
From my university days I have to thank my Clarion University speech professor and
debate coach, Barry McCauliff, and the head of the Marketing Department, Dr Joseph
Grunenwald, who later became the President of Clarion University itself. Of my employment
career prior to mobile, I want to mention Todd Stevens, Aaron Weinberg, Chris Barker and
Otto Cruz at OCSNY in New York. Then at Helsinki Telephone Company (Elisa), I want to
thank my fave boss of all time, Matti Tossavainen, an icon of Finnish telecoms history. Also
I want to recognize Pekka Eloholma, Jukka Alho, Juha Malmberg and Gunnulf Martenson.
Of the team we had selling '999' branded international telecoms services, I want to thank
Minna Rotko - and here I have to do the Minna song Minna Mii-Mii-Mii! - Mikko Lavanti,
Olli Rasia, Tiina Kovero, Markku Lempinen, Tarja Aarnio, Jouko Viitanen, Anne Nikula,
Hannu Peltola, Mikko Heijari and Ismo Leino. (PS Ysi-Ysi-Ysi, vai mita?)
At Nokia, I want to thank first my first boss, who inspired and supported me, Tarja
Sutton, and then my last boss, Ilkka Pukkila, a true visionary whose wise words guide me to
this day. Of many other colleagues at Nokia, I still fondly remember our time from FSG days
with Russell Anderson, Nicole Cham, Janne Laiho, Jochen Metzner, Merja Vane-Tempest,
Merja Koistinen, Paavo Aro, Jarmo Harno, Aarne Sipila. Then with the 3G team, my
department team leaders Ismo Karali, Canice McKee, Reza Chady, and of my consultants I
want to still thank Merja Kaarre, Kati Holopainen, Timo M Partanen, Vesa Sallinen, Markku
Kivinen, Paolo Puppoli, Maija Gao, Petro Airas, Asko Rantanen, Jaakko Hattula, Rob
Hughes, Paivi Keskinen, Hannu Tarkkanen, Krishna Bhandari, Monika Marosfalvi and Harri
Leiviska. There were many more at Nokia's 3G project and at HQ, of whom I want to
remember also Arja Suominen, Tuula Tupu Putkinen, Ukko Lappalainen, Ebba Dahli,
Helena Kahanpaa, Harri Holma and Antti Toskala, Scott McMahon, Anssi Vanjoki, Tero
Ojanpera and Lauri Hirvonen.
As I transitioned my career into an independent consultant and author, I needed a lot of
guidance and inspiration and advice. So I want to mention first the biggest influences to my

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


x My colleagues, my gurus, my friends

consulting and 'guru' career, my three personal gurus and guides - Jouko Ahvenainen, Alan
Moore and Voytek Siewierski. My consulting career has also been helped enormously by the
loyal friendship and support of Ajit Jaokar who runs futuretext, publisher of several of my
books and who co-moderates Forum Oxford with me. I must mention Peter Holland at
Oxford University who has also become a very close friend over our many collaborations
with the University and 3G mobile. Then my Japan market insider and to a large degree my
Asia guru long before I moved to Hong Kong is Lars Cosh-Ishii of Wireless Watch Japan. I
am inspired and learn ever more from any collaborations with the author-gurus Jonathan
JMac MacDonald and Gerd Leonhard. I want to thank author-blogger-mobilist extraordinaire
Russell Buckley now known for working for Google as part of their Admob acquisition. Two
very dear friends from our days at Fjord are Mike Beeston (still with Fjord) and Mark Curtis
who now full time runs Flirtomatic. I also mention Alex Tan with NokiaSiemens Networks,
not just a close colleague here in Asia but a true and close friend and Lauri Kivinen of Nokia
(now CEO of YLE the TV broadcaster), another true friend.
We get together anywhere we happen to be in the world with several of the best minds
in mobile that I am honored to call close friends: Dan Applequist of Vodafone, Mike Short of
the MDA, Rory Sutherland of Ogilvy, Paul Golding the author-guru, Ed Candy at Three,
Peter Miles of SubTV, Christian Lindholm of Fjord, Nicanor Santiago of Axiata, Jari
Tammisto and Madanmohan Gao of MoMo (my best regards to all MoMoists - smile its
Monday!), Heike Sholz of Mobile Zeitgeist, Mark Newman Informa, the inimitable Antti
Ohrling of Blyk, the most gracious Ralph Simon MEF, Rudy de Waele of M Trends, the
numbers man and author Chetan Sharma, Ewan McLeod SMS Text News, the international
telecoms comedy actor Martin Feldstein whose day job is at Meriti and Foromovil, my
patents genius Faith McGary at kgb; and my dear and loyal friend and eternal source of cool
discoveries, Steve Epstein.
Then several other people have had a profound influence to my understanding of
mobile, of whom I have to mention my mentor at Nokia, the Grand Old Man of mobile data
and inventor of SMS, Matti Makkonen; Elisa Group's former strategy director Teppo Turkki;
the current CEO of Starhub, whom I got to know back when he was CEO of M1 in
Singapore, Neil Montefiore; Softbank's Executive VP Ted Matsumoto; AirCross's CEO BJ
Yang; MTS's Group Strategy Director Garrett Johnston; Luciana Pavan then of MTV;
Krzysztof Procska then of Polkomtel; Steven Chan then of M1; Taina Kalliokoski of Fujitsu;
Akihisa Fujita D2C, Sigve Brekke Telenor; and the supersmart futurist author Tony Fish
with whom I can never get enough time. Obviously in addition to Alan, I want to also thank
my other co-authors Timo Kasper, Sara Melkko - and here I have to do the Sara song, Sara-
Sara-Sara, Sara-Sara-Sara.. - and Jim O'Reilly - Jim, you know why, thank you thank you
thank you - and Joe Barrett.
Next I mention a couple of people who have supported my career for longer periods:
Steve Jones 3G Portal, Peggy Ann Salz M Search Groove (once a Pennsylvanian, always a..),
Sharon Haran then of Partner/Orange, Olof Schybergson Fjord, Lars Hobaek Telenor, Esther
Villancher Frost & Sullivan, Rick Constanzo and Juan Lontok RIM, Mike Wright Striata,
Ville Virtanen Tieto, Helen "Technokitten" Keegan Tanla, Rich Sepcic Dun & Bradstreet,
Alvin Yap Nexgen, Jackie Danicki (pronounced, like the Polish way, eh!) then of Qik, Simon
Cavill Mi-Pay, Judy Brown in m-Learning, Antoine RJ Wright at Mobile Ministry Magazine,
David Cushman then of Emap, Enrique "CEO" Ortiz of MoMo, Dan Virtopeanu Voxline,
Volker Hirsch Scoreloop, Peter Bruck WSA, Raimo van der Klein Layar, Trip Hawkins
Digital Chocolate, Roberto Saracco TIM, Zahid Ghadiali 3G 4G Wireless, Thomas

This eBook is available for free download Tomi T Ahonen


Acknowledgements xi

Michelson DiViA, Albert Cuesta the journalist, Ricky Cadden the former Symbian Guru part
1, Sissel Henriette Larsen Telenor;
Then there are the authors (remembering that many in the above are also authors..).
And as I love books so much, it is not just a delight, but an honor to be able to say, these are
my friends and I am a huge fan of their books so my thanks to Howard Rheingold, Kim
Dushinski, Martin Sauter, Barbara Ballard, Rod Ghani Agha, Paul May, Gary Woodill,
Chavez Miguel Leon, Unhelkar Bhuvan, Tom Hayes and Ben Rigby.
Some journalists have been instrumental in helping me with my visibility. This is
incomplete but I want to mention Vic Keegan and Michael Fitzpatrick at Guardian, Maija
Palmer Financial Times, Derek Chen Channel News Asia, Kristie Lu-Stout CNN, Matthew
Weigand Korea IT Times, Theo Valich Brighter Side of News, Dennis Bournique Wap
Review, Arik Hesseldahl and Stephen Baker Business Week, Stephen McClelland Newsweek,
Jim Cook Mobi Ad News, Jennifer Schenker Red Herring, Alan Mitchell Marketing Week,
Jessica Sandin Informa, Seong-Ju Lee Telecoms Korea, Holly Owen Mega, Barry Welford
Web Pro News, Joyce Schwarz i Media Connection, Diane Hessan and Julie Wittes Schlack
Brandweek, Dan Nysted Macworld, Shashank Tripathi CNet.
And so many many more colleagues who have assisted me in some way or another, so
let me just mention Daniel Scuka Wireless Watch Japan, Olav Henrik Kjorstad Telenor, Dr
Hyun-Oh Yoo SK Communications, Paul Kostigan & John Bourke Movidius, Kenneth
Chang MiTV, Maja Lapcevik InternetQ, Mikki Jang then of MEF Asia, Werner Braeg
Stephan Eberhagen Rick Pryor Stefan Ciesielski Dieter Klein Dr Margit Brandl Siemens;
Benjamin Joffe Plus8Star, Thomas Hansen and Jakob Holst TDC, Peta Spinks and Glenn
Price Motorola, Gerhard Louw T-Mobile, Claude Florin HP, Patrick Scodeller M1, Klaus
Muller Drei, Blums Pineda Globe, Teresa Richards Naked, Pekka Ala-Pietilä Blyk, Ernst
Axelbank Artificial Life, Ryan Wickware Amdocs, Karri Mikkonen TeliaSonera, Kazutomo
Hori Cyworld, Paul Lee KTF, Eleonora Villanova Buongiorno, Julie Hyunh Sybase, David
Doherty 3G Doctor, William Volk Playscreen, Hock Yun Khoong and Philip Heah IDA,
Pawel Szczerba Infovide-Matrix, Walter Adamson Digital Investor, Tracy Klinger
Comverse, Ryan Wuerch Motricity, Marina Levina Ericsson, Mika Tammenkoski Digital
Chocolate, Heikki Karimo IBM, James Parton O2, Judi Romanchuk in Calgary, Kari
Onniselkä Talent Partners, Steve "Keitai Steve" Flaherty, Dr Hannes Ametsreiter and Dr
Alexander Kucher Mobilkom Austria, Sean Mitchell Movidius, Julian Fouregard Le
Catalyst, Claus Nehmzov Shazam, Gregory Gorman Open Group, Rafe Blanford All About
Symbian, Gary Schwartz Impact Mobile, Josh Dhaliwal Mobile Youth, Graham Brown
Wireless World Forum, Madanmoban Rao MoMo (wait, didn't I say Madan Rao already, no
it doesnt matter, he's such a nice guy he deserves two mentions!), Alan Hadden GSA, Ann
Mohan and Taina Kujanpaa NSN, Heidi Fisk eLearning Guild, Anna Peron CWTA, and a
huge list of newer Nokia friends since I left: Keith Pardy, Samuli Hänninen, Kimmo
Lehtosalo, Pekka Somerto, Harri Heikkinen, Bill Chang, Mark Selby; and still more: Nikola
Rafaj Tuesday, Kris Rockwell Hybrid Learning, Christopher Billich Infinita, Agustin Calvo
Movidream, Stephanie Frasco Basement Inc, Aaron Chua Singapore, Jutta Neuhaus
Medienforum, James Peh Frenclub, Jak Boumans of the Netherlands. Carlos Sanchez AIE,
Martin Wilson, Sami Makelainen of Telstra, Moray Rumney Agilent, Peter Vesterbacka,
Colin Miles iPop, Alex Kerr,
Then there are all the other bloggers that I read starting with Oliver Starr of Mobile
Crunch, Xen Mendelsohn Xellular, Colin Crawford Colin's Corner, Tommi Vilkamo S60,
Emily Turrettini and all at Textually, Tom Hume Future Platforms, Richard MacManus
ReadWriteWeb, Leo Blanco and all at Mobile Weblog, Greg Rollet and Jonathan Marks

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


xii My colleagues, my gurus, my friends

Critical Distance, Om Malik Gigaom, Rod McLaren Mobbu, Mark van t Hooft Uniquitous
Thoughts, Richard MacManus Read Write Web, John Bell Digital Influence, Dennis
Haarsager Technology 360, Alessandro Pace Biskero, Tim Lynch Molecular Voices, Robert
Scoble Scobleizer, Michael Mace Mobile Opportunity, Michael Bauens Integral Visioning,
Gil Galanti Cult Case, Paul Sergeant Calico Jack, Clo Willaerts Bnox, Ronald Rovers
Emerce Mobile, Tom Chandler Engagement Principles, Daphne Dijkerman Explore Media,
Jon Anderson Spark of Accident. Bloggers by name: Russell Beattie, Darla Mack, Cameron
Moll, Anja Merrett, Debi "Mobile" Jones; and blogs where I don't know the bloggers:
Experientia, Futurize Korea, X Series, Slashphone.
I also want to recognize the people from my Mobilistas lists on Twitter. Very many are
already listed in the above, but a few more deserve mention here that mostly I have known
before but have grown much closer with our chats on TW: David Wood, Kei Shimada, Rita
Khoury the ex Symbian Guru part 2, Troed Sangberg, Sitaram Shastri, Werner Egipy Souza,
Statys Bielinis, Theo Valich, Susanna Hahenohrl, Carl Martin, Horace Dediu, Gibson Tang,
Mauricio Reyes, Andrew Grill, Martin Keene, Dave Birch, Andreas Constantinou, Dan
Gacke, Barney Craggs, Please note there is a listing of my fave Twitterers that I can warmly
recommend at the back of this book.
Finally as always I want to list my personal digital "test-lab". I am the geeky Uncle Toi
to my nephews and nieces who always enjoy showing me how they navigate the digital
world. You have no idea how much I learn from these sessions that are all too infrequent. I
miss you more than you can imagine and you are the reasons why I try to come to visit
Finland as often as I can. Thank you Jon and Ere Luokkanen, Olli and Salla Kasper, and Ema
and Joseph Moore. The next generation is coming and already the eldset of this group are
getting their own phones: Iiris and Aamos Lundgren; Luca, Leo and Timotei Lundgren;
Maria and Katariina Karimo, and Nea Sukola-Kasper (I will still learn that Wii control!). I
also want to thank my family, Tiina Brans; Kari Lundgren; Jukka and Hanna Lundgren; Jari
and Inkeri Lundgren; Pirjo, Kris and Petteri Jorgensen; Timppa and Tinna Kasper; Alan and
Tricia Rowland; Robert, Maria and Salvatore Abiuso. In memoriam Roni Jorgensen.

While I should dedicate this book to my readers, they have made me a 'bestselling' author, I
will not. I owe an even greater gratitude to those who took the risk in me, when nobody knew
me, the publishers who created 'the Author' Tomi T Ahonen. First, at John Wiley & Sons
Mark Hammond and Geoff Farrell. And then at futuretext, Ajit Jaokar. Thank you Mark,
Geof and Ajit, for taking a risk in me, for letting me pursue my passion, for putting up with
all the silly 'Tomi Ahonen requests' over the years. I could not be here with you, and I could
not give this book to our readers, were it not first the chance, that you took with me, all those
years ago. This book is for you!
And my very special thanks to my dear friend Gerd Leonhard, who was able to
convince me, that I should try to release one of my books as a totally free, complete edition.
You, the reader, can thank Gerd for spreading the gospel of the value of sharing.
The book blog is www.communities-dominate.blogs.com I am on Twitter almost
daily as @tomiahonen and please do write to me at tomi@tomiahonen.com
Finally, if you have bought the printed edition of this book, or if you have any of my
previous printed books - when the paths meet at some point in the future - please do not
hesitate to bring that book with you for me to autograph. I am indebted to you, my readers,
for having this prolonged career writing about mobile. You are the only reason my publishers
were willing to ask for more books from me. I will be delighted to sign it for you!

This eBook is available for free download Tomi T Ahonen


Chapter 1 - Introduction 1

"A mobile phone is an extension of our bodies. No other media


can reach this level of intimacy with the consumer."
Adilson Xavier, Presidente Giovanni & Draft fcb

I
Introduction
Everything you ever wanted to know about mobile
(but were afraid to ask)

Why is it, that 'everybody' is doing mobile? In the past few years we've heard the
world's biggest internet company, Google, say the future of the internet is mobile.
We've heard the world's biggest software maker, Microsoft, say their future is
dependent on success in smartphones. We've heard the world's largest PC maker,
Hewlett-Packard announce they count on the mobile future so much, they bought
the smartphone maker Palm. Apple believes in mobile so much, they stopped
calling themselves 'Apple Computer' when they launched their first mobile phone
handset, the iPhone in 2007, and today Apple call themselves a 'mobile company'.
The media giants are there too. The BBC said a while ago that all TV and
broadcast content will be available on mobile. Other media are there as well, with
top management from Warner Music to EA Entertainment Arts in videogaming
have said that the future of their media is on mobile. Airlines from Lufthansa to
Japan Airlines to American Airlines are deploying mobile phone based check-in
solutions. Carmakers now say that the internet will come to cars. That will be via
the cellular ie mobile telecoms network. And lets not forget money, finance and
banking. Today 56% of all banking accounts in Kenya are mobile phone banking
accounts, and more than half of the South Korean population already use credit
cards or mobile payments on their phones.

Radio and the Seven Dwarfs

Where did this all come from? It sure came in a hurry. Lets put mobile into context.
A decade ago, there were roughly speaking seven globally adopted technologies of
roughly similar size, of between 500 million and 900 million users on the planet.
That was global size of television sets, of personal computers, of fixed landline

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2 Everything you ever wanted to know..

phones, of internet users, of credit cards, of automobiles and of mobile phones. And
there was one giant, FM radio which was the giant at roughly 3 billion users.
Technologically one could say it was the time of FM Radio and the seven dwarfs.
So if you had the impression that 'mobile is just one of several technologies,
roughly as important as the internet or PC or TV or the landline phone' - that was a
perfectly valid and factually correct view, until quite recently.
What happened. In the past decade, fixed landlines grew mildly, reached a
peak, and turned into decline. At its peak there were about 1.25 billion landline
phones on the planet, and today its down to about 1.15 billion. For example one
quarter of US homes has abandoned the fixed landline as redundant (because all
family members have cellphones) according to the FCC. This is no surprise, its a
universal trend, first observed in Finland in 1998, and in Finland today over 60% of
all homes that once had a landline phone have abandoned it.
The PC population grew strongly, roughly speaking doubled and passed the
billion user number in 2007. Today there are about 1.4 Billion PCs of any kind in
use, including desktops, laptops, notebooks, netbooks and tablet computers (like the
Kindle and iPad) all put together. Yes, a big number.
The internet user number was smaller than the population of PCs a decade ago.
That reversed, today there are more internet users than total population of PCs.
How did this happen? Its because some users share PCs, such as a family shared PC
for the kids, or a university PC lab, or an internet cafe; and of course because of the
rapidly growing trend of accessing the internet on a mobile phone. The number of
internet users today is about 1.8 billion people.
Television kept growing as well, roughly speaking doubling in total worldwide
audience, and today there is a TV set in about 1.6 billion homes. The number of
credit cards also roughly speaking doubled, and today there are about 1.5 billion
unique holders of credit cards. And while the car is far more expensive than any of
the rest in this list, the number of automobiles nearly doubled in the past decade,
and today there are about 950 million registered automobiles in use in the world.
Oh, and what of FM radios? They kept growing also in numbers, and
reached about 4 billion FM radios in use today.

Only Ubiquitous Technology

So that is our context. Each of the giant technologies grew, some modestly like
fixed landlines and FM radios, most of them doubled in size like TVs, PCs and the
internet. What of mobile? At the start of the year 2000, there were about 500
million mobile phone subscriptions on the planet. Then the number exploded.
Already a decade ago there were more mobile accounts than internet users, cars or
personal computers. By 2002 the number of mobile phone accounts grew past fixed
landlines. By 2003 it shot past TV sets. By 2004 we had more mobile phones than
credit cards. And FM radios? By 2008 the world passed the point where there were

This eBook is available for free download Tomi T Ahonen


Chapter 1 - Introduction 3

more mobile phones than FM radios on the planet. The mobile has become the most
widely used technology on the planet. And mobile did it only in the past decade.
Note, where most of its rival 'hot' technologies like the internet and PCs and
TVs roughly speaking doubled in size over the past ten years, mobile phone
subscriptions grew ten-fold. At the summer of 2010 we had 5 Billion active mobile
phone subscriptions on the planet, for a population of 6.8 Billion people and we will
reach 5.2 Billion by the end of the year (meaning 75% global per-capita penetration
rate, and counting).
I want to make this point. All other major technologies that were roughly of
the same size, TV, PC, internet etc - grew roughly speaking to double over one
decade. Doubled in ten years. Mobile started roughly of same size but grew to ten
times its size in the same decade. They started as more-or-less equals, today mobile
towers over all others.
And do remember, that is global numbers. Three quarters of the planet means
mobile telecoms now covers people who are refugees from wars, living in poverty
etc. On the planet there are 800 million people of reading age who are illiterate, 1.6
billion people live beyond the reach of electricity, and 900 million are children
under the age of 7. There are more people with mobile phones than have access to
running water. More mobile phone subscribers on the planet than use a toothbrush
(its true!). Yet even across all these hardships, the mobile has spread so rapidly that
there was a mobile phone for three quarters of the planet by the time you are
reading this. I will return to the differences between the advanced Industrialized
Countries, or 'the West', and the Emerging World countries, in more detail in the
Digital Divide chapter later in this book.
There has never been any technology that has even remotely been this widely
spread. Remember those FM radios? They are not evenly spread on the planet. In
the 'West' ie the Industrialized World, we have on average 2.2 FM radios per capita.
In the Emerging World (meaning Africa, Latin America, and less-affluent parts of
Asia, where 5 out of 6 people on the planet live today) they share five people to one
FM radio, on average. But even on the least affluent of the inhabited continents,
Africa, the penetration rate of mobile phones has passed the 50% level.
The mobile phone has become so important to us, that we take the phone with
us everywhere. There are three things currently most people will carry, their wallet,
their keys, and their mobile phone. Visa tells us that even here the wallet and the
mobile phone are not created equal. We report a lost mobile phone within 38
minutes, but we report a lost credit card the next day. Furthermore, the trend is for
both the keys and the various items in the wallet, from credit cards to cash to
photographs and identity cards, to migrate to the mobile phone. And Kodak tells us
that it used to be that photographs were the most valuable item a typical family
would own, that they would run into a burning building to save, but this has now
been replaced by the mobile phone. It contains our most important pictures,
messages, sounds, videos, numbers, addresses, birthdates, anniversaries, etc.

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


4 Everything you ever wanted to know..

We literally take the mobile phone to the bathroom and to bed with us. Most of
us use the phone as our alarm clock too. I like to say its the last thing you see before
you fall asleep, and the first thing you see when you wake up. Former Nokia
President and Chairman of Blyk, Pekka Ala-Pietila put it this way in 2008:

Mobiles are an integral part of our lives – so much that many of us cannot
remember a time without them. To have a mobile has become second
nature and we are generally never separated from them – we eat, breathe
and, yes, even sleep with our mobile phones – making them the most
private and personal accessory we own today.
Pekka Ala-Pietila Chairman of Blyk, past President of Nokia

Yet just a decade ago, mobile was but one of many similar technologies. The
change has been enormous, and it has been sudden. So if you didn't know mobile,
there is a good reason for it. Until very recently, it was 'just another technology' and
as a pocketable gadget, it could easily be dismissed as just another in the series of
the iPod and PlayStation Portable and the digital camera and the GPS device and
portable DVD player etc.

So Its Obviously Still Primarily A Phone?

So we examine a new phenomenon from a perspective that we know. A 'mobile


phone' is still a phone, isn't it? So its primary use is to initiate and receive phone
calls? Yeah, that sounds very reasonable. Its called a "mobile phone" (or "cellular
phone" in North America) for good reason? Its a phone.
But no: not anymore. That was true, yes, a decade ago that the primary
purpose of the mobile phone was to make and receive voice calls, but that is not
mobile today. Today all over the planet, the primary use of a mobile phone is to use
a far more efficient form of communications - SMS text messaging. In most
markets the total outbound traffic from mobile phones has shifted away from voice
calls, to SMS text messages. Even the USA found this trend about two years ago.
Its been observed in many Asian and European countries for most of the past
decade. And yes, its not a 'youth only' trend. Lightspeed Research reported that in
2009 already 13% of global mobile phone owners have stopped placing any
outbound calls on their phones (in India its already at 30%). Its time we stop
thinking of it as a mobile 'phone' (or cellphone).
The issue is no longer a novel argument presented by some obscure telecoms
author. The fact that the total population prefers SMS to making voice calls has
been verified by the UK telecoms regulator for Britain, the Irish regulator for
Ireland; its been verified from the Philippines to New Zealand; and its even now
been established as a fact in the the USA, by the CTIA in 2009. For the majority of
mobile phone owners, their primary use of the phone is no longer voice calls, it is
SMS text messaging. That is a fact. Which probably is a 'wake-up call' for many

This eBook is available for free download Tomi T Ahonen


Chapter 1 - Introduction 5

reading this book. "Wow, SMS text messaging, really? I hadn't thought of that..."
And don't think for one moment its going to be wireless eMail that will replace
SMS. The opposite is true, as I will show you with evidence in the messaging
chapter later in this book.

Most Widely Used Data Application

So we need a few significant points about SMS, the most widely used data
application on the planet. Mobile data services today are predominantly used on
SMS. If measured by revenues, SMS alone accounts for 40% of all data service
revenues earned by mobile. If we add in MMS (commonly called picture
messaging) we get over half of all mobile data service revenues. So whatever your
passion or interest or 'cool idea' for mobile, half - HALF - of the global opportunity
today is built on mobile messaging. And this part of mobile, will keep growing
strongly through this whole decade. Please forgive me, if this book often refers to
innovations around messaging, at the expense of say, smartphone apps (which have
existed for nine years worldwide, yet account for only 0.3% of all mobile data
revenues in 2010).
To ignore SMS in mobile, is like to ignore the car, in considering motorized
transport. This book has to emphasize SMS, else I would not be offering you the
reader honest real value for your time in reading this book. Any book in mobile
which doesn't devote a major part to SMS is blatantly ignoring the real economic
opportunity and the biggest industry sector. So in addition to its own chapter, I
discuss SMS in many chapters of this book. And I want to make a few overview
points here in this intro chapter.
We heard from Clickatell in February 2010 that the world was passing the 4
billion active user number for SMS text messaging. Do remember, that all internet
users number 1.8 billion and not all of those are active users of email. Facebook,
Twitter, YouTube, MySpace etc are tiny fractions of that number. SMS text
messaging is used by 4 billion people (59% of the planet's population) and virtually
every mobile phone handset and cellular network supports basic SMS text
messaging. It is the only data communication technology that reaches the pockets of
75% of the planet today.
SMS is the magical way for any other media or technology to create an
interactive experience with their customers or audiences or constituents or patients
or however they consider their users. SMS text messages earn TV shows like
American Idol bonus income, the latest USA run of American Idol generated about
100 million dollars worth of televotes - the 'Pop Idols' reality TV format earns half
a billion dollars of SMS voting income worldwide in shows from Australian Idol
and Indian Idol to X Factor in the UK, Deutschland Sucht Der Superstar in
Germany. and Neuvelle Star in France.
SMS is used by libraries, hospitals, dentists. SMS is a national emergency
warning system for tsunami warnings, health epidemic alerts, volcano and

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


6 Everything you ever wanted to know..

earthquake warnings from the Philippines to Guatemala. Texting is a powerful way


to deliver coupons, discounts, tickets, balance statements etc. Juniper measured that
in 2010 a total of 2 billion mobile tickets of some kind including movies, travel, etc
will be delivered worldwide. SMS was used to send 41 million dollars in charitable
contributions to the victims in Haiti. And now the coin-minting industry has
suddenly become frightened of mobile money as Estonia banned coins in use for
paying for parking and Sweden similarly banned coins from paying for bus fares -
both happened to prevent coins-oriented crime. Many have predicted new
technologies would kill cash, from cheques to credit cards to debit cards to
contactless cards to eBay and various digital money online. But it wasn't until
mobile money came along, that cash started to be eliminated. Sweden became the
first country to start parliamentary discussions about the elimination of cash
altogether. That started in the summer of 2010. The nation of Swaziland in Africa
has also opened this discussion. Meanwhile in Kenya, by the end of 2010, one
quarter of the nation's economy will pass mobile phones. I will discuss mobile
money in its own chapter later in this book.

MMS Is Next

What is the next big thing? It is not smartphone apps and it is not the real internet
on phones. The next big thing in mobile is MMS. You may think of MMS as a
clumsy, expensive and unreliable picture-sharing system, which results in poor-
quality images when received, if received. Then they'll charge you an arm and a leg
to send the pictures. And email is free, so any 'intelligent' person would use email
attachment to even send pictures from one phone to another right?

Subscribers
Millions
Millions
Cellphone Timeline 1990-1996
1200
World PC count PC count
passes 100M 200 M
1000
Internet Internet on
10M users cover of Time Musicphone
800
500M fixed Telecom revenues Mobile revenues
Landlines pass $500B reach 10% of telecoms
600
First PC based First phone based
SMS sent in UK SMS sent n Finland
400
Mobile subs
pass 100M
200 GSM Launches Pre-Paid
in Finland Portugal
Apple iPod
0
1990 1991 1992 1993 1994 1995 1996 1996

This eBook is available for free download Tomi T Ahonen


Chapter 1 - Introduction 7

Fine, lets leave that point to one side. MMS can be used to send pictures from
one phone to another, that is true but MMS is not a picture messaging platform.
MMS is a Multimedia Messaging System. Yes, multimedia includes text, includes
sounds, includes pictures and includes video. Video content. You could send short
clips of stories via MMS. Or a series of pictures (like a cartoon) via MMS. And
sounds yes, plus longer text based messages than in SMS.
MMS? 3.4 Billion people, thats who. More than twice the global number of
personal computers, twice the number of TV sets, the only two 'other' globally
prevalent mass media devices that can do multimedia. MMS is the worlds most
widest-reaching multimedia platform. Think of it as thee world's largest video-
enabled medium. In 2010 it reaches literally the pockets of half the world's
population. MMS is a media industry's dream. It has all the benefits of SMS, but it
breaks through the 160 character limit, and allows pictures, sounds and videos. This
is the ultimate couponing, advertising, music and TV and movie and gaming -
related media platform: the ultimate.
Yes, the price is more per message obviously than SMS. Yes, there are still
many teething problems, not all phones support it (the early iPhone did not) and
often the user has not enabled the right settings for MMS on their phones. There are
still many interconnect problems between mobile operators/carriers.
However, these are just teething problems that are being fixed. Look at the
numbers. The value of MMS this year is 31 Billion dollars according to Portio
Research, or 32 Billion dollars according to Research & Markets. My TomiAhonen
Almanac 2010 reports that in 2009 MMS had an active user base was 1.7 billion
people or 37% of all mobile phone subscribers on the planet.
This is huge. MMS alone is bigger than the global music industry, and this
year is passing the global movie industry box office revenues in total value. MMS

Subscribers Cellphone Timeline 1996-2002


Millions
1200
Cellphones PC count Apple
past PCs 500M iPod
1000
Internet Google Internet Internet
100M users 200M users 500M users
800
Mobile revenues 1B Fixed
pass 20% of telecoms Landlines
600
1B SMS 10B SMS SMS used 100B SMS
n
annually PC Populatio annually by 50% annually
400
M-Banking Nokia Ring tones M-Parking Mobile ads Ring tones
Finland Snake Finland Norway Finland $1B
200
Nokia Communicator i-Mode WAP Cameraphone Blackberry 3G
Finland Japan Finland Japan Canada Japan
So,
0 how many people have a phone and network capable of receiving
1996 1997 1998 1999 2000 2001 2002

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


8 Everything you ever wanted to know..

is a magnificent platform to deliver compelling but still very simple multimedia


experiences to end-users. TV shows can send MMS-based 'minisodes' to loyal
viewers - for example soap operas send short previews of tomorrow's episode,
available right after today's episode has ended. The ABC hit youth show, Pretty
Little Liars for example does this currently. These short minisodes cost typically
from 50 cents to about a dollar per MMS episode or are sponsored through
advertising, and make tons of extra money to TV broadcasters. In China all major
newspapers offer a twice-daily MMS 'breaking news' service, and 40% of their
readers have already signed up to these services.

4500
Subscribers Cellphone Timeline 2002-2008
Millions
4000
4000
Cellphone Cellphone Cellphone
past past past PC count
Landlines TVs Credit cards 1B
3500
3500
Internet M-Internet M-Internet
1B users 500M users 1B users
3000
3000

Prepaid 3.3B Mobiles


reaches 50% half of planet
2500
2500

M-Content Mobile Revenues M-Content SMS pass


pass $10B pass $500B pass $50B $100B
2000
2000
d holders
Unique credit car
1500
1500 Television sets
Landline phones

500B SMS 1T SMS 2T SMS SMS 2B


1000
1000 annually annually annually users

M-Gaming M-Community Ring Tones M-Games M-Community


pass $1B South Korea pass $5B pass $5B pass $5B
500
500
MP3 Mobiles TV-Mobiles Camphones iPhone
South Korea South Korea 50% of all USA

0
2002
2002 2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008

This eBook is available for free download Tomi T Ahonen


Chapter 1 - Introduction 9

So who cares if MMS is used to share pictures (- and it is used that way as
well, mostly by young users). That is not its best ability. MMS is the almost
perfectly media-focused messaging platform, the ideal advertising and media
content delivery mechanism. With its active user base at 1.7 Billion people is more
than all internet users, all PCs in use, and all TVs in use. And you thought it was a
stupid picture messaging concept? Just don't think its somehow "only picture
messaging." Over 30 Billion dollars generated by MMS in revenues in this year
alone. This is a huge mobile data opportunity, indeed.

Seventh Mass Medium


Cellphones in 2010
Millions Then we have the 7th
5.2 B Cellphone subscriptions mass medium. Mobile is
5000
the newest mass medium
and as I say, "mobile is
as different from the
internet, as TV is
4.1 B Active users of SMS different from radio" and
4000 "as different as cinema is
4 B FM Radios
from radio." This book
has one whole chapter
3.4 B Cameraphones examining the 7th mass
medium. As related to
3000 that concept I have been
reporting on the unique
abilities of mobile as a
mass media channel. So
2.2 B holders of bank accounts far, mobile has found 8
2000 1.9 B Active users of MMS unique abilities that
1.8 B internet users cannot be replicated on
1.6 B Televisions any legacy media, not
1.4 B Users of
1.4 B email users DVDs, not digital TV
mobile internet 1.2 B All PCs
and not broadband
1.1 B Fixed landlines
1000 internet.
850 M 3G+ phones 8 'unique abilities'?
Here are the keys to the
550 M Smartphones magic kindom. Here is
how the next billionaires
are made on the planet.
Those who understand
2010 these 8, are the next
barons of industry for

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


10 Everything you ever wanted to know..

this decade and the next. I have a whole chapter on the 8 unique benefits in this
book, and another whole chapter on the media content we can offer on mobile.
Nokia told us in 2010 that the average user looks at the mobile phone 150
times per day. LM McCann told us last year that one out of every 7 minutes of
media consumption involved the mobile phone. There is nothing else like it.
Compare that to our use of TV or the PC or any other media like a newspaper. Do
you have reason to open the same newspaper 150 times per day? Of course not. The
mobile phone gets not twice as much interaction and attention, not three times
more, not five times more, but ten times more interaction and attention from us,
than any other technology or media! I have a whole chapter looking into the
customers of mobile.

Growing at Break-Neck Speeds

Mobile is a Trillion dollar industry. Yes, the total mobile telecoms related
businesses, selling handsets, the mobile minutes and SMS text messages, all our
mobile content, and the network infrastructure that is underneath, total over a
Trillion (ie 1,000 Billion) dollars in annual revenues. Out of all giant industries on
the planet that reach a Trillion dollars in value (automobiles, banking, food,
construction, armaments, etc), mobile has done it by far the fastest, in only 28
years. Its not just a giant industry dwarfing most other tech industries in the process,
like the PC industry, the internet business, broadcast media and the fixed landline
telecoms business; mobile is also the fastest-growing tech industry of them all. I
discuss the future race into the 5 Trillion dollar convergence battle in one of the
Essays in this book.
In our lifetimes there will be no better opportunity to make money than mobile
is today. Mobile is the ultimate epicenter of all digital convergence - fixed telecoms
is migrating to mobile, the internet is migrating to mobile, all media content is
migrating to mobile, advertising is going to mobile, banking and credit cards are
going to mobile; even almost every other industry on the planet from policework to
education, from car makers to farming, fishing and forestry. I discuss the economy
and the major players in one chapter of the book, looking also at the 25 biggest
companies in the mobile industry; and in another chapter, I discuss how to make
profitable services in mobile.
There has never been anything like mobile. It is the only device that is
ubiquitous on the planet, even the wristwatch is giving way to the phone. Every
economically viable person on the planet has a phone. We take our phone to the
bathroom and we sleep with the phone at our bedside. It is quite literally the first
thing we look at when we wake up and the last thing we see before we fall asleep.
And as more than half of the world sleeps with phone ringing turned on for
incoming urgent calls or messages at night, mobile is he only medium to reach us
when we sleep.

This eBook is available for free download Tomi T Ahonen


Chapter 1 - Introduction 11

Every industry from media to banking to travel to retail to government to


education to fishing and farming can use mobile. I report on how panicked some in
the money industry are now about mobile cannibalization of the coins and cash
industry, in the chapter on mobile money and banking. Mobile can be used to
connect with people, with pets and farmyard animals, with household plants and
trees in forests. There never ever was anything remotely as powerful as mobile is
today. If you thought that the internet changed the world in the past 15 years or so,
that was just a little technology 'tease', to whet our appetites. Mobile will bring far
more radical global disruption to our lives over the next decade than what the
internet has been able to do.

Is Only the Beginning

This industry is young, dynamic, and full of paradoxes and myths. I explain eight of
the myths in this book. An earth-shattering change to the industry came in 2007,
when Apple joined the mobile industry with a bang. Its launch of the iPhone in June
of 2007 seemed to change all the rules about the mobile industry. It certainly
changed the way we think about internet and applications on premium phones. It
helped popularize the smartphone to consumer markets and in particular in the
USA, the iPhone opened the eyes of executives in the PC industry, various media
industries like TV, movies, print; the advertising and marketing industries; and
various commerce from banking to retail. I explain how radical this change is, in
the essay about 'Before iPhone and After iPhone'.

Rate of Change Getting Even Faster

The mobile industry itself is experiencing faster innovation than the PC industry at
its peak, or the internet industry at its peak. As the mobile is at the center of digital
convergence, there is innovation coming from all directions, propelling the change.
And as much of the world got into the 3G high speed data environment more-or-
less simultaneously - in the big scheme of things, most advanced Industrialized
countries launched within 4 years of each other, and most of the planet's major
economies have launched 3G within a decade, now that China, Russia, Brazil, India
etc have launched 3G. The innovation in mobile can happen just as well in
California as in Finland, or in the Brazil as well as in Japan, or in India as well as in
Italy. I will examine many of those innovative services and concepts in this book in
upcoming chapters.
I want to mention a few examples. Consider Layar, the augmented reality
browser which can best be described as delivering 'magical' experiences to its users
worldwide. It sounds like futuristic digital magic that should come from Japan or
South Korea. Layar was invented in the Netherlands.
What of Angry Birds, the most popular iPhone videogame and most
downloaded paid app on the App Store? Surely it has to come from the West Coast

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


12 Everything you ever wanted to know..

of the USA, home of EA and all the clever gaming developers? No, Angry Birds
came from Finland, developed by a Finnish company called Rovio.
Then for all my European and Asian readers who might be led to think that the
USA is lagging in mobile, what of the most advanced mobile video blogging and
sharing service, Qik? This is so clever, it has to come from Japan or Scandinavia,
doesn't it? No, Qik was launched in the USA.
And what of a social networking application to help people find jobs? If its
mobile social networking, that has to be Japan or South Korea, right? Wrong.
Babajob, the award-winning mobile social network to help people find jobs, came
from India.
As we know, the wealthiest person on the planet now is no longer Bill Gates of
Microsoft in the USA, it is Carlos Slim of America Movil, based in Mexico.
This is my point. There was never been such a global rush to innovate and
create new opportunities in any industry, as we now have in mobile. Then bear in
mind, that this rate of change itself is accelerating. The mobile world is changing
even more rapidly today than it did in 2008 or 2005.
Those who understand the fundamentals of mobile, will not be on a 'wild
goose chase' after some myth and wasting their efforts. This book cannot tell you
where the gold is in mobile, if it was that easy, everybody would be doing it.
However, this book can show you what parts to avoid, illustrate what widely held
beliefs are in fact myths; and highlight positive opportunities where the gold may
be hiding.

Get Into It Now

You don't need to be Vodafone or China Mobile or AT&T to have a place in


mobile. You don't need to build phones like Nokia and Apple and Samsung. You
can enter mobile via SMS or MMS or WAP or HTML 'real web' or even perhaps by
smartphone apps. There are still many great opportunities even in basic services
around voice and sounds-related services as I will show in a case study about
'mobile radio' in India, later in this book.
But whatever you do do, whether personally, or your project, or your team, or
your department, or your division, or your corporation - please study mobile today.
Set up a mobile task force to capitalize on this opportunity before your rivals beat
you to it. This is the golden age of mobile. It is the best economic opportunity of
our lifetimes.

This eBook is available for free download Tomi T Ahonen


Chapter 2 - Size of Mobile 13

"If others would but reflect on mathematical truths as deeply and


as continuously as I have, they would make my discoveries."
Carl Friedrich Gauss

II
Size of Mobile
Newest Trillion Dollar Industry

I publish my annual TomiAhonen Almanac early every year with the numbers for
the mobile industry. As I am writing the manuscript for this ebook, we are at mid-
point of the year 2010 and I have to make projections to the end of 2011. So please
allow me some 'fudge' factors in the projections in the numbers, but for December
2010 or January 2011, these are relatively accurate figures. You will be able to get
the exact numbers if you visit my blog early in 2011.

5.2 Billion Subscriptions

The mobile industry passed the 4 Billion level of active mobile phone subscriptions
in 2008. It shot past the 5 Billion level in the summer of 2010. We hit 5.2 Billion by
year-end and will pass the 6 Billion level around 2012 or so, and breach the 6.9B
level sometime around 2014. Why is that an important milestone? That level is the
total population of the planet. So within a couple of years from you reading this
book, there will be more mobile phone subscriptions in the world than there are
people alive, from babies to great grandparents.
At the start of 2011 we will be at 5.2 Billion active subscriptions. Globally,
there are about 850 million children too young to go to school. They have little need
for a mobile phone. Then there is a further approximately 760 million illiterate
adults according to the United Nations. So if we remove the very young children
and the illiterate adults from the total planet's population, we have about... 5.2
Billion people. We are already at the point, that the mobile phone penetration rate
has matched the rate of people who know how to read.

Unique Users, Actual Phones In Use

Not all subscriptions are actual 'unique users'. Many people have two phones. Many

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


14 Newest Trillion Dollar industry

more have two or more subscriptions while only having one phone - the multiple
subscriptions are often used to save costs in mobile calls and messages. So we need
to split the total subscriber count down. Out of 5.2 Billion total subscriptions, there
are about 3.7 Billion unique users of mobile phones. That is real people, who have
at least one active mobile phone subscription, and at least one mobile phone in their
pocket. That is a huge number too. It was in 2010 for the first time more than half
of the total population of the planet, and is 55% of the real, live total population of
the planet, at the start of 2011. That is up from 50% at the start of 2010.
Therefore, we know that out of 5.2 Billion active mobile phone subscriptions,
3.7 Billion are unique users, that means 1.5 Billion of all subscriptions are 'multiple'
subscriptions, a second (or third, or fourth) subscription for the same person. The
most obvious use is for an employed middle-manager at some corporation, who has
a Blackberry as an employee phone, but also has gotten an iPhone as a personal
phone. Here we have one person with two subscriptions and two phones. It could
also be, that the person has one phone, and one 3G 'data card' connection for the
laptop - which is a typical example of one phone and two subscriptions.

Mobile Subscribers, Phones in Use and Unique Owners

3 Total Subscribers
Phones in Use
2
Unique Owners
1

0
98
99
00
01
02
03
04
05
06
07
08
09
19
19
20
20
20
20
20
20
20
20
20
20

Source: TomiAhonen Almanac 2010

The preliminary numbers for the start of 2011 look like this. Out of the 3.7
Billion unique mobile phone users worldwide, about 68% have only one phone, and
only one subscription. The remaining about 32% have two or more subscriptions.
So to start with, almost one in three people on the planet who already has a mobile
phone, is actually paying for two or more subscriptions supporting usually also two
(or more) rival networks. Note there are more 'second subscriptions' to mobile on
the planet, than total fixed landline phone accounts! That is a very big number and
it is one that the industry is struggling with, in anything from marketing promotions
to handset replacement cycles. Worldwide the percentage is 32%. In Europe already

This eBook is available for free download Tomi T Ahonen


Chapter 2 - Size of Mobile 15

more than half of all unique mobile phone owners have two phones. In the United
Arab Emirates (Dubai, Abu Dhabi etc) the rate is so high, that those who have a
mobile phone, tend to have on average typically 3 subscriptions.

How Many Have Two Phones

Meanwhile, how many of the people with two subscriptions, also has 2 phones?
That is obviously less than those with two subscriptions, and is about 14% of all
unique mobile phone owners. So 3.7 Billion unique mobile phone users, carry
around daily about 4.2 Billion mobile phones. So if you want to know how many
actually activated, in-use mobile phones are operational worldwide, on accounts
that are still active, that is 4.2 Billion mobile phones. And yes, one in seven of us,
who has a mobile phone, actually walks now around with two phones in their
pockets. That is about one in four Americans and one in two Europeans.
Simultaneously the mobile phone is expanding to ever less affluent parts of the
planet. There are dozens of countries where a third of the population lives on a
dollar per day (or less). So then we get the poverty related issues to the newest
subscribers, we are now adding. For example, there are about 300 million people
beyond the 3.7 Billion unique users who live in poor households where they share a
phone, such as often in Africa for example. So if you wanted to measure the 'true
reach' of mobile today, in 'real people' it is the 3.7 Billion unique users, plus those
300 million family members in very poor countries, where the mobile phone is
shared, to give a total reach today of 4 Billion people on the planet. That is the 'real
real' number. If you want to consider the total potential reach of this technology,
then there are 4 Billion people worldwide who have their own mobile phone, or
who share the phone with their family members. That is 59% of the planet.
Out of the 4.2 Billion handsets in use, about 425 million (10%) are second-
hand phones (as in many countries of the Emerging World) or hand-me-down
phones (as often with younger teenagers and children). And out of the 5.2 Billion
subcriptions about 300 million are not actually used by humans for telecoms
services, but are either 'telematics' subscriptions connecting machines, remote
metering etc, or data connections to laptop computers.
Since 2008 when mobile phone subscriptions passed the last giant technology
rival, FM radio, mobile has become the most widely spread technology on the
planet. The phone is now the most commonly used time-piece, as many have
abandoned wearing wristwatches and use the mobile phone as their only way to tell
time. The phone is the most used alarm clock. There are ten times as many
cameraphones in use today than any kind of stand-alone cameras in use, digital or
film-based. More people have an MP3 player on their phone today than own any
kind of musicplayer including iPods and home CD players. And in some of the
poorest households, the embedded FM radio of a modern mobile phone is actually
the first radio that family has ever had.

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


16 Newest Trillion Dollar industry

Earns 1.1 Trillion Dollars In Annual Revenues

The mobile industry is a global giant which generates about 1.1 Trillion (1,100
Billion) dollars in annual revenues. Compare that with 'major' industries such as
print (newspapers, magazines & books) or Television or advertising or the
computer industry - these are all industries roughly speaking worth only half a
Trillion dollars. The fixed landline phone industry is also worth in that group. Only
a few global industries earn a Trillion dollars such as automobiles, food,
construction, finance & banking, and military spending. And since 2008 also
mobile telecoms.
Of the 1.1 Trillion dollars, about 900 Billion dollars is service revenues and
200 Billion is hardware. The service revenues split is very roughly speaking so that
625 Billion dollars is voice call revenue; 175 Billion dollars is mobile messaging
revenue; and 100 Billion dollars is non-messaging 'mobile data' revenues. Of the
hardware income, about 160 Billion dollars is handset sales and about 40 Billion
dollars is network infrastructure expenditure.

Annual Sales of Major Electronic Gadgets

1400

1200

1000

800

600

400

200

0
as

es
e

s
g

Cs

ts
er
on

er
in

se

on
er

P
m

ay

ay
al

ph
TV
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Ca
an

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ile
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ed
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ab

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Source TomiAhonen Phone Book 2010

Of the mobile messaging, about 120 B dollars is earned by SMS text


messaging and 35 Billion dollars by MMS messaging. The mobile data revenues
(including messaging) are now larger at 275 Billion dollars than all internet-related
revenues including advertising, content revenues, and access fees (broadband and
dial-up) added together.

This eBook is available for free download Tomi T Ahonen


Chapter 2 - Size of Mobile 17

The average mobile phone user when counted as total subscriptions on the
planet pays about 13 dollars per month for mobile telecoms services.That ranges
from nearly 50 dollars per month in North America to well under 5 dollars per
month in countries of Emerging World. New first-time mobile phone subscribers in
some of the poorer countries like Bangladesh or Nigeria will join the mobile society
paying only 1 dollar per month. Those are the economics of the industry.

Sold 1.3B New Handsets

The industry sells over a Billion new handsets every year. During 2010 the handset
industry will sell about 1.3 Billion new mobile phones. That number needs
comparison to understand how exceptional it is. The home electronics industry sells
about 300 million new TV sets annually including the new plasma screen TVs.
There are about 300 million new PCs sold annually, including desktops, laptops,
netbooks, and tablet PCs like the new iPad. There are about 250 million DVD and
CD players sold per year. No other consumer electronics comes even close to
mobile. The average replacement cycle for mobile phones, at 17 months, is also far
shorter than for other digital technologies.
The population of 4.2 Billion phones in use have rapidly gained enormous
capabilities. 100% of the installed base of mobile phones are able to receive SMS
text messages. 96% of all phones have some kind of browser, whether a 'real' xTML
browser of a more limited WAP browser. 94% of all phones in use have a color
screen. 82% of all phones in use can receive MMS multimedia messages. 79% of
all phones in use are cameraphones. 72% of all phones have a modern xTML web
browser. Over half of all phones have bluetooth, a media player; and can accept
downloads ie have Java or Brew. 48% have a memory card slot, 32% are 3G high
speed data phones or faster (not all of those are connected to 3G networks) and 21%
have WiFi. Only 16% of the installed base of mobile phones are smartphones.

How Many Are Smartphones?

If we look only at smartphones, then in the full year 2010 the Nokia brand formed
about 37% of all new smartphones sold. RIM and its Blackberry smartphones sold
about 17%. Apple's iPhone was at about 16% of new smartphone sales. Samsung
was fourth selling about 10%, and HTC was fifth biggest selling about 8% and
Samsung the fifth biggest selling 6% of all smartphones. Thre rest is split over thre
dozen brands of smartphones including SonyEricsson, LG, Motorola, Lenovo, HP
(ie ex-Palm), Dell, ZTE, Huawei, Sharp, Fujitsu etc.
Of the installed base of smartphones, Symbian branded smartphones (about a
dozen brands but mostly Nokia) account for 55% of all smartphones in use on the
planet. Blackberry smartphones are the second most common type by operating
system, with 14%. Apple's iPhone OS/X forms 9% of all smartphones in use. The
Google Android operating system is the fastest-growing OS now in 2010, selling

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


18 Newest Trillion Dollar industry

the second-most in the Autumn of 2010, behind only Nokia's Symbian, but because
it launched so recently Android is still in fourth place when counting installed base,
at about 8% of all smartphones in the world. Microsoft's Windows Mobile (used by
over a dozen manufacturers but predominantly HTC brand) control 7% of all
smartphones in use. All other smartphone operating systems such as Samsung's
Bada, Microsoft's new Phone 7, Linux Mobile, Palm, MeeGo etc form the rest at
7% of all smartphones in use. I will have a whole chapter looking at smartphones.
A very important point to bear in mind, is to understand that 'internet phone'
does not mean 'smartphone' and also that 'app store' does not mean 'smartphone'.
More than half of all phones (mostly 'featurephones') have a 'real' web browser,
which supports full HTML internet pages; and most even very basic phones support
the simpler WAP (Wireless Application Protocol) which offers a limited internet-
like subset of web standards, which still allow most popular internet services to be
consumed on basic WAP phones, like Google search, Amazon book sales, etc. I
will explain the full story of what is (and what isn't) the 'mobile internet' in its own
chapter towards the end of this book.
Similarly many think that you have to have a smartphone to be able to use an
'app' on a phone, ie an application. Actually that is also not true. Only one in six
phones worldwide is a smartphone, but half of all phones in the world can accept
applications to be installed, using industry standard tools like Java, widgets and
Brew. So if you are interested in apps, don't make the mistake of thinking you only
can sell them to an iPhone or Android based smartphone. I will also be including an
essay into the smartphone app economics, to explore who makes money, and how
much, today around smartphone app store applications, whether paid or free.

4.1 Billion SMS Text Messaging Users

Mobile phone messaging using SMS is the most widely used data application on the
planet. All 5.2 Billion mobile phone subscriptions are capable of receiving text
messages. SMS text messaging is used by 80% all mobile phone subscribers at the
start of 2011, and the 4.1 Billion active users means 60% of the planet's population
can not only receive an SMS text message, but knows how to reply to it.
There are almost 3 times as many active users of SMS as there are total
number of personal computers on the planet. Please bear in mind, that not all of
those 1.4 Billion PCs are connected to the internet. In many countries in Latin
America, Africa and poorer parts of Asia, many PCs are still solely stand-alone
devices. The ITU reported in 2010 that still 100 million homes with a PC did not
connect to the internet. But yes, SMS text messaging has three times as many
users, as all connected personal computers on the planet.
What of email? Radicati measured that in 2010 the total global email user base
was 1.4 Billion email boxes, of which about 400 million were used by
business/corporate users and 1 Billion by consumers. But at 4.1 Billion active users
of SMS, mobile phone messaging will reach an audience of almost 3 times bigger

This eBook is available for free download Tomi T Ahonen


Chapter 2 - Size of Mobile 19

than email. While the reach is particularly obvious in the Emerging World
countries, this 'digital divide' also applies to those who are less affluent in the
Industrialized World. In the USA, for example, the heaviest users of data services
on mobile phones tend to be the poor segments, Hispanics, African-Americans etc,
who often cannot afford a PC and its broadband connection, but are happy to use
data services on their cellphones.
The planet sends 6.1 Trillion SMS text messages during the year 2010 (ITU,
2010), which is 16.7 Billion messages per day (two and a half SMS for every live
person on the planet per day), or 11.6 million messages every minute - or 193,000
SMS text messages sent every second of every day. At a world average cost of 2.5
US cents per SMS text message, the SMS industry earns another million dollars
every three and a half minutes of every day, day and night, 365 days per year.
The most used data application on the planet became the fastest-ever industry
to reach 100 Billion dollars in annual revenues in only 16 years. And grew users,
services and revenues in 2009, a year of economic crisis. MMS is following on the
heels of SMS hitting over 30 Billion dollars in only 9 years and yes, MMS also
grew users, services and revenues this past year.

More Internet Users On Mobile Than On PCs

The transition point has been passed and as we heard Nokia CEO Olli-Pekka
Kallasvuo say earlier this year, that today there are more people who access
browser-based 'internet' services on a mobile phone than on a personal computer.
Out of all 1.8 Billion internet users today, there are only 400 million who never use
a mobile phone and only access on a PC. 850 million use both a PC and a mobile
phone to access the internet. And 550 million people today never use a PC to access
the web and only use a phone.
In numerous populous Emerging World countries the majority of internet
access is from mobile such as in India, South Africa, Bangladesh, Russia etc. In
many very advanced Industrialized World countries of high broadband penetration
the same phenomenon has happened such as in Japan, Sweden, South Korea and
Taiwan where also more people access the internet on a phone than on a PC. Thus
the total PC based internet user base is now 1.25 Billion people but the mobile
phone based internet user number is 1.4 Billion people. Note that these numbers
include any browser services including WAP (often called 'mobile internet' as
distinct from the 'real internet' using xTML web browsers on mobile phones)

Mobile Premium Content Worth 98 Billion Dollars

The total premium data revenues on mobile data services, after removing mobile
messaging, are worth 98 Billion dollars. Only 4.1 Billion dollars of that total today
is advertising revenue said Juniper in 2009. So paid content and services on non-
messaging mobile services total 94 Billion dollars worldwide. That number is four

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


20 Newest Trillion Dollar industry

times as much as all paid content revenues on the legacy PC based internet. The
oldest form of mobile content is the basic ringing tone - I am not talking of
'truetones' or real samples or real music, the very basic simple monophonic tunes
you hear random people have on their phones when you walk on the street. Then
look at this number: basic ringing tones earned 5 Billion dollars of revenues in
2008. More than 2.5x more than all of Apple's famous music store, iTunes earns
globally. But who is singing the praises of basic mobile music? So much of this
industry is hidden success stories. I will expose many of those secrets in this book!
And I have not even started with 'Ringback' tones - also today bigger than all
of iTunes - or any more advanced forms of mobile music styles such as
Realtones/Truetones; and full MP3 track downloads, and music streaming services,
and mobile music videos, and welcoming tunes, and background tunes, and mood
music, and music gifting and music recognition and yes alas, the mobile karaoke
service. Each of those is a real service earning millions. Music recognition
(Shazam, if you know the brand) earned 100 million dollars last year out of 35
million paying customers. Music on mobile is worth 13.9 Billion dollars in 2009.
When you remove mobile music, the rest of the global music industry is worth only
17 Billion dollars (according to IFPI 2010). Mobile forms of revenues account for
45% of all music spending by consumers on the planet!
However, its not just music. News services on mobile deliver 9.8 Billion
dollars annually. Videogaming on mobile is even bigger at 11.6 Billion dollars. And
while few actually watch full TV episodes on mobile (millions do, but mostly the
youth) the real money out of 'mobile TV and video related services' is of course in
the SMS-to-TV service opportunity - think voting for American Idol or the
Eurovision Song Contest - total TV and video services including SMS voting on TV
are worth.... 14 Billion dollars in 2009. How much is YouTube contributing to the
income of NBC or Fox or HBO or Disney or the BBC? Not much. But mobile
video and related services including SMS votes - deliver already 4% of the total
worldwide TV industry revenues. Thats exactly the same level as ringing tones
were early in the previous decade.

Mobile Advertising Grew 85% Last Year

So the last item I want to discuss is mobile advertising. 'mAd' as I like to call it, is a
tiny part of the big picture of mobile, but is of great interest in particular last year
after the news that Google bought Admob. So the story? There has been advertising
on mobile phones for a decade since first introduced in Finland in the year 2000.
Today 2.1 Billion people on the planet have received ads on their phone and in
leading countries like Spain, Japan and South Africa, between 70% and 90% of
mobile phone owners receive ads on them.
When using the most modern 'engagement marketing' methods, hundreds and
even thousands of consecutive mobile ad campaigns by the giants of the ad
industry, Coca Cola, Nike, Mastercard, Ford, L'Oreal etc etc etc - have achieved

This eBook is available for free download Tomi T Ahonen


Chapter 2 - Size of Mobile 21

consistent response rates from 20% in the USA to 25% in the UK to 30% in
Slovenia to 45% in Japan. Consistent response rates (not just click-through rates)
and across thousands of campaigns - but not as stupid banner ads or spam SMS or
pre-roll ads or location-based spam; but rather by using 'engagement marketing'
methods, which I will discuss in more detail later in their own chapter in this book.
As these newer better engement marketing methods are being discovered,
learned, spread and utilized, mobile advertising grew enormously last year - a mind-
boggling 85% growth rate in a year when the overall economy crashed, and all
advertising budgets were severely slashed, and all non-digital advertising budgest
were decimated and even internet advertising was flat for the year. But mobile
exploded by 85% growth.
Mobile is the way to go if you use engagement marketing methods. Mobile
advertising will roughly double again in revenues this year and will end up the
biggest ad platform of the planet, bigger than the internet, or print ads or radio or
even television before this decade is done. Mark my words. As to the year when all
ad industry funds vanished due to the economy but mobile ads were so compelling
that the brands showered their money on mobile, it grew yes 85% last year.

WHERE NEXT?

So you'd like some more data on the industry? Here I have to plug both of my
statistics books, they are your best value books on the stats, start here before buying
the expensive industry reports.

TomiAhonen Almanac 2010


by Tomi T Ahonen
(note is an annual publication)
ebook format
only from www.tomiahonen.com
has 82 tables and charts of data
(the 2009 edition has been translated into Spanish)
cost only 9.99 Euros

TomiAhonen Phone Book 2010


by Tomi T Ahonen
ebook format
only from www.tomiahonen.com
has 90 tables and charts of data
cost only 9.99 Euros

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


22 Newest Trillion Dollar industry

Essay:
Telephone Houses

When I was a Young Man,


There Used to be Tiny Houses
for Telephones..

A story from your future. You will sit your grandchild onto your knee and tell the
child a totally unbelievable story.
"You know, when I was your age, they used to have these houses, all over the
city, that were built just to be a home for a telephone. The houses were so tiny, that
only one person could fit inside, and even then,they could not sit in those houses.
They were so small that you could only fit in by standing. The houses were proper
houses with walls, windows, one door, and a roof. And the only thing that would
live inside that house was a telephone."
Your grandchild will look at you with that child's expression of very deep
thought. Pondering. Maybe this is one of those famous jokes that grandparents are
known for. But it was said with the honest voice, not the joking voice. Your
grandchild will then decide and say: "You are kidding. If they built a house for a
phone, someone would just take the phone away."
Now you laugh, and you add, "Well, actually those phones were tied to the
house by a cable." "Why so people would not steal them?" "No, that was how all
phones worked when I was your age. all phones were connected by a cable."
Your grandchild will not believe you. So you go and show the picture of
yourself in a phone booth..
Moral of this story. The payphone is on its way into history. Finland was the
first country to start to decommission payphones.Use this opportunity while we
have it - and take a picture of yourself in a phone booth. Some day it will no longer
be standing there.

This eBook is available for free download Tomi T Ahonen


Chapter 2 - Size of Mobile 23

Tomi T Ahonen is quoted in over 100 books by other authors:

Anderson, Freeman et al, Mobile Media & Applications, John Wiley 2006
Baker & Hart, The Marketing Book (Sixth Ed), Butterworth-Heinemann 2007
Bigdoli Hossein, The Internet Encyclopedia, John Wiley 2004
Breslin et al (editors) Recent Trends and Developments in Social Software, Springer 2010
Brown Reva, Flagship Marketing, Routledge, 2009
Calvo Agustin, Open Your Eyes and Wake Up Your Business, Calvo, 2006
Chaffey, Chadwick et al, Internet Marketing, Butterworth-Heinemann, 2009
Chaffey & Smith, eMarketing Excellence, Butterworth-Heinemann, 2008
Chavez Miguel Leon, Fieldbus Systems and their Applications, Elsevier, 2007
Chhokar, Brodbeck, et al, Culture and Leadership Across the World, Routledge, 2007
Christians, Handbook of Media Ethics, Routledge 2009
Cocoran, Ian, The Art of Digital Branding, Allworth, 2007
Coleman & Levine, Collaboration 2.0, Happy About, 2008
Coyne R, Tuning of Place, MIT Press, 2010
Crestani, Dunlop et al, Mobile and Ubiquitous Information Access, Springer 2004
Cruz-Cunha Maria Manuela et al Handbook of Research on Developments in e-Health IGI 2010
Cushman, David, Power of the Network, Lulu, 2008
De Bra, Kobsa et al, User Modelling Adaptation and Personalization, Springer 2010
Dubreul & Roger, Le Marketing du Multimédia Mobile, Editions d'Organisation, 2003
Dumova & Fiordo Handbook of Research on Social Interaction Technologies, Idea Group 2009
Dushinski Kim, Mobile Marketing Handbook, John Wiley, 2009
Earls Mark, Herd: How to Change Mass Behaviour, John Wiley, 2007
Elleithy Advanced Techniques in Computing Sciences, Springer Science 2010
Elliott & Phillips, Mobile Commerce and Wireless Computing Systems, Addison Wesley, 2003
Fling Brian, Mobile Design and Development, O'Reilly, 2009
Fotheringham & Sharma, Wireless Broadband, John Wiley 2008
Frasier & Dutta, Throwing Sheep in the Boardroom, Quill Driver, 2009
Glotz Peter & Stefan Bertsch (editors) Thumb Culture, Transcript Verlag, 2005
Golding Paul, Next Generation Wireless Applications, John Wiley, 2005
Gow & Smith, Mobile and Wireless Communications, Open University Press, 2006
Guttshce & Aulich, Untersuchung der Nutzung von Mobiler Kommunication, Grin Verlag 2008
Guy Retta, Evolution of Mobile Teaching & Learning, Informing Science, 2009
Hayes Tom, Jump Point, McGraw Hill 2008
Hartleben Ralph, Werbekonzeption und Briefing, Metropolitan, 2004
Hartmann Thomas, Ganzheitliche Marketingkommunikation im Internet, Publicis 2004
Heaton & McLelland, Age of Conversation, Variety, 2008
Hill Chrystie, Inside, Outside & Online, ALA, 2009
Holma & Toskala (editors), WCDMA for UMTS: HPSA Evolution, John Wiley 2007
Hongbowon Haeoe, Korea Policy Review, Korean Overseas Information Service 2007
Hoppe, Melanie, Informelle Mitgliedschaft in Brand Communities, Gabler Verlag, 2009
Iyar Subrah, Why Buy the Cow?, Lulu, 2007
Jaokar Ajit & Tony Fish, Mobile Web 2.0, futuretext 2007
Jaokar Ajit & Tony Fish, Open Gardens, futuretext 2004
Kaaranen, Ahtianen et al, UMTS Networks, John Wiley 2005
Kapferer Jean-Noel, New Strategic Brand Management (4th edition), Koran Page, 2008
Kartajaya Hermawan, Connect, PT Gramedia Pustaka Umata 2008
Kelly Lois, Beyond Buzz, Amacom 2007
Kent, Tony & Rewa Brown, Flagship Marketing, Routledge 2008
Khorsow-Pour, Mehdi, Managing Worldwide Operations and Communications, IGI, 2007
Koekemoer & Bird, Marketing Communications, Juta Academic, 2004
Latchem Colin & Insung Jung, Distance & Blended Learning in Asia, Routledge 2009

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


24 Newest Trillion Dollar industry

Tomi T Ahonen is quoted in over 100 books by other authors:

Lee Incorporating Mobile Multimedia Into Everyday Life, University of Wisconsin, 2008
Lehu Jean-Marc, Branded Entertainment (French "La Publicite est dans le Film") Kogan Page, 2007
Levy Frederick, 15 Minutes of Fame, Alpha, 2008
Lewis & Moscovitz, AdvancED CSS, Springer 2009
Loekemoer & Bird, Marketing Communications, Juta, 2004
Lombard & Nahon, Second Life of Networks, Odile Jacob, 2008
Lombard, Nahon et al Le Village Numerique Mondial, Odile Jacob, 2008
Lut, Warta Ekonomi, Obor Sarana Utama 2008
MacDonald, Jonathan, Every Single One of Us, Lulu, 2008
Marcus, Roibas et al, Mobile TV, Springer, 2009
Marti Javier, Mobile, Domains & the Future, Trendirama, 2008
Masterman & Wood, Innovative Marketing Communications, Butterworth-Heineman, 2005
Meyerson, Mitch Success Secrets of Media Marketing Superstars, Entrepreneur 2010
Moll Cameron, Mobile Web Design, Cameron Moll 2008
Morales, Distance Education Issues, Nova Science 2007
Nawrocki, Aghvami & Dohler, Understanding UMTS Radio Network Modelling, John Wiley 2006
O'Farrell, Levine et al, Mobile Internet for Dummies, For Dummies, 2008
Parasuraman, Grewal et al Marketing Research, Wiley India, 2009
Patry William, Moral Panics and the Copyright Laws, Oxford University Press, 2009
Philabaum Dan, Alumni Online Engagement, Morgan James 2008
Phillips Paul, E-Business Strategy, McGraw Hill 2003
Pousttchi Key & Dietmar Wiedermann Handbook of Research on Mobile Marketing IGI 2009
Poyalt, Pierre, Kulturwissenschaftliche Motivforschung bei Konsumenten, Grin Verlag, 2009
Pulido, Monica, Consumidores Nomadas, Netbiblio, 2008
Rapp Reinventing Interactive and Direct Marketing, McGraw Hill 2009
Reeves & Knell, 80 Minute MBA, Business Plus 2009
Resende & Pardalos (editors), Handbook of Optimization in Telecommunications, Springer 2006
Rigby Ben, Mobilizing Generation 2.0, Jossey-Bass 2008
Rossi Melissa, What Every American Should Know about Europe, Plume, 2006
Safko & Brake, Social Media Bible, Wiley, 2009
Salz Peggy (editor) Netsize Guide 2010, Netsize 2010
Salz Peggy (editor) Netsize Guide 2009, Netsize 2009
Salz Peggy (editor) Tanla Mobile Marketing Guide 2008, Tanla 2008
Sauter Martin, Beyond 3G, John Wiley 2009
Schuurman, Marez et al, Content for Mobile Television, Springer, 2009
Shama, Herzog & Melfi, Mobile Advertising, John Wiley 2008
Sties Peter, Ein Verfahren zur modellbasierten Entwicklung von multimedialen..., BoD, 2005
Takala, Teemu Markkinoinnin Musta Kirja, WSOY 2007
Taniar David, Mobile Computing, Information Science, 2009
Taniar David (editor), Encyclopedia of Mobile Computing and Commerce, Igi Globa, 2007
Thomason, Lincoln et al, Retailization, Kogan Page 2006
Turner, Magill et al, Service Provision: Technologies for Next Generation..., John Wiley 2004
Unhelkar Bhuvan, Handbook of Research in Mobile Business, Idea Group, 2006
Weber, Heike, Das Versprechen Mobiler Freiheit, Transcript Verlag, 2008
Wertime & Fenwick, DigiMarketing, John Wiley, 2008
Wilcox Mark, Porting to the Symbian Platform, John Wiley 2009
Wilkins & Christians (editors), Handbook of Mass Media Ethics, Routledge, 2008
Wisely David, IP for 4G, John Wiley, 2009
Wittkower & Wittkower, Facebook and Philosophy, Open Court, 2010
World Bank, Information and Communication for Development 2009, World Bank 2009

This eBook is available for free download Tomi T Ahonen


Chapter 3 - Consumers 23

"Mobile is the last thing we see before we fall asleep,


and the first thing we see when we wake up."
Tomi T Ahonen

III
Consumers
And the Input Myth

I told you in the intro chapter that voice calls are now shifting to SMS text
messages. This pattern is globally consistent. Its time we stop thinking of it as a
mobile 'phone' - or cellphone.
SMS is used by libraries to send reminders to patrons that their books are due
to be returned. Text messages are used by dentists to reschedule cancelled
appointments. SMS is used to inform car owners when their car is ready to be
picked up from the garage. As it reaches every person, SMS is increasingly adopted
as the first form of emergency warnings for things like Tsunami warnings and
health epidemics in various Asian countries. Texting is a powerful way to deliver
coupons, discounts, tickets, balance statements etc. The Helsinki public
transportation system has more than half of all single tickets to the trams and
subway sold via SMS. Finnair reports that half of the passengers on its short-haul
flights of its popular routes now use SMS based check-in. Juniper measured that in
2010 a total of 2 billion mobile tickets of some kind including movies, travel, etc
will be delivered worldwide.
SMS was used to send charitable contributions to the victims in Haiti - 41
Million dollars worth, was the final tally for the disaster. In Estonia you can't use
cash to pay for parking and in Sweden you can't use cash to pay for bus fares, but in
both countries let you make that payment using SMS, of course.
Norway was the first country to accept tax returns submitted via SMS. Sweden
has started parliamentary discussions about abandoning cash money and shift to a
pure digital money environment, driven by mobile payments. A key reason is that
digital money is far more difficult to be stolen - in Sweden a rush of robberies of
bus drivers for the cash they carried, resulted in Sweden abandoning cash payments
in public transport and enabling mobile payments - same reason (cash oriented
crime) was why Estonia banned cash in parking meters. Spain already accepts
contract signatures electonically, via SMS and Estonia is aiming to become the first

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


24 And the Input Myth

country where national elections accept SMS votes. Meanwhile in India, out of
every 3 SMS messages received by a mobile phone owner, one out of the 3 is some
kind of machine-originated content, typically media content or some other customer
service or marketing message, according to the Indian Telecoms Regulator.

Reaches Us in our Sleep

The mobile phone is a radical new technology of completely unprecedented reach


and power. It has been proven to be addictive in university studies from Belgium to
Australia. SMS text messaging was proven to be as addictive as cigarette smoking.
The phone is so personal that we don't share our phones with our wives or
husbands, and teenagers won't let parents snoop inside their phones.
Mobile calls and messages even reach us in our sleep to wake us up. UK
research by Lightspeed revealed in 2009 that 67% of British mobile phone owners
took their phones to bed or used as their alarm clocks beside the bed - and 86% of
those - meaning 53% of all UK mobile phone owners - would not turn the phone to
'silent' mode at night. More than half will keep the ringing on, to wake up to
incoming phone calls or messages at night. Think about that. Never ever ever in
history has there been any device or media or platform that reached us in our sleep
(that we did not ourselves set up beforehand, at a set time, like an Alarm clock).
Standard FM radio cannot suddenly go from 'off' to 'on' and wake us if an
emergency has happened somewhere, maybe a Tsunami or earthquake or fire is
endangering our home - unless its a special type of 'emergency warning radio'. Yes
we can set the clock-radio to wake us up at 7 AM, but that clock radio cannot then
use its 'intelligence' to wake us up at 4 AM when the disaster happens. Similarly TV
can't wake us up, nor can the internet, nor can the Playstation or the iPod. But we
think our phone calls and messages are so important, that over half of us already are
willing to sacrifice peaceful sleep.

We Look At Phone 150 Times Per Day

Heavy SMS users from the UK to South Korea to the USA send on average over
100 SMS text messages per day. If someone sends 100 messages every day, they
tend to also receive 100 messages daily. So ignoring all other uses of a mobile
phone, the young user needs to look at the phone more than 200 times every day,
just relating to the messaging habit. Then lets take the 'other extreme' - adults in
Africa - Young & Rubicam told us in 2010 that the average African (poorest
continent) mobile phone user (mostly an adult) looks at the phone on average 82
times per day. Nokia told us at the MindTrek conference in Tampere Finland in
2010 that the global average is 150 times per day. We, normal people all over, find
a reason to pull the phone out of our pocket and look at it, 150 times every day.
This is nothing less than addiction.

This eBook is available for free download Tomi T Ahonen


Chapter 3 - Consumers 25

There is no other device like it. Yes, we may use our PC at work and many
spend several hours on the PC. But one session on the PC may last half an hour
without a break. What of TV at home - we'll tend to sit and watch attentively
through our fave programs, rarely interrupting the attention except for advertising
breaks. So if we watch 2 hours of TV at home, we'll probably look at the TV what,
5 separate times in that one session, perhaps 10 separate viewing sessions would be
typical. And like the PC, our TV viewing tends to be within a short window of time
- for most of us thats during TV's 'prime time' ie evening viewing, on fairly
consistent time windows based on our TV viewing habits and our fave TV shows.
The mobile phone gets not twice as much interaction and attention, not three
times more, not five times more, but fifteen times more interaction and attention
from us, than any other technology or media!
We use the phone as our clock and our alarm. A survey at Portland State
University found that only 10% of students wore a wristwatch anymore, because
they use the clock on their phone. In Britain the Birmingham Post said 71% of
British citizens think the bedside alarm clock is now obsolete, because they use the
alarm on their phone. Nokia told us in 2006 that 73% of phone owners use the clock
on their phone and already then, four years ago, 72% of all phone owners used the
alarm clock feature on their phones. Yes, we all do that, Morgan Stanley told us
back in 2007 that 91% of the owners of mobile phones keep the phone within arm's
distance - or about 3 feet or one meter - 24 hours of every day. Yes, its now totally
commonplace that we sleep with the phone next to us.

Human Changes and Mobile Behavior

In my segmentation workshops for the industry I often offer a simple slide of the
ten stages of personal evolution, where each change relates to our communication
needs. I show the slide to illustrate how much more powerful a simple 10 segment
model based on real consumer behavior can be when compared to what many
operators still have today - segmentation systems based on their billing system ie
pre-paid and post-paid customers and some variants of those. I do believe most
brands, products, companies and services can find new opportunities for new
customers, for selling new and different services, and find the risks of losing long-
standing loyal customers, when the changes happen with these stages. More
specifically, with mobile services and applications, these ten stages offer
opportunities to differentiate, to discover new market opportunities, as we,
consumers grow and mature and change.
Not everyone goes through all the stages, so not all will have children,
obviously not all marriages end in divorce etc. Some go through some of these
cycles several times - a young adult may move out of the home, then find bad
economic situations force the person to move back to live with the parents later on
for a while, etc. But there are a lot of 'logical' rules about the list. For example you
can't have a divorce before you've been married. Not all get married, and not all

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


26 And the Input Myth

married couples get divorced. You can't become a grandparent, if you are not first a
parent. And so forth.
Some of these changes are profound and will alter just about totally our
behavior. Think of the first child. Before that the couple will prioritize their partner
first. After the first child, the child (and/or subsequently children) come first. Etc.
So lets start from the toddler. The toddler won't use a phone. They may play
with an old phone and pretend to be an adult holding the phone at their cheek and
pretend to speak to it. But its not until the child learns to read, that they become
viable customers to the mobile phone industry. We do have new cameraphones
already that are designed to appeal to under 10 year olds (Japan was the first to have
them, back in 2008). Phone so 'childish' in pinks and light blues, with butterflies
and dinosaurs and kittens, that their older siblings, 11 and 12 year old brothers and
sisters will refuse to use them, as 'too childish'. And these are still new
cameraphones. Yeah, its a crazy industry. The first phones that kids use mostly tend
to be hand-me-down phones and certainly they are selected by the parents, and the
mobile operator/carrier network is selected by the parent.

Ten Stages of Life

First stage is the young child. The baby, the toddler, the 'rug-rat'.. The under
6 year olds who will accept almost whatever their loving parents give them and tend
to be very content with that. Not really aware of a world far beyond the immediate
family, and with not many friends and contacts and outside influences, beyond
perhaps childrens TV programmes that they might watch together with the parents.
I used to argue that this age child is not part of the target market for mobile
phone use, until I heard from my friend Sami Makelainen of Telstra in Australia,
who told me of his two children. The 3 year old daughter Amanda is fully fluent in
using the iPhone, playing games on it, calling the parents, and even understands
downloaded apps - to the point of asking Sami if a given game is free or not
(knowing that daddy is more likely to download a free app to the iPhone than a paid
one). And the 2 year old son Benjamin is also using the iPhone, looking at photos,
playing simple games and using early learning apps. Sami said that the kids' use of
the family iPhone adds about AUD $5.00 per month to their monthly mobile
telecoms phone bill. So even this segment can be relevant to us. But my point is
still, that they tend to be copying the behavior of their parents, and their innate need
to communicate with friends (using a phone) is not yet fully developed. That comes
when they go to school and get suddenly many new friends.
Second stage (and thus first change) is literacy. The approx 6-7 year old learns
to read. And goes to school and discovers friends not selected by the parents or not
out of the back yard of the home. New friends, new influences. Now things like
brand competitiveness starts to emerge, I want Levis brand jeans, not the ones
mother had suggested, etc.. But most importantly for readers of our blog, any
digital media will not be powerfully (probably fully) able to be used. Yes, we have

This eBook is available for free download Tomi T Ahonen


Chapter 3 - Consumers 27

lots of videogames and basic computer programmes for even younger kids but after
they learn to read, they can go Google and discover the digital world for
themselves. If for some reason you don't have the PC and connection for them at
home, soon they will find a best friend who has a PC and broadband in their room
and suddenly spend a lot of time visiting that friend.
The third stage is puberty. From about age 15-16 maybe 14. Now kids rebel.
They want to excert their own identity, they refuse to take their parents suggestions
and ideas and services. Things that are 'not my parents' choice are particularly
appealing. A kind of MTV generation is here, the rebels. Experimentation with
alcohol, sex, drugs. Possibly big shifts in the behaviour. The desire often develops
to leave the home (soon, as in a few years)
We all go through these first three stages (mostly, there obviously are still
parts of the world where for example parents do not let their girl children go to
school and learn to read, but thankfully, this is a diminishing part of the world, the
UN and education bodies expect that within a decade every child will have access
to school and learning). The next six are all optional, some happen to most, some
only for perhaps half the population.

Unique Phone Owners & Multiple Subscribers, by Region

1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
t

g
t
a

a
st
ed

a
es

in

ic
d

ric
Ea

Ea
nc
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op
W

er
Af

Am
va
e
Ca

e
el
e

dl
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v
ad
ro
ro

id
de
&

tin
Eu

M
Eu

AC
SA

La
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As
AP
U

Source: TomiAhone n Almanac 2010

The fourth stage is leaving the home, and I like to say this is the "\'going to
university stage' even though it may be going to serve in the military, or it may be
really just leaving home to set up an apartment elsewhere, or moving in to live with
the girl friend/boy friend etc. This stage is the first time the person has to take care
of himself/herself. It means no curfews, can party all night, get as drunk as they

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


28 And the Input Myth

want, etc. If its the university option (as in moving to another town and living on a
college campus) it can be very 'free' with very few limitations and still strong
support from home; and at the other extreme is the military option, which is very
restricted with lots of rules and probably much more tightly controlled than the last
year or two at home. Nonetheless the person goes through a radical change again.
What is typical of this stage, is that the young adult is not very well off in terms of
money and disposable income. (Note some people never leave home, and
eventually take over the family house or farm or business etc)
The fifth stage is the first job. Note this can happen simultaneously with the
above, but can also happen years after the previous, ie if the person goes to college
and then graduates four years later and gets a first job. The first job is when we feel
like millionaires. The first paycheck, it seems to last forever, we go on major
spending sprees and still find lots of money left over in the bank. We feel rich!
The sixth stage is marriage. This won't obviously happen to everyone, and it
may happen sequentially, ie many times. But the first change from single status to
married status is the relevant change. I'd argue in many cases the commitment to
move together and live together as partners is also equivalent to the married stage. It
means that some of the late night partying is diminished, the family unit starts to
plan for common household investments, the couch, the new bed, etc.
The seventh stage is the first child. It sometimes again happens without the
marriage/living together stage, but often follows after that, and obviously not all
families have children. But yes, the first baby into the family changes it drastically.
Now the needs of the child come first. Priorities are totally changed.
The eighth stage is not necessarily desired, but happens to more than half of
marriages and obviously to the far majority of all cases of partners living together;
it is divorce (or break-up). The previous happily married parent turns into a single
adult, and returns to the singles-scene. A different style of dating and partying
lifestyle happens here and all kinds of lifestyle needs, from new fashionable clothes
to fitness etc are suddenly an interest.
Note that the second marriage and second divorce and third marriage etc cycle
can repeat many times. But these would produce generally a similar change in
behaviour, ie the change from single to first marriage, would similar to the change
from second single to second marriage.
The ninth stage is grandparent. Not all get to this stage, and obviously you
have to have had at least one child to be able to get there, but many older people do
get there and it again changes priorities. At this stage the person is also old enough
to mostly have paid off mortgages and car loans etc, perhaps retired or nearing
retirement, and thus well-to-do in terms of disposable income. And suddenly the
delight of grandchildren to give new and different meaning to life. I often point out
that grandparent age people usually learn to send SMS and MMS messages, not by
messaging with each other, but rather connecting with their grandkids.
Ok, and the last stage is retirement. We all get there (obviously unless we die
before that) so its the fourth stage that we all necessarily go through before death.

This eBook is available for free download Tomi T Ahonen


Chapter 3 - Consumers 29

At retirement we also have lots of time and often good disposable income as well.
But now things like personal health matters are ever more important.
So there, ten stages. Not everyone goes through all ten. Not everyone goes
through them in the same order. And some may be repeated several times. But these
ten are rather universal and give good foundation for understanding how we face
situations that force us to change our behaviour. And for clever brands out there, in
particular those involved in the digital space, these ten can give chances to
differentiate. If you can help your customer over the change, you should have a
happy loyal customer for the next stage..

Job Finder

Lets take a concrete example, finding a job. Take Babajob, the award-winning job-
finder/temporary worker locator service out of Bengaluru India? It was described by
my dear friend and author Russell Buckley at the MobHappy blog like this:

The big idea is that many people are trapped in poverty as they don't know
the right people to get better jobs. As an example, they presented two
nannies, one of whom earned 120 dollars per month because her sister
knew some rich people, and the other who earned 20 dollars a month
because she was born and worked in a slum - despite both doing
essentially the same job.
A further issue is that over time in urban areas, people can travel
shorter and shorter distances to work, due to congestion. This means that
the number of jobs they could do, gets smaller and smaller. Babajob's
solution is use the mobile as a tool to merchandise new jobs to Bangalore's
poor, via the mobile and it works via IVR, SMS up to a mobile web portal.
This is a fantastic use of the mobile as the poor often have no access to
other media, such as newspapers or a PC. They also provide incentives to
mentors to help illiterate people or those who don't have mobiles
themselves.
Russell Buckley at MobHappy Blog

To post a job costs 999 rupees ie 20 US dollars and the service has 30,000
registered users. Very simple, elegant solution, that addresses a real problem.

What of Youth

If you want a truly mind-boggling statistic, proving that mobile goes where no tech
has ever thought of going - now Retrovo reports out of the UK, that 10% of British
youth think its ok to send SMS text messages... while having sex. During sex?
"Sorry honey, can you move your head, I am just sharing this experience with my

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


30 And the Input Myth

buddies..." Sending SMS during sex? Hiding the phone under the pillow perhaps?
Yes, already one in ten British youth think nothing of it.
Which brings me to texting blind. 42% of US teens can send SMS text
messages with their phone hidden out of view such as in their pocket or under the
table said Nielsen in 2010. Nothing new here, the USA again follows global
patterns, this was reported by UK youth by SubTV back in 2006. And they
multitask doing it - 48% of British youth were able to carry on a conversation with
a parent or teacher or someone like that, while simultaneously sending SMS
messages - said Carphone Warehouse in 2006. The phenomenon is again global.
This ability can save your life, quite literally. There was an airline hijacking in
Mexico City last August, where one of the hostages on the plane was sending
updates to the outside world with her phone hidden in her pocket. Not a teenager,
an adult woman. And at one point the hijacker had been holding her other arm. She
continued sending messages in secret with her phone in her pocket - a Blackberry
by the way - and she later illustrated this ability on Mexican TV when the hostage
drama was over. Yes, SMS can save your life even, isn't it time you learned to send
SMS text messages blindly? There has never been anything like this before.Mobile
is the newest, the 7th of the mass media channels, and it is the most versatile and
most magical.

Not Facebook, more SMS

So, what of the future? Yes, the youth love their instant messaging, don't they? And
many of our fave tech pundits promise a cloud-based future for mobile content and
services. Perhaps a promising view. Lets look at the the youth and their preferences.
First lets consider mobile messaging and how much it is threatened by
Facebook, Twitter, and any kinds of instant messenger services from Yahoo to
Blackberry. Lets go to the country where the internet is the strongest, and relatively,
the mobile is the weakest. Where of all industrialized world countries, the youth
have lowest penetration of mobile phones and one of the highest penetration rates of
home PC access to the internet: the USA. Here are numbers from a current May
2010 youth survey of US teens and young adults.
When ChaCha Research interviewed US youth, they found that when asked to
select the favorite way to communicate, 68% picked SMS text messaging. The
distant second was voice calls at 10% (six times more youth pick SMS than voice
calls). Facebook for all its hype and success, only came in third at 9% (seven times
more teens pick SMS than Facebook in 2010!). Only 3% picked instant messaging
(22 times more youth pick SMS than pick instant messaging!!!). And how did email
do? eMail receive 0.3% of the preferences. The US youth are following a global
trend, French and British youth were reported to feel SMS was preferred over eMail
at the start of this decade, in 2001. South Korean youth for example were saying in
the middle of the decade that they never used email "unless communicating with
some old people."

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Chapter 3 - Consumers 31

Similarly Pew latest youth survey of US youth out in April 2010, reveals very
relevant changes - changes - in youth preference. Since 2006, when Pew started to
monitor the behavior types, out of different communication methods used by US
teens, using the fixed landline is down of course, now at 30% of US youth using it.
eMail is down, no surprise there, down to 11%. Instant messaging? Is not up as you
might suspect, it is down since 2006, now at 24% of US youth using the
communication method. Did that go to social networks, perhaps a bit, Social
networks are up, but only slightly to 25%. Phone calls by the youth on mobile
phones are up also slightly, to 38%. But the only communication activity that has
changed strongly - in fact doubled in use in the past 4 years, and dominates all
others - at 54% of youth using it, is SMS text messaging.
The conventional wisdom suggests that in particular in America, where youth
cellphone ownership is low, and internet access is high; and a very strong cultural
framework exists with strong internet brands offering instant messaging and social
networking, that the youth would prefer free internet based communication tools.
Yet the evidence is clear, that SMS is now the preferred method.

MMS and the youth

So, the youth the world-over prefers SMS over any other means including
Facebook, MySpace, Twitter etc. But then lets see how do American youth think of
MMS. The Pew study also looked at the other activies the US youth do on their
phones. Yes, as we can imagine, the youth purchase products, surf the web, send
emails, visit social networking sites, but all of these are used by a small minority of
US youth phone owners, under one in three teens. Videogaming, recording videos
and playing music are roughly speaking used by half. But the most popular activity
on the phone after telecommunications services (SMS and voice), is the camera
feature - and guess what - 64% of US youth send pictures with their phones.
Similarly a 2009 survey of US youth use by US High School Student Lifestyle,
found that 72% of US youth send pictures from their phones to the phones of their
friends. Of US high school students, only 10% used the internet on their phones, so
the majority of picture sharing could not be through picture-sharing services like
Flickr or Facebook, so most of those were using MMS to send the pictures. (Were
you still doubting the future of MMS at this point?)
A good reason why, is of course that secretive part to mobile phone messaging
that is so addictive with SMS. The Pew Study reported that 15% of US youth admit
to receiving sexually explicit or nude pictures from friends (meaning in all
likelihood the number is far bigger). You can more 'safely' send a picture that the
parents might not like, if you use the MMS feature on your phone, than posting it
on a social networking site, where your parents may see it too.. So don't think MMS
will end anytime soon. The US regulator, the FCC has released its 2010 cellular
industry market study and found MMS messaging in the US grew 152% in the
latest 12 months, yes MMS traffic more than doubled in the USA in just one year.

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32 And the Input Myth

Generation C

In our book Communities Dominate Brands with Alan Moore in 2005, we defined
"Generation C" (it means 'Generation Community', not Generation Content or
Generation Cellphone etc) type of customer, which was very strongly centered in
that 16-24 year old segment. Since that was five years ago, its a good time to do an
update about Gen-C.
So the obvious cautions. I am not a sociologist and I am not a psychologist. I
do not study the youth or young adults for a living. I don't have my own kids so I
can't even tell you from my own experience. But I have been involved in
segmentation in one way or another my whole professional career and have written
extensively about it. I have been particularly drawn to trying to understand the
youth, because I think that observing how the youth behave (with mobile phones,
the internet, social networking etc) gives us a good (but obviously not perfect)
window into what is likely to happen in the next 5 to 10 years or so.
So the lower end of the age scale for Gen-C is puberty, somewhere around age
13-to-15 or so, the teenager will start to assert their own will and 'rebel' against their
parents' preferences. Suddenly the parents' phone is no longer cool. Ringing tones
suffered this fate. They were cool only until the parents started to use them, after
which suddenly ringing tones were very uncool. That is the ethos of the teen after
puberty. The other big change comes with sexual awareness. The teen becomes
interested in the other sex, starts going to parties, then dating etc.
I like to say that of all the changes, this change of puberty has the longest-
lasting effects to life-long brand loyalties. Some brand choices made here may
easily last for decades, is it Pepsi or Coke, McDonalds or Burger King, etc. This
age bracket is of great interest to most brands. Furthermore, more than at any other
age, teens tend to associate in groups. In their own tribes, if you will. They usually
seek conform to their peer group. That doesn't mean that there aren't drastic
differences, but those tend to be differences between the groups. Kind of 'herds'
often with distinctive types of music to act as a unifying element like a dress code.
So if a given brand (phone maker for example, or a social networking service
etc) gains the acceptance of the thought-leaders within a given group - this may
often happen if the pop music stars of that group use or endorse a given brand - then
rapidly all will want to use that brand. One last 'generic' thought of the young end of
this age group, the younger teens tend to 'look up to' those who are a little bit older.
Perhaps one year older in school, etc. They seem very much more 'mature' and seem
to do cool things. So if a 17 year old does something, the 15 and 16 year old
younger siblings, cousins, friends etc tend to want to emulate the slightly older one.

Six Changes Compared to their Parents

I have argued that the youth of today is different in six profound ways to their
elders. These differences are so enormous, that any one of them would warrant a

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Chapter 3 - Consumers 33

whole book to examine that change, and indeed several of these changes had
spawned countless books to explain modern youth culture.
The first of the observations I make is about search. This generation grew up
always knowing 'how to Google'. I say it is the relationship with information. Older
people were brought up thinking that information was a long journey. You went to
school, then to the university. You had to study and research to acquire information.
Some professors had it and you had to go seek that, etc. Today's kids are totally
different. They believe that all information exists on the web, and can be found and
tends to be totally free. And in most cases it only takes a computer, an internet
connection and Google. Imagine how different that is in terms of attitude to
information, if you start your life feeling that all info you may ever need, is not
hidden in some ivory tower in some exclusive university for some elite, but is
available for everybody, instantly. Its a liberating and empowering feeling.
The second aspect is media participation. When we were young, it was not
conceivable that we could somehow influence what was on television. TV bosses,
big executives decided what happened in our favorite TV shows. Not today. Today
reality TV allows TV viewers to vote off those people they don't like in the TV
show. Typical American Idol type of format. But imagine how recent this is. The
first TV show to take televotes by SMS text messages was Videoclash on MTV
Europe in 2001. Thats nine years ago. But today reality TV with voting is a global
phenomenon, from China to Brazil. And yes, the youth of today expect to be able to
participate in the media experience. They go and give their ratings to the DVD they
saw even if there are 700 reviews already of that movie.
Which is a curious phenomenon. Logic would suggest that there is no gain to
you personally to give a review or rating of something you've seen or read. The
benefit is only for those who come after you, who consider that purchase. If people
were 'perfectly rational' then nobody would bother to make such ratings and
reviews. Yet we see that its far more than any fad or short-term phenomenon.
Young people, especially those digital natives, feel a duty or obligation to
participate. And there is a perception or expectation even of being famous. So you
have your opinion posted, your name (or nickname) is there for all to see.
The third big difference between teenagers today and their elders is digital
sharing. This is often called the Napster generation. Napster happened over ten
years ago. Give a teenager 50 dollars and take the kid to the music/DVD store and
say the kid can buy anything in the store. I used to say that the kid will not go to the
music/CD section of the store but rather to the DVD section. Why? Because the kid
knew that all music ever made is available for free on the web (or via some clever
friends). Movies and TV shows also tend to exist for free somewhere, but nowhere
near all of it, and it takes ages to download movies. So the kid would use the money
to buy movies or TV shows rather than music.
This concept has now changed. I've heard that today in 2010, if we do the same
experiment with a teen, the youth will not buy any recorded media at all, not even
movies or TV shows, but use the money to buy storage media, like a big box of

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34 And the Input Myth

empty DVD's. These are even more valuable, as they allow the kid to store media
content that is copied with friends from other sources.
The point is, that teens of today know that almost anything digital can be
shared. If there are copy-protection systems, those can be cracked or hacked in
some way. There always is some clever friend somewhere with the needed DVD
burner and some software to do the pirate copies etc. The assumption is that
anything can be shared - and the philosophy is that it should be shared. Even after
all the lectures and warnings and lawsuits, the belief is that everything should be
free of copy-protection schemes and 'DRM' Digital Rights Management.
The fourth change in Gen-C today, compared to their elders is that every
member of the youth can participate fully in the creation of content. Never before
was there a generation in any nation, where every member had easy access to media
authoring tools. Today's kids seem to all have cameraphones - if not personally,
then a sibling or good friend will have a cameraphone. Thus any kid has access to a
still camera, voice recorder and video camera (all in the modern mobile phone) that
they can create their own artwork, own movies, own recordings. Imagine how much
more creative output a famed mega-artist of the past would have had, if they had
been blessed with this ability. What of Alfred Hitchcock and his movies or Charlie
Chaplin? If they had cameraphones in their pockets? Salvador Dali or Leonardo da
Vinci or Vincent van Gogh? But today's kids have that ability. It won't make every
child a Renoir or a Tarantino, but those with creative talent, will get to explore
those tendencies from very young. Its a radically different generation.
Which means instances of injustice (think of the Rodney King beatings by the
LA police department, caught on video). It means new ways to use cameraphones -
to copy homework, to scan images from magazines, pictures as memory aides, etc.
Fifth in this series, we have virtual. A kid 20 years old today was 7 years old
when the first Tamagotchi appeared. So for that young child, the first 'pet' that 'died'
was not a real dog or cat - it was the stupid electronic toy, that Uncle Tomi forgot to
feed over the weekend... This is the first generation ever, that grew up becoming
attached to a virtual pet. And then for that generation, Habbo Hotel and its various
clones emerged - today Habbo Hotel has 175 million avatars - equal to more than
10% of the total population on the internet and if Habbo Hotel was a nation in the
real world, it would be the 6th largest country on the planet by population.
The relevant point is that for a youth growing up with virtual worlds, they
make no distinction between the virtual and the real - both are totally real to the
youth. So, in South Korea, a 16 year old boy will ask a 16 year old girl out on a first
date. They could go to Pizza Hut or see a movie. Or just as normal, they can go to
an internet cafe, sit at adjacent PC screens, log into the same battle game, and fight
each other inside the game (?). Before you say, 'impossible' - think - this is 'safe'
semi-intimate interaction, not unlike dancing. You get to see how the other person
'moves' and you get to 'touch' without it being inappropriate. And of course, the boy
will act like a gentleman, and let the girl win. First dates to play combat games?
This is the life of Gen-C and their virtual worlds.

This eBook is available for free download Tomi T Ahonen


Chapter 3 - Consumers 35

SMS is Defining Aspect

All of the first five changes are enormous. There are legitimate sociologists who
study just any one of those changes and are ready to proclaim that we have a new
generation of youth, just because they grew up as the 'Google generation' or the
'Napster generation' or the 'Tamagotchi generation' etc. Every one of those is as
profound a change to the current youth, as was the advent of television to those who
grew up in the 1960s and 1970s compared to their parents growing up before TV.
Five huge changes, yet one change trumps them all. The sixth and biggest
change in the youth of today, compared to their parents' generation is SMS text
messaging. I have discussed SMS a lot in this chapter already and will talk more
about it in the chapter about messaging. But I want to make this particular point
about Generation C and mobile phone messaging. SMS is the nearest thing to
telepathic connectivity. Imagine, if you are so proficient that you can easily thumb
out text messages blindly, with our phone hidden in your pocket. And your phone
message typing speed is faster than most can type on a full keyboard on a PC. And
then remember, that the best friends of that teenager will not go anywhere without
their phones. That is almost magical, almost telepathic connectivity between the
teens.

SMS Text Messaging Use by Age

6-15

16-25

26-35

36-45

46-55

56-65

65+

0% 20% 40% 60% 80% 100%


Source: TomiAhonen Almanac 2010

Peter Miles, the CEO of SubTV, the university TV broadcaster of Britain,


often talks about the youth and their obsessions with mobile. Peter likes to show the
image of the cyber-monster character in the Star Trek Next Generation TV series,

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36 And the Input Myth

called the Borg. The Borg were a collective of millions of units of semi-humans,
who were permanently connected (wirelessly and across the galaxy) to each other.
As a 'hive' entity, when one of the Borg experienced something, they all
experienced it. That meant, that the Borg would adapt and adjust much more rapidly
than humans ever could. With that fantasy monster in mind, Peter tells us, that with
SMS, the youth of today 'is the Borg'. And he adds, resistance is futile, you too will
be assimilated, into the SMS culture.

MYTH 1 - THE INPUT MYTH:


MOBILE IS NOT THE DUMBER INTERNET

And what of the small keypad for inputs? Yeah, if you want to write a lot of text, a
PC keyboard is far more convenient than even the best of smartphone QWERTY
keypads. And most phones today have the T9 style keypad, where you have to
triple-tap the numeric keys just to generate any alphabetic characters. Tedious. Yes.
I'll grant you text entry is better on a PC than on a phone. Its not impossible on a
phone, but PC is better.
But let me give you a counterpoint, in any case. Teenagers who are
comfortable with T9 keypads, can actually type faster on a phone than on a 'real' PC
with its full-sized QWERTY keyboard. Why is that? The QWERTY keyboard on a
typical PC is of course a relic from the typewriter. QWERTY was an American idea
of placing the keys in the order of what are most used in the English language
towards the middle of the keyboard, and the not-often-used letters to the edges.
First, obviously, the QWERTY format is not in any way relevant at all to other
languages, and secondly, there is no conceivable 'logic' to the sequence of the
letters. You can not reason where a given alphabet letter 'should' be on the keyboard
if you don't know. The only way to master a QWERTY is to memorize the layout.
But a T9 keypad is easy - its in alphabetical order! And even better, you only
need to memorize the location of 8 keys (the 1 key and the 0 key do not have
alphabetical characters on them). So anyone can easily memorize the layout of T9
in just a couple of days of heavy SMS texting, but it takes considerable effort to
memorize all the keys of the full PC keyboard with QWERTY keys. And if you
have not memorized it, you have to look down from what you are writing - and try
to find the key you want. This is significantly slower a, because there are more keys
b, because the keyboard is far bigger so your eyes have to scan a far bigger area to
find the letter, and obviously c, because the keys are not in any logical sequence.
On T9 if you forget where a letter is, its very fast to find it on one glance.

Phone is Better At Inputs

But I will grant you, that yes, for any serious text entry - like for writing this book
for example - we will prefer to use a 'real' keyboard on a PC. Now, my point is, that
data entry is far easier on a phone than a PC. What? But Tomi you just granted the

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Chapter 3 - Consumers 37

argument that text entry is easier on a PC than a phone? Yes, 'text entry' is easier on
a PC, but not all 'data entry'. There are plenty of other data formats, more advanced,
than text. Want to enter sounds? Far easier to move the phone microphone near
your sound source, than moving your laptop with its built-in microphone. Want to
enter pictures - now phones win hands-down. Most desktops don't have cameras at
all. Many laptops still don't. And try to use the camera of your laptop to take a
picture of something other than yourself in video call. Its very tedious (and of poor
picture quality). The screen is facing the 'wrong way' for 'camera use'. But at the
high end many of our new phones now have 12 megapixel cameras already, many
with 'real' Xenon flash units. Some premium cameraphones have added 'real' zoom
in optical zoom (in addition to the far cheaper electronic gimmick of 'digital' zoom).
These are proper semi-professional cameras already, top end cameraphones.

Picture or 1,000 Words?

A picture is worth a thousand words. I can trump data entry of any PC one
thousand-fold, instantly, by clicking on the camera shutter and taking a picture -
and using that phone, to send it instantly to over 3.6 billion people on the planet
who have an 'MMS-compatible' phone in their pocket. Meanwhile lets compare to
pictures via the internet and PC. Most who want to upload pictures to Flickr or
Facebook, have to have a separate stand-alone digital camera.

Cameraphone Sales 2001-2009

Year Sold Cumulative In Use As Pct of all

2001 3M 3M 3M 0%
2002 10 M 13 M 13 M 1%
2003 58 M 71 M 68 M 5%
2004 250 M 321 M 299 M 19%
2005 345 M 666 M 598 M 31%
2006 450 M 1,116 M 935 M 39%
2007 852 M 1,968 M 1,594 M 56%
2008 1,080 M 3,048 M 2,315 M 68%
2009 1,093 M 4,141 M 2,850 M 73%
Source: TomiAhonen Almanac 2010

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38 And the Input Myth

So imagine the wonderful sunset you see. Now go get your camera. Take the
picture. Then come back to get your PC, turn on your PC. Wait a 'microsoft minute'
for it to load up. Use the USB cable to transfer the picture to the PC, then open the
picture in their picture viewer software and save it into some file. Then get
connected to the internet - where is the nearest WiFi connection? Then open the
email application and upload the picture to the picture sharing site, or include it in
an attachment in email to a friend.
In the best case, moving the picture from your stand-alone camera to your PC
and then sending it via email or uploading to a picture sharing site (assuming the
PC had to be turned on and logged to broadband or WiFi) will be minutes slower,
than the instant upload from the cameraphone. Thats your best case scenario. Worst
case is hours slower than sending the MMS message. Yes, it can be done with a
PC, but today the picture sharing experience is FAR more tedious for the average
shutterbug on a PC than on any cameraphone. CNN i-Report for example receives
over 10,000 citizen journalism images and clips monthly - by far most of those are
snapped on cameraphones. And out of all digital content that mankind has created,
the whole internet etc, by far more of digital content is in images than in text
format. My mobile already wins your laptop and its stand-alone camera many times
over 'by input' speed.

Video or 1,000 Pictures?

But if you still argue PC text entry, I will double down on my cameraphone and
raise it to video. A moving picture tells the story of a thousand images. Thats a
thousand times thousand - ie million times better than text entry. Try to tell the
movie of Avatar or the latest Shrek in text without any images and no moving video
or sound. Try to get the exact emotions and feelings and experiences across. I think
it is pretty fair to say thats a million times more hard (for the average person), than
just sharing the video of the movie?
Almost every cameraphone does video recording. Today top cameraphones
record not just DVD quality video, now top phones record HD quality video. Most
of the content that exists in digital format for mankind today is not in text format or
as images or as music; most of the total digital content in data volume is in video
formats. Video consumes the most digital bandwidth, so in terms of richest
experience and most storage that is used worldwide, that is in the DVDs we have
for our movie collections, and the videos on YouTube, rather than the pictures on
Flickr, or the text in our blogs and on Twitter.
Video creation is child's play on a cameraphone, but try to create any type of
video - other than your own video call - on the stationary inward-facing camera of
your laptop. Or then, try your digital camcorder, and find the right cables to connect
to your PC - you may well need an adaptor you don't have. Or then find that the
memory on your PC and CPU is not strong enough to process the video. And if you

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Chapter 3 - Consumers 39

do, then you still need video editing and viewing software on your PC. It soon
overwhelms the average consumer.
Yet anyone can shoot video on a phone, and then send short snippets of video
via MMS to friends. Easy-peasy. And most 3G phones do video calling, so they can
use services like Qik for instant 'video blogs' - one button uploads that others can
share in viewing, and with automatic feeds to social networking sites like YouTube
if you want. No cables needed, no special software to install to your PC that is often
very complex to use, no media engineering tech courses to attend. Its that easy that
CNN for example issues 3G cameraphones to its journalists as back-up broadcast
camera units, in case the journalist finds himself or herself without the broadcast
TV truck but is in the middle of news.

Mobile Input is Like Magic

And I haven't even touched on several more exotic data entry methods that are
exclusive to mobile. We can do touch screen of course. But lets go further. What of
the 2D barcode reader? This is sheer magic. We can embed a web address, like
http://www.communities-dominate.blogs.com (41 characters plus the 'enter' key on
a laptop; 76 actual character inputs using basic T9 text input of a basic phone) on
one click on one QR code, ie 2D barcode. Then we can point our cameraphone at
that square squibble, and within a second, the full text of http://www.communities-
dominate.blogs.com appears on our phone screen ! This is magical. This is
wonderful.
This means we bypass any typing need at all. It is inherently better than typing
on any keyboard. And inherently faster. And inherently more accurate. Its so
incredibly user-friendly, that just 3 years after 2D barcodes were launched in Japan,
76% of the total population was using them - and utterly loving them. And you can't
read 2D barcodes with the camera on the typical laptop. It does not make typing
obsolete, but it sure feels like it when you use it, and it makes any URL entry seem
hideously outdated if you have to type it in by text. Why isn't every website
accessed with 2D barcodes?
And there is so much more. We have many automated data entry methods. We
can do data entry with motion sensors (like the Wii gaming console, or like the
iPhone and many modern smartphones). We can do data entry by proximity
sensors. We can do data entry from the network - take location positioning for
example. The phone is far superior to any laptop in data entry methods. So don't let
any 'expert' bamboozle you into thinking the phone is inferior in its data entry or
screen abilities.
And we get time input, from the network, accurately. You think - yes, we can
do that on the internet - no, not automatically; only if we enable that feature on our
PC. Note, on the internet, the only way to collect time input, is if the user turns the
feature on; but on the mobile network, it is automatically collected - and cannot be
turned off. Even if you somehow disable your clock on your phone, the network

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40 And the Input Myth

will still assign an accurate time stamp to every activity you ever do on the network,
all of your calls, all of your messages, all of your web surfing clicks, etc.

Voice Inputs, 3D Inputs

Mobile services are often designed to have voice controlled parts. These are
particularly useful for people who may use a service while driving a car. Voice-
operated services are for example very useful for blind people, who can't see the
screen and for people who are illiterate - 800 million of those still on the planet. But
yes, there are lots of services that will read the news for you, allow you to voice-
navigate services, etc.
Next we are entering the era of 3D video on our phones. In India and Japan in
2010 the first phones were released which showed 3D images and videos without
the need of custom 3D goggles. These 3D displays will become more common
around the world during 2011 and 2012. And high tech companies such as
Movidius are now shipping phone technology that allows 3D video processing on
the phones. Movidius say that soon we will have three cameras on the phones, not
two. One for videocalling yes, facing inwards, but two parallel cameras facing
outwards, which will capture 3D images and 3D videos onto the phone.

Single-Handed Use

A most powerful ability on mobile, again not unique, is the single-handed


operation. The PC based internet totally fails this. You cannot take your laptop from
your briefcase, turn it on, navigate to web pages, etc, while carrying something
heavy in your other hand, and walking. Yes, we can use a laptop single-handedly, if
it is set on something like a table or our lap if we are sitting. But to hold the laptop
in the hand, we cannot operate it with the same hand while walking. Now, some
other media can be operated single handed - we can read a book single-handed, or a
magazine; we can operate an iPod or MP3 player single handed. But of the
interactive media most mobile phones can easily be used single-handedly. A laptop,
desktop, notebook or even netbook, cannot be operated single-handedly (by nornal,
non-acrobatic circus people)
Most mobile services, on most mobile phones can be used single-handedly.
This is very important. It means that we can use the 7th mass media services and
applications in far more situations than say a 6th mass media 'real internet' service.
For example as we walk on the street. In London they have started to put padding
on some traffic signs, as distracted pedestrians walk into the traffic signs, while
they are 'walking-while-texting' ie reading or sending text messages as they walk.
You cannot send Twitter updates or email messages on your laptop while you
walk, if the other hand carries something heavy. But sending text messages - or
doing those Twitter updates - easy to do while you walk, with something heavy in
your other hand. That we can use it single-handedly is also a major reason why we

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Chapter 3 - Consumers 41

consume mobile content while we consume other media. None of the first 6 mass
media is like this. We don't read a book in the cinema. Earlier this year Universal
McCann revealed that already every one in seven media minutes consumed in the
USA involved mobile. We vote while watching TV, we send comments to our
newspapers, we even comment on movies from the cinema as the end credits roll -
telling our friends whether to go see that movie or not. Only mobile is used together
with every other of the seven mass media. Mobile is unique.
There are many more examples. Using the mobile internet on one phone and
sending text messages on the other. Talking with one person on the phone while
voting on American Idol on the other, etc. The point is, that the phone is optimized
for one-handed operation. This is actually a very old idea, first suggested by Matti
Makkonen who won the Economist innovation award for inventing SMS text
messaging. Jukka Salonen, CEO of Book-It the Finnish messaging specialist
company, said of his meeting with Matti Makkonen years ago, when few people
believed in mobile. Matti said:

“Why should we limit mobile applications to things we normally do on a


PC! Mobile phone has advantages that PC does NOT have: It fits nicely
in your pocket, so it is always with you. You can use it with one hand and
press the buttons with your thumb, even when you moving. Think if we
could make reservations, payments and quick and easy transactions just
pressing one button.”
Matti Makkonen, inventor of SMS, quoted from his days as
executive at Telecom Finland in 1996

A good example of this comes from billboards in Slovenia. Lenovo was doing
soccer/football related marketing with a company called Qootia. They had the game
set up on an interactive video board. Passers-by were invited to join, pick a side in
the soccer game, then take their phone and move the player and kick the ball. You
might think this needs an 'app' for a smartphone. Or how else can they do it in 'real
time' with SMS for example too slow to do live game movements? They did it on
an IVR response machine. Take your phone, dial this number, then press 2 o go
forward, press 4 to go left, press 6 to go right, press 8 to go back and press 5 to
kick. Brilliant, elegant, simple - works on absolutely 100% of all phones. Get
people to walk by, stop, play the game against some friends, while others view.
Mobile services can be optimized for one-handed operation. It means we can
rather easily learn to use two phones in two hands. This gives the mobile a powerful
advantage over other digital mass media, whether the PC or Playstation or Digital
TV - we tend to only consume one of those at a time. But we can rather easily
consume two distinct mobile phone based services - on two separate phones - from
two competing networks even - simultaneously. Or, we can consume mobile
services while we are supposedly paying attention to the other older media such as
TV, Internet, or a video game, etc. Don't let them tell you mobile is 'inferior' in its

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42 And the Input Myth

data inputs. Far from it, mobile is the most versatile medium for inputs ever
invented. And all of it fits in your pocket.

WHERE NEXT?

So you'd like to read more about mobile phone consumers? My previous hardcover
book Mobile as 7th of the Mass Media has three chapters that focus on the
customer of mobile. But for pure consumer understanding, I'd recommend Howard
Rheingold's excellent Smart Mobs. And while not purely a mobile book, Mark
Curtis's Distraction is also a great read about consumers in the digital world.

Smart Mobs: The next social revolution


Howard Rheingold
Basic books, 2002

Mobile as 7th of the Mass Media


Tomi T Ahonen
futuretext, 2008

Distraction, Being Human in a Digital Age


Mark Curtis
futuretext 2005

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Chapter 3 - Consumers 43

Case Study 1 from the UK


Fanta Mosquito Noises

My dear friend Russell Buckley (Google, Mobile Advertising


Association, author etc) who blogs at MobHappy wrote about the Fanta
tennis game played on mobile phones with Bluetooth. So far so good.
The really clever part - the ball makes bouncing noises on the phones -
which are of such a high pitch, that us older folks can't hear them.
These sounds, that are also called 'mosquito noises' have been used a
couple of times in the past, but now kids have a cool Fanta game to enjoy
the sounds that their parents certainly cannot hear. It must be weird to
know they can't hear. And it must also be a sad sign of growing old, for
the 18-19 year olds now, when they notice in a year or two, that they no
longer hear the game...
Anyway, there is also a "youth rebellion" side to the phenomenon. Of
course some clever kids have now stored the sounds as their ringing tone.
To their elders, like their teachers and parents - the phone is totally silent.
But the kids hear it. Ha-ha, seems almost like the phone can read my
mind. The game was developed by our friends over at Ogilvy, so
congratulations to them as well.
How successful was the campaign for Fanta? The MMA (Mobile
Marketing Association) reported in New York in June 2010, that the
mosquito noises were downloaded 600,000 times.

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44 And the Input Myth

Excerpt from Tomi's fourth book


Communities Dominate Brands:
Marketing and Business Challenges for the 21st Century
by Tomi T Ahonen & Alan Moore
with foreword by Stephen Jones,
Chief Marketing Officer of Coca Cola
280 pages hardcover
futuretext 2005

Available from all booksellers


including Amazon
also available in eBook format

for more info see publisher


website:
www.futuretext.com

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Chapter 3 - Consumers 45

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


46 And the Input Myth

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Chapter 3 - Consumers 47

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


48 And the Input Myth

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Chapter 3 - Consumers 49

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50 And the Input Myth

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Chapter 3 - Consumers 51

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52 And the Input Myth

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Chapter 3 - Consumers 53

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54 And the Input Myth

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Chapter 3 - Consumers 55

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Chapter 3 - Consumers 59

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Chapter 3 - Consumers 65

Opinions on the book Communities Dominate Brands:

"Although wary of another book claiming that the world has forever changed, I have been
won over by this deeply impressive book. Packed full of statistics, examples and case studies,
the arguments are well supported and persuasive. The authors provide a comprehensive
exploration of this emerging topic which is presently unrivalled. Thought-provoking and
practical, you will be hard pressed to find a more challenging marketing book this year."
From official book review by UK Chartered Institute of Marketing
(CIM)

"While the new media do offer companies new opportunities to communicate with their
customers, their principal effect is to provide customers with many more ways of
communicating with each other. This book is invaluable in predicting how the power to make
and break brands will reside far more with ordinary people than with companies."
Rory Sutherland, Vice Chairman and Global Creative Director,
OgilvyOne UK

"This is an eye-opener with a key message essential for all consumer centred enterprises. An
excellent, reassuring book! In 5 years time it will be called a classic - the new bible for new
marketeers."
Dr Axel Alber, Marketing Director, Masterfoods Europe

"This book provides a comprehensive understanding as to why business, media and


customers will never be the same again; where interrupting audiences and one-way flows of
marketing communications are things of the past."
Rishad Tobaccowala, Chief Innovation Officer, Publicis Groupe Media USA

“The authors vividly illustrate the rapidly growing power of digital communities with examples
of real cases where companies have achieved considerable business success by being creative
and engaging customers.”
Harry Drnec, Managing Director Red Bull UK

"This book clearly identifies the significant issues facing the audio-visual industry and the
impact these have on commercial broadcasting."
John Ranelagh, Vice President TV2 Norway
former Commissioner of the Independent Television Commission UK

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66 And the Input Myth

More opinions on the book Communities Dominate Brands:

"All other books on marketing pale before this book on the 21st century world. This is the
world of my children rather than my parents. A must read. Written with verve and
excitement. I can see neurons humming. I am assigning it to my classes at University of
California as a required text."
Professor Richard Ross, University of California Santa Barbara, USA

"Wake up. Get inspired. Understand the change that's happening in the world of marketing.
And the change in consumer behaviour. Read this book."
Ami Hasan, Chairman and Chief Creative Officer, hasan & partners Finland

"This is the first book I have seen to capture the immense influence and rapidly expanding
presence of communities. The authors identify the underlying dynamics that are at play, from
bloggers to videogamers to mobile phone users."
Adriana Cronin-Lukas, Founding Partner, the Big Blog Company, UK

"The authors understand how living in a converging mobile world introduces threats to your
business model from a wide range of competitors, and then the book gives concrete examples
of how to survive. I recommend you read this book."
Kazutomo Robert Hori, CEO, Cybird Japan

"An absolute cast-iron must-read. If you have anything to do with marketing, mobile,
advertising or the media this is essential reading. It's a wake-up call for anyone who thinks
today is just like yesterday, just a little bit faster. Read it and you WILL want to change the
way your business functions."
David Cushman Projects Editor and Engagment Evangelist, Emap UK

"Great reference for anyone attempting to develop market reach to connected mobile device
communities of young consumers. It describes how to invite today's mobile device totting tech
savvy 20 somethings to your products or services, -because conventional advertising isn't
working.."
Glenn Greenblatt, Director of Business Development, NSTL USA

"This is a great book with a key message for our business about engagement. Consumers
want a relationship with companies and they want - indeed expect - to be treated with care
and respect. This book has changed the way we look at our business and our relationship
with our customers. Good research, background and case study examples including where it
can all go wrong. Very Good Book."
Rob Castle, Managing Director, Korg UK

This eBook is available for free download Tomi T Ahonen


Chapter 4 - 7th Mass Media 45

"There is nothing more practical, than a good theory."


Leonid Brezhnev

IV
7th Mass Media
And the Screen Size Myth

You the reader may be unsure whether to think of all 'normal' mobile phones as
mass media devices, similar to say radio, newspapers, TV and cinema. It does
become easier to accept when one considers the Apple iPhone but what of the
'dumbphones' ie non-smartphones? Can they be, and should they be counted as
mass media devices, or 'only communication devices'? So lets start just with the 7
media to explain the taxonomy:

1st mass medium - print - from 1500s


2nd mass medium - recordings - from 1890s
3rd mass medium - cinema - from 1900s
4th mass medium - radio - from 1920s
5th mass medium - television - from 1950s
6th mass medium - internet - from 1990s
7th mass medium - mobile - from 2000s

Media Audience

Lets take advertising. For 2008, Juniper Research measured the total worldwide
audience who had received advertisements on their mobile phones and found that to
be 1.5 Billion people. At the time the global smartphone installed base was under
400 million, so it meant 1.1 Billion people received ads on phones that were
'dumbphones'. That 1.5 billion was out of the total mobile subscriber base of 4.6
Billion at the time, meaning almost one third of the planet's phone users received
ads on the phone.
The 1.5 Billion audience number is interesting for another reason. In 2008 the
total number of television sets on the planet was 1.5 Billion. So without considering
'paid content' on mobile phones, only considering those who received advertising -
mobile had grown in only 8 years to be as big as television - and not all television

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46 And the screen size myth

networks show advertising. Or consider another major advertising medium -


newspapers. The total worldwide circulation of all paid and free newspapers was
about 480 million in 2008, so if you put ads on a phone, you reached an audience
that was three times bigger than total circulation of newspapers. As the average
number of people reading a newspaper is three people (says World Association of
Newspapers in 2008) the total of all people who saw any ad in a newspaper in 2008
was 1.44 Billion people, yet ads delivered on mobile phones reached 1.5 Billion
people. Today mobile advertising reaches far more than that, at over 2.1 Billion
people.
Definitely mobile is a mass media channel, at least in terms of as an
advertising platform. Now, please recognize, we receive very few ads on our
phones - thankfully - and are not blitzed by a barrage of unwanted overload of
marketing messages. The total volume of ads is miniscule compared to those on the
internet, or on TV or print etc. Yet the growth is enormous. A survey of only 22 out
of the 40 biggest mobile ad networks by Mobile Marketing Magazine in the
summer of 2010, revealed that the monthly amount of ads delivered by those
networks has passed 58 billion ad impressions per month. Across the global
subscriber base, it means 11 mobile ads delivered per average mobile subscriber per
month, or almost one every 3 days.
In terms of total revenues, mobile advertising is still in its infancy. Depending
on which analyst house you might believe, the 2009 total global mobile advertising
spending was somewhere between $2 Billion and $4.1 Billion dollars (Gartner
$2.0B, Berg Insight $2.1B, eMarketer $2.6B, Juniper $4.1B). A significant
observation on that scale, is that the official count of mobile advertising just in
Japan alone, passed $1B dollars of value in 2009 (source D2C 2010), so the real
number is likely to be closer to the top of that range than the bottom. Nevertheless,
mobile advertising is still such a small fraction of all advertising spending, that you
could say, for 2009, roughly 1 in 10 dollars spent on 'digital media' advertising
(mostly online and mobile) was on mobile; and digital advertising itself accounted
for only about 1 in 10 total dollars spent on global advertising. The big advertising
channels are still in television, newspapers, magazines, etc. However, do understand
what I said. I did not say that mobile will become an advertising medium soon, it is
one, and a very sizeable one, already today.

Entertainment

So lets examine what kind of mass media content thrives on this new mass medium,
apart from advertising obviously. Music was the first content type to emerge as paid
downloaded content to mobile phones 11 years ago. Today mobile is a giant new
market opportunity for the music industry and as I showed, while only 7% of the
global music industry is delivered via Apple's iTunes music store, 40% of the global
mobile music revenues paid by consumers are for music services delivered by the

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Chapter 4 - 7th Mass Media 47

phone. Basic ringing tones alone are worth 5 Billion dollars and the second biggest
mobile music content type, ringback tones, is also already bigger than iTunes.
Similarly in news. Currently 14% of British Consumers (ComScore 2010),
13% of US consumers (M:Metrics 2008), 18% in China (Asia Digital Marketing
Yearbook 2007) 21% in India (Trak In 2009), and 34% of Japanese (Japan Mobile
Marketing Laboratory 2009) mobile phone owners consume news on their phones.
If we use the smallest of those percentages, 13% - and multiply it across the planet's
mobile phone subscribers, we get a minimum level of 676 million who pay to
consumer news on their phones today - thats 40% more than total paid and free
circulations of all daily newspapers worldwide. These numbers are quite compelling
and prove that news is also a suitable content type for mobile as the 7th mass media
channel. Absolutely, totally irrevocably, mobile is a mass media channel, and is
capable of enormous cannibalization of existing media industries.

Mobile is More than a Media Channel

Now, we have established that mobile is a mass media channel. So far so good. But
mobile is more than a mass medium. It actually started as something else - an
interpersonal communciation channel - a mobile telephone - and does many things
beyond being a mass medium today, such as a payment technology, a media
creation device (cameraphone), a fashion item etc. That is an ability that is
'something other than a media'.
Note the similarities to radio. The original purpose for radio, as imagined by
Marconi, was not to broadcast our news, music and drive time talk shows. Marconi
did not think radio being suitable for broadcasting media content at all, in fact. His
vision of radio was to do communications, very specifically to solve the problem of
telegraph communciations not reaching ships. So he figured we could use a radio
transceiver to send beeps of sound in morse code over large bodies of water, and be
able to give telecommunications connections to ships at sea. A very important
contribution, considering how many people used to die in shipping disasters.
His invention was later adopted - by others - for radio broadcasts. But note,
that radio evolved further, and has a major use today for example as a measuring
instrument: radar. Where would the global air travel industry be today, if we did not
have radar at every airport making sure the jumbo jets do not collide in mid-air.
So we have some very valuable lessons here for mobile. Radio started as a
communication device, it evolved into a multi-purpose device, and one of its uses
was as a mass media channel. And fifty years later mobile phones emerged, also
first as a telecommunications technology, then a multi-purpose platform where one
of its uses is mass media.
This is not always the case in mass media. Some mass media are designed for
mass media from the start, and tend to stay there. Cinema and TV are like this.
They were from the start conceived as (new) mass media channels and decades
later, they have not evolved other uses, and are still only mass media.

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48 And the screen size myth

Why do I make the point about mobile being more than a mass medium? So
that any media or advertising-oriented readers can understand the relative
'importance' of their media and advertising ideas to the mobile telecoms industry.
Mobile telecoms is a giant industry, worth a Trillion dollars (1,000 Billion) in
annual revenues. That is far bigger than any media industry - more than twice the
size of TV and twice the size of all print including newspapers, books and
magazines. Mobile telecoms is five times the size of radio or the internet, and
between 20 times and 50 times bigger than recordings and hollywood movies.
Mobile is also twice as big as the global advertising industry by revenues.
I do not say this to diminish the media, I say this to point out that in mobile
there will often be 'other priorities', which may greatly frustrate the media brands
and owners. Mobile today earns most of its revenues from voice calls, with SMS
text messaging a distant second.

Comparison of Sizes Globally 2010

Newspapers daily circulation 470 million


Cable/satellite TV subscriptions 850 million
Cars registered in use 920 million
Fixed landline telephones 1.15 billion
PCs in use including laptops 1.2 billion
Email active users 1.4 billion
Internet active users (using any access) 1.7 billion
Television sets 1.6 billion
Credit cards - unique owners of 1.7 billion
Banking accounts - unique owners of 2.2 billion
FM radio receivers 3.9 billion
Mobile phones - unique subscribers 3.4 billion
Mobile phones in use 3.9 billion
Mobile phone subscriptions in use 4.6 billion
Source: TomiAhonen Almanac 2010

More significantly, of its profits, mobile earns about half of its profits from
SMS, and nearly all of the rest from voice calls. Together, voice and SMS account
for 90% of mobile industry service revenues, and 95% of mobile industry profits.
Remember that media content is but one part of many other new abilities that
phones can perform for us. So the telecoms industry has to balance media interests
with m-payment/m-banking needs, against 'telematics' concepts (remote metering,

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Chapter 4 - 7th Mass Media 49

remote control etc) and all sorts of newer innovations and ideas. Media content in
total, delivered less than 7% of mobile telecoms industry revenues last year and a
tiny miniscule fraction of its profits.
As to mobile advertising? Less than half of one percent of total mobile
telecoms industry income comes from advertising. Compare that with the internet,
where advertising is often the only way to generate any kind of revenues. In its
abilities to generate revenues, mobile is far more like cinema, where every movie is
paid for by every audience member who walks into the theater, but the cinema
industry still has a side-line business of some extra income, through advertising.
This type of 'relevance' is likely the near future of advertising and its role to the
giant mobile industry. Like cinema. Not like the internet, where almost all content
is 'free' but sponsored by advertising. Cinema does not need advertising to survive.
The internet needs advertising desperately to survive. For its ability to deliver
content revenues, mobile is far more like cinema, than like the internet, and that is
very good news for any media owner. It means that consumers are willing to pay
for content and services on their phones, even where they might not be willing to
do so on the internet.

The Seven Mass Media

So, we know mobile is a mass medium. We also know mobile is many other things,
beyond just a mass medium. Now, lets set a framework to really explore the true
abilities of mobile, and compare with the other mass media. Recalling that
Brezhnev quotation, lets get something really practical here, a good theory. We
have a convenient methodology for the analysis of mobile as a mass medium to
compare and contrast with the other mass media. It is called the 'seven mass media'
taxonomy (there is a Wikipedia page for it) and this theory of mine is gaining wide
acceptance, and has been featured in a dozen books already. There is no significant
disagreement on the classification.

1st was Print

The seven mass media, in chronological order of introduction, start with print 500
years ago as the first mass medium. Print includes major formats such as books,
magazines and newspapers and even billboards (printed posters published in public
places). All produced in the same way, a writer (and perhaps also illustrator or
photographer) produces the content, it is turned into printable pages by some layout
method, previously manually, now by machine digitally, and then that is sent to a
printing press which makes 'mass' volumes of our print output. Then the media
content, books, magazines, newspapers etc are sold to readers via booksellers and
news stands. With magazines and newspapers we supplement the income with
advertising, some free newspapers even exist on purely advertising. Print invented
the subscription revenue model in particular for magazines and newspapers.

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50 And the screen size myth

2nd came Recordings, the first performance medium

Recordings appeared as the second mass media channel at the end of the 19th
century. Recordings were the first media which required a separate media 'player'
device to be used (initially a gramophone). Recordings created the performer artist,
but the business model of selling the 'records' was similar to selling books and
magazines.
Now, lets go quickly back in history. Before the first gramophones and first
records there was pop music as a mass market offering. What? Before records? And
this was before radio and TV? How could it be? Yes, before records, there was a
pop music industry. If you were Lady Gaga or the Rolling Stones or Madonna in
the 1800s, you could not sell ringing tones or MP3 downloads to iPods or CDs or
records or cassette tapes or 8-tracks. You could not get airplay on radio - radio
hadn't been invented yet - or be on heavy rotation on MTV as there was no
television. But you could sell your music and make a living as a pop music
musician.
Part of the business was live performing (as it is still today). But performing
live is not a mass market proposition. The very first vehicle to sell popular music to
the masses, was through print. Yes, through print. Music in the 1800s was sold as
'sheet music'. Your song was sold in a few sheets of paper with the music score on
notes that was arranged for the piano. And then for the mass market consumer, if
you were musically inclined (and wealthy enough to own a piano in your home)
you would buy the sheet music. You'd learn to play it on your piano, and at the next
party, your friends might ask you to play the song for them. That was how pop
music was sold - and consumed by the masses before recordings (and radio).
This was very clumsy. Most did not own pianos, very expensive. Many who
did, did not bother to learn the piano well enough to do this. It would take years of
piano lessons to master the instrument well enough to play music on it. And the
songs were expensive too (the sheet music scores). This all changed totally when
the first music records were introduced with the gramophone (ie an early type of
record player, a predecessor to today's CD player).
Soon music vanished from print, and was only sold through records and
eventually also would be played on radio etc. This is the first case of a new media
(recordings) totally cannibalizing the business opportunity of a legacy media
(print). The internet now gobbling up audiences from newspapers and revenues
from advertising, is nothing new...

3rd is Cinema, the first multimedia medium

Cinema appeared as the third mass medium ta the start of the 20th century and was
the first multimedia (moving pictures) medium. It was funded by a pay-per-view
model. Cinema like print did not require a 'player' but rather cinema was a shared
audience experience where the expense of showing movies - and the expensive

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Chapter 4 - 7th Mass Media 51

projector and screen technology, was installed in specialized theaters, where


hundreds would see the same movie at the same time.

4th is Radio, the first broadcast medium

Radio was the fourth mass medium just about a hundred years ago and introduced
the broadcast model where all listeners heard the same content simultaneously.
Radio was funded in some countries by a mandatory listening license, and in other
countries by advertising, or a hybrid of these two models

5th is Television, the first new medium to give us nothing new?

Television as the fifth mass media channel appeared in the middle of the last
century and did not have any true innovation in media, it simply combined the
multimedia moving pictures from cinema, with the broadcast model from radio. TV
also took the business model from radio and just like recordings and radio,
television required audiences to buy a new expensive media consumption gadget
(the TV set).
I would like to pause on this point and make the observation: all of the first
four mass media offered something new when they were launched. Television
offered no new innovation. Yet with nothing truly new to offer, TV became the
predominant media towering over all others in influence and a giant in revenues.

6th is Internet, the first interactive medium

So we come to the internet, what started as a communication tool for the cold war,
became a mass media channel when web browsers appeared two decades ago. The
internet introduced three unique benefits that you could not do with any of the
legacy mass media at the time, by the early 1990s. The internet was interactive, it
introduced search, and it allowed social networking. You can't do any of those in
print, radio, cinema etc.
Note that these three unique benefits, when used with legacy mass media
concepts like newspaper websites or YouTube videos or the iTunes music store etc,
will add to the utility, making the internet media experience better than the same
experience on legacy media channels. We can search the NY Times archive! We
can leave a comment to the journalist, and we can blog about it (or Twitter) and get
the viral effects. Using the unique benefits of the newest mass media, we can build
more compelling media concepts.

Maturity of the Media

Yes, that is the first six of the mass media. The first five: print, recordings, cinema,
radio and TV are very well known, with familiar formats, well-established business

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52 And the screen size myth

models, their own awards systems for excellence from the Nobel Prize in Literature
and Pulitzers in News, to the Oscars in movies and Emmys in Television. The
internet is also a mass media channel, but at under 20 years of age, it is quite young
and still evolving and growing. The internet is also rapidly cannibalizing many
traditional media formats and opportunities. Over the past two decades plenty of
knowhow has been gathered about the web, and there are plenty of books and
university courses you can take if you want to learn and build your career on this
'new media' platform. And for many years nobody has doubted the fact that the
internet is indeed a media and has its own rules and competences and that it is truly
different from TV or print etc.

Mobile is 7th Mass Medium

Mobile is the newest mass medium, only 11 years old this autumn. Mobile is by far
the least-well understood mass media channel. Mobile in the media space is still
experimenting, and there are wide variances in how it performs as a mass medium
comparing even neighboring countries around the world. Mobile is so young as a
mass medium, that few books have been written about services and applications for
it (I wrote the world's first back in 2002) and even fewer books exist to discuss
mobile specifically as a mass medium (again, I wrote the first book to focus on that,
in 2008). Few university courses exist today to teach mobile services, apps, content
or media (again yes, I created the worlds first media course in mobile for Oxford
University in 2009).

Used with Other Media

Each mass medium has its own formats, its own business models; its own distinct
audiences, its own technical requirements, and its own legal and regulatory
requirements. Each mass medium, when launched, introduced techncial and
creative talent opportunities for new skills and competences. Each media supports a
global industry worth dozens or up to many hundreds of billions of dollars.
So, first major observation. None of the six legacy mass media is used with all
others of the media. We can consume many of the media together for example we
may read the newspaper with the radio on. Or we may surf the web while listening
to some music on the CD player or the iPod. But we don't do it with every possible
combination. You don't listen to radio while watching TV. You don't read a
newspaper while sitting in the movie theatre. And you don't carry your laptop to the
cinema to do some Google surfing while James Bond seeks a Quantum of Solace..
That all changed with the mobile. Mobile is the first mass media that is always
present when we consume other mass media. We have the phone within arm's reach
when we watch TV - we vote on Big Brother and American Idol - we interrupt our
iPod listening when the SMS text message arrives. The youth even have their
phones on but silent in the movies and send updates to friends outside the cinema,

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Chapter 4 - 7th Mass Media 53

on whether the new movie is good or bad - while the movie is still playing. A
survey by Disney in 2007 found that 52% of the youth send SMS text messages
from the cinema.
For the first time ever we have a "parallel" mass medium - that mobile is with
us always when we consume any other media content. Habbo Hotel was the first to
capitalize on this, and enabled its youth customers who did not have credit cards to
go online into the Habbo Hotel internet virtual world and make simultaneous
payments using the mobile phone. Mobile is different from the six legacy mass
media channels.
Mobile is not just a glue to connect multi-platform media experiences, it is the
money engine to generate revenues to dying media concepts. I will discuss
examples of how legacy media use mobile such as the Economist and the Hockey
News print editions, both of which grew print sales using a related mobile service.
Meanwhile in China the local newspapers offer a twice-daily paid premium news
headline service used by 40% of the total readership making tons of money to the
struggling print industry.

Mobile Books? Written on Mobile Phones (!)

The weirdest print industry related story has to be the amazing success of mobile
books out of Japan. As far back as 2007, five out of the top 10 bestselling printed
books of Japan had started their life as mobile phone books. But the most bizarre
part of that story is that most of the Japanese mobile phone books... were written on
phones! Before you say 'impossible' - think again. The heaviest users of SMS text
messaging are the population of the Philippines, where the whole population
averages 26 SMS sent per day. The maximum length of an SMS text message is
160 characters. If we say an average SMS text message sent in the Philippines is
half that maximum length, so lets call it 80 characters, then an average Filippino
will create enough new text to fill a normal paperback book in about 4 months of
basic texting. This is not a 'heavy user'. This is an average person in the Philippines.
If you do it daily, the words really build up.
So lets go back to Japanese mobile books. If you're a young Japanese teenager
girl who is having romantic trouble and reports the ups and downs of her love-life
in her journal or diary - which today is of course social networking, and in the case
of Japan its a mobile phone based blogsite (52% of Japanese access blogsites on
their mobile phones, said Japan Mobile Marketing Data Laboratory 2009) - how
much effort does it take then to turn that into a novel? Most of the text is already
created.. In fact thats how most first-time authors of Japanese youth novel authors
start their first books. They write their diary or their dreams or fantasies on their
mobile blog, and then find out that there is a paid market to turn that into a mobile
phone book. Its almost no risk to the book publisher. They pay based on how many
mobile pages are delivered to paying customers. If the book is successful on

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54 And the screen size myth

mobile, it will then be released in printed book format, and may lead to a TV show
or movie etc as bestselling m-books will of course do.

Don't Copy!

One issue that keeps coming back to me in my workshops and lectures, is the issue
of copying old media and trying to squeeze it onto mobile. Don't even bother to try.
Yes, we can of course copy banner ads from the internet (which themselves are
internet versions - ie copies - of static print ads); or copy spam SMS (which is a
copy of spam email ads, which are again adapted to the internet when copying junk
mail at home); or do pre-roll video (copy of TV ads, interruptive and forcing us to
view ads before letting us see the TV/video we want) etc. Same for attempting to
make your website display 'properly' or 'as designed for the web' but on a phone.
Don't try to copy.
Understand what makes mobile unique, what makes mobile different; what are
abilities that you cannot do on the six legacy media - including the internet - and
develop new media formats that allow audiences to enjoy more, different - dare I
say - better experiences on mobile. Don't copy!
A good lessons comes from the first TV ad run in 1941 in America, as reported
by my dear friend Russell Buckley of Admob (ie now with Google obviously) and
past Chair of Mobile Marketing Association who blogs at MobHappy. Russell
showed a still image of the world's first TV ad, which was for the watch maker
brand Bulova. It was black-and-white of course, as back in 1941 there was no color
TV. That is not the striking part. The first TV ad featured a still image of a clock
face (even the second hand did not move), with a text superimposed on the screen,
saying "America runs on Bulova Time". And there was no jingle, no video, no
music, no sound effects. There was a voice-over, which slowly said that one phrase,
reading it outloud for the TV audience, "America runs on Bulova Time."
That was it. No laughing kids, no fluffy animals, no cartoons, no 'special
effects', no emotional storylines to connect to; and very importantly, no jingles.
What Bulova had done, is take their print ad, aimed a TV camera at it for 30
seconds, and have an announcer read that short statement. That was it. A straight
copy of a print ad. When I see banner ads now on mobile, or preroll ads, or search
words, or interstitials, these are all tired copies of older formats that do not play
well on mobile. Mobile can do far better. And I will examine many of those new
ideas in this book with you.

Enhances Other Media Experiences

Not just that we look at the phone ten times more daily than any other technology or
media, but only mobile is present whenever we consume any other media. We have
our phone within arm's distance when we watch TV - American Idol just earned 100
million dollars in 2010 out of SMS televotes. The phone is with us whenever we

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Chapter 4 - 7th Mass Media 55

listen to radio - UK radio stations have been engaging with listeners via SMS for
many years now. The phone is with us when we read newspapers, magazines and
books. An advertiser can interact with passers-by even with billboard advertising,
Audi did that with the launch ad campaign for the R8 - when they let passers-by use
their phones, to listen to the engine sound of the new Audi sports car.
Universal McCann told us in 2009 that 1 out of every 7 minutes spent on any
mass media, involves our phone. The same study said 77% of TV viewers use their
phones while watching TV and that 42% of the population have gone from one
medium to another, driven by the phone.

Newest Medium is Least Understood

The world is changing more than you can imagine. Some did foresee that the
internet would migrate to mobile phones. That was the easy part. Some very
visionary people foresaw that some digital media like music, gaming, perhaps even
TV would migrate to phones. But print media like books? It seems anathema. Yet
this industry, mobile, is full of those counter-intuitive phenomena, that have caught
out even the best of us time and again. It seems at times, that all rules of 'reason' are
removed - we pay more for a short snippet of a song (as a ringing tone) in poor
quality, than the same song as a full MP3 file. We insist our emails are free, yet we
are willing to pay 10 cents per message for our SMS, where again the length is
capped and there is no ability to format and no ability to add attachments. The
mobile industry is full of such strange facts.
But that is why I wrote this book for you. I want to help you navigate this
treacherous new industry, where so often 'madness' seems to rule the day. Yet, the
mobile data industry alone is worth 250 billion dollars - more than the total internet
industry including content revenues, all search and advertising revenues, and all
dial-up and broadband access revenues. Yes, mobile data alone is bigger than all
that - and younger and growing much faster. The mobile data business alone is
bigger than the global music industry, the global videogaming industry, the
worldwide movie box office and all residuals incomes including rentals and DVD
sales of movies, and the worldwide radio industry - combined. This is a giant
industry and growing at breathtaking speeds

MYTH 2: SCREEN SIZE MYTH


MOBILE IS NOT INFERIOR DUE TO THE SMALL SCREEN SIZE

As we discuss mobile as the 7th mass medium, its easy for many to look at the
small screen and observe similarities to a 'pocket PC'. Then its very easy to leap to
the faulty conclusion that the small screen of the mobile makes it an 'inferior' PC.
No. The mobile is not a crippled PC. Lets deal with the pervasive screen size myth.
We hear many use the '4th Screen' (or '3rd Screen') concept as a corollary of
the 7th Mass Media theory. For example Nokia often uses the 4th Screen concept to

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56 And the screen size myth

explain why mobile is a different medium from the other older screens-oriented
mass media, cinema, TV and the PC/web. In the four screens thinking there is a
natural progression where the screen sizes grow progressively smaller (cinema
giant, TV big, laptop modest and mobile small) and their audience sizes also shrink
- movies seen with hundreds, TV watched in homes with a handful of people, the
PC is rarely shared by more than 2, and the phone screen is usually only seen by
one person - who may actually watch two mobile phone screens (by this analogy,
meaning we get 'half a person' to view either one of the phone screens
simultaneously).
The danger of this thinking is to assume we lose in ability as the screen size
shrinks. Nothing could be further from the truth. If screen size ruled, today TV
would have nothing to fear from the internet, and the world's biggest mass medium
would still be cinema (as it was early in the past century). Screen size is totally a
red herring. To start with, with the screen we watch different screens from different
distances, so if you want to consider how large an impression a screen does to us,
then the TV screen is viewed at far shorter distances than the cinema screen - hence
its true size differential is partly compensated by shorter distance. The perceived
difference in size is not nearly as big. Same is true of the laptop screen (and iPad
screen) which is viewed at far closer distances than TV screens, compensating
partly for being smaller. Same is also true of the smartphone screen, which is
viewed closest of all the four screens of life.
But there is more to screens than their size alone. The internet brought us
'interactivity' to the screen, something cinema and analog broadcast TV could not
do. And mobile too is inherently interactive. Interactivity on a screen seems to
'trump' the size of the screen.
Now, if we compare a PC screen to a mobile phone screen, we get some
benefits to one, other benefits to the other. Mobile is not 'worse' - mobile is
different. Its like comparing a bus to a taxi, both have their valid uses in any city
public transportation. Yes, there is overlap, but both have clear opportunities where
the other cannot match. The PC has a bigger screen, so it has the size advantage.

Two Phones, Two Screens

We know from the statistics chapter that increasingly the heavy users of mobile
worldwide have two phones that they carry. So now, if we consider one big screen
on a laptop, or two separately connected screens on two phones. Increasingly the
youth and young adults are comfortable handling both phones in both hands, and
can use them in synch with each other.

TV Out

High-end phones are starting to have "TV-out features", something we saw first in
Nokia five years ago, and even the newest iPhones now offer TV out. So I can call

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Chapter 4 - 7th Mass Media 57

your 9 inch netbook screen or your 14 inch laptop screen, or even your giant 20
inch desktop PC flat screen - I'll trump you with my 50 inch plasma TV screen,
using my mobile phone and its TV-out feature. And before we know it, there will
be phones with pico projectors - as Samsung already introduced the world's first
pico-projector enabled smartphone, its Galaxy Beam in the summer of 2010, as you
see on the cover of this book. Suddenly a tiny mobile phone can offer a far bigger
screen than any laptop.

Phone Screens Can Be Rotated

The phone screen is different from the laptop or desktop (or TV) screen in can
easily be rotated. If you want to view the picture from an different angle, just like a
real paper printed photograph, a phone can be rotated easily in our hand. Yes, some
netbooks do allow this (on larger screens too) but most laptops are bulky and
cumbersome to rotate. So think for example of a map. You can easily re-orient the
map on your phone, by simply rotating the phone. On a laptop you have to use the
software to rotate the image, if you happen to want "North" to point "down" on your
phone.
This is not a huge thing, for now. But it is another element we can use, part of
what makes mobile magic, what makes it different from the six legacy mass media.
When we combine it with the movement sensors that the iPhone introduced to
phones, now we get abilities for games etc. There is potential here that goes beyond
copying a web page which is almost always planned to be viewed only from one
angle.
A media experience on the phone need not be "simpler and dumber" than that
on a PC. Mobile is a different mass medium. Mobile is as different from the
internet, as TV was from radio. We can build the magical for mobile, go beyond
what is even possible on the PC. And the screen is but one element. Do not fixate
on the screen. If the screen was so powerful, then radio would never have found a
market at all - remember we had cinema for decades before radio became a mass
market proposition. Do not fixate on the small screen (or tiny keyboard). Think
beyond and create magic.
So yeah, mobile is very different from the legacy mass media channels. And
the joke that I have on the back of my current hardcover book, Mobile as 7th of the
Mass Media, where I say "...On the other hand, you have your other cellphone."
This is increasingly becoming a reality, not only a joke. Yes, more and more young
consumers are fully prepared to consume two separate mobile services on two
phones, simultaneously.

More Complex than Rocket Science

This is the biggest economic opportunity of your professional career no matter how
old or young you are. If you are currently in the media, adertising, IT or telecoms

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58 And the screen size myth

indsutries, you should get yourself into the fastest growing and most profitable
sector teh fastest you possibly can. It is the best career with the best salaries and
best promotions and best career achievements than any other option. The more you
wait, the more your peers move ahead of you. Remember all trends point to mobile.
All of them.
But it is not easy. Mobile is far more complex than rocket science. That is
why there are such big opportunities in it. The old legacy mass media are well
known. There are not many new exciting opportunities in those. Most of the legacy
media is copying and doing again the old tired ideas. The internet still has a lot of
growth and opportunity for invention and innovation. But the internet is very weak
at monetizing its medium.
Mobile is the opposite. Mobile is so powerful at monetizing content, that
mobile is used to generate revenue to all other mass media. Mobile is the newest
mass media. It is the most complex mass media. It is the least understood mass
media.

WHERE NEXT?

Obviously the 7 Mass Media taxonomy is my theory and thus the best place to read
about it still today is my book on the topic, Mobile as 7th of the Mass Media. 322
pages and 16 case studies on the topic.

Mobile as 7th of the Mass Media


Tomi T Ahonen
futuretext, 2008

This eBook is available for free download Tomi T Ahonen


Chapter 4 - 7th Mass Media 59

Case Study 2 from Japan


Tohato Snacks

Engagement Marketing Japan Style. Tohato makes snacks. They


introduced two popular brands of spicy snacks sold in small bags, similar
to potato chips. They were "Habanero" and "Satan Jorquia". The two
new brands were launched in the autumn of 2008 on an award-winning
engagement marketing campaign, via mobile.
The Tohato campaign asked consumers to pick their favourite brand
of snack, and join their "evil army" and enter the "World's Worst War" to
join the army and fight in the war, to defeat the other brand. So if you
liked Habanero, you would join the Habanero Evil Army. Or if you
preferred Satan Jorquia, you would join their evil army. The snacks were
aimed at young male users who would be already very likely to enjoy
multiplayer online gaming.
To join - you had to buy a bag of the snacks, and enter the game using
your mobile phone, via a 2D barcode printed on the bag. Then in the war
there were battlefields, where these two armies would do battle, and you
would initially enter as a private in the army. But to use viral marketing
methods - if you used your phone and recruited friends to join, then you
would be promoted. And as your friends recruited friends to your side of
the war, they too would be promoted, and you would be promoted higher
still, in the Evil Army of your choice. A classic pyramid scheme and
remarkably viral. A private was promoted to sergeant, then promoted to
lieutanent, then to captain, etc..
The armies had 31 battlefields to win the World's Worst War. These
had again really appealing names for this generation, like Sweet Sucker's
Execution Hall, the City of Anal Torture, and Shadap Bay. Remember
the target audience, this is exactly the kinds of names that are cool to
them..

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60 And the screen size myth

The battles were scheduled for 4 AM - when there is least traffic in


the network. They generated enormous traffic, 100,000 page views per
day. The game included things such as a 24 hour news service via the
mobile phone, so who had died in battle, who had been promoted, which
battlefield had been captured by which side, etc.
The game was developed by Japanese creative ad agency Hakuhodo
and won major advertising awards. I initially learned about the service
from my friend David Wheldon of Vodafone when I was presenting to
the first Vodafone Mobile Advertising Conference. What particularly
attracted me to this campaign, is that here was a totally non-digital brand,
selling totally non-digital goods (snacks) and yet it was able to launch a
digital initiative, fully consistent with its target audience and its passions.

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Chapter 4 - 7th Mass Media 61

Tomi is available to present at your event!


Tomi does keynotes, seminars, workshops,
briefings, courses. Write to him at
tomi@tomiahonen.com for availability

With Andy Zain in Jakarta


With Martin Feldstein of Meriti in Buenos Aires

With Jonathan Marks in UK


With the 'Senoritas' Malaysia's top girl band
Ajit Jaokar
Interviewing Rory Sutherland in London and me in
Seoul

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


62 And the screen size myth

With Voytek Siewierski of NTT DoCoMo, as VIP guest to


Renault Formula One factory! Thank you Voytek!!!!

The wonderful HR Team at Microsoft, hosting me at M-Education San Diego

The 'James Bond lifestyle' With my dear friends Jari Tammisto


(MoMo), Ralph Simon (MEF), (me) and Gary Schwartz of Impact
Mobile at Gala of World Summit Awards in Abu Dhabi

This eBook is available for free download Tomi T Ahonen


Chapter 5 - 8 Unique Abilities of Mobile 61

"Mobile is as different from the internet,


as TV is different from radio."
Tomi T Ahonen

V
8 Unique Abilities of Mobile
And Myth of Location-Based Services

Lets consider the seven mass media, and think of the power of a 'unique ability'.
Print was first. Print made 'writers' (and photographers/illustrators) the creative
artists, through books, newspapers (the correspondent and the columnist) etc. For
authors and journalists we have global awards like the Nobel Prize for Literature
and the Pulitzer Prize for journalists. When Recordings came along, their first
media format was the 'record' ie music. (Today Recordings also have many other
media formats, ie videogames, PC apps, DVD sales and rentals of movies and TV
shows etc). When Music Records, and the Phonograph offered us suddenly the
ability to reproduce sound - this was a radical innovation in media content.
At that point, with the sudden introduction of sound into the silent media
landscape of print, a new form of media star was born, the recording artist (pop
star). It did not end the need of a 'writer' in music, we had composers who wrote the
music, and then often another wordsmith who wrote the lyrics, but totally new
careers were born, where the recording artist (pop music star) became popular
because of 'how' they sang, not that they had written the song. So for the music
industry, they give out Grammy awards for those who write the best songs, but also
for those who 'perform' the best songs. Elvis's Blue Suede Shoes is a perfect
example. The song very strongly associated with Elvis, was actually penned and
recorded (and reached bigger sales) by Carl Perkins. But most who are not
specialists in rock n roll, think that Elvis's version of Blue Suede Shoes, is the
'original' and the dozens of other versions - including the original by Carl Perkins -
are 'copies of Elvis'....

Unique Means Radical New Industries

Let me make one further, very important point. If a newer media has at least one
unique ability, that means - as an absolute irrefutable fact - that you the media

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62 And myth of Location-Based Services

owner, can develop new media concepts (formats) for that media channel - which
cannot be replicated on the older legacy media. Think of this as if you get a 'media
monopoly' on the new way to consume your content. For example moving pictures.
Cinema brought us the ability to show moving pictures in a mass media for the first
time. That meant totally new, revolutionary business concepts, 'movies' - that
launched the careers of motion picture icons like Charlie Chaplin. Mr Chaplin was a
creative fellow and a stage performer earlier in his professional career. But radio
(2nd mass medium) did not offer his visual comic talents a way to shine. Neither
did print (1st mass medium). Only movies (3rd mass medium) could launch
Chaplin into superstardom - who then became the first globally recognized media
superstar and the biggest star on the planet.
I go so far as to say, "mobile is as different from the internet, as TV is different
from radio". Cinema and TV are similar. Radio and music recordings are similar.
But TV and radio are totally different to the audience. I tell you, mobile is as
different from the internet, as TV is different from radio. With as much unique
media opportunities. Mobile being TV in this analogy, as the 'bigger' opportunity
mind you, not radio the 'smaller' media by revenues and relevance today. That is the
fate of the internet. It will inevitably lose out to mobile as a mass medium in every
way, and will have to adjust to the 'little brother role' exactly like radio did with
television. This is inevitable. If I can show you just one unique ability that mobile
has, then it cannot - it cannot - become the same as the older mass media of the
internet, no more than TV cannot somehow 'retreat' into being 'just radio' again. I
will prove that to you in this chapter in eight ways.

Mobile Has Eight Unique Abilities

So far by 2010, we have discovered eight unique abilities that mobile has (as a mass
media channel, it has other unique abilities in other uses; and it has dozens of non-
unique benefits as well). When I say 'so far' I do mean that. The eighth unique
ability of mobile was only discovered this year, so we may well find more in the
years to come. But yes, the eight unique abilities are:

1 - mobile is first truly personal mass medium


2 - mobile is permanently carried by its owner
3 - mobile is always kept on and connected
4 - mobile has a built-in payment system
5 - mobile is available at the 'point of inspiration'
6 - only mobile measures the audience accurately enough to be actionable
7 - only mobile captures the social context of all of our media consumption
8 - mobile enables augmented reality for the mass market

Every one of these is at least as radical an innovation, as 'sound' was for


Recordings, that launched a multi-billion dollar global music recording industry, or

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Chapter 5 - 8 Unique Abilities of Mobile 63

'moving pictures' was when cinema was introduced. All already contributed to
successful commercial media applications, formats and content.
And yes, obviously - any service that uses one of these abilities for a
significant aspect of that media experience, is by definition only viable on mobile.
You cannot (make business out of) launch(ing) that same concept on any other
legacy mass media, not on CDs and DVDs, not on radio, not even digital radio; not
on TV/cable TV/satellite TV/digital TV/IPTV; and not on the internet. And as you
ponder that point, is Tomi really serious, there are mass media concepts
commercially launched today, that you can only do on mobile, remember the very
first media content for mobile - ringing tones. Still today, twelve years from launch,
as ringing tones are a 5 billion dollar global music industry giant, we have nobody
selling ringing tones to our television sets or our laptop computers or our
playstation portables. Only for mobile. It is one example of a unique media format,
that can only be (commerically viable) on mobile the seventh of the mass media.
Please note that many of the other abilities of mobile are not unique benefits.
Take location-based services for example. The location-identity may seem on first
view, that this is unique to mobile, but when we consider all past media, we find
location is already an integral part of an earlier mass media - cinema. Yes, every
movie theater is location-based, and if they want to, they can show local content
and sometimes even do show for example local advertising - a restaurant which is
walking distance from that cinema, etc. When I say these 8 are unique abilities, I do
mean unique, that no legacy media can replicate them (today, in a commercially
viable way, to the majority of their audiences).

Unique Ability 1 - Mobile Is Personal

So, lets get into the unique abilities. To start with, mobile is the first personal mass
medium. You can't show a personal unique storyline edition of Star Trek to each
individual audience member in the same cinema audience. You can't sell tens of
thousands of individually personalized versions of Harry Potter with different
endings in the same bookstore. All other mass media were designed to be consumed
by their intended audience in the same standard form. We share our newspapers and
magazines, we share the music from our personal CD library when we play music
to our guests visiting for dinner. Note how different this is. We do not have a couple
over for dinner, and each visitor hearing a 'different version' of the same song? We
put on the CD, and everyone hears the same song. We watch TV together as a
family. If the kids don't want to watch with us, they go to another TV set and watch
that, with their friends...
Even the internet is only semi-personal. We individuals often feel that the
given laptop PC from the office is 'ours' or that when we go to Facebook on the
family PC, it is only me and my experience. So the internet is very good at giving
us an illusion of being personal. But the truth is, that for very many internet users,
there is a shared element to it. We do share our family PC. At work, our IT

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64 And myth of Location-Based Services

department installs all sorts of company apps and services to our PC and our
employers often retain the right to snoop inside our emails and communications etc.
In many countries more internet users share a PC at an internet cafe, than own a PC
at home.
But mobile is personal. So personal, that we do not share our phones with our
spouces. Our kids when they reach puberty, will refuse to let their parents 'snoop'
inside their phones. I am serious, there are tons of studies showing we totally refuse
to let others see inside our phones. A survey in Australia revealed that its gotten so
bad, that one third of Australians in long-term relationships will snoop inside their
partners' phones - when the partner is in the shower.. Only mobile is truly personal
as a mass medium
Because mobile is personal, it allows us to 'personalize it'. That means a big
global industry of the personalization services to the phone - yes decorations - from
interchangeable covers to our phones, to various phone decorations, little trinkets
and toys that kids hang on their phones, to of course the ringing tones and various
pop culture related screen savers. Better than that, we can design media concepts
where each recepient feels like they are receiving truly customized, personalized
content.

NTT DoCoMo I-Channel

This is a perfect example of what I mean. Lets take a media concept that exists - the
breaking news 'ticker feed' like the CNN news ticker we have on all 24 hour news
shows, streaming at the bottom of the screen. This is of course not invented by
CNN, they took the idea from the stock markets, with their 'stock ticker' that
showed the dealers in stock markets the latest completed sale of given stocks, to
show what is happening in that very volatile fast-moving industry of the stock
markets. CNN was pretty smart to turn that into news content on their 24 hour news
show nearly three decades ago.
The CNN ticker has a particular audience problem. You want to feature
relevant breaking news, but you cannot have too many of the news items, because
typical 24 hour news show viewers will not hang around for an hour or more. So
they have to have a very short set of highlights, that rotate perhaps every 10 minutes
or even every 5 minutes or so. And knowing some who watch the news want sports
news, some want financial news, some want international news, some want
celebrity news, etc, it means a severe compromise. Is it news that a golf star has had
some family incident. If the 24 hour news channel puts that story on the news
ticker, it means some other story will have to be eliminated. What of the hotel
bombing in Somalia, does that qualify, etc.
The CNN news ticker is a brilliant idea, copied by all 24 hour news channels
in all languages and is a 'staple' of the 24 hour TV format. Now lets use the power
of mobile and make it uniquely better, using the first unique ability of mobile as a
mass medium, that mobile is the first personal mass media channel.

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Chapter 5 - 8 Unique Abilities of Mobile 65

Japan's biggest mobile telecoms operator/carrier, NTT DoCoMo about four


years ago launched what they call 'i-Channel' as the their breaking news service
exclusive to the mobile phone. They used a very clever technology ability, called
'idle screen' to allow news items to be delivered to your phone while it is in 'idle'
mode - such as sitting on the desk or in your pocket - when it 'normally' would
show the clock or your screen saver - and turn that idle screen into a 'live' ticker of
news. So far so good, this is copying CNN to the mobile phone. Then the twist:
Because mobile is personal, we can then customize our news feed. Hey, wow,
this gets far better than CNN. So if you are interested in sports, you get more sports,
and if you are not interested in financial news, you say no financial news. This is
totally customizable, so you can pick how many categories you want to follow, and
they provide the headlines for you. Now you get more of what you really want, and
none of the clutter to waste your time. Imagine you are only interested in sports,
nothing else. If CNN shows six sports news headlines every 5 minutes, you have to
wade through 4 minutes of other news like finance, international news, domestic
news, celebrities, weather reports every 5 minutes. But on i-Channel if you select
only sports news - you get only sports headlines and nothing else. Because there is
none of the clutter, you get more of what you really want. It means you get to see
those news items of your interest, which CNN cannot show on its 'general
audiences' oriented news feed.
And when there is a real breaking news item - you get it far faster, because the
news ticker feed does not have to scroll through all that news content that you
personally do not care about. It is like CNN news ticker, but inherently better. You
can have your personal news feed. Live on your phone at all times, even as the
phone is in 'sleep mode' even as it is silent in a meeting, you get your news ticker
scrolling on that phone screen. If nothing new happened, the same headlines scroll
just like on CNN, and the moment something new happens, the service eliminates
the oldest item, and adds the newest item - except, that since this is personalized,
you get only what is relevant to you. If you want just gossip about Brittney Spears
and Angelina Jolie and Amy Winehouse, thats fine, just select 'celebrity news' and
that is what you get 24 hours a day on your phone. No clutter.
This is far better than CNN. And how is it doing? In its first two years,
already one in six customer on the NTT DoCoMo network had subscribed to the
service, paying about 2 dollars per month for it. In 2007 the service earned over 160
million dollars in news service revenues on just one network in Japan. The service
is so popular that NTT DoCoMo is now exporting the technology and it was for
example launched in Guam and in India. I loved this idea so much, I made it my
first case study in my sixth book Mobile as 7th of the Mass Media.
Note, that the NTT DoCoMo i-Channel has other abilities and features that
make it compelling, not just the personalization ability. It is in our pocket all the
time, it is connected all the time, we can charge our customers for it, etc. These
touch on several of the other unique abilities of mobile. But those are additional
abilities, that help make it even more economically viable. When it comes to

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66 And myth of Location-Based Services

'breaking news' then the i-Channel will outperform CNN every day every night
every hour every minute and every second. It is just inherently better to deliver 'my
news' to me, on my phone. Rather than 'the most popular news topics' that run on all
24 hour news channels. And absolutely definitely totally, you cannot deploy this
type of i-Channel 'equivalent' commerically on cable TV, where the original CNN
news ticker was born. Mobile has a unique ability, and it has delivered a massive
newsmedia paid service with very happy customers - using this first unique ability
of mobile.

Permanently Connected

The second unique ability is that the mobile is permanently connected. It is possible
to have other media also be permanently connected - our radio at home or our TV
set or our interent connection, but they were not designed to be left on for 24 hours
and be permanently connected. The services built upon those electronic media were
not designed to take advantage of the ability. In most cases we are taught to turn off
our radios and TV sets and PCs to conserve energy. In the cases of laptops, the
battery usually does not last more than 3 hours so permanent connectivity is not
even feasible. But mobile phones were designed from the start to be left on for 24
hours and remain connected. It is how we are able to be reached - I will discuss the
concept of 'Reachability' later in the Convergence chapter, as the key to why mobile
is addictive in nature.
The permanently connected ability means that mobile is the ideal device for
breaking news. I could mention many news-oriented examples, but lets pick
something less obvious to illustrate the power of the always-on connection.

BMW Winter Tyres Via MMS

BMW's winter tyres MMS campaign is an award-winner and very well known in
the mobile advertising circles. So here are the main highlights. BMW in Germany
had a full customer database of all new BMW owners, who had bought their BMW
within the past 12 months, but during the summer months. In Germany every winter
there is snow on the ground, and the law says that during winter time, cars have to
use winter tyres. So cars bought during the winter months would be sold with
winter tyres. But cars sold during the summer time did not.
BMW created a personalized MMS picture messaging ad campaign. In it, each
new BMW owner received a picture message featuring what looked like exactly his
or her specific BMW, in the exact right model and type, in the exact right color, and
with the exact wheel rim that the owner had bought. Then BMW offered a
recommendation of the winter tyre for that specific car model. Obviously this was
an automated system, they did not attempt to go photograph every BMW owner's
car. They knew from the purchase invoice, exactly the required details. And in the
picture message, they only showed the front quarter panel of the car, so even the

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Chapter 5 - 8 Unique Abilities of Mobile 67

license plate was not visible. But it was truly personal. Because the BMW model
was the right model, in the right color, with the right wheel, each owner believed
they were receiving a picture of their own car.
Then to totally maximize the opportunity, BMW waited with the campaign
ready to run, until the day, when the first snow fell in Germany, and that campaign
went out within minutes, to every targeted BMW owner. As the BMW owner
looked out of the window, noted the snowfall, and perhaps thought "its time to think
of winter tyres", the phone would beep and BMW would offer a perfect,
personalized solution. Its like the phone was reading our mind. Magical!
The campaign offered a recommended winter tyre, and suggested nearest
authorized BMW dealers where that specific tyre was in stock, with an easy one-
click contact to schedule the appointment to install the winter tyres. The MMS
message also included a link to BMW's mobile website (running on WAP) where
BMW owners could go and see other tyres, select possible new rims to the wheels,
etc.
The response rate was unbelievable. Fully 30% of BMW owners in Germany
who received the ad - not only saw it, and read it, and responded to it, and liked it -
but showed up at an authorized BMW dealer to buy the recommended tyre. Yes, the
BMW winter tyres campaign, on MMS, achieved a 30% conversion rate! The
BMW campaign was analyzed extensively at Forum Oxford by my dear friend Ajit
Jaokar, who blogs at Open Gardens with some help from the industry guru Romi
Parmar. Their findings were then further discected and validated through some very
intelligent discussions at Forum Oxford.
The campaign including creative effort and all airtime costs of MMS
messages, was less than 120,000 US dollars. With 30% of BMW owners actually
using the offer to make winter tyre (and often also new wheel rim) purchases, the
simple campaign earned 45 million dollars. This is the power of using the second
unique ability of mobile, being permanently connected.
I met up with Marc Mielau the head of mobile advertising for BMW when we
both presented at the Vodafone Mobile Advertising conference held at the McLaren
Centre and we had a great discussion about BMW's initiatives in this space. They
are very methodical with the seventh media channel using mobile, from launching
the 1 Series, to using 2D Barcodes, to helping owners of BMWs sell their used
BMW cars, etc.

Always Carried

The third unique ability is that mobile phones are always carried. I told earlier in the
chapter about consumer behavior, that mobile phones are taken to the bathroom,
into the bathtub even, and not just in the bedroom but into the bed, with us sleeping
with the ringing turned on. The phone is taken everywhere. It used to be said, that if
your house was on fire, the reason you would run into a burning building was to
save your photographs. Now Kodak Chief Marketing Officer and author Jeffrey

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68 And myth of Location-Based Services

Hazlett tells us that it is no longer true. Today we value our mobile phones ahead of
the photographs, and it is our mobile phones that we will run into a burning
building to retrieve.
No other media is carried permanently. There have been pocketable TV sets
since the early 1980s, for almost 30 years - and they were much cheaper than the
early phones with color screens. Yet we do not carry those pocket TVs everywhere
- how many of us even bothered to buy one? What of iPods or Playstation Portables
or the digital cameras. As we learned from the Jacobs Media and Arbitron study
this year, now that we have mobile phones, the use of all other pocketable and
portable electronics is in decline. We are carrying ever less our digital cameras,
MP3 players, gaming devices, laptop computers etc.
As the phone is always carried, it means we also can use the mobile to deliver
digital solutions when traditional means are not practical. Typical early examples
were the SMS-enabled vending machines from Coca Cola machines in Poland to
parking meters in Estonia to luggage storage lockers in Japan.

User Generated Postage Stamps

Recently a more clever use was by the German post office, which enabled mobile
phone based stamps, first deployed on the E-Plus network. If you need to mail a
letter or postcard in Germany, just take our phone and send a message to the post
office to purchase a virtual stamp. You will receive a unique 12 digit alpha-numeric
code by return text message to your phone. Just print out those 12 digits to the top
right corner of the envelope, where the postage stamp would go - and you have
replaced the stamp. No trees need to die for postage stamps anymore, and these
mobile phone delivered virtual stamps can be sold at any hours everywhere in
Germany. No more looking for the nearest post office and waiting in line to buy
stamps. Brilliant, simple and elegant. Makes our life a little bit better. I hope every
post office adopts this solution.
Now some mobile experts have been quick to combine the two, thinking that
'permanently connected' is the same as 'always carried'. They are not the same. You
can have a digital device that is permanently connected, but not always carried -
like our home fixed landline telephone. Meanwhile, its possible to have a digital
device that is always carried but not permanently connected, like our laptop. So
please do not mistake these two as being one benefit. They are two distinct unique
abilities. One is permanently connected, the other is always carried. Mobile has
both, but both are unique abilities and we can build useful mobile services on either
one (and obviously in many cases, using both).

Built-In Payment Channel

Only mobile has a built-in payment channel. I talk about mobile money in its own
chapter later in the book. The point is that you can't do money payments natively on

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Chapter 5 - 8 Unique Abilities of Mobile 69

the internet without a spearate payments system like credit cards, or using Paypal, a
very cumbersome work-around which is only used by about 10% of all internet
users. But every single mobile phone account on every single network in every
single country can handle payments natively - meaning you can deploy 'click to
buy'. No credit card numbers to enter, no cumbersome passwords, just click and the
payment will be authorized, and shows up on your phone bill (or is deducted from
your pre-paid account balance). Like voting for TV shows, or buying ringing tones.
Image the power of the full mobile phone, added to money. Think if
MasterCard or Amex could offer an intelligent credit card, with an active screen, an
interactive keypad, an active network connection and a memory chip. What kind of
superior services can be deployed. Show available balances in real time. When you
travel and see prices in another currency, on your phone show the price in your own
currency. Give alternate links to do price shopping. Offer real time couponing.
"Rather than the 1 litre of Coca Cola, would you like a 20% discount coupon for
Pepsi" etc.

Features of Installed Base 2009 and 2008


Feature/Ability 2009 2008 Growth
SMS text messaging 100% 100% -
Browser phones 95% 92% 3%
Color screen 93% 90% 3%
2.5G Data capable 91% 88% 3%
MMS picture messaging 80% 71% 10%
Cameraphones 73% 68% 7%
Bluetooth capable 64% 52% 15%
Media player 56% 45% 25%
Downloadable (Java/Brew) 53% 44% 18%
Memory card slot 44% 33% 33%
3G capable phones 29% 24% 20%
WiFi capable 16% 12% 33%
Smartphones 13% 11% 23%
Second-hand phones 10% 9% 10%
Source: TomiAhonen Phone Book 2010

Eventually everything we buy will be paid for by mobile. No country is there


yet, but Sweden is the first country to start Parliamentary discussions on the end of
cash. Yet the financial industry moves very slowly, so give this trend at least 10-20
years. But it is an irreversible trend. And far more powerful than credit cards or
Paypal, we can build integrated and converged services on mobile utilizing money.

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70 And myth of Location-Based Services

Every major expert in mobile agrees that in the long run mobile money
solutions (often called mobile wallets) will be the norm. Now, back to marketing
insights about our customers. If ever you felt that airline or retail loyalty card
schemes have a wealth of data, that is truly peanuts, compared to how powerful
mobile money related data will become, once our total wallet runs through the
phone. Is Tomi Ahonen a Pepsi guy or a Coca Cola guy, etc. Think how much
MasterCard or Visa know about us, but multiply that by a factor of ten at least.
Comparing credit card or store loyalty schemes to mobile wallet collected data is
like comparing a children's storybook to the Encyclopedia Britannica.. This mobile
industry will soon own the majority of commercial transaction data. Wow... I will
be examing mobile customer data in its own chapter later in this book.

Gillette Razor Trial

So lets take just a quick example of money and mobile. Coupons. On the internet a
reasonably successful interactive ad campaign will get perhaps -0.5% click-through
rate. Achieving 1% click-through is usually considered excellent performance. So
lets look at mobile. A standard banner ad or SMS spam ads can yield far better rates
than that, typically 4% to 6% average click-through rates on mobile. In the mobile
advertising chapter I will explain what is the new native ad format for mobile,
called 'engagement marketing' which yields typically 25% to 45% response rates.
That is enough to give internet ad gurus heart-attacks. But that is nowhere near the
record in mobile.
The current world record response rate comes from South Korea, where
Gillette ran a free sample coupon campaign for its Fusion razor. It was op-in of
course (all good mobile advertising campaigns are fully opt-in, of course) and out
of 240,000 registered men who were intersted in Gillette products, they sent out the
coupons and 98% were redeemed. But as I said, we'll talk much more about mobile
money in its own chapter later in this book.

At Creative Impulse

Then in 2006 my friend and author Tony Fish of AMF Ventures discovered the 5th
unique benefit, that mobile is available at the point of creative impulse. The only
comparable instrument is the pen, that many of us carry with us, to be able to take
notes and write in any situation. But a pen is not a medium, its only a creative
device. Mobile is both a creative instrument and a mass medium.
This means user-generated content in mass media. The cameraphone in
particular. If you're into blogs, Twittering etc, the phone is increasingly your main
method of updates. So for those customers who are true advocates (our "army of
fanatics" as UK marketing guru Jonathan MacDonald says) will be using their
smartphones to promote their causes. And we will capture that customer insight,
and we can join in the conversation if we learn to do engagement marketing,

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Chapter 5 - 8 Unique Abilities of Mobile 71

obviously rather than just old-fashioned interactive marketing. Mobile is becoming


the focal point of all social networking. YouTube is headed to mobile, Facebook is
headed to mobile, CNN has received iReport submissions from over half a million
people already, etc. Only mobile is available at the creative impulse.

Ez My Styling

So lets look at a case example. EZ My Styling is the free virtual hair dressing
service from Japan. It is a utility that uses the cameraphone feature, the user takes a
picture of their face, then uploades it to EZ My Styling. Then on the mobile web
page the user can select hairy styles and see how they would work. These can be
sent to friends for opinions using picture messaging - which haircut should I take -
and of course the service knows where you are, where are the nearest hairdressers
that do that haircut, and allow instant booking of a time. Elegant. Can't do that on a
PC or netbook or digital camera or PSP or Kindle.

Most Accurate Audience Measurement

Tony Fish also discovered the 6th unique ability of mobile in 2007, that it has the
most accurate audience measurement of any mass media, and is more accurate in its
audience measurements even against the previus master, the internet, by a factor of
9 times more accurate in identifying the total audience.
Mobile is a way to measure other media audiences, and being the most
accurate at that too. TV for example. In New Zealand on local TV 2 channel, they
used an interactive SMS points game to measure actual active viewers far more
accurately than "Nielsen boxes" in a campaign that awarded various prizes to
viewers. If you ask a TV viewer to send an SMS to the TV station when a given
logo is visible on the TV screen, you get exact audience data. Not that the TV set
was on. Not that someone was reading a magazine with the TV on the background.
Not that someone started to watch but didn't finish watching that TV show. Most
importantly, the same person could be tracked - did the same person who started
watching that TV show, continue to watch it to the end of the show, and then, did
the same person follow on that TV channel to watch the next show. Far more
accurate audience information than possible using any other means. Because we
don't share our phones. Powerful info to help measure audiences of other media.

Guinness Sevens

For a service using this feature, I like to mention the free mobile phone based sports
and tourist guide, used by Guinness beer at Sevens Rugby Tournament in Hong
Kong and developed by Ogilvy. It gave the obvious sports related information you
would expect of any sports mobile service, like game schedules and scores,
statistics, player biographies, venue information, etc. Then yes, the obvious tourist

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72 And myth of Location-Based Services

guide parts such as the maps, shopping guides, restaurants, hotels, the subway map
etc. And the Guinness element: helping tourists find the nearest pub or bar that
served Guinness of course.
The amazing gimmick that is definitely a 7th mass media feature, that would
only work on mobile, is a clever translation utility. They didn't attempt to do real-
time translation (such services also exist) but rather just a simple click-to-talk series
of common short phrases a tourist might need in Hong Kong. Clicking on a link of
the phrase in English, the phone would speak the equivalent phrases in Cantonese.
So it had the basic instructions to taxi drivers, bartenders, even included a few chat-
up lines for talking to girls in the bars. And it featured various offers for Guinness
beer during the tournament. How successful was it? Ogilvy told us in 2010 that the
app was so successful, it grew Guinness beer sales in Hong Kong by 25%.

Captures Social Context Of Consumption

The 7th unique ability was then discovered by two of my dearest friends, Alan
Moore (CEO of SMLXL and co-author of my fourth book) and Jouko Ahvenainen
(then Chairman of Xtract, who wrote a forword to my third book) in 2008; who
have since also written a book together, Social Media Marketing, where they
discuss this aspect as well. The 7th benefit is that only mobile captures the social
context of our media consumption.
I need to explain 'social context' a bit. With this measure, it means that I am
not measuring 'what I consume' but rather, 'who I communicated with relating to
that consumption'. So understand, I can have social context of consumption - even
if I did not personally consume the item. I can influence my friend to buy (or not to
buy) a given item, and if so, that is part of the 'social context of consumption'. The
various communications that relate to recommendations and other discussions.

The Obama App for iPhone

Let me illustrate with this early example from the Obama presidential campaign of
2008. As this is truly bleeding edge ability for mobile, ry few appliations of it exist
in any space. But we have one very good one to illustrate the unique ability: The
Obama app for the 2008 presidential campaign and its iPhone App in the USA. The
Obama iPhone app replaced the normal phonebook with the Obama campaign
related phone book - and based on the US 'area codes' for phones - which tend to
relate to the states - the Obama app would show the 'context' of the presidential
election polls for each state. So if your friend Johnny lives in Texas, it would show
the latest polls at that moment, so lets say McCain leads by 62% - 38%; but if your
friend Jimmy lived in Pennsylvania it would show Obama leading 57% to 43% etc.
Note this was 'social context' not 'consumption'. We had not voted yet, the person
with the iPhone app did not need to give his/her own view or opinion - and we
didn't care if Johnny in Texas or Jimmy in Pennsylvania were Obama or McCain

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Chapter 5 - 8 Unique Abilities of Mobile 73

supporters - it measured social context only, not preference (ie 'purchase' or voting
behavior by our friend).
Brilliant app, we'll see much more of the social context in the years to come as
the advertising industry gets to grips with this new aspect of mobile, just like it took
a while for radio ad 'creatives' to learn to use jingles in their radio ads.

Enables Augmented Reality

Now we have the 8th unique ability. Its discovery is credited to Raimo van der
Klein of Layar the Augmented Reality browser, out of the Netherlands earlier in
2010. Layar is currently just about the hottest story in all of the mobile telecoms
industry. Raimo is a long term good friend of mine as well, from MoMo
Amsterdam (Mobile Monday) and very well known in the Dutch and European
mobile industry circles. Raimo and I were having some chats on Twitter and at the
7thMassMedia.com blog and came to the conclusion that yes, Augmented Reality is
indeed the 8th unique ability of mobile as a mass medium. Yet another thing that
mobile can do as a mass medium for you, that other older mass media cannot
match. And now we have the brand-spanking new list of why mobile is a different
mass media channel, and what makes it unique. I will discuss Augmented Reality in
the 'Beyond Reality' chapter later in this book with plenty of case examples.

Then Location-Based Services

The American comedian Steven Wright has a saying, "Everywhere is walking


distance if you have the time." Lets talk about location a bit more. The mobile
network is capable of tracking every single mobile phone continuously, to an
accuracy of about 100 meters (300 feet) in city situations, without any GPS chips.
This is done with an advanced form of triangulation by measuring signals from cell
towers. The method is accurate for most consumer needs, as its accurate enought to
serve us a small map of a couple of city block.
So already today we have a remarkably accurate tracking system that covers
every one of the 5.2 Billion mobile phone subscriptions globally. And those are
getting every more precise with GPS location. Then we get accuracies measured in
a few meters/feet. And technologists are drooling over the prospects of 'Location-
Based Services' (LBS) Except that this is another remarkably persistent myth. The
truth is that everybody loves the idea of tracking others, but everybody hates the
idea of others tracking them.

MYTH 3 - LOCATION BASED SERVICES


BEWARE THE LOCATIONISTA

There is a dangerous group of false prophets for the mobile industry which I call the
'Locationistas'. This thought-to-be-extinct breed of technology-purists, feels that if

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74 And myth of Location-Based Services

you make it more accurate, the consumers - and revenues - will come. It does not
matter at all to these 'alchemists' that all the evidence of more than a decade now,
prove conclusively that the customers will not come. Yet they persist in peddling
that tired old wives-tale, that "there is a pot of gold in location-based services."
Location-based services. Yet another variation of 'tell me where I am' or 'tell
me where my friend is' or 'tell me where something else is'. This nearly vanished
type of engineering passion suddenly re-emerged out of California when Apple put
GPS onto its second edition of the iPhone in 2008.
So, today one of the hottest stories in any West Coast related tech investor and
innovator groups is the collection of ever more mad ideas around location-based
services, location-based games, location-based advertisements, location-based
coupons, location-based social networks, location-based apps etc. And tons of
investment dollars and expensive developer resources are tossed at recreating
fantastic precise location-based services to find out where is the nearest cash
machine or toilet; where is the wife or kids; where am I; and various navigation
aids, location-based games, coupons, ads etc.
What a waste of effort. Futile. Totally futile.

Driven by iPhone Apps

Now that the iPhone hype is strong and one of its sexy features is the assisted GPS
positioning, there are very many new pilgrims arriving to pray at the altar of LBS.
I've seen many new reports and semi-credible experts comment on LBS. The
business and tech press has been re-energized to revisit this much-maligned area.
And some who never lost faith, have said: "But yes, we always said you needed
precision in LBS, and now with GPS on top phones we can do LBS right, and the
customers will love it and use it and the money will finally come."
This will not happen.
I hate to burst this bubble, but there is now so much hype around LBS, that I
have to step in with a major word of caution. Please, please do not build your
business around LBS as its primary element. Yes, sometimes location information
can add value to your service. But if you make the location positioning as the
primary benefit of any mass market service, your service will fail in the market. I
am very serious about this. Mass market services will not survive if their primary
benefit is based around positioning, and having assisted GPS and near-perfect pin-
point accuracy will not fix the issue. If your business is currently built around an
LBS concept, please trust me that much, that you read this essay and re-consider.

Tomi And LBS

So first why should you care about me and my view? Fine, once Tomi Ahonen was
the head of Nokia's global telecoms consulting unit. Fine. Lets see how well I know
this space. My first book. Services for UMTS, on mobile services - a global

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Chapter 5 - 8 Unique Abilities of Mobile 75

telecoms bestseller in 2002 - was not only the first book published about mobile
services, it was the first book to cover location-based services, and has more than a
full chapter on LBS and several dozen actual LBS service concepts outlined. My
second book, m-Profits, a global telecoms bestseller in 2003, also had also more
than a chapter on LBS. I developed the mobile services short course for Oxford
University around these books and we featured LBS prominently there. Its not that
this Tomi T Ahonen somehow discovered LBS a couple of months ago; I have been
quite legitimately one of the world-leading authorities on LBS for most of this
decade. I really know this stuff. So lets go back. In 2002 this is what I wrote
expressly about location information when discussing "movement" as one of the
attributes of mobile services and applications in Services for UMTS:

"Location will often be an integral part of the service to the point that
without it the service would not exist. Positional information is one of the
key knowledge factors that Mobile Internet operators will use to add
additional value to their mobile service offerings."

(The emphasis has added by me now in 2010.) I am sure that is a mouth-


watering endorsement for any developer of LBS today. It certainly echoes many
current statements coming from the West Coast of America. If you take most
'expert' positions, analysis, forecasts and projections for location-based services
now in 2010, they will have sentiments that are very similar to that paragraph I
wrote in 2001. But that was written nine years ago, when almost no LBS services
had launched commercially. Now, lets see how I phrased the same thinking in my
follow-up book, that was written with much actual market insights from early LBS
services hitting the market. This is my view on positioning on the same Movement
attribute from my follow-up book m-Profits:

"Positioning rarely provides direct benefit to the user, unless the person is
totally lost and wants to know where he is. Nevertheless, positioning can
be used to guide and to provide assistance in finding friends and
colleagues for example in a crowded place."

(The emphasis has again been added by me now in 2010.) This was a dramatic
change in my personal view to this opportunity, reflecting just about one year of
evolution in my own understanding. It illustrates how much my thinking evolved
as we went from the pure theory view - before commercial launches - to the
practical honest analyst's view after dozens of commercial launches.

Not Blind Leading the Blind

Understand please where I come from. I went on record in my first book to state
that positional info was a key factor, and so much an integral part of mobile

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76 And myth of Location-Based Services

services that they would not survive without it. So once I have believed whole-
heartedly in this concept. I devoted more than a chapter for all kinds of LBS
services. Trust me on this - I was a self-employed consultant in 2002 when the
reality started to hit in. It would have been in my best interest to find any evidence
of any slightest success, to showcase my 'brilliance' of how smart I had been in my
first book. It would have been to my interest to uncover any silver lining on the
LBS cloud, any slightest bit of it, for my second book. In my first book, a global
bestseller, I had clearly stated that positioning was a key factor to mobile services,
and that many services would not survive without it. For me to shift this
dramatically in just one year - I had to have heard time and again. And time and
again. And again. And again, that every one of the early LBS services was failing
in the marketplace. Every one of them.
This failure of LBS happened while we were experiencing the first wave of
innovation and experimentation in mobile services. We had stunning success stories
in anything from basic ringing tones becoming a billion-dollar business, to
videogaming to news services to to mobile payments. Then in stark contrast, LBS
services were a global failure in every market, and in every mass market use, for
every segment, where they were tried.
So already in my second book I turned cautious about LBS, and said
"positioning rarely provides direct benefit". I saw the inevitable facts on several
continents, on every concept I had outlined, failing. I have to be truthful to my craft,
and report the facts, even if that means I was wrong in my book. Trust me I did not
want to write that in m-Profits. But I did. And since then I have repeatedly said
whenever discussing mobile service creation - that Movement the attribute is only
one of the six M's out of the Six M's of mobile service creation. And I have been
teaching in my workshops on mobile service creation when covering the Movement
Attribute, that focusing on Movement alone, tends to lead to an over-emphasis of
LBS. An over-emphasis of LBS.

LBS Weather, LBS Friends, LBS Dogs

We as an industry somewhat learned that lesson (in very costly launches and trials)
during this past decade in most leading mobile markets, with Italy launching the
LBS based tourist guide in 2001 to help you know which church or bridge or statue
or fountain you are near. I was talking to the product manager of an operator who
was testing their soon-to-be-launched friends-tracker in 2001 and had his wife's
phone on it (and his wife did not know) to see when she was shopping. This is not a
new idea! An Israeli friend of mine said in 2002 that the first killer app for LBS is
not the child-tracker or wife-tracker, it is the mother-in-law tracker - wouldn't we
want to know when our mother-in-law is coming for an un-announced visit?
We had the French launch the LBS based doctor service making house calls in
2002. We had the Finnish hunting dog service - track your hunting dog via LBS
(GPS) collar in 2003. The Japanese offered the haunted house finder in 2003 and in

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Cambridge they had an LBS based virtual treasure hunt in 2003 (copying a similar
idea by the Japanese called Mogi). The Germans offered the personalized weather
service - how long does this rain last from 2002 - individual radar-based rain cloud
tracker with pin-point positioning to where you are. The Germans later added the
real-time allergy warnings to the personalized weather (the direction of the wind,
and allergen warnings, based on pollen counts, and your personal allergies).
Technically brilliant weather and health related service, certainly that must now
make it a mass market success. No. It had merely 100,000 registered users several
years after launch - in a country of 80 million people. Excellent, accurate, and
technically elegant and truly personalized weather forecasts that have attracted
barely over 0.1% of the total population as users. This is not a mass market
success. Every conceivable LBS service has been tried - and failed or only very
weakly adopted - as a mass market service.
There are many niche apps, most of all in the vehicle, parcel and employee
tracking areas that are very good. Yes. Follow and track your employees, your
vehicles, your company's assets, etc, that makes sense. But for mass markets,
please, any concept you can think of - I've already seen it written about, and
launched commercially - and usually to dismal success. And if you think GPS
makes it somehow now successful, no it doesn't. GPS was on Japanese phones since
2001. Yet the LBS services using GPS are just as much a commercial failure in
Japan as the others I have found.
Incidentially, to show how much I've moved my thinking 'beyond LBS', my
fifth book Digital Korea has only one page devoted to LBS.. This is not our big
opportunity when we enter the vast and profitable eldorado of mobile services.

Disappointed in Japan

So, maybe Tomi is the eternal pessimist and has some personal grudge against the
LBS industry? Yeah, perhaps this industry does have promise after all. So let me
give my clinching argument. When I heard this, I personally admitted, LBS is not
ever going to fulfill its promise.
Japan. An amazing country. In Tokyo - an enormous city - 8 million live
within Tokyo city limits, another 4 million in adjacent Yokohama, Tokyo's harbor
neighbor, and over 20 million in the metropolitan area. A monster town, where it
takes you 3 hours to take the express train from one edge of the metropolis to
another.
So lets talk location-based services. Here is the really nutty part about Tokyo.
The house numbers are not in numerical order on any given street! Yes. This is true.
On any given street you might find house number 17, followed by 22, then by 5,
then by 61, then 18, then 44, then 131. There is no logic. Not odd/even logic. Not
increasing numerical order nor declining numerical order. No pattern (every other
number or doubling the previous number or whatever). They are not based on the
block, as many American addresses are. Nor are they based on the crossing street

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78 And myth of Location-Based Services

number as in some places. No. There is no logic and no pattern. Taxi drivers will go
to the right street, and then just cruise slowly up and down looking at literally every
house number until they discover the number you are seeking. This is why in Japan
people will always give landmarks, it is near the MacDonalds etc..
So. If ever there was a city where we need location-based guidance, it is
Tokyo. And yes, KDDI - Japan's second biggest mobile operator/carrier network -
was among the worlds' first mobile operators to launch LBS guidance and mapping
in 2000 called EZ-Navi. The system has gotten progressively better with fantastic
guidance and info and services to it. Before you can say "But, GPS makes LBS
better" - yes, EZ-Navi was upgraded to GPS ...already nine years ago in 2001.
Today there are dozens of maps and guidance systems, including full 3D renderings
of all of Tokyo's main districts, so you can look at the building on the phone, and
compare it to the view you have, to see is it the building you want, etc.
The service is available on all three networks and has been rebranded Navitime
and perhaps its coolest feature, launched in 2007 is the "as many roofs as possible"
route. On a rainy day even with an umbrella, you can ask it to offer you the route,
that keeps you indoors, underground, overground, and under awnings and
overhanging roofs, to avoid the rain. Oh, and if you hate walking up stairs, you can
also have it program the route with least steps, ie using escallators, lifts/elevators,
and other ways to avoid walking up stairs. Or if you want to do a bit of a workout
while walking in town, it will give you the route with the most steps to climb, etc.
This is what Alan Moore says we need for new services to be "life enabling, life
simplifying, and navigational."
Navitime is by a wide margin the world's most advanced location-based
mapping and guidance system, with pin-point GPS accuracy, and 3D maps. This in
the country where the mobile internet was first launched and the first industrialized
country to see the migration of majority of internet users to mobile. So the Japanese
are not new to using the mobile phone for advanced mobile services. And Tokyo is
the most bizarre city for navigation, where literally exists the biggest need for
guidance. Surely it must be a hit today?
No. Six years after launch, and after they were available on all 3 Japanese
networks, they had reached the point where 1.7 million or about 2% of the total
Japanese subscriber base had signed up to use Navitime (Mobikyo Japan Mobile
Internet Report 2007). This is Japan's oldest and best-known and best navigation
utility. And its price is not the reason either. You can sign up for a month of
Navitime for 300 Yen (about $3.50 US dollars) or get a daily pass for 100 Yen.
They are still not a mass market hit. It has a small niche user base, a tiny fraction of
the Japanese consumer base - this in a country where 52% of Japanese phone
owners access mobile blog sites, 50% use mobile search engines, 41% have created
their own mobile web page etc (Japan Mobile Marketing Laboratory 2009). But
navigation is still underperforming. Its not that there are no users, but just that
almost anything else you would launch on mobile will outperform location-based
services.

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Chapter 5 - 8 Unique Abilities of Mobile 79

If LBS services will not work in Tokyo, where even the house numbers are not
in numerical order - and where today more than half of all internet users access the
web on their mobile phones - then, it should be clear that the evidence suggests that
this Tomi Ahonen is right - mobile services will not thrive if built on LBS
principles.

Where The Money Is... Not

So to also underline the point. LBS services were first introduced in the year 2000,
they are now 10 years old. In its first 10 years, mobile music grew from zero dollars
to 14 Billion dollars in value. In its first years, videogaming on mobile grew from
zero to 12 Billion dollars. Mobile advertising, which has had a slow growth, went
from zero to 4 Billion dollars in ten years. The much-maligned applications (both
consumer 'app store' apps and enterprise apps) went from zero to 5 Billion dollars in
nine years. Mobile social networks grew from zero to 6 Billion dollars in only five
years.
Then consider LBS. Abi Research reported in 2010 that the total revenues for
all location-based services in use worldwide this year, nine years from launch, is
only 560 million dollars.
There is literally no other mobile service concept or idea which has performed
as poorly as LBS has over the past decade! I track several dozens of mobile service
areas and anything else that is more than five years old has managed to pass a
Billion dollars in value. Not location-based services. LBS were launched from the
very beginning of the industry, and today account for 0.6% of the total industry.
This is not a success by any stretch of the definition!

Non-LBS Benefit

When we get a hit service - like the Japanese innovation of Otetsudai Networks, the
location-based short term work finder - that is primarily a work finder (or temporary
worker-labour finder from the view-point of the prospective employer), where LBS
is a minor additional benefit. The service would work just fine without LBS, but the
job-finder service is better with LBS. The service is not built to be an "LBS
service", it was built to be a job finder service, that just happens to have LBS,
Otetsudai Networks helps match temporary work offers to people so it is primarily
a job-finder service. To prove my point, Babajob in Bengaluru of India deployed a
similar service to Otetsudai Networks, running on SMS and WAP without the LBS
feature and had very similar adoption rates to Otetsudai Networks. Location was
not the key to success, work-finding was the key.
Same is true of almost all mass-market services that are cited as supposed
'successes' of LBS. If you think location-based coupons have a great success, I
maintain that opt-in mobile coupons even without any location-info, will be at least
as big a success, if not bigger. If you say location-based social networks like

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80 And myth of Location-Based Services

FourSquare are popular, I maintain that a social network on mobile will be a


success all by itself, and location is only a small additional gain. If you say that
augmented reality proves the concept of location, I point out that there are many
ways to trigger AR without necessarily using location information. Yes, AR is cool
but LBS is not cool.

We Know Why

So yes, if the evidence suggests LBS is not the key to big killer applications, then
why not. Yes, I've asked this question hundreds of times myself in 2001-2003 and
have been involved in countless discussions with the various experts who launched
those early services. And in my public speaking and my lecturing and workshops I
have also been answering those questions myself since 2002... I think I know most
of the "why not".
One. We are rarely lost. Think of the normal adult employed person. Not you
and me, high tech specialists who may jetset around the world, but the average
working person. A secretary at an office, a factory worker, a waitress at a
restaurant, a nurse at a hospital, a teacher etc.. Then think of how they move.
Almost every morning they take the exact same route to work, using the same
method. The bus, the tram, the subway or train; the car, a bicycle, or perhaps walk if
the job is close to home. But the factory or office building or hospital or school - the
place of employment - did not suddenly move last night to an unknown hiding
place. The place of employment is the same it has been for years. Then similarly,
coming home, our home has not suddenly run away to hide while we were at work.
And if you say "but the kids" - same story again. They go to school in the
morning - the same school as yesterday and last week and last month and last year.
Maybe once in four years they change schools. What of play time? Most days they
go to familiar places on their way back home, or in their evening play with friends.
The familiar park for football, the familiar Burger King, the familiar cinema, the
familiar ice cream parlour etc.

We Go To Familiar Places

Now, comes the second part. Almost always, almost always, in our home town,
when we don't go directly home - we go to familiar places. The favourite pub or bar
or cafe after work; the favourite shop or store or shopping mall near our home; or
the same address to visit our brother, where our brother has lived for the past seven
years.. The post office has not suddenly moved last night, neither has the nearest
branch of our bank, etc. We are not 'lost' during a typical week, not once. We may
be 'lost' briefly, perhaps once per month... and then almost always we knew that we
would be going to an unfamiliar place beforehand.
When we anticipate that we'll be going to an unfamiliar place, we mostly tend
to go with others who know where we were going.. So if we go to check out the

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Chapter 5 - 8 Unique Abilities of Mobile 81

new Spanish restaurant that opened down town, and don't know where it is, the
person we are going with, most likely does know.
So this is the second big lesson to understand. We don't 'find ourselves
suddenly lost' most of the time. Even if we go to a totally unfamiliar place - we tend
to know this beforehand, and we prepare. We take out a map or we ask our friend
for instructions how to get there using landmarks ("its in the new building right
across from the opera house") but we plan beforehand to make sure we know
where we need to go. When we need to go to the post office, we know fully well,
where is the nearest post office to our home, and the one nearest to our office, or
along the route when we go home.

Everybody Likes The Idea Of Tracking Others, But...

And what of the famous child-trackers? Of course parents would love to know
where the kids are - but kids are not stupid. The Disney MVNO in the USA had its
child-tracker feature. When kids noticed that one given phone brand or
operator/carrier brand was spying on them - that phone - and that kid! - become
toxic. Nobody wants to be friends of the kid whose parents are spying on that kid...
The Disney phones became famous for being 'toxic' and if you had such a
phone, you better not carry it with you, else your school friends would not play with
you. Very soon the Disney phones were 'forgotten' at home, or left at school etc,
and the parents were left in a false sense of security, thinking that Billy was at home
doing homework when only the phone was there, while Billy went with friends to
the party, without bringing the phone. Remember, we all love the idea of finding
out where others are. We all hate the idea of others spying on us where we are.

Holidays And Travel

Ok, then the final element. When we travel, go to vacations, and certainly then we
need maps and guidance, don't we? And surely yes, this is when we really would
need plenty of travel assistance and the phone is the ideal device to do that.
Now, how often do normal people take vacations? How often do they go to
places they have visited before - and know pretty well - and how often they go to
places they have never visited. And of those who really need the maps and
guidance, what are the roaming data charges for the phones in that country on that
network in that situation.
The places and times when normal people most would need maps and
navigation assistance, when we are honestly for the first time in a strange city or
country, very often the international data roaming charges are then prohibitive. This
adds to the perception that international data use on a phone is far too expensive,
meaning most normal vacation travellers will not even consider trying them.

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82 And myth of Location-Based Services

If You Build It, LBS Will Not Come

These LBS concepts are fantasies. Dreamt up by technologists, who pray to the
altar of LBS, thinking simplistically, that "if I only make it more accurate, they will
come." The customers will not come. Since 2000, I have discussed more than 300
LBS based service concepts in the public domain (among the more than 1,200
"Pearls" that I've shown into the public domain; my books have over 600 of them). I
have discussed and debated and analyzed and tracked them since. They are
singularly the biggest failure of our industry. The biggest failure. This has nothing
to do with GPS accuracy. These concepts simply do not find a loving customer
response.
Yes, we can do business/enterprise applications with LBS functions - they
manage forests in Finland with GPS/GSM chips on every single tree, or the parcel
tracker service or the pocket cop app used in Baltimore on the Blackberry. Yes,
business and enterprise niche apps yes. In our car, yes the driving navigation utility
has great value. But only one out of every six mobile phone owners has a car. Even
if every car owner found value enough in navigation systems to pay for it - a very
unlikely scenario - that would only mean an adoption rate of about 15% of all
mobile phone subscribers. So yes, some consumer niche apps too, the hunting dog
collar with LBS is pretty clever. But how many of us go hunting with our dog?

Use The Other Of The 6 M's

We have six M's (Movement, Moment, Me, Multi-User, Money and Machines) to
build services for mobile. Movement is but one of them, and from having run
hundreds of service creation workshops and seeing them deliver hundreds of
commercially launched services and applications, I know - and I always say this -
that Movement is the least relevant of the Six M's. The most powerful of the six are
Moment, Me and Multi-User. Any of these three can generate far more compelling
and attractive services, that can deliver far more money for you. Don't focus and
fixate on Movement.
Further, that Location/Positioning (GPS) is only one of the elements in
Movement. Back in my second book M-Profits I aleady pointed out that
"Positioning rarely provides direct benefit to the user, unless the person is totally
lost." We are mostly not lost. If we drive our car, then yes, there is good use for a
mapping/guiding system - but that already exists, in TomTom and its clones.
Nothing new here. And that model does not transfer well to pedestrians.

Maybe Tomi Is Wrong..

Now one last bit of wisdom from the old consultant... I am old, and grumpy guy,
and very negative about LBS. I am not pessimistic about all mobile services, I am
very enthusiastic about for example mobile social networking and mobile

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Chapter 5 - 8 Unique Abilities of Mobile 83

advertising and augmented reality. So I am not the "glass is always half empty" kind
of pessimist. But yes, I once believed in LBS, very passionately, and have changed
my tune. That should give my view more credence than the view of a random
'expert' who has recently discovered this supposed mobile 'golden' opportunity and
hasn't written extensively about it and engaged in countless debates in Japan and
South Korea and Scandinavia and other advanced markets about LBS.
But, it is of course possible that I am wrong. I have been wrong many times in
the past. I do not discourage you from experimenting in this space. Please just do
not base the basic premise of your whole service or business idea on mass-market
LBS.
Now, a great business concept may have a location-based dimension and be a
big success. We can have a social networking service with location, for example
FourSquare. They are not a success because of location, they are a success because
of the social network. We can have augmented reality - like Layar - and it is
definitely possible to do augmented reality with location-information (like Layar) -
but its not the only way you can do augmented reality. You can also do augmented
reality for example with special 2D barcodes as the famous Ford Ka campaign
illustrated. So Augmented Reality is cool. Location is not. Location is one possible
way to trigger augmented reality but its location is not what makes it awesome, it is
the Augmented Reality part.
Same for coupons and discounts served via location. Why limit your coupon to
the location? Coupons and discounts can be successful, they don't need location to
be so, look at the remarkable redemption rates of Borders bookstore coupons for
example - 23% dedemption rate. It is better to get permission from the recepients
and have them indicate what types of goods and products they prefer for which
they'd like coupons and discounts, rather than spam them based on location.
Understand what I mean, your coupon will work better if you go the permission and
targeting route, than the location-based spam route. Then we don't need to limit the
coupons to GPS-enabled smartphones; and we don't need to pay mobile networks
for the meaningless location-positioning data.
As much as I am a pessimist about mass market LBS services, I believe a lot in
niche LBS services (Long Tail and all that). And Movement is one of the attributes
of my theory on the 6 M's, and I still teach it, so yes, we can add value with LBS.

Carbon Diem

We can have very useful services also made with LBS. Seize the day, or walk this
way.. feeling green? use Carbon Diem. I heard of this via our friend Steve Epstein
and this sounds like a pretty clever way to bring green values into daily life, and
using location-based info of the phone.
The idea is that this new service, Carbon Diem, will monitor the movement of
your phone. Created by Springwise, they use clever algorithms to determine your
method of movement and its impact to carbon. If you move walking speeds or

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84 And myth of Location-Based Services

bicycling speeds, you don't burn carbon. But if you move in say car speeds, lots of
carbon. And if you are in a train or bus (lots of regular stops, and obviously a
regular route) and then calculates a smaller carbon footprint as used when sharing a
bus or tram or train. And if your phone disappears at one airport and two hours later
appears at another airport in a city a thousand kilometers away, it knows you've
been burning some serious carbon in the jet you took...
These are the kinds of innovations we need to do with mobile today, to not
only replicate the web and TV etc experiences, but also to go beyond them. Invent
to mobile what were reality TV and talk shows and game shows on TV, or what are
social networking and wikis and blogs on the web. Be bold, be daring, be inventive.
Try to create that magical moment of delight within your customer base. We are
dealing with a powerful new media. With that, I'd refer to one of my favorite Sci Fi
authors, Arthur C Clarke, who said, "Any sufficiently advanced technology is
indistinguishable from magic."

WHAT NEXT?

Well, the 8 Unique Abilities is my theory so there isn't really any other author really
who deals with it (yet). My previous hardcover book Mobile as 7th of the Mass
Media is the major treatise on these unique aspects, and you pretty well get the full
322 pages on the topic. But I would say that Paul Golding's Next Generation
Wireless Applications (but get the Second Edition) is as good as it gets, even
though he isn't specifically dealing with the 8 C's.

Mobile as 7th of the Mass Media


Tomi T Ahonen
futuretext, 2008

Next Generation Wireless Applications, 2nd Ed


Paul Golding
Wiley 2010

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Chapter 5 - 8 Unique Abilities of Mobile 85

Case Study 3 from the USA


Blackberry Pocket Cop
When is your location information the most important piece of
information? And not to you, but to your peers? If you're a cop in
trouble. And you may be in a situation where you cannot 'speak' even to
your wireless police communication system, because it may be that some
drug-dealing criminal with an Uzi is trying to find out where you are..
Yes, the US police do truly have that need, they want their dispatchers to
konw where they are, so if in trouble, they can summons help without
speaking. So what do we give them? A Blackberry and PocketCop.
The City of Baltimore is a typical major US city with its share of
violent crime (as popularized by HBO's TV series The Wire). They
trialled the PocketCop with 80 Blackbery handsets. It had typical police-
work type of uses, like looking up suspicious car license plates,
collecting the crime history of suspects, and with Blackberry cameras,
many cameraphone-related uses obivously from collecing digital pictures
to sharing images. And being a Blackberry the police officers can
communicate silently using the QWERTY keypad and Blackberry
Instant Messenger. Best of all its the most secure mobile phone system so
it can't be easily hacked by criminals and the Baltimore police
department can instantly disable any of its Blackberries remotely if one is
stolen etc. All good.
So they bought 80 Blackberries and trialled the system. The police
department loved it so much, and found it was so useful in policework
they bought 2,000 Blackberries.
The Blackberry with PocketCop enables everything that the
traditional car-based police radio system allowed, and it adds all the
instant messaging, social networking and cameraphone based
collaboration. And yes, for the police officer's safety, it allows constant
monitoring in real time where each cop is. Wonderful!

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86 And myth of Location-Based Services

Excerpt from Tomi's sixth book:


Mobile as 7th of the Mass Media:
Cellphone, Cameraphone, iPhone, Smartphone
by Tomi T Ahonen
with foreword by Pekka Ala-Pietila,
Chairman of Blyk, former President of Nokia
301 pages hardcover
futuretext 2008

Available at all major booksellers


and at Amazon

for more information, see


publisher website
www.futuretext.com

This eBook is available for free download Tomi T Ahonen


Chapter 5 - 8 Unique Abilities of Mobile 87

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Opinions on the book Mobile as 7th of the Mass Media:

"Tomi instinctively knows that in the tumult of convergence between mobile and other media,
there lies opportunity. In this book, building on his earlier themes, he presents his ideas with
characteristic wit and charm, handily demystifying this new media landscape. A most
enjoyable and remarkably practical book, his best yet!"
Daniel Appelquist, Senior Technology Strategist, Vodafone Group UK

“Tomi Ahonen has always been a visionary and lucid thinker about media in general, but
especially ahead of the pack in his insight about the profound computing revolution that is
being led by digital mobile phones. This book provides a solid foundation for how we got
here, why, and what’s next.”
Trip Hawkins, Chairman & CEO Digital Chocolate,
Founder of Electronic Arts USA

"Tomi's latest book continues his deep insights into the mobile industry and provides
practical examples of advanced media concepts utilizing the unique benefits of mobile. I can
warmly recommend this book for anyone who wants to deploy media concepts to mobile."
Jari Tammisto, CEO & President, Mobile Monday Global, Finland

"Tomi Ahonen's latest book adds to the wealth of insights he has given to the industry, and
has useful perceptions of how the Japanese market is evolving as it adjusts to cellphones as a
mass media channel."
Ted Matsumoto, Executive Vice President and
Chief Strategy Officer, Softbank Japan

“Tomi's book takes us through the changes and opportunities in this new converged world of
voice, data and broadcast media. With fascinating examples from around the world he lays
out the potential for an industry that could become one of the largest in the world. Anyone
who is interested in the future of mobile should read this book.”
Colin Crawford, Executive VP Interactive, IDG Communications USA

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106 And myth of Location-Based
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More opinions on the book Mobile as 7th of the Mass Media:

“Tomi Ahonen is the most thoughtful commentator on the mobile industry: his theory that
mobile is a new mass media is spot on.”
Mark Curtis, CEO Flirtomatic UK
Author of Distraction

“Tomi's latest book offers a deep comprehension into how advanced marketing and
advertising concepts can be built using mobile phones. His style of mixing real world
practical examples with the latest customer insights and sound commercial data makes his
books so valuable in understanding mobile in leading markets today.”
BJ Yang, CEO AirCross South Korea

"Tomi has built a compelling story how the other platforms will ultimately be part of the 7th
mobile platform. He demonstrates the fundamental shift from 'mobile communications' to
'personalized communications' and in the long run, to 'all personalized transctions and
interactions' and that this will encompass all elements of the value chain from research and
awareness building to sales, marketing, production, service and lifecycle. Bravo, Tomi."
Garrett Johnston, Chief Marketing Officer, MTS Russia

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Chapter 6 - Handsets 87

"Everything that can be mobile, will be mobile."


Christian Lindholm, Fjord

VI
Handsets
My phone is my best friend

Then lets look at the mobile phone. I have split this analysis into two chapters, this
first one looks at all phones and 'dumbphones' including featurephones. The next
chapter will deal with smartphones and their operating systems. And lets get right
into the numbers, shall we.

Mobile Phone Final Market Shares 2009

I published my analysis of the final market shares on my blog, as usual. All have
been adjusted to include the pirated phones and thus there is significant variance
with originally-reported markets shares especially from 2008 when the scale of
pirated phones was not yet clear to the industry. Here are the final market share
numbers for all top 10 biggest mobile phone manufacturers for 2009 including the
2008 market share in parenthesis:

1. Nokia Finland 432 million 34% (36%)


2. Samsung South Korea 227 million 18% (15%)
3. LG South Korea 118 million 9% ( 7%)
4. ZTE China 60 million 5% ( 4%)
5. SonyEricsson Japan/Sweden 57 million 5% ( 7%)
6. Motorola USA 55 million 4% ( 8%)
7. RIM Canada 35 million 3% ( 2%)
8. Huawei China 31 million 3% ( 2%)
9 . Sharp Japan 27 million 2% ( 3%)
10. Apple USA 25 million 2% ( 1%)
All other branded phones 74 million 6% ( 6%)
Pirated 'unlicensed' phones 120 million 10% ( 8%)

Total sales for 2009........................1,260 million (=1.26 Billion)

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88 My phone is my best friend

11 C'S - Is Not A Talking Device Anymore

So lets talk mobile. The phone in your pocket is not your father's mobile phone. A
decade ago, in every market including Finland, the primary use of a mobile phone
was to talk. Voice calls were the primary use of all cellphones everywhere. But a
funny thing happened on the way to the Carphone Warehouse. The basic cellular
phone evolved. It transformed itself. It grew in ability and it also grew up. And in
what so often baffles older experts and pundits, the modern mobile phone is no
longer primarily a voice calling device. It has become something much more. Lets
examine that. I have developed a theory I call the 11 C's of Cellphones, to help
undersetand this evolution and growth and transformation.

First C Is Communication

The first commercial first-generation cellular phone network was not launched in
America, it was actually launched in Japan by NTT in 1979. The first use of a
cellphone was communication. This has not changed. The form of our primary
communciation has changed in this decade, away from voice calls and into SMS
text messages, but the phone is and will continue to be most of all a
communication device. The Playstation Portable is an interactive gaming device.
The iPod is a music consumption device. The (stand-alone) digital camera is a
picture capturing device. These all are pocketable devices that number in the dozens
of millions to even hundreds of millions of devices. We love them. But we do not
carry them everywhere. Literally everywhere.
But we do take the phone everywhere. Three out of four people use the alarm
clock feature of the phone. Thus it is the last thing we look at when we go to sleep
and it is the first thing we see when we wake up. The phone is with us all day, even
when we know we are not allowed to use it, like in a theater or the movies. We take
our phone with us to be able to communicate - and be reachable - just before, and
immediately after that movie or theater piece. And we want our phone to be able to
capture the attempts of our friends to call us (with the phone on silent) and to
receive SMS text messages sent while we were unable to respond. We even take the
phone to the bathroom and yes, we send secret messages while sitting on the toilet.
I will cover mobile phone messaging in its own chapter in this book, but please
don't forget that even if its no longer the primary use of voice calls, almost all
mobile phones are still used for voice calls as well. We don't take our iPod or PSP
or digital camera to bed and the bathroom with us. The reason is the need of
Communication. The first C of Cellphones.

Second C Is Consumption

Eleven years ago, in 1998, the digital cellular phone grew to adopt a new ability:
consumption. The phone became a media consumption device, in addition to being

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Chapter 6 - Handsets 89

a communication device. It became a multi-purpose digital media device. We have


already looked at the media angle in the previous chapter about mobile being the
7th of the mass media and I will give a later chapter about some popular media
content.

Third C Is Charging

The next year, 1999, we saw the birth of mobile payments, m-commerce and
mobile banking. These were commercially launched by Smart and Globe in the
Philippines. Today in many advanced markets like South Korea and Japan, half of
all mobile phone users make payments on phones. But its not just advanced
markets. In Kenya, 58% of all banking accounts today are mobile phone banking
(or money-transfer) accounts and by the end of 2010, one quarter of Kenya's total
national GDP will transit mobile banking accounts. Some smaller coins-oriented
industries nationally have started to eliminate coins in favor of mobile payments
(parking in Estonia, bus fares in Sweden) and Sweden became the first country to
start official government plans for when to eliminate cash altogether. There is a
mobile money chapter coming up in this book.

Fourth C Is Commercials

In 2000 we then get advertising on mobile phones, first launched in Finland to


support an SMS based daily news service by MTV3 the Finnish commercial TV
broadcaster. Advertising has grown very slowly on mobile phones and there are
dramatic differences between countries. Japan, South Korea, Spain and South
Africa have been global leaders in developing the early mAd opportunities but later
in this decade the UK has also joined the leaders in the cellphone advertising
opportunity. I will discuss mobile advertising in its own chapter later in this book.

Fifth C Is Creation

In 2001 we get the next new ability of the phone - creation. The Japanese network
J-Phone (now Softbank) launched the first commercial mass-market cameraphones
and a related picture messaging service, Sha-mail. While the camera industry did its
best to belittle the modest quality cameraphones, the consumers fell in love with
them. Soon the camera feature was the must-have ability and phone makers started
to compete on who had more megapixels.
Today more than 79% of all phones in use are cameraphones and their sheer
numbers are mind-boggling. Excluding older cameraphones that have been replaced
by newer models, the installed base of cameraphones in active use passed 3.4
billion this year. Why is that a relevant number? It means, that across all ages and
countries, there is a cameraphone in active use, for literally half of the planet. Not
for 'households' or 'adults' or only counting the affluent 'Western' nations of the

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90 My phone is my best friend

Industrialized World. The traditional camera industry was caught totally off guard
and lost out in this dramatic shift. Today professional news journalists at CNN for
example all have a high-end high quality 3G cameraphone as their back-up camera
and communication device. And what of the big camera makers? This decade saw
two of the Japanese giants, Minolta and Konica exit the camera business altogether.
From 2004 the world's best-selling camera brand including all film based and
digital cameras, has been Nokia.

Price Pyramid of Mobile Phones 2009

Premium Smartphones Over $450 5%

Low cost Smartphones $250 - $449 9%

Featurephones $100 - $249 17%

Basic phones $50 - $99 24%

Ultra-cheap phones Under $50 45%

Source: TomiAhonen Phone Book 2010

The ability to have a creation device in every pocket has had a dramatic impact
to picture and film industries. Ever since the 7/7 underground train bombings of the
London Tube, today all breaking news stories on TV will feature first pictures and
videos by amateour paparazzi on such services as CNN's i-Report.

Sixth C Is Community

Launched commercially in South Korea in 2003, social networking on mobile had


in only three years grown bigger than its older internet-based sibling by revenues
and today towers over internet based social networkign services generating more
than twice the revenues worldwide. Mobile Social Networking is also the fastest-
growing Billion-dollar industry in the economic history of mankind. This industry

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Chapter 6 - Handsets 91

sector broke the Billion dollar barrier in only two years from launch, and reached 6
Billion in four years from launch. There is a chapter on mobile social networking
coming up in this book to study this phenomenon further.

Seventh C Is Cool

By cool I mean fashion. The Apple iPhone. Need I say more? The phone has gone
from being an utilitarian business tool, into a fashion accessory. Brands such as
Prada, Armani and Dolce&Gabbana have released premium phones. Nokia has its
jewerly-luxury brand Vertu. The first major fashion brand to go onto a phone was
Benetton on NTT DoCoMo in Japan, in 2006.

Eight C Is Control

There have been individual niche services to use a mobile phone as a remote control
device for many years, from turning on the heater in your sauna (useful in Finland
where cold days can be -30 degrees and a hot saunabath can be the perfect antidote
to waiting in the blizzard because you missed that bus) to the remote control tea-
kettle that they had in Britain, controlled by SMS (I wonder how well that
'innovation' actually sold, ha-ha). But the point is that we can control almost
anything with digital interfaces, by using our phones. Some exotic uses do exist yes,
but now it is going main stream. In 2007 they had started the construction of
apartment houses in Japan and South Korea, where the locks are operated by your
mobile phone. Holiday Inn hotels is experimenting with hotel room locks controlled
by mobile phones, so yes, they are replacing our keys soon too. For a more science
fiction type of application, South Koreans now sell household robots which you
control using the phones, as I explained in my 5th book Digital Korea with Jim
O'Reilly. Yes, major shopping malls in Seoul have actual shops that specialize in
home robots.
The remote control abilities are not limited to consumer services. There are
utility metering services, temporary controls where permanent fixed landlines are
not practical, and all sorts of industrial controls. In India for example mobile phones
are often used to control irrigation systems on farms. And then for the more
whimsical, If you remember the James Bond movie where the superspy operated
his BMW rental car remotely, by using a phone, this is also becoming reality.
Rinspeed in Switzerland has already produced a prototype car which is controlled
by an iPhone.

9th C - Context - 2008 USA

This is a category I initially was not sure about. Back in 2007 a reader named Cooli
- Olivier Guyot - suggested on our blog that Context should be one of the C's and
argued it included the GPS ability and mapping and compass and cell-id, plus our

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92 My phone is my best friend

status updates and shared calendars etc. I felt back then that context was not a
human need we had (like to communicate or to consume), rather it was an enabling
technology underneath, like IP the Internet Protocol. We humans have no need for
'IP' ("sorry, honey, I gotta go get me some IP now") but IP can be used to build all
forms of services for the internet (or mobile) from YouTube to email to Google to
Skype. But I reserved judgement for Context, that it might become something in the
future, but that I did not see (back then) any mass market uses of context based
services. Yes, GPS chips were coming onto phones such as on the Nokia N95 but
even then, I did not believe in LBS or location-based services (for mass markets),
which have, after all, existed commercially since 2001 and have been colossal
market failures in every market.
This all changed in the past 12 months now with Twitter. I am now totally
convinced that there is a human need to let people know our status (what are you
doing), and we can build lots of services around this, from yes Facebook and
Twitter updates to 'mood music' as launched by Dada in Italy. So now when my
friend Chris Bannink from the Netherlands suggested that Context should be a C, I
do agree. And I have to admit, Cooli back two years ago saw this first.. Yes, its the
9th C and I time it for 2008, around the time Twitter broke into the mainstream and
Apple added GPS to the iPhone, so this is also an ablity that was commercially
launhced in the USA even though we've had various LBS services for most of this
decade from Japan to Germany to just about the whole world. Twitter really
changed my mind on this. Yes, Context is the 9th, but its commercial mass-market
opportunity emerged in 2008, led by the USA.

10th C - Cyber - 2009 Japan

I had the 8 C's in my latest hardcover book Mobile as 7th of the Mass Media and
I've been showing the story to my audiences in seminars and speakerships around
the world. Often my audiences ask, what is the next C. And I have honestly been
looking for it. In 2009 it occurred to me, that Cyber has to be the next. My epiphany
moment was with the news that a Japanese company, AgriHouse, has introduced a
gadget that monitors the houseplants that you have and sends a text message when
your plants need to be watered.
Again this area of cybernetics and the communciation between humans and
other living things is not really new in mobile. We have been connecting pets (LBS
hunting dogs in Finland) and farmyard animals (Cows in Canada and Iceland) and
even such immobile objects as trees (Forestry management in Sweden and Finland
via GPS/GSM chips). South Korea even had that commercial launch of Bowlingual,
letting your dog barks be translated to human speak via SMS. But I still counted
those as niche markets. Now we have a true mass market, household plants - which
start 'to communicate' with us humans in our language, so to speak.
So Cyber is a valid category for mass markets now in 2009. But it will not stop
with pets and plants. We are also witnessing a host of new truly 'magical' services

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Chapter 6 - Handsets 93

that allow us to enhance reality and alter it, using augmented reality, and of course
the magic of the mobile phone. I have been talking of the Kamera Jiten
cameraphone dictionary from Japan or the Ford Ka augmented reality ad campaign
from the UK and Germany, or now the first case of an inherently superior browser
for the phone, something that is not viable on a PC, the Layar augmented reality
browser that overlays browser info to the real time view seen on the cameraphone
and its view screen. Augmented reality? Enhanced abilities for humans (translations
for example) and communciating with non-human onbjects like houseplants, trees
and pets. Yes, Cyber is the 10th C, and it became a mass market C in Japan in 2009.

11th C - Career - 2010 USA

And now in 2010 we discovered yet another capability of the mobile phone. It now
only helps us do our jobs better, or help us find a job as I showed with job-finder
services like Babajob and Otetsudai Networks in this book. The mobile phone can
become a work employment platform all by itself. Alan Moore explained when
lecturing at Oxford University in 2010 that croud-sourcing work providers like
txteagle will take jobs like translations, mathematical and programming tasks, etc,
and divide them into small short jobs that can be done on mobile phones, even at
the SMS text messaging level. Then they send the short tasks to their army of
workers worldwide, who complete the short tasks, return their part of the project,
and txteagle does the compilation work to produce finished product. This way
competent, well-trained professionals can work from home, and very importantly,
well-paid white collar jobs can be performed in Emerging World countries. The
phone has again expaned in ability, it is even now a job platform, a career device.

Is A Baby, Learning To Walk

Many also are frustrated by this industry. The "potential" is so huge, the real world
results seem so tiny. Why is it that everybody is not surfing the web on the phone,
why aren't we all making payments on the phone, why isn't advertising on the
phone bigger, etc. Give it time. Please note those dates of each of the 11 C's. The
expansion of the abilities of the phone started only in 1998, eleven years ago. It is
not a mature industy yet. We will see a lot of innovation and growth for this
industry. We will also see clashes between different cultures and technologies and
industries and business models. Every one of the C's in the above is both a threat for
someone and an opportunity for someone else. The next decade will offer greater
total changes to our lives, based on the phone, than we've seen in this decade, so the
opportunities are indeed huge. But don't panic. Give this industry some time to
learn to walk before it can run.
So this is the story of how the mobile phone has evolved and expanded. Like
Christian Lindholm the ex Nokia ex Yahoo mobile design guru and author, now
Director at Fjord, likes to say about the mobile phone: "Anything that can be

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94 My phone is my best friend

mobile, will be mobile." Or the way I like to say, mobile has 11 unique abilities we
cannot replicate on any other digital platform.

Annual Sales Handsets by Brand 2000-2009

1400

1200 Unlicensed
Others
1000
Siemens

800 Motorola
SonyEricsson
600 ZTE
LG
400
Samsung
200 Nokia

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source Tom iAhonen Phone Book 2010

Unprecedented Change

Any one of these Eleven C's would be big news and traumatic and dramatic change
for the industries involved. But look at the impacts. Media content industries. Soon
half of all music revenues will be generated on mobile. All other media content
industries show dramatic migration to mobile. None are safe. And none have
migration of money in the opposite direction. Banking, credit cards, your salary.
Headed to a phone. Advertising? Onto the phone. The cameraphone. Social
Networking on mobile. Even fashions and now remote control funcitons are coming
to a pocket near you. It is no longer just a communication device, and certainly the
cellular phone is no longer just a voice calling device. In just over a decade, the
phone has expanded into the most versatile multi-purpose device on the planet, with
eleven legitimate uses. The Eleven C's of Cellphones. I guess it is time to smell the
cellphone

When iPhone Is Forgotten Toy To Pre-Teens

Then consider the modern smartphone. What is your favorite smartphone? An


iPhone 4 or Samsung Galaxy or Nokia N8 or Blackberry Bold or whatever is your
superphone of choice. Then remember, the world average replacement rate for
phones is 17 months (its more than twice as fast for phones as the 42 months for

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Chapter 6 - Handsets 95

personal computers). So if you bought your latest phone in the summer of 2010 and
love it now, by late 2011 you will be in the phone shop already looking for
something better, faster, more capable. Your hot superphone of 2010 will have
become a used hand-me-down phone given to your eldest teenager kid by next
Christmas. And that teen will also replace his or her phones every 17 months on
average (actually faster than that, if your teen is like most teens) so by the summer
of 2013 it will be yet another old phone, forgotten and forlorn, where far more
powerful superphones are in our pockets.
That smartphone, which was the absolute ultimate best phone of today, that
you cherish using now, will be so obsolete, that you will hand it over to a 7 year old
nephew or niece - essentially as a toy. By 2013 we will be giving used, old,
forgotten smartphones with 3G speeds, WiFi, a 5 megapixel camera, DVD quality
videorecording, a large color screen, touch screen etc - as toys to our pre-teen aged
kids - yes, 2010 stats reported in The Telegraph in the UK said that 79% of kids
age 7 to 11 already had mobile phones. If you are one of those parents who has 13
year old kids begging for their first phone and you are still resisting that, do bear in
mind that the global average keeps coming down and in advanced markets its
normal for 6 year olds to have their first mobile phones. But mostly we do not buy
new phones as the first phones to our kids. We give them our hand-me-downs.
Except that what we have now is very powerful. And within a few years, those very
powerful phones are going to be the hand-me-downs to our kids. That means that
these 'second hand' smartphone devices are still as powerful as a new top-end laptop
from a few years ago, or a supercomputer twenty years ago. Yet we give them as
almost throw-away toys for our kids.

Moore's Law And Africa

Finally a thought about the superphones of today. Moore's Law has held constant
for many decades now, that the processing power on microchips will double every
18 months. That also means as a corollary, that the equivalent processing ability
will drop to half its cost, in only 18 months.
When we factor in Moore's Law, and take a superphone from 2010 -
essentially all top phones from the iPhone 4 to Samsung Galaxy to Nokia N8 to
Blackberry Bold etc, will cost roughly 600 dollars (when handset subsidy is
removed). Then, projecting that price to year 2020, we find that the average cost of
creating an 'equivalent' phone of today's top ability - a 3.5 inch touch screen 3G
phone with WiFi, with about 8 megapixel camera and flash, full internet browser,
media player, bluetooth etc - will cost... ten dollars to sell profitably. Yes, in ten
years, if the mobile handset industry wanted to replicate today's superphone, and
sell it as a super-cheap Africa phone, they could give every African user a new
smartphone for ten dollars, that matches today's iPhone 4 or Nokia N8 or Samsung
Galaxy or Blackberry Bold etc.

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96 My phone is my best friend

I am not suggesting that is what 'Africa phones' in 2020 will be like. I mean
this as a theoretical view, to understand, that if today we can afford to sell ultra-
cheap basic phones in Africa for about 25 to 30 US dollars, long before this decade
is done, those will be smartphones. Not top end smartphones like sold to Americans
and Europeans and the Japanese, the mass market smartphones for Africa will still
be quite modest in ability. But Moore's Law is relentless. All of Africa will have
smartphones before this decade is done. Make no mistake about that.

On iPod vs Musicphones

So who Told You First? In the summer of 2005, I was the first person in the world
to state into the public domain (quoted in the Financial Times), that musicphones
would exceed iPods in total sales - stating it explicitly that this astonishing statistic
would happen already in the very next year of 2006 (some others of my peers had
noticed the trend, but suggested it would happen before the end of the decade). To
understand the context, the iPod was celebrated in the press at the time in 2005 with
quarter after quarter of record-breaking sales.
I was pretty much crucified on my blog for saying that and received literally
hundreds of angry comments on the blog (and I responded painstakingly to every
one). The prevailing thinking by Apple loyalists and many music fans, was that it
was not 'possible' for any musicphone to cannibalize iPod (or other pure MP3
player) sales.
In my previous books I have had to explain the logic around the history of
PDAs, cameraphones etc in the 'Battle for the Pocket.' However, for this book I no
longer have to explain myself, we can go to the source. Apple CFO Peter
Oppenheimer was quoted in the Apple quarterly results analyst phone call about
this very issue. Peter said:

"I would like to discuss how we are looking at this market. We have three
categories of what we call pocket products. Traditional MP3 players, iPod
Touch, and iPhone. For traditional MP3 players, which includes Shuffle,
Nano, and Classic, we saw a year-over-year decline which we internally
had forecasted to occur. This is one of the original reasons we developed
the iPhone and the iPod Touch. We expect our traditional MP3 players to
decline over time as we cannibalize ourselves with the iPod Touch and the
iPhone."
Peter Oppenheimer, Apple CFO, in 2009

So now we have categorical unequivical confirmation, officially from Apple. The


musicphone can cannibalize stand-alone iPod (music player type) sales, and indeed,
even Apple itself is now using the iPhone (a music-playing mobile phone) to
cannibalize iPod sales.

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Chapter 6 - Handsets 97

But more than that, note that Oppenheimer confirms that the iPhone was
developed explicitly for this purpose and this thinking was already inside Apple HQ
before the iPhone was announced - ie this was Apple straegy in 2006. They are
smart people in Cupertino, they looked at exactly the same data as I did, and they
came to exactly the same conclusion. (Its nice to be found to have been right, when
the facts finally emerge..)
So, think to yourself, when was it that you first heard any industry expert state
that definitely in this decade, musicphones will cannibalize iPods. Not a
hypothetical that it might happen, and not abstract future that sometimes in the next
decade or beyond. And when did you first hear any expert give an explicit year of
when that cross-over would happen? Readers of my blog heard it first.

WHERE NEXT?

So you have a hunger for more information about mobile phone handsets? There are
many books about them, most are utter rubbish. I can strongly recommend Christian
Lindholm's and Turkka Keinonen's book Mobile Usability. And then probably the
next best is my market analysis book of mobile phones, the TomiAhonen
Phonebook.

Mobile Usability
Christian Lindholm & Turkka Keinonen
McGraw-Hill, 2003

TomiAhonen Phone Book 2010


by Tomi T Ahonen
ebook format
only from www.tomiahonen.com
has 80 tables and charts of data
cost only 9.99 Euros

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


98 My phone is my best friend

Essay:
The Nokia Decade
What to call the past decade? Has to be the Nokia decade, here's why

The world's first handheld cellular phone was invented by Motorola, but
commercial mobile (cellular) telecoms services were commercially launched by
NTT DoCoMo in Japan in 1979. Nokia was not one of the earliest pioneers. They
had made portable (carphone) type phones earlier, but Nokia's first truly handheld
phone, what could be considered an early and very bulky mobile phone, was the
Mobira Cityman in 1987 on the NMT analogue (1G) standard. At this time Nokia,
the corporation, was a multi-industry conglomerate in Finland.
Nokia the company originates from the town of Nokia in South-Western
Finland (a little bit outside of the city of Tampere). Nokia started as a wood mill
and rubber company. It moved its HQ to Helsinki and eventually to Helsinki's
adjacent neighbor city of Espoo. Still, in the 1980s Nokia was manufacturing
anything from home TV sets to personal computers to car tyres and rubber boots to
toilet paper and electical cabling. They also made telecoms networking equipment
on the fixed landline side of the industry. They made industrial systems like nuclear
reactor control gear and military stuff like military radios. Oh yeah, and a tiny unit
of Nokia dabbled in mobile phones.
But from that point, Nokia's growth in mobile has been phenomenal and it
would only take eleven years for Nokia to overtake Motorola and become the
world's biggest mobile phone maker in 1999. And from January 2000, Nokia's lead
in phones has been dominant, for most years its size has been as big as the second
and third and even fourth largest rival handset makers put together. So for Nokia,
clearly it has been a mobile phone decade. But what of the world? Could we say
this past decade has been not only a 'mobile phone' decade, but in fact, the Nokia
decade. I would argue yes. Follow me on this.
The last year before the decade began, the total annual market for mobile
phones was 285 million units, and the world had a little over 500 million mobile
phone subscribers globally. Nokia sold about 77 milllion phones that last year
before the decade began. Since January 1, 2000, to December 31, 2009, over the
past decade, Nokia has shipped a total of 2.7 Billion mobile phones. It is by far the
most widely spread technology brand of all time, in the pockets of 1.38 Billion
people today, or in the hands of literally one out of every five people on the planet.
Not 'of all adults', and not 'of all households'. Quite literally by measuring all people
alive on the planet from from babies to great grandparents. There is a currently
actively used Nokia branded phone for literally 20% of the planet. Ford even with
its Model T car never achieved this. Sony with its Walkman or Apple with its iPod
or even Microsoft with DOS and Windows computers, never came close to this

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Chapter 6 - Handsets 99

kind of global market success. 20% of the planet is talking on a Nokia branded
phone (or sending SMS messages on it).
So we have a starting point. There is no historical precedent for this. That is a
breathtaking accomplishment. Consider the world's bestselling watch, Timex. It
reached one billion sold in 2003, which was accomplished in 80 years, and certainly
nowhere near one billion humans on the planet wore a Timex at any one time. The
Apple iPod has only passed 200 million shipped in its lifetime. For contrast, Nokia
sells over 400 million phones annually. But it is not just about the mobile phone.
Consider these significant industries and their measurements.

Voice Calls

Lets start with voice calls. At the start of the decade, on January 1, 2000. the world
had about a billion fixed landline phones at this time (twice the number of mobile
phones, worldwide) and the number would keep on growing until reaching a peak
level of about 1.25 billion by 2007. Now total fixed landline connections are in
slight decline worldwide. This changed in a hurry. By 2003 there were more mobile
phones than landlines and today the advantage is almost 4:1 for the mobile phone
and growing fast.
So yes, today there are about 1.2 billlion fixed landlines in the world. And the
installed base of Nokia branded mobile phones is 1.38 billion. So consider the
telecoms voice call business. Today, try calling someone. The odds are better that it
rings on a Nokia branded mobile phone - than any kind of fixed landline phone on
the planet. That is quite a big achievement, I would say: "Wow." Nokia clearly is
the company that rules voice telecoms globally. Now lets examine the world
beyond voice calls.

Messaging

Email started on mainframe computers in 1965 and by the time the PC came along
in 1974, email was spreading to the desktop PCs. Email was the first 'killer
application' for businesses and consumers to want to connect to the internet. By the
end of 2009 there were about 1 Billion PCs currently connected to the internet (out
of a total of 1.2B in use), and for practical purposes essentially all connected PCs
will be used for email.
Now lets compare to Nokia. The most widely used data application on the
planet is SMS, which has now about 80% of all mobile phone users as active users.
Nokia has consistently promoted SMS use, taught the mobile operator (carrier)
community about this addictive service and made sure its phones have always been
among the most SMS friendly in the industry. Lets use the average, and assume
80% of Nokia phones are used for SMS (the real number would be bigger, as for
example Nokia's worst market, the USA, is a laggard in adopting SMS). Just at 80%
of installed base, gives Nokia 1.1 Billion using its handsets for messaging.

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100 My phone is my best friend

So, compared to unique PCs that are connected to the internet and thus the
maximum capable of delivering eMail, today Nokia alone has more messaging
enabled digital devices also actively used for messaging, than all internet connected
computers in use on the planet made by all of the PC brands, HP, Dell, Lenovo,
Apple, Acer, Toshiba, FujitsuSiemens, etc - combined. not all of which are used for
messaging... I think the message of this article is that it was the Nokia Decade?

Music

The world's most recognized song is the 'Gran Vals' by Francisco Tarrega (actually
Francisco de Asis Tarrega y Eixea). You might not recognize the name of the song
nor the composer - who died one hundred years ago. But we all know that bit of
music. We all know it. It is literally the most recognized piece of music on the
planet.
This piece of classic Spanish guitar music is what most people think of as "the
Nokia Tune". Note that the Beatles have sold about 1.3 billion records, and Michael
Jackson and Elvis about one billion. But being embedded on every Nokia phone
since 1994 - the first phone with the song was the Nokia 2100 - Tarrega's grand
walz has been sold (as a tiny part of the bundle) over 2.9 billion times. The Nokia
tune has sold over twice as many times as all of the Beatles's records. All of them.
By the end of this year 2010, more copies of Gran Vals will have been sold as part
of the bundle of services and apps on Nokia phones, than all records by the Beatles,
all records by Elvis and all records by Michael Jackson - combined. Love Me
Tender, indeed, but only the Nokia tune is known by every person on the planet. It
is indeed at least the theme song to the decade; has to be. More people recognize the
Gran Vals/Nokia Tune, than the James Bond theme or White Christmas or Happy
Birthday, etc.
I've discussed the iPod vs musicphone "battle" many times at my blog and in
my books, so I'll keep this short here. Apple launched the iPod in 2001. The first
MP3 playing musicphones were launched in South Korea in 2003 but Nokia was
soon in that game and rapidly expanded its musicplayer line. By 2006 Nokia was
selling more Nokia branded musicphones than all iPods sold that year. Today more
than 800 million people have a Nokia branded MP3 player on their phone, whether
they listen to it or not, vs about 200 million Apple branded iPods ever shipped or a
cumulative 260 million Walkmans sold over four decades, including both the earlier
cassette players, and the Walkman branded musicphones by SonyEricsson. While
the older population think of portable music as 'a walkman' and younger
generations think of portable music as 'an iPod' - Nokia musicphones are in the
pockets of nearly twice of those two giant music player brands, combined. Is this
tune not really a Nokia decade?

This eBook is available for free download Tomi T Ahonen


Chapter 6 - Handsets 101

Clock Clock, Tick-Tock

So then some time around 1997 Nokia stuck a clock and alarm on the phone. (Its
astonishing to think that the early mobile phones did not have this basic feature.) I
don't know who did this first for a mobile phone, but I know Nokia had it on the
6110 model in 1997. From this point on we start to see the migration of wristwatch
use to the mobile phone as well as alarm clock use.
So yes, how many? I don't have a measure of how many people wore a
wristwatch at the peak of that form factor, but since the early parts of this decade,
we've seen a migration of wristwatch use to the mobile phone. A Portland
University study in 2005 found that only 10% of university students were wearing a
wristwatch. The peak year of wristwatch manufacturing was 2004, when 1.35
billion wristwatches were made, according to the JCWA, the Japanese Clock and
Wristwatch Association which is the global body for the industry. In 2008 the
global production was 1.1 Billion wristwatches and declining (while the phone
industry in 2008 and 2009 made around 1.2 Billion phones). Timex has made the
most watches in history, with about 1.1 billion produced over a span of 80 years.
So Nokia sold about 420 million phones last year, and every one of them had a
clock and most phone owners now use the clock as their watch. Of the total
shipments, against Timex's 1.1 billion over 80 years, Nokia sold 1.1 billion phones
with clocks in the last 2 and a half years. In terms of thinking of time and the past
decade, shouldn't we count it as the Nokia decade already?
No? Alarm bells not ringing yet? Then lets do alarm clocks. A 2008 UK study
reported in the Birmingham Post revealed that 71% of British people think their
home alarm clock is obsolete, as they use their mobile phone as their alarm clock.
How does that square with clock shipments? The JCWA also reports on clocks,
which fall into three categories: Tabletop clocks (including alarm clocks), wall
clocks, and instrument panel clocks like on cars, boats, airplanes etc. The clock
manufacturing is still growing but tabletop clocks represent about half of all clocks.
In 2007 the total of clocks made was 530 million units and half of those were
tabletop clocks, or 265 million. (Not all of these were alarm clocks.) But yes, Nokia
branded alarm-enabled mobile phones alone outsell all brands of stand-alone
alarm clocks by something close to 2:1. Time to wake up and smell the cellphone?
Nokia decade?

Videogaming

The first computer designed for gaming was the British Nimrod in 1951. The first
successful arcade game was Pong in 1972 and that year US based Magnavox (later
bought by Philips) launched its Odyssey, the first family of videogaming consoles
for the home, that sold 2 million units. The most played videogame on consoles is
the family of Super Mario Brothers games on Nintendo consoles, that has been sold
120 milllion copies in all of its variants. Tetris in all its forms on the PC and mobile

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102 My phone is my best friend

phones has sold well in excess of 100 million copies. A far more popular
videogame, however, is Solitaire, the game that has been shipping with Windows
and as part of that package, has reached total shipments of a billion units. a
milestone that Microsoft recently celebrated.
Nokia innovated again in the mobile space in 1997 by installing the Snake
game onto its 6110 phone. Since then the classic PC game has been commonly
called the 'Nokia Snake' game and has reached a total shipment level of over 2.5
billion. Currently over 1.3 billion people use a Nokia phone that has Snake pre-
installed on it. It is the world's most widely spread and most played videogame.
Game, set and match? Nokia decade!

Calculator

So in 1999 Nokia released the 6210, which included a calculator. Again, I don't
know if this is anywhere near the first phone with a built-in calculator, or even
Nokia's first such model, but it was a mass-market phone that did have the feature.
Since then the calculator function has expanded to most phones in the line. How
does that compare? Casio invented the electronic calculator in 1957. It took them 49
years to sell their billionth calculator and they are the only brand of desktop and
pocket calculators to reach that milestone. - Oh, obviously excluding mobile phone
makers. Nokia is the first brand to sell more calculators than Casio, as embedded
devices in the phones and accomplished a billion calculators in their phones in only
seven years. Today more than 1.3 billion people can do their mathematics on their
phones. I like to say that numbers are my buddies, and the way I calculate it, this is
the Nokia decade, isn't it?

Internet Browser

The first web browser was Mosaic, launched in 1993. Today there are a little over a
billion personal computers with a browser and almost all of them are now
connected to the web (but not all). Nokia was the first phone maker to include a
WAP browser on its 7110 model in 1999. Today more people surf the "mobile
internet" using WAP (and other technologies such as i-Mode) browsers than surf
the "real internet" on a personal computer. And yes, over 1.2 billion Nokia branded
phones are in use that have at least a basic browser. More people can browse
internet type content on a Nokia branded phone, than any PC based computer
browser. This has to be the Nokia decade.

Camera

So we come to the digital camera. Stand-alone digital cameras were introduced in


1990 and after a long struggle, took over from film-based cameras. According to the
CIPA Camera Imaging Products Association, by 2006 film-based cameras formed

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Chapter 6 - Handsets 103

only 4% of the total world camera shipments (excluding disposable cameras). IDC
said that in 2008 stand-alone digital camera sales reached 111 million units.In 2004
approximately 120 million rolls of film were sold globally so that is the maximum
possible active use of film-based cameras and the more an average user buys film
per year, the less is the total active installed base.
The first cameraphones came from Japan in 2001. Soon Nokia too started to
install cameras to phones. The world has shipped 3.8 Billion cameraphones in the
past 9 years and 2.5 Billion of those cameraphones are in use today or 65% of all
phones in use. So Nokia's installed base of cameraphones in use is about 1 Billion.
Now compare, even counting all film based cameras, and all digital cameras, ever
made: Nokia branded cameraphones in use exceed all non-phone cameras ever
made, counted together. This picture is starting to look a lot like a Nokia decade, I'd
say.

Video Camera

The first portable (shoulder-mounted) video camera was the Ikegami ENG
professional news gathering camera in 1973. The video tape recorder (open reel, not
video cassette) was a back-pack sized device that was so heavy, it took another
engineer to carry it, and which could only be operated when on a flat surface. Still,
this was the beginning of man-portable video recording. Technology evolved and
by 1980 Sony released the world's first camcorder. I haven't found global shipments
and installed base figures for camcorders but we can safely assume they are far less
than the levels of stand-alone digital cameras. due to the great price difference.
Video recording ability was offered already on some of the early J-Phone
cameraphones in Japan and Nokia had it from its early cameraphones too. So if
Nokia bested stand-alone digital cameras, it certainly bested the camcorders too.
And yes, most early cameraphones did very grainy poor quality video, but today top
end Nokias (and many other cameraphones) record at DVD quality, perfectly usable
for mainstream consumer video recording use. I think we can safely guess where
this home movie is now headed? My little film is called the Nokia Decade.

Computers

I have been arguing for a long time that the smartphone is a tiny computer, but it
truly fits the definition of computer. It was held as a widely heretical viewpoint
some years ago, but now the PC industry has come to the same conclusion. Now
almost every major PC player from Apple to Google to Microsoft to Dell to HP are
making some play to the mobile space, and none of the major CEO's doubts
anymore, that a smartphone is indeed the latest form of personal computer.
Last year the PC industry sold about 280 million PCs including desktops,
laptops and the hot new netbooks, all counted together. HP has been gaining market
share as the global number 1, and has sold about 54 million units in the past year.

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104 My phone is my best friend

But if we add in the 180 million smartphones sold in 2009, the total market
becomes 460 million computers sold, and suddenly out of nowhere, the world's
biggest computer maker is the smartphones part of Nokia, with roughly 72 million
smartphones sold. When we add smartphones to the market, then HP only has 11%
of the market, and Nokia already has 15% of the global computer shipments for
2009. Right at the end of the Nokia Decade, Nokia still snatches another major
industry crown. I would compute that as clear evidence it was indeed a Nokia
decade, don't you?

GPS, Compass, PDA, FM Radio, TV

There are many more. Its likely that Nokia is about to be (or perhaps has already
become) the world's biggest supplier of GPS equipment. Now they are adding the
compass functionality to phones. The PDA battle was long since won by the Nokia
Communicator series (now part of the E-Series) and yes they have inbuilt FM
radios and now are integrating TV tuners etc. We are seeing ever more
cannibalization.

Conclusion: Nokia Decade

So there you have it. The world's most widely-spread technology brand. If you want
to compare it, consider these types of numbers. Logitech, the PC mouse maker, has
sold one billion mice. Seagate the hard disk drive maker, has shipped one billion
hard drives. Hot Wheels, the toy car maker, has manufactured one billion toy cars.
Nokia has shipped more nearly 3 billion phones in the past 23 years, and has an
installed base of active users of its phones at over 1.38 billion, and sells a massive
420 million more phones this year alone (of which well in excess of 100 million
will be smartphones).
But there are still bigger players in the 'graphical input industries'.. (???) BIC
has sold 100 billion ballpoint pens and its rival, Crayola, has manufactured 100
billion color crayons for kids. So there is still a way for Nokia to grow into the next
decade ha-ha.
But seriously, readers, never before has any one technology brand been so
pervasive on the planet, so ubiquitous, and at the same time slash and burn so many
other giant industries as Nokia and mobile phones did this past decade. I say it can
definitely be nothing other than the Nokia decade.

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Chapter 7 - Smartphones 105

"The Americans have a need of the telephone, but we


do not. We have plenty of messenger boys."
Sir William Preece, Chief Engineer
of the British Post Office, 1876

VII
Smartphones
Supercomputer in your Pocket

What is a smartphone? The standard definition for a smartphone is that it is a


mobile phone which has the type of operating system for which users can install
applications. The industry furthermore classifies smartphones to be those phones
that have one of specified smartphone operating systems (in aphabetical order) as
Android (by Google), Bada (Samsung), Blackberry (RIM), iOS (Apple iPhone),
LiMo (Linux Mobile Foundation), Maemo (Nokia, being replaced by MeeGo),
MeeGo (Nokia and Intel), Microsoft Phone 7 (Microsoft), Symbian (Symbian
Foundation and Nokia), Palm/WebOS (Hewlett-Packard), Windows Mobile
(Microsoft, being replaced by Phone 7). Four out of five mobile phone handsets
sold worldwide is not a smartphone, so they have 'proprietary' and usually far
simpler operating systems than these.
This definition was rather cut-and-dry at the early part of the past decade, but
recently the line between this definition of smartphones and that of the
'dumbphones' (ie non smartphones) has become blurred. There are many
'featurephones' that offer abilities to install software and applications in particular as
the widgets have spread more broadly. Java based applications are compatible with
far more than half of all new phones sold today, and the reach of Java is about three
times as many mobile phones as the total installed base of smartphones. If the
definition says ''users can install applications' then why should these Java-capable
phones not be counted as smartphones? (or equivalent Brew capable phones).
Meanwhile touch screen featurephones like most touch screen phones from LG and
Samsung - both South Korean mobile phone makers which outsell just in their
touch screen phones the total output of Apple's iPhones annually - are not
smartphones either. The line is blurring between what is counted as a smartphone
and what is not. Incidentially, the original iPhone 2G from 2007 did not fit the
definition of smartphone either, it was technically classified as a featurephone.

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106 a supercomputer in your pocket

There are those who claim that this definition is too vague. That we should
have more precise and practical classifications for premium mobile phone handsets,
perhaps along the lines of their form factor or input method (QWERTY phones as
one category, touch screen phones as another and hybrid input phones as yet
another), or that one should only count as smartphones those devices that are used
in ways appropriate to a smartphone - ie that the user installs applications to the
phone or surf the real internet on the phone, etc.

Average Sales Prices of Smartphones Regionally in USD

450
400
350
300
250
200
150
100
50
0
ed

ng

a
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pe

pe

ica
st

ric
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nc

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er
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Eu
Eu

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dl
ad
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AC

M
A

ia

La
US

As
AP

Source: TomiAhonen Phone Book 2010

The biggest problem in any kind of analysis of the handset industry by such
newer types of classifications, is that there is no data to measure the groupings. We
do not get quarterly or even annual counts of the industry by the major industry
analyst organizations, to report that detail. Therefore, for this book, I will be using
the standard definition, as used by Gartner Dataquest, IDC, Canalys and Strategy
Analytics, the four primary industry analysts who regularly report on the
smartphone market specifically every quarter. Obviously my consultancy,
TomiAhonen Consulting, also uses this commonly accepted definition for example
in my industry statistical reviews, the TomiAhonen Almanac and the TomiAhonen
Phone Book. As far as I can tell, all other major analysts who also regularly release
smartphones related consumer data, like ABI Research, Nielsen, ComScore etc,
also all these use the same definition.
So, if your phone has one of the eleven major smartphone operating systems,
like Symbian or iOS or Blackberry or Android, your phone is a smartphone. If it
does not have that kind of operating system, even if you are able to install apps on
the phone or if it has a touch screen etc, it is not a smartphone. All non-smartphone

This eBook is available for free download Tomi T Ahonen


Chapter 7 - Smartphones 107

cellular mobile phones are collectively 'dumbphones' but can be divided further into
'featurephones' of higher performance and technical ability, and basic phones.

Smartphone Market Shares Projection for End of 2010

Most of the data in this book will be based on end-of-year 2009 numbers, or my
projections to the end of 2010 numbers. The smartphone market is in such turmoil
currently, with Google's Android making strong gains and Samsung's Bada having
launched, I will need to use the Q3 numbers and make a projection for end of 2010,
as the final numbers for smartphone market shares, to have as accurate and relevant
picture for this book as possible.
For the year 2010, smartphones will sell about 21% of all mobile phones in the
world. In absolute numbers, there will be about 300 million smartphones sold in
2010. The market shares by smartphone maker break down as follows:

1 Nokia Finland 105 million 35%


2 RIM Canada 47 million 16%
3 Apple USA 47 million 16%
5 Samsung S Korea 25 million 8%
4 HTC Taiwan 18 million 6%
6 Motorola USA 14 million 5%
7 SonyEricsson Swed/Jpn 8 million 3%
8 Fujitsu Japan 7 million 2%
9 Sharp Japan 6 million 2%
10 LG S Korea 4 milion 1%
Others 19 million 6%
Total 300 million

Nokia has better market share in smartphones than it has in normal mobile
phones overall, and is twice as big as nearest rival, RIM at number 2, and Nokia is
almost as big as its next three rivals added together.

While looking at the race by operating systems, we get this picture

1 Symbian Nokia 120 million 40%


2 Android Google 62 million 21%
3 Blackberry RIM 47 million 16%
4 iOS/iPhone Apple 47 million 16%
5 WinMo Microsoft 10 million 4%
6 Bada Samsung 6 million 2%
Others 8 million 3%
Total 300 million

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108 a supercomputer in your pocket

Again Nokia dominates with the Symbian OS being almost twice as big as the
nearest rival. This lead is likely to be threatened now with the two strongly growing
smartphone operating systems. During 2010 Android passed passed Apple and the
Blackberry OS and becoming currently the second-bestselling smartphone OS in
the world. By the fourth quarter of 2010, it was nearing the activation levels of
Symbian, so it will rival, possibly pass Symbian in total size in 2011.
Meanwhile Samsung launched its Bada OS. Currently only a third of
Samsung's smartphones are manufactured using the Bada OS. Simultaneously
Samsung become the biggest Android provider ahead of HTC, Motorola and
SonyEricsson. Samsung's Bada OS has had the best six month launch of a new OS
ever, even more activations than Apple managed in the first six months of its
iPhone in 2007, and far ahead of the first half-year performance of Android. It is
likely that during late 2011 Samsung will shift its mid priced smartphones and most
of its low cost smartphones to the Bada OS. If Samsung achieves the same market
share in smartphones as it currently has in dumbphones, Bada would easily pass
Apple and RIM and take third place for OS.

No One Perfect Smartphone

So there are many pundits and analysts who suggest there is a 'superphone' out
there. That perhaps the iPhone is the shape of all future phones to become. That
thinking presumes that smartphones which depart from the iPhone form factor are
somehow 'obsolete' - an argument often made about Blackberry for example. That
for example the small screen with full QWERTY keypad is an 'old-fashioned' (and
soon to be extinct) form factor. That Blackberry is an obsolete type of smartphone.
With this argument there is an underlying assumption - that it is humanly
possible to produce a single device that would be considered perfect by the vast
majority of consumers? I say no. The mobile phone market space is more like that
for automobiles. Some like a slick, sexy fast sportscar. Someone else wants a big
safe family car. Someone else wants all luxury and no hassle while yet another
wants an eco-friendly small car. These become mutually exclusive. You cannot
create a fast high-performance car (a sports car) that also has the high ground
clearance and seats for all kids in the family and the dog, like an SUV. Yes, you can
create a fast SUV, but even the best Porsche or BMW SUV will never match the
performance of a similarly priced 2 seat sports-oriented Porsche or BMW. It is
'either/or'. Either you have lots of room and ground clearance, but at a cost of top
speed and ground-hugging performance, or not.
Same with phones. You can have a 12 megapixel camera on your phone like
on the Nokia N8. You can have a slick ultra-slim sexy thin phone with 3.5 inch
touch screen like the iPhone. Or a far bigger screen like a Samsung Galaxy S. You
can have a full QWERTY keyboard like on the Blackberry. But in almost every
case, it is a compromise. You have to decide, do you really want a large screen or
good camera or in-built keyboard or flash or digital TV tuner or what. Exactly like

This eBook is available for free download Tomi T Ahonen


Chapter 7 - Smartphones 109

in a car, yes there are very expensive "hybrid" prodcuts like a BMW branded SUV,
but its not really a sportscar, and its not really a full-sized SUV either, won't match
the Jaguar on the road and won't match the Range Rover off-road.
And the more your "all-in-one" perfect-phone-wannabe tries to be best at all, it
will add to cost, size and weight; and it will drain batter, CPU and memory. The
digital device in our pocket is a compromise and the further we move along, the
more what one person will love, to someone else will be a mediocre phone. We will
have phones that are optimized for one or two abilities, and are acceptable at others.
The increasing complexity has also resulted in a reversal of the amount of
engineering that goes into the hardware vs the software. In about seven years, the
development costs have reversed, as Samsungs Won Kim explained in 2005:

Japanese cell-phone makers estimate that the cost of developing a


cellphone today is split 80 to 20 between software and hardware, while the
split was 20 to 80 in 1998. Large US software makers now estimate that
high-end embedded software will consist of up to 9 million lines of code in
the near future.
- Won Kim, Samsung, writing in Journal of Object Technology Vol
4, Number 4, 2005

What Decides Market Success In Smartphones

What is the single biggest factor, one that totally overrides all other factors in the
global market success of any given smartphone? Is it design? Is it brand? Is it the
Operating System (OS)? Is it ease-of-use? Is it the features set? Is it touch screen?
Is it size of the phone? Is it size of the screen? Is it battery life? Is it camera
resolution? Is it QWERTY keyboard? Is it price? Is it the apps store? What is it?
I'll tell you what it is. The smartphone market, differing from other markets for
consumer technologies, like home electonics, the PC industry and cars for example,
is not ruled by normal free market economics (???).
The smartphone market has two dramatic peculiarities, which so totally distort
the market, that if you don't understand these two, you will never succeed in the
market as a global player. And yes, the biggest single factor to determine who wins
and loses in the smartphone success is none out of the above list. It is the role of the
sales channel or what is called 'carrier relationships'.
Within carrier relationships lie two factors. The handset subsidy distorts the
market opportunity enormously for all countries where it exists. And the other
distorting factor is that many smartphones in use are not actually purchased by the
person using the phone. They are often provided as employee phones by larger
enterprise/corporate users. Together these two factors cover about two thirds of all
smartphones sold around the world. True free-market economics, where a
smartphone is judged primarily on its merits and its marketing, only applies to one
out of three smartphones sold worldwide.

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110 a supercomputer in your pocket

Group 1 - Enterprise

Lets start with the easiest part to consider: the enterprise/corporate sales of
smartphones. By enterprise/corporate customer I mean the big employers in any
country, the big industry and government institutions. This type of larger customer
will negotiate with the carriers/operators, to purchase thousands of handsets as
company-provided employee phones. They may be referenced as enterprise,
corporate or business customers, but in this essay I will use the term enterprise
customer to mean the largest types of corporate and government customers. There
also are far more companies in the so-called SME (Small and Medium Enterprise)
business customer cateogry. As SME customers tend to follow the large enterprise
customers when it comes to choice of mobile telecoms providers and handsets, I
will not devote time to the SME sector of business/corporate customers. The
distortion with smartphone sales is most pronounced at the largest enterprise
customer end of business users of smartphones.
With (large) enterprise customers, the employees get typically business-
oriented smartphones like a Blackberry or Nokia E-Series, and the enterprise
customer negotiates a heavily discounted rate for the telecoms traffic, usually the
bigger the client, the bigger the discount. The enterprise customer usually has
custom services such as secure connectivity like VPN (Virtual Private Netork).
Secure wireless email was one of RIM's early competitive advantages in bringing
the Blackberry to this segment of the smartphone market. Recently the Blackberry
was even accepted for President Obama's use (with premium level security systems
added).

Carriers Serving Enterprise Customer

While all operators/carriers will want to catch the big enterprise customers in every
country, the reality is that serving dozens of large corporate clients with tens of
thousands of employees is very different from serving millions of individual
consumer customers. The larger the enterprise customer, the more they need
specialized services and sales attention from their suppliers. So in the natural
evolution of any liberalized telecoms market, there usually emerges one or two
main national operators/carriers who have most of the enterprise customer market,
and the other rivals have very few of these. So for example in the UK, arguably the
most competitive mobile telecoms market in terms of parity of network
operators/carriers in the world, of the five operators/carriers, Vodafone and O2 have
the majority of enterprise customers, while Orange, T-Mobile and Three have very
few enterprise customers.
This becomes a virtuous cycle, where the enterprise oriented carriers/operators
become ever better at serving the needs of enterprise customers, and get ever more
of that total business customer market segment including SME customers; and can
devote more resources (sales support product management and other such staff) to

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Chapter 7 - Smartphones 111

serve the enterprise customers ever better. The remaining operators/carriers almost
abandon the top-end of the corporate/enterprise customer segment, and only provide
telecoms services (and handsets/smartphones) to some SME (Small and Medium
Enterprise) clients and tend to have a far smaller slice of the total business/corporate
and enterprise customer market segment in that country.

Sales To The Enterprise Customer

For the operator/carrier which serves the enterprise/corporate segment, the actual
Sales Representatives (Key Account Managers) of big enterprise clients are the real
"kings" of the company. They personally deliver so much of the total sales volume,
telecoms traffic, and profits to the operator/carrier, that what they want, they get.
If you have not worked inside a telecoms operator/carrier, you cannot imagine
how powerful key account managers are. They have absolute rule as it relates to
their "own" enterprise customer inside the operator/carrier. They have dedicated
support staff serving only their customer. Key account managers can perform all
kinds of special favors to their enterprise/corporate customers. Oh, your executive
Tomi Ahonen is a James Bond fan, and he would like a 007 phone number onto his
company phone? No problem, let me find one and get back to you...

Traffic And Handsets

Let me show you the math. Take a typical large enterprise customer in a major
European country, with 5,000 company phones. Those phones could be expected to
be replaced very roughly speaking, every 2 years. So we can count new phone sales
of 2,500 units per year. If we say an average smartphone costs 200 dollars, that
means a total sales volume of half a million dollars. Sounds quite impressive. But
remember, if those phones are sold to the customer by the carrier/operator (this is
not necessarily so), then the operator/carrier was a bulk sales "store" and sold the
smartphones on dramatic discount with truly bottom-barrel profit margins (far more
likely with zero profit). So lets say for the sake of argument, that there was a 5%
mark-up on the smartphones. The actual sales commission that the operator/carrier
earned on those 2,500 smartphones sold this year, was 25,000 dollars. The rest of
the 475,000 dollars is money paid directly to the smartphone manufacturers who
provided the phones, ie RIM Blackberry or Nokia E-Series etc. The operator/carrier
only earned 25,000 dollars (in the "best case" scenario) out of this "sale".
But the telecoms traffic, generated by this customer annually, with 5,000
company phones, in a typical European large country, would be about 60 dollars
per enterprise subscription per month. Doing the math, the total value of that one
enterprise customer annual contract is 3.6 million dollars in traffic revenues
generated onto the mobile network. Where typical mobile operators/carriers
globally have about 35% EBITDA margins ("gross profit") this means that the
annual contract would deliver 1.26 million dollars of profits to the operator/carrier.

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112 a supercomputer in your pocket

In reality the industry is competitive and the enterprise customers are most
aggressive in their price negotiations, so this number is certainly much smaller,
probably half or less even, but if we say half, it means 630,000 dollars of profit
earned on telecoms traffic, compared with 25,000 dollars earned on the handset
sales (in the best case). So the profits from the traffic generate 25 times more profits
than even the best case of handset sales. Any competent salesperson looks at this
equation, and never let the little part - handsets - threaten his livelihood and the 3.6
million dollar annual contract.
And as the handset manufacturer is a separate entity, the mobile
operator/carrier often agrees to sell the handsets at zero margin. It makes sense to
"cut the profit" to zero on the smaller amount, and show the customer that you are
offering good value to them, while attempting to hold the maximum profit on the
larger item that they are buying (the annual contract).

Purchasing At Enterprise Customer

Meanwhile, on the side of the 'client' ie the enterprise customer making purchases
for thousands of handsets and bulk telecoms services; the driving factor is... IT
maintenance. Yes. While enterprise customers are so large that they have a
professional purchasing department and some staff to cover the telecoms services,
who do handle the actual contract negotiations for the enterprise customer, that
telecoms purchasing executive is a very modest power executive, compared to the
IT department. The purchasing decision specifically relating to any smartphones, is
for all practical purposes overridden by the enterprise customer's IT department.
And the IT department are not looking to find the "best smartphone" for their
employees (?) but rather, they seek to prevent more headaches in the IT systems,
and very explicitly are looking to prevent more costs to their maintenance.
I need to explain this a bit. The enterprise/corporate customer IT departments
are all overwhelmed by ever escallating maintenance costs of sustaining multiple
redundant and rival IT solutions of different departments. In many cases of IT costs,
the maintenance costs can be as high as 80% of the total costs related to a given IT
system in a given year. The last thing IT support in any enterprise/corporate
customer wants, is to add complexity to their support headache. Because of
typically dozens of separate IT systems interconnected, any new element introduces
many dimensions of potential conflicts.
Please also note, that the existing enterprise/corporate smartphones tend to
have either a Blackberry or Symbian or Windows Mobile operating system or mix
of those. The IT department knows if they accept a new smartphone platform now,
they have to support it for years to come with ever increasing staff, plus handle all
conflicts that inevitably arise when their employees start to mess with these new
phones and interacting with company soffware solutions and also with their private
interests, you know, like wanting to Twitter or do Facebook updates ("for work

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Chapter 7 - Smartphones 113

reasons") etc. So the IT department resists doggedly the addition of any new
systems to their world.

Play It Safe

Lets think back to the Key Account Manager (Sales Rep) at the operator/carrier
who's full-time job all year is to sell to that one big enterprise customer. The key
account manager will focus all effort to make sure that next year, when the multi-
million dollar contract comes up for renewal, the customer will sign for another
contract period with him/her and not switch to a rival network. Understand this
dynamic. The phones are not what the operator/carrier makes its money on. The
phones are only a risk that the enterprise customer may become upset with the
operator/carrier. The Key Account Manager will not jeopardize that contract worth
millions for the sake of some fancy new smartphone.

Smartphones in Use: Business & Consumer

600

500

400
Consumer
300
Business
200

100

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: Tom iAhonen Phone Book 2010

This means that for any smartphones that want to invade the enterprise phones
space, they have to start from smaller businesses, and then build up a porfolio of
services, apps and reference customers. Then they can hope to start to sell to
enterprises. This is a very long process literally measured in years not months.
It does not mean that Android or iPhone or Phone 7 or whatever new device
cannot break into this segment, only that the decision is not based on 'which phone
is best today' - type of logic. The decision is a long process. Here for example
Windows Mobile used to have a long track record and obvious points of inter-
operability with the Windows PC environment in the enterprise/corporate customer
base. Now Microsoft hopes that the Phone 7 operating system can help them use
this cross-platform compatibility in selling enterprise/corporate phones.

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114 a supercomputer in your pocket

For RIM it took five years of consistent sales effort to grow from zero to 5
million subscribers globally to their enterprise service. Comparing that to today
when RIM has shifted to consumer markets, they sell another 5 million new phones
every month. Or take Apple iPhone. Apple CFO Peter Oppenheimer revealed in
2009 that out of Apple's total sales of 5.2 million iPhones for the April-June quarter
of 2009, the iPhone had done "well" to Apple's opinion in the business customer
segment. Then Oppenheimer revealed that the total number of iPhones sold to
business customes of any size was 35,000 units. That is 0.7% of all iPhones sold
that quarter. While there will be, definitely, an increasing echo of news stories
about some big corporate client 'trialling' the iPhone or accepting it for employees
to use, understand this scale. Apple celebrated 0.7% of iPhones sold to enterprise
customers as doing "well".

Inertia Rules In Business Phones

What does this mean to the business phones segment? It means that for business-
oriented smartphones, the market has severe 'damping' effects which reduce
volatility, promote stability and reduce opportunity. Or in other words, inertia rules.
Whether the next Blackberry or E-Series phone is truly a great phone or only
mediocre; or even below par as a smartphone against its supposed rivals; it will still
automatically get significant market success in the enterprise segment, because all
variables are stacked against innovation and change. It is almost totally irrelevant,
what the tech pundits and reviewers say about which smartphone is best. This
segment is not buying what is the best flavor of smartphones this week. It is driven
by the avoidance of any new systems. And both the iPhone and Android are seen as
new systems in their concept of time, at the IT departments.
How many of all smartphones are used as employee phones in businesses of
any size? Early on almost all smartphones were sold for business use, but ever since
Nokia started to make consumer-oriented smartphones, the market has shifted. The
year before the iPhone launched, consumer-oriented smartphones accounted for a
third of all smartphones, and today the picture has reversed. By 2009, two thirds of
all smartphones in use worldwide were used by consumer customers, and only one
third were used as employee phones, according to the TomiAhonen Phone Book
2010. As typical of all mobile telecoms industry stats, with this number too, the
North Americans were the laggards. Europeans and Asians (and Australians) had
discovered the consumer smartphone well before the iPhone woke the US market.

Group 2 - Subsidies

After we remove employee phones, we are left with consumer oriented


smartphones. That segment is obviously about twice as big as enterprise phones by
installed base, and accounts for about well in excess of two thirds of all new
smartphones sold. For this consumer side of the smartphone market, the world has

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Chapter 7 - Smartphones 115

roughly speaking two relatively similar-size markets, with one glaring difference
between the two: handset subsidies.
I need to explain the subsidy. Most typical American consumers are under the
impression that the price of a new iPhone, like the iPhone 4 in the summer of 2010,
is about 199 dollars. That price is what AT&T asks the new iPhone buyer to pay in
cash when taking delivery of the iPhone. Some customers do understand that there
is more to the price, hidden in AT&T's two year contract. But even the 199 dollar
cost seems 'expensive' to American consumers, for a fancy cellphone with some
internet abilities etc.
The real cost of the iPhone 4 is about 600 dollars. That is what AT&T pays to
Apple. AT&T is not generously handing out iPhones at a huge loss. AT&T has
hidden the remaining 401 dollar cost differential into the two year subscription
plan. The American consumer is paying the full 600 dollar price whether they know
it or not. It is a forced two year installment payment plan, with a 199 dollar down
payment, in reality. Note, that also means the consumer pays interest too, for that 2
year credit term. Its almost as bad as putting the 600 dollar smartphone on a credit
card and paying off the cost over the next 24 months. This means that the typical
US consumer actually pays something like 700 dollars for the iPhone, out of the
'delight' to get to have the impression they bought it for 199 dollars.
If most US consumers knew how silly this is - they can afford to buy 1,000
dollar plasma screen TVs with no problem, why put the 600 dollar smartphone on
an installment payment plan? The average iPhone owner earns over 100,000
dollars. They can easily afford to pay the full price up front. Then the monthly
subscription and data costs on AT&T would be far lower. This is by the way how
over half of the world's smartphones are sold - the phone with no significant
subsidy, and the monthly fees are far lower. Like in Italy or South Korea or
Belgium for example.
But to be clear, in this book I am talking of the real price, not the fake nominal
marketing gimmick price like that used by AT&T to market the iPhone in the USA.
The real price you pay for the iPhone 4 in 2010 is 600 dollars. Apple openly tell us
this in their quarterly results.
This is the murky science of handset subsidies and how it confuses markets.
Let me explain. Imagine you are buying a car. The car costs 25,000 dollars. You
come to the dealership and see a special financing deal for you, that you only have
to pay 20% down payment. So you have to have 5,000 dollars in cash to pay the car
dealer, and the rest of the 20,000 dollars (plus usually quite a lot of interest) you
pay in same size monthly payments for the next three years.
So you paid 5,000 dollars today and drove home in your fabulous new car. But
you know fully well, that you are not buying a "5,000 dollar car" even though that
is all you actually handed to the car dealer today. You are buying a 25,000 dollar
car. You know that it was partial payment, you committed to three years of
installment payments to pay off the remaining 20,000 dollars of the price of the car.
Car buyers know this, because car dealers display the real car prices quite clearly.

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116 a supercomputer in your pocket

In mobile telecoms, in some markets with subsidies like the USA and Japan,
the real price is very much hidden. In other markets with subsidies, like in the UK,
the consumer is rather clearly shown the real price and their contract options, of
whether selecting to take the subsidy (and higher monthly contract fee) or paying
upfront for the phone in full price, and taking a lower price contract. In the USA the
situation is so twisted, that the carriers will not even give you a lower monthly
contract, if you bring in your own phone to their network. This is something the
FCC and the US lawmakers are looking into, whether this is in the best interests of
the US consumer. Obviously it is not.

Impact To Smartphone Sales

So, roughly speaking half of the consumer smartphones sold in the world have big
subsidies like in Japan and the USA and France. And half are sold at the real cost
with no subsidies in countries like in South Korea, Israel and Italy.
When there is a subsidy, it will not be for every possible phone model. The
carrier selects some phones that get a subsidy. The remaining smartphones are sold
at full retail 'street price' with no subsidy. The psychological effect of the price
differential in cases of a subsidy for one phone and not for another, is enormous,
totally distorting the decision-making process for the average consumer. Then it
doesn't matter how great your touch screen is, or how fancy your camera resolution
is, or which operating system your smartphone runs, or how many apps you have in
your apps store. In the USA where the iPhone 3GS was subsidised and the Nokia
N97 was not, the 3GS outsold the N97. And in the UK, where the 3GS was
subsidised to about 200 UK Pound cost, but the N97 was subsidised to be "free",
the N97 outsold the 3GS. The phones were the same in both markets. The real price
was near identical. It was the subsidy which totally distorted the market.
To understand how rare it is for a given phone model to receive a subsidy with
one carrier in one country, the world has over 1,000 actual phone models in
production by over 70 manufacturers at any one point in time and the big 3, Nokia,
Samsung and LG each have more than 50 models in production at any one time.
For a phone model to be selected by one carrier to receive a subsidy is a 'live
or die' decision to that carrier market. Look at the Google Nexus One. It initially
was supposed to be sold by several of the big US carriers. Then they decided not to
subsidise it. Google tried to sell the Nexus One at about 600 dollars in the USA,
through its online store, while the iPhone was sold for 199 dollars. The Nexus One
was a total market flop. But in other markets where there was no subsidy advantage,
the Nexus One did reasonably well.
Who decides on the subsidy? The only entity that can decide, and will decide,
whether there is a subsidy for any given phone model (in those countries where
subsidies are allowed, obviously) is the carrier/operator. The carrier/operator
extends credit to that customer for 24 months, and takes a risk the customer runs
away with the phone and defaults on the remaining payments.

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Chapter 7 - Smartphones 117

But My Smartphone Is Better

Please understand what this means in countries of subsidies. It does not matter one
iota, in a subsidied phones market, if your phone is 'the world's best superphone' by
all reviews and experts, and is the coolest, slimmest, hottest, best smartphone with
all the bells and whistles, endorsed by all supermodels and superstar athletes (and
rap stars), with the best user interface and biggest apps store and all sorts of content.
If the local carriers/operators decide not to offer subsidies for your phone, but there
are significant subsidies for some of your direct rivals, then your phone will not
become a hit phone in that country.
This is a market distortion that does not exist in home electronics like plasma
screen TVs or DVD players or iPods or digital cameras or the PC industry. Where
there are subsidies for the handsets, that subsidy will distort the market completely.
And those decision-makers at the carriers/operators who make the choice of what
handset model to take into their lineup and which to subsidise, will be the king-
makers. They decide whether LG will outsell Samsung or Motorola or Nokia or
Blackberry or Apple or HTC or whoever, in their home country market. The 'truth'
about which phone is 'best' by any metric, is no longer relevant. The only contest is
between those phones that are equally subsidised.

Group 3 - Unsubsidised Markets

We covered enterprise smartphones and we covered subsidised consumer


smartphones. That leaves roughly speaking one third of the smartphone market. If
the carrier/operator does not subsidise phones, and customers tend to pay full price,
then there is little incentive for the operators/carriers to support an expensive sales
outlet network of carrier/operator stores. The phones are then often sold through
independent dealerships, various electronics stores and dedicated handset stores etc.
That means many resellers. And for the handset maker, its totally a game of
pure marketing: textbook basics of marketing. All of it. You have to build your
brand. You have to have a good product design, that fits the current trends and is
appealing to consumers. It has to not only 'be good' it also has to 'look good' ie
packaging and outwardly design. Colors, materials, packaging. You have to
segment your customer base and then offer targeted phones to each segment you
want to compete in. The phone has to fit the local expectations which differ greatly
between regions (ie Americans love clamshells, Europeans love candybars, etc).
The phone has to work in the local languages and alphabet/character sets. It
has to offer locally relevant technologies, so for example if digital TV broadcasts to
mobile phones have been launched into that market, the locally relevant smartphone
has to cater to the right standard, like in South Korea it needs a digital TV tuner on
the DMB standard or in Italy on DVB-H or in Japan on 1Seg TV, etc. These are all
technically incompatible requiring separate hardware, so it means regional or
national versions of the 'same phone'.

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118 a supercomputer in your pocket

Your smartphone has to be available in as many retail outlets as possible and


then you have to efficiently manage your distribution channels - including the
inevitable channel conflicts (the carrier wants an exclusive phone, but your local
dealer wants that specific phone and they sell more phones than the carrier, etc).
You have to price your phone competitively with thin margins. You have to
promote your phone very visibly within that market so it means massive TV
advertising, sponsoring the local sports teams, etc; and lots of internet advertising.
And you have to have regionally localized after-sales support and service.
This group of countries with no or very few subsidies includes essentially the
whole emerging world as well as many advanced countries of the industrialized
world, from Italy to Belgium to Finland. While the total living standards in the
emerging world are far lower than in the industrialized world, there are still millions
of wealthy people even in the poorest of nations. And those wealthy people will
want fancy mobile phones, which tend to be smartphones. So any smartphone
maker who wishes to be big, cannot ignore the customers of say Sao Paulo or
Nairobi or Mumbai or Moscow or Manilla.
Have a guess who is the grand master at this game? Nokia. Yes, in the
countries and for the segment where the decision is made by the individual phone
user, and when the playing field is as even as it can be, that is where Nokia totally
rules. In countries where there are no subsidies (excluding obviously the home
markets of the handset makers), Nokia is the runaway master with a market share of
about 60%. Apple by contrast said in its quarterly results call in the summer of
2009, that they tend to do better in markets with subsidies, and do poorly in
markets with no subsidies. It says something about being able to convince
consumers, that your product is perfect for them.

So There

Thats it. There are roughly speaking three main market segments for smartphones.
The smallest of the three segments is the enterprise/corporate market. The second is
countries with subsidies. And the last group is already the biggest of the three and
the one growing the most, is where customers pay full price for phones. The
enterprise oriented business smartphones for employees, are effectively selected by
an IT department at any major corporation, that wants desperately to avoid any new
systems to add to their complexity. They will resist any newcomers and the iPhone,
even as it was introduced over 3 years ago in 2007, is completely a newcomer to the
IT departments. But its not the employees who get to pick what phone to use. It will
be the IT departments.
Then in the markets where subsidies distort competition, the decisions of
essentially awarding market shares to given brands of smartphones and given
smartphone models is with the carriers/operators; not with the handset
manufacturers. Again, see how much the US market is now expecting Verizon to
offer the iPhone. That shows that while AT&T may have made a good launch

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Chapter 7 - Smartphones 119

strategy to select its carriers, it now is missing out on sales, as the iPhone is sold by
many of the world's biggest carriers/operators. Only in the unsubsidised consumer
market, is there real undistorted competition to weed out the strong from the pack.
I know it will feel very 'unfair' to many reading this book, who believe that
their fave smartphone (or maybe fave OS) is somehow 'inherently superior' to all
others, and 'deserves to be the best-selling phone in the world'. I hope this section of
this chapter helped bring some realism to that understanding. The smartphone game
is not a free market economy. The smartphone market is inherently distorted. If
you do not understand these distortions, you cannot possibly win in the market.
Companies like Google and Microsoft had learned those lessons early in 2010 and
now companies like Dell and Lenovo are going through similar lessons. The
smartphone market is not like the PC market, not at all. And anyone who looks at
the smartphone technically as being a 'small computer' - and thinks because they
were successful in the PC market, that the same rules would apply in smartphones,
will be severely disappointed.

Real Battle is in Smartphone Operating Systems

The race between the handset makers jostling in the market makes for an interesting
parlor game to guess whose market share will grow and whose will shrink. That is
not the big battle for this new decade. The real battle is for the operating systems
that will power the most used digital gadget for the decade of the smartphone.
The smartphone 'platform war' is similar to for example the Blueray and High
Definition DVD standard war we just witnessed in the past few years, or the
previous video cassette war standards war we saw with VHS and Betamax. Similar
wars existed early in the PC world, when other operating systems in addition to
Microsoft's DOS and Windows were offered for personal computers. IBM for
exmaple attempted to recover from the mistake of letting Microsoft produce the OS
for the 'IBM Personal Computer' and its evolution path, so IBM released the OS/2
as a rival to Windows, but it was too late for IBM. The only relevant early rival to
Microsoft that survived to this day is Apple's Macintosh OS/X operating system
that also spawned the iOS for the iPhone. We are seeing a prolonged home
electronics battle with the videogaming consoles, between Microsoft's Xbox and
Nintendo's Wii and Sony's Playstation.
We saw from the previous chapter that the basic mobile phone has adopted
eleven new abilities as the 'Swiss Army Knife' of the digital world. It has even
evolved beyond its original purpose (voice calls) not unlike radio which evolved
past its original purpose of long-distance over-the-water telegraph communications
as I showed in the 7th Mass Media chapter.
In this decade the mobile phone will evolve much more, in ways we cannot
imagine today. If someone said in the year 2001 that at the end of the decade there
would be mobile phones so powerful they can be used to capture professional
quality video recording and that the memory chip to reocord two hours of that

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120 a supercomputer in your pocket

would be the size of a fingernail, this would have been unacceptable to most who
did not own a mobile phone with a color screen yet, far less one with a camera,
recording video, or having a memory chip.
I am going to show in the digital convergence chapter (Convergence and the
Cannibal) that the smartphone of today is a complete computer, and in fact all major
experts in the computer industry now agree it is so. Then in the previous Handsets
chapter, I applied Moore's Law to illustrate that well before this decade is done,
most, if not all, mobile phones will be smartphones. Now that the smartphone is a
gaming device, our pocketable video recorder and the next PC, of course this battle
is going to be intense for the winners in the smartphone OS battle.

Not iPhone, not Blackberry, but Nokia

US based readers will find it difficult to accept, and even many in Europe may feel
that its time has passed, but do understand, my reader, that the battle for the
smartphone OS for this decade has one dominant player, holding most of the aces.
It is not the iPhone, not the Blackberry, and not even Google's Android. It is Nokia.
First, lets remember that this does not apply to the North American market, where
Nokia has gone from a desired mid-priced brand to a bargain-basement cheap
phone brand. This is due to many reasons from Nokia's product design preferences
to the US carrier selections of what handsets they are willing to subsidise, to even
matters such as the CDMA/GSM standards war.

Therefore, North American readers should not be mistaken into thinking their
home market is like the rest of the world. No, North America is an anomaly. And

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Chapter 7 - Smartphones 121

North America is consistently evolving to mimick more the rest of the world,. than
the rest of the world evolving to mimick North America. Not 'leading', North
America is catching up in mobile, in practically everything from SMS use to
prepaid accounts to unsubsidised handsets to the adoption of smartphones to
multiple subscriptions to 3G migration rates. While one in four smartphones
currently is sold in North America, only one in 8 total mobile phone handsets is
sold in that region. So as the prices of smartphones decline, and the migration
globally accelerates from dumbphones to smartphones - the proportion of USA's
contribution to smatphones will approach that percentage it has in all mobile phones
today - about one out of eight (only).
The relevant battle for world domination is that, who controls the world, not
that who controls the US domestic market. This is why it is so vital to understand
the scale difference with Nokia. Outside of North America in 2010, out of all
smartphones sold half - half - had the Symbian OS controlled by Nokia.
I explained in this chapter earlier, that to win in selling smartphones, is not a
question of making the 'best' smartphone, but in understanding the two big
distortions in the market, and only after that, for about a third of the planet
(explicitly, not North America) is there a reasonably open competition where real
market rules apply.

We Almost Avoided a War

Nokia joined its rivals more than a decade ago to set up the Symbian partnership -
this at a time when Nokia was already the world's biggest handset maker and Nokia
had invented the smartphone. Nokia could have easily produced its own smartphone
operating system, which if it had been in Nokia's total control, could have
responded to such challenges as the Apple iPhone in 2007, far more rapidly than
working through the Symbian Partnership. If so, there would have been half a
dozen smartphone OS's early in the decade and we'd have seen a costly smartphone
OS war for ten years already. However, Nokia has been driving collaboration
initiatives with its European rivals and promoting those with all global players, so
the Symbian partnership incredibly a decade ago included all of the biggest 7
handset makers: Nokia, Motorola, Ericsson, Siemens, Samsung, Sony and
Panasonic. While Nokia was seen at the time as having by far the most user-
friendly user experience in phones, and Nokia was also innovating with features and
abilities, it shared those insights through the Symbian partnership, and considering
its age today, Symbian's OS has stood the test of time incredibly well.
No, Symbian is not the best OS for touch screens (but none of the pre-2007 OS
platforms were good at touch screens prior to the iPhone, that would be a poor
benchmark). Consider all the improvements to the iPhone OS since 2007 -
multitasking, folders, cut-and-paste, Microsoft Office Suite compatibility, etc etc
etc - all were celebrated as significant new features of the iOS platform - which had
existed for years - for years - on Symbian prior to the launch of the original iPhone

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122 a supercomputer in your pocket

in 2007. It was an old OS, yes, it was bloated in code and fragmented in its device
universe and difficult to program for, but Symbian had been created purposely for
being an OS for mobile phone handsets, not for personal computers, like for
example iOS and Windows Mobile.
The point is, that we almost avoided a war with the operating systems. The
Symbian partnership stood together with only a small North America based protest
movement around Palm, RIM and Microsoft Windows Mobile, until the iPhone
came along. Then the pressures of Apple's rapid rise, and conflicting needs of
Symbian partnership members of how to respond to the iPhone; combined with the
simultaneous launch of Google's new Android OS, triggered the break-up of the
Symbian partership. Today, except for Nokia, none of the Biggest 7 handset makers
offer Symbian devices anymore (Samsung and SonyEricsson were last of the big 7
to pull out of Symbian during 2010). Still, Symbian is not done, several Japanese
manufacturers including Fujitsu and Sharp make Symbian handsets in Japan, in
addition to Nokia obviously.

Meanwhile in North America

So the North American smartphone market was late to wake up to smartphones.


Back in 2006 before the iPhone, most Americans thought a smartphone was
tantamount to a Blackberry, and still many Blackberries in use had monochrome
screens and didn't include cameras. The Palm OS and Microsoft Windows Mobile
were both targeted at enterprise customers and the few Nokia smartphones one
might see were E-Series phones seen as cheap Blackberry knock-offs by Nokia.
Europe, Australia and advanced parts of Asia had already seen consumer
smartphones led by the Nokia N-Series and other advanced consumer-oriented
smartphones by SonyEricsson, Samsung and LG. The North American analysts and
pundits still in 2007 mostly used outdated 'Blackberry era' business-smartphone
concepts and assumptions, such as evaluating the iPhone's performance based on
how well it was (or not) accepted into the enterprise/corporate market segment.
Early US pundits also questioned the consumer willingness to use the cameras on
cameraphones, the music players on musicphones and the web browsers on
internet-enabled phones. This was all very familiar to those of us who had studied
the industry longer, as these arguments were met and passed early in the decade in
Europe and advanced countries of the Asia-Pacific region.
That all changed with the iPhone, as I explain in my essay 'Before the iPhone,
After the iPhone' later in the Convergence and Cannibal chapter. Today the North
American smartphone market is exactly like in other advanced phone market,
driven by consumer smartphones. The consumers are - just like in other markets -
adopting all major abilities of the phones from SMS text messaging to mobile news
to cameras, music and gaming. In North America in the year 2010 the three big OS
platforms of similar scale in unit sales, were Android, Blackberry and iOS. By
installed base, the biggest is still Blackberry and smallest is Android. But with

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Chapter 7 - Smartphones 123

Android selling the most, soon Android will also be the biggest platform of North
America. Palm and Windows Mobile are disappearing, and Microsoft's new Phone
7 is not catching the world by storm in any market, yet. Nokia's Symbian and
Samsung's Bada are not in any way relevant to the North American market today. It
is fair to say, the battle for North American OS will be one between Android, iOS
and Blackberry where Android has already an upper hand.

Rest of World is Three Way Race

The rest of the world turns into a three-way race. The clear market leader is
Symbian and Nokia. They have far more than half of the installed base, and they
sell about half of all smartphones in this area of the world. And remember, Nokia
has consistently had s stronger market share in smartphones than dumbphones. It is
reasonable to assume they can migrate most of their current market share in
handsets, into smartphones.

Apple has had significant market entry success in Europe, Japan, South Korea,
Australia and parts of advanced Asia. Even in China they have made meaningful
sales. Yet Apple's total market share of all smartphones sold outside of North
America is only 12%. Meanwhile remember that Apple's Macintosh market share
has been stable in the 3% - 4% for the past decade. The Mac is a premium luxury
PC. If we look at the iPhone's global market share, not of smartphones but of all
mobile phones, in 2010 it will have reached about 3.5%. This is Apple's 'natural
share' and please, my dear reader, do not be mistaken into thinking that Apple can

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124 a supercomputer in your pocket

ever 'dominate' the mobile phone space. It cannot. It is by definition a highly


desired luxury brand, and needs to maintain very high costs of R&D to remain as
one of the most desirable gadgets in the world. This, Apple has very successfully
turned into highly profitable business, not unlike Porsche or Ferrari can do in cars,
but Apple is not Ford or Toyota of phones, it is a premium luxury brand. Its place is
in the premium luxury bracket. It is nearing its ceiling for global handset market
share, which will be in the scale of what the Macintosh achieved in 27 years of PC
sales, not more.
Similarly Blackberry has been incredibly successful in some markets, in
becoming the smartphone of choice for the youth segment, from Indonesia to South
Africa to Venezuela. But they are a classic 'niche' player, with a tightly focused
niche product serving a niche need. It will not become the global popular mass
market device. While the iPhone and Blackberry are seen in North America as
'dominant', worldwide they are not. The world market is divided by three players,
Nokia, Google Android ...and Samsung Bada.
Google's Android is a clear market success in North America, so many who
read any tech press are very easily willing to accept that Android will be big and
could even become the biggest OS in the world. Part of what powers Android is that
it is free to the phone makers, meaning that very many 'third tier' phone makers like
Huawei and ZTE and G'Five etc are offering Android based handsets. It is also the
OS of choice for those of the traditional PC makers who are new to smartphones, ie
Dell, Acer and Lenovo. An interesting analysis is to look at the market shares of the
Top 10 dumbphone makers of 2009. If we assume that all dumbphones will at one
point become smartphones - and we assume that the manufacturers are able to
transfer their dumbphone market shares to the same shares in smartphones (not easy
to do, witness Motorola, SonyEricsson and LG) - then theoretically the 'Android
Army' would have a potential market share of 45% of all phones sold in 2009 -
bigger even than Nokia's 37%.
There are complications for Android, however. The obvious first one is
Microsoft and its Phone 7. Several previous Microsoft Windows Mobile
smartphone makers have announced support of Phone 7 (strangely, Microsoft
decided not to offer a migration path from Windows Mobile to Phone 7, for the
developer community, and many Windows Mobile handset makers abandoned
Microsoft in this transition). So LG and SonyEricsson are for example also going to
provide Phone 7 handsets. This means that part of the support of the 'Android
Army' is going to be split between Android and Phone 7.

Bada Not Dark Horse, Is Real

The bigger long-term loss to Google is Samsung, as Samsung is the only


manufacturer of the Android Army which has launched its own OS, called Bada. In
the first half year of Bada, it sold 5 million smartphones and Samsung has annouced
a target of selling 10 million in its second half year. Already in the first six months,

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Chapter 7 - Smartphones 125

Bada has achieved a world record in the best new smartphone OS launch in history,
selling more in the first half year, than Google's Android or Apple's iPhone.
The magic potion for Bada comes in two parts. First, it can count on powering
most of Samsung's total family of smartphones in the coming years. While the
Galaxy series of Android-based Samsung smartphones is very popular now, it is a
premium smartphone. Bada was built for low-cost phones. So as Samsung migrates
its dumbphones to smartphones, most will be lower cost phones, and that means
most of Samsung's actual 21% market share will be Bada devices, not Android
devices. And this low cost design is also the competitive advantage that Bada has
over both Android and Symbian - as Bada was built to run on very low cost phones,
on low power CPUs, on low amounts of memory etc.

Nokia's Complicated Migration Path to MeeGo

Meanwhile, Nokia starts off with the global lead, even for the full year 2010,
Nokia's Symbian will sell more smartphones than the biggest two rivals combined.
From that strong position, Nokia faces a difficult migration path. It has to manage
somewhat a similar transition as Microsoft did with its OS shift in personal
computers from DOS to Windows.
Nokia has announced the parts to this migration. The future OS for Nokia
smartphones will be MeeGo, a new OS evolved from Nokia's previous Linux based
OS project called Maemo (which powered Nokia's N900 premium smartphone).
MeeGo is developed together with Intel and has several dozen manufacturers and
partners signed up, but those include none of the big 10 makers that used to support
Symbian. So MeeGo is likely to be seen as primarly a Nokia OS,
Before MeeGo handsets are launched, Nokia will continue to evolve Symbian
and will run the two OS's in parallel likely for many years, offering Symbian as its
low-cost handset OS (similar to how Samsung runs Bada) with premium phones
increasingly using MeeGo.
The development environment for both Symbian and MeeGo is now Qt, which
offers one set of tools to develop applications for both OS platforms. This is how
Nokia ensures support of its developers as Nokia migrates from one platform to the
other. And at the consumer end, Nokia offers the Ovi store, which will offer
applications and other content sold to not just MeeGo and Symbian phones, also to
simpler Nokia featurephones that run the S40 operating system.

Three of Biggest Four are Certain

The biggest platform race ever seen in the world of technology, will be seen in this
next decade for the smartphones and many other devices that these operating
systems can power, such as the Apple iOS powering the Apple tablet PC the iPad
and Apple's portable media player the iPod Touch. Similarly the Android platform

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126 a supercomputer in your pocket

is supporting already television sets and tablet PCs. And Nokia's MeeGo is already
targeting some automobile telematics types of uses.
There are three 'sure winners', to the degree we can assume with confidence
that anything can be sure in forecasting. Nokia sells more than a third of all phones
in the world. They invented the smartphone, and Nokia has consistently had a better
market share in smartphones than dumbphones. Nokia know how to migrate their
customers successfully from dumbphones to smartphones, globally. This is not
always by making the most desirable uber-gadget, but rather in understanding that
Nokia's core customer is a mass-market customer, and Nokia has to address the
needs of the mass market. So if we use the tired car analogy, it is more important
for Toyota to make sure its Corolla is desirable for all, than to try to make the Lexus
the best-selling supercar. Whether Nokia does extremely well or extremely poorly,
they will easily have a quarter of the smartphone market and may sell four out of
ten smartphones, towards the middle of the decade. As far as one can forecast,
Nokia's smartphone platform evolution (Symbian-to-MeeGo via Qt and Ovi) is the
surest to be one of the big 4 winners in the smartphone OS races.
The second sure bet is Android. Google has achieved such strong early
acceptance of Android, powering so many of the second tier maker phones.
Explicitly, in particular with HTC, Google have proven that they can deliver a
consistently winning OS platform for HTC, that Microsoft was unable to do in the
past with Windows Mobile plagued with perennial delays and bugs. Even if
Samsung were to depart totally from the Android Army and only focus on Bada in
this decade, of the Top 10 biggest dumbphone makers of 2009, the Android Army
would be left with 24%, a hefty market share. The more Samsung provides a split
of its efforst, the better for Android. It is certain to have at least a fifth, and could
have as much as half of the smartphone market towards the middle of the decade.
The only other certain bet of a big OS platform in smartphones is Samsung's
Bada. Samsung has already announced it launched Bada to power the majority of its
smartphones, and Samsung may at some point abandon Android completely and use
Bada to power all of its phones, as Samsung would have more control of Bada than
trying to influence Google about the development of Android. And Bada would
give Samsung opportunities to differentiate against LG, SonyEricsson, ZTE,
Motorola and Huawei, other Top 10 handset makers who all support Android. If
Samsung puts most of its effort to Bada, and assuming Samsung continues to do
well in dumbphones, it can easily own a fifth of the market of smartphones.

The rest fight for fourth place

It is very important for analysts, developers, strategists and experts to understand


that the race today in the OS wars is not for who wins, it is for who comes in as
fourth. The first three places are already confirmed. Yes the battle between Google
and Nokia is for who is number 1, but their market shares will be very similar in
size. Bada is certain to be number 3. The race is for who gets to be fourth biggest.

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Chapter 7 - Smartphones 127

The obvious biggest threat there is Microsoft Phone 7. It has several


manufacturers supporting the brand new OS, and for the first time Microsoft has
designed a purpose-built OS for smartphones, where previous editions were phone
adaptations of its PC operating system. Microsoft has a long history of fighting
platform wars (DOS, Windows, Office Suite, Xbox) and is very profitable in its
main business with deep pockets to keep this fight going for a long while. The
biggest problem for Microsoft is who is fighting in its corner. The company that
had made most smartphones for its previous Windows Mobile, Taiwanese HTC,
made a loud shift to Android and is expressing only lukewarm support of Phone 7.
It seems like the relationship between HTC and Microsoft has soured over the
years. Also the lack of Motorola's support of Phone 7 (a past Windows Mobile
supporter) is now felt at Microsoft, while Motorola fights to regain a role in the
smartphones space.
The second big player is Apple and the iOS. Apple is not willing to license the
iOS to other manufacturers and up to 2010, had resisted even calls for splitting its
annual product range to more than one model of iPhone. Many analysts had
suggested Apple could grow market share strongly if it introduced an 'entry level'
low cost iPhone model as something like an iPhone Nano. I would say this is
inevitable in the mid term, but it now comes too late to save Apple. A year ago, and
Apple could now be contesting for the Top 3. Instead, Apple is struggling to stay in
the Top 4 for the mid-term. Apple can be seen, however, to remain in smartphones
'forever' almost no matter how small their final market share might end up being.
Look at how stubbornly they stuck to the Macintosh PC platform and how that has
kept them distinctive and iconoc, with a loyal returning customer base. Expect
Apple to be around for the decade, but a dark horse to be in the Top 4.
Blackberry is another difficult play. RIM has played their cards very well and
is finding new markets. It is however, also like Apple, not licensing the OS for
other manufacturers, and is now nearing its ceiling for how far they can grow. Its
OS is dated and needs a complete overhaul, which would be complicated for
develoeprs. Blackberry has been growing less rapidly than the industry and this
signals strongly that their overall market peak may have passed. Unless they make
dramatic changes to their strategy, RIM's market share of all phones will be in the
scale of Apple's, in the 5% scale plus or minus a few percentage points.
A possible strong player, who is failing currently in the market is Hewlett-
Packard with its Palm acquisition. If HP uses its Palm platform to provide a
'business smartphone platform' to its strong enterprise/corporate PC footprint - this
strategy will ultimately fail and condemn HP/Palm to a decaying path. I explained
earlier in this chapter what decides corporate/enterprise sales of smartphones. HP
can make modest sales of smartphone handsets to some business/enterprise
customers, but that is not enough to sustain the platform and unless HP rapidly
takes a parallel consumer strategy, Palm and WebOS will die. All early signs from
HP are wrong, and they seem not to grasp this vital shift. They owned the one
touch-screen handset and OS, which in US based comparisons of late 2009 was

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


128 a supercomputer in your pocket

seen as 'as good as' and in parts 'better' than the iPhone and iOS, What Palm lacked
was the deep pockets to fight for the global consumer market in smartphones. It
could have achieved that support out of HP. But HP seems not to have cared, and
all early announcements from HP about Palm have been disappointing. It is not too
late, but it will soon be too late for Palm even with HP's deep pockets. If they focus
on the enterprise, they will not survive. Blackberry has mined that market for as far
as it can go. Nokia E-Series and Microsoft Phone 7 will take what crumbs are left.
If HP tries to re-enter that segment, they will be cruicifed, not because of a bad
solution, but simply because of the reasons I explained before in this chapter. The
enterprise/corporate IT departments will not accept new platforms without a severe
fight. Palm's developers will not hang around long enough to see HP with one or
two percent market share years from now.
Linux Mobile was once a major player out of Asia, especially out of Japan. It
is now seeing most competent developers shifting their efforts to newer Linux
based OS platforms like Google's Androd, Nokia's MeeGo and Samsung's Bada. I
do not see Linux Mobile as a viable contender for the 4th biggest position.

Projection For 2011 Market Shares

This book is not intended a forecasting analysis for the mobile industry. But for
many readers, the question of which smartphones will be the major platforms will
be very significant. I have therefore added a projection of smartphone operating
system market shares for the year 2011. I am assuming that Samsung will
aggressively migrate its featurephone user base to both Android and Bada, but will
shift more to Bada during 2011. I am assuming Android will continue to grow but
its growth rate will slow as most of its major handset makers like LG,
SonyEricsson, Motorola and HTC had already released their Android phones by the
summer of 2010. I am assuming that Microsoft Phone 7 is seen as a competitive
product and it launches on time in late 2010, and will restore part of Windows
Mobile's sagging shares. I am assuming the rest of the market behaves roughly
evenly, ie gains by Android and Bada will be reflected roughly evenly in market
share losses by Symbian, RIM and Apple.

1 Symbian and MeeGo (Nokia) 29% - 37%


2 Android (Google) * 22% - 34%
4 iOS iPhone (Apple) 13% - 17%
3 Blackberry (RIM) 12% - 16%
5 Bada (Samsung) * 6% - 12%
6 Phone 7 and WinMo (Microsoft) 3% - 6%
7 others 2% - 4%

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Chapter 7 - Smartphones 129

* Note: Samsung will be supporting both Android, Bada and Phone 7, so to what
degree Samsung prioritizes Bada will reflect in declines in Android and Phone 7
totals.

What Of Apps Stores?

Some will say the app stores will tilt the balance. I understand the argument, but
today Apps stores are a total non-story. They do not matter one iota in the big battle
for smartphones this year, but you will hear all kinds of silly stats and forecasts and
billions of downloads. That will not determine the market success. I told you what
decides market success globally in smartphones. I also told you the media's silly
obsession with app stores is pointless. But I furthermore said that app stores are a
good trend, and eventually, in many years from now, we may have real value out of
app stores. Whenever you hear 'app store' mentioned in 2010 safely skip the story, it
is meaningless to smartphone market success. Don't fall for the app store hype

WHERE NEXT?

So you want to know more about smartphones? Ok, that means the best data you
can hope for is in my new TomiAhonen Phonebook. That has over 90 tables and
charts and graphs about the handset business. If you are more interested in the
design of the UI, then I warmly recommend Barbara Ballard's Designing the
Mobile User Interface.

TomiAhonen Phone Book 2010


by Tomi T Ahonen
ebook format
only from www.tomiahonen.com
has 90 tables and charts of data
cost only 9.99 Euros

Designing the Mobile User Interface


Barbara Ballard
Wiley 2007

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


130 a supercomputer in your pocket

Essay:
Golden Decade of Photography
The Camera is about 170 years old. For most of its existence, the camera
population on the planet grew roughly at the rate of doubling in size per decade.
Twice as many cameras in use at the end of any decade, than at the start of the
decade. This pattern held until about the year 2000. Then the world experienced
a dramatic explosion of cameras, and during the past decade, the population of
cameras in use grew ten-fold. It has clearly been the golden decade for the
camera industry and for photography.
The camera industry correctly forecasted a dramatic growth in consumer
adoption of digital cameras for this past decade. The growth was even better
than they expected. But the growth was shifted from stand-alone digital
cameras to cameraphones and the sales of stand-alone digital cameras stalled
and stagnated. This is a common pattern in the 'Battle for the Pocket' as I have
chronicled in my books from the PDA vs Smartphone battle to the musicphone
vs iPod battle, etc. Same pattern always.
So what happened to the big four camera brands? In 2000 when the
cameraphone was launched the world's biggest camera brands were Canon,
Konica, Minolta and Nikon, all out of Japan. Today only two of them continue
making cameras, Canon and Nikon - which both quickly shifted their focus
from consumer snapshot cameras to premium professional and semi-pro camera
systems. Minolta and Konica have quit the camera business altogether. This is
the decade of the biggest growth of consumer camera use ever, where the
annual market for new digital camera purchases grew by more than 10 fold. It
was the golden age of cameras, yet two of the big 4 failed to survive this
enormous opportunity.
Same is true of the various other cameras-oriented industries like Kodak
and Polaroid. Kodak lost 95% of its consumer photography related revenues
during the past decade, yes while the industry itself grew 10-fold, Kodak lost
20-fold. And poor Polaroid. During the past ten years they went bankrupt...
twice.
Today the world's most sold camera brand is Nokia. The world's most
sold branded camera optics are not Nikon or Canon branded lenses, nor any of
the independent Japanese lens-maker giants like Vivitar or Takumar. The
world's biggest optical camera lensmakers today are Carl Zeiss optics, as they
are on many premium Nokia cameraphones.
Of the total population on the planet, out of any person who has ever
used any type of camera, for 9 out of 10 such users, the only type of camera

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Chapter 7 - Smartphones 131

they have ever used, is on some cameraphone. It may be difficult for older
readers in the Western industrialized countries who see the long lines of
cameras and accessories sold at the electronics stores, yet the numbers are
perfectly clear.
So lessons. The cameraphone did not kill the stand-alone camera. It just
took 90% of the market. For the mobile industry that was far more than
'enough'. The big phone makers like Nokia, Samsung, SonyEricsson and LG are
not in the business of creating professional cameras. They can happily leave the
small 'pro market' to the specialists like Nikon and Canon. But as the mass
market for stand-alone cameras, digital and film-based vanished, the mass
market business also shifted. Kodak, Minolta, Polaroid, Konica and so many
other major camera industry players had to abandon the camera related business
and shift to something else like professional imaging or scientific
instrumentation or photocopiers or whatever, or else go bankrupt, like Polaroid.
If they had aggressively pursued the mobile market, either through a
premium cameraphone or a specialist role in the ecosystem or in partnership -
any of the big giants of cameras could have a major role in the mobile industry
today. Look at Apple, a computer maker, who decided to do its music player
(iPod) on a phone as the original featurephone iPhone 2G, and then decided to
make it a full 'pocket computer' by the second release of the iPhone 3G as a real
smartphone in 2008. They only sell 2% of the world's total mobile phone
handset market today, but its such a huge market, that it powers the majority of
Apple's revenues and the majority of Apple's profits.
In the decade from year 2000 to 2009 we have witnessed the golden age
of photography. In it the global user base of cameras grew ten-fold. The number
of pictures taken grew so dramatically, most pictures ever taken, have been
taken within the past few years. Yet in the golden age of photography, all of the
past giants of the camera industry struggled or even died. The market
opportunity was taken by mobile phone makers, none of which even made one
camera at the start of the decade.

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


132 a supercomputer in your pocket

To be added:

Excerpt from Tomi's 11th book:


TomiAhonen Phone Book 2010
has just been released

A later version of this eBook will include


some sample pages and stats from the
TomiAhonen Phone Book 2010

please monitor Tomi's blog or website or Twitter for more information.

www.communities-dominate.blogs.com

www.tomiahonen.com

Twitter: @tomiahonen

(Please note this edition you are reading, is a late draft version from 2010. Please
return to Lulu to get your final edition of this free eBook in early 2011)

This eBook is available for free download Tomi T Ahonen


Chapter 8 - Mobile Messaging 133

"Everybody loves incoming."


Mark Curtis, CEO Flirtomatic

VIII
Mobile Messaging
And the Myth of MMS being a failure

Faster than a locomotive, able to leap over giant buildings - yes, its... SMS! Text
messaging has three times the users of email and is twice the size of television
Mobile phone based messaging is 3 times as big as email when counting the
user base. Mobile phone based messaging has twice as many active users as the
total worldwide population of television sets. And personal computers of any kind
including netbooks and tablet PCs like the iPad? Mobile phone messaging is three
times as big as the total global installed base of any kind of personal computer. And
this is not 'wireless email' no, nor is it 'twittering' or mobile 'instant messaging'. No,
the most used mobile messaging system - that is, the most used data application on
the planet - is SMS text messaging.
I can now tell you for a fact, that nobody is safe. Even the last luddites will
take to it. That uncle of yours who says 'never' - even he will be converted. We now
have the evidence! Its about time to take a look at mobile phone based messaging
for 2010.

SMS Used By 53% Of Planet

I've been reporting passionately about the latest developments in that amazing
success story that is SMS messaging. I write about SMS regularly in my books, my
blogs, and speak at my various public presentations. So lets update the view to
mobile text messaging, the most widely used data application on the planet.
Consider email. Email was invented in 1971, so it has had 39 years of life. In those
four decades email has spread globally and has 1.4 billion active users today (said
Netcraft Feb 2010). Note this is far more than the total number of personal
computers in use worldwide, as obviously there are many who share a PC at home,
or use one at an internet cafe or at work or the university etc. Still, in 39 years,
email has achieved 1.4 Billion users which is 21% of the total population on the

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134 And myth of MMS being a failure

planet. Very impressive. In fact, email has more users than fixed landline
telephones (at 1.15 Billion and in gradual decline). Did you notice that? More send
messages than talk on a fixed landline worldwide.
Email was the first 'killer application' for the internet. It was a vital link in the
expansion of the personal computer from the office to the home. It was the first
reason why 'normal people' wanted to get an internet connection (and eventually
was superceded as a reason to get online by search and browsing, and now social
networking like Facebook, YouTube, Twitter etc)
That is our context. 39 years, 1.4 Billion users. Now take SMS text messaging.
Mobile phone based messaging was invented by Matti Makkonen then of Telecom
Finland (part of TeliaSonera today) and my former mentor when we both were
employed by Nokia later in his career. Matti's invention was first technically used in
the UK when machine-originated SMS were used for testing purposes in 1991. The
first commercial use of SMS was in Finland on Radiolinja's GSM network (part of
Elisa, another of my former employers). The first use of SMS to send a text
message from one phone to another phone was by Nokia employee Riku Pihkonen,
who did this on obviously a Nokia phone and the Radiolinja network in 1993.
So SMS text messaging is less than 17 years old today. Literally less than half
as old as email. How has SMS fared? Spreading like wildfire, SMS became the
world's most widely used data application. It was used by half of all mobile phone
subscribers by 2002. That year SMS user number shot past the total worldwide
count of email users. SMS hit one Billion active users by 2004 and two Billion
active users by 2006. The juggernaut continued its relentless climb and by 2008
SMS had passed 3 billion active users (Ericsson 2009) and earlier this year we
heard from messaging solutions giant Clickatell that SMS passed its 4 Billionth user
(Clickatell 2010). That is now at 80% of all mobile phone subscribers on the planet.
Towering over email, SMS has 3 times more users than email. The active user base
of SMS text messaging is 59% of the total population on the planet.
Even the last 'laggards' are getting onboard, with the majority of Americans
now active users of SMS. It was at 65% of US cellphone subscribers two years ago
and growing strongly (Wirefly Apr 2008) and American consumers now prefer
sending SMS text messages to making phone calls on their cellphones - another
universal trend by the way (CTIA 2009). In advanced markets like Britain 87% of
all subscribers send SMS (Carphone Warehouse 2009), China 90% of subscribers
send SMS (China Mobile Sept 2009) and in Pakistan 90% of subscribers use SMS
(Daily Times of Pakistan Feb 2010). In Brazil SMS is used by 79% of mobile
phone subscribers (Acision Dec 2009)

How Much

Lets put this in numbers we can appreciate. The limit of a standard SMS text
message is 160 characters (if you're familiar with Twitter, Twitter's limit is 140
characters). Now, the average user in the Philippines send 28 SMS text messages

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Chapter 8 - Mobile Messaging 135

per day (Manila Bulletin, 30 March, 2010). If we assume the average length of an
actual text message sent in the Philippines is 80 characters in length - half the full
length - then the Filippino population produce that much new original text - by
triple-tapping on their phones - that each average user would create a new book in
the number of words produced ...every four months. So every Filippino writes that
much on their phones, they're creating the equivalent of 3 new books every year.
Note that the above is not the heaviest users of SMS, no not by a long shot.
Heavy users, older teenagers and young adults from the UK to South Korea to the
USA have been measured sending on average 100 SMS per day. A third of US
teens are already in this category, averaging more than 100 SMS per day (CTIA
2010). In the UK it is so far past the teen segment, that 10% of the total UK
population was sending over 100 SMS per day already in 2006 said Virgin Mobile.
If we assumed it was only the 16-24 year old segment in the UK, it would mean
71% of the youth are now so addicted to SMS they send 100 SMS per day. In
reality its probably nearer 50% who do that, and the age spread of heavy SMS users
extends in the UK well into those over the age of 30.
If you send 100 text messages per day, and then you obviously would typically
do that with friends who are also heavily into SMS text messaging, so you'd
roughly speaking receive also the same amount - another 100 SMS text messages
arriving on your phone daily - that means you're either reading or writing a new text
message every 5 minutes of all hours you are awake in the day (every single day of
the year). Note, this does not include re-reading messages... And as I reported in the
consumer behavior chapter earlier, for the average user, counting all uses of mobile,
we glance at our phone on average 150 times per day according to global
measurements by Nokia in 2010.

Addictive

SMS text messaging is a universal trend. It is proven to be addictive in university


studies on mobile phone addiction from the Catholic University of Leuven in
Belgium to Queensland University in Australia. Proven not just to be addictive, it is
as addictive as cigarette smoking! (so there is absolutely no prospect of going back.
Understand this paragraph - SMS text messaging is proven to be addictive in
university studies and as addictive as cigarette smoking - that means, that anyone
who ever 'gets the habit' won't be able to stop). By the way, who was it who first
told you in a book that SMS was showing signs of being addictive? Its yours truly,
in my second book m-Profits in 2002. If you were around to read that book back
then, and you bothered to follow up with my writing, you'd be a mobile messaging
mogul and millionaire now (as some of my readers of course are).
As of this January the world sent 12 Billion SMS text messages every day,
which is half a billion every hour, or 9 million SMS every minute or 150,000 text
messages sent globally every second of every day. Each of those is a paid or

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136 And myth of MMS being a failure

charged message. 150 thousand paid messages sent every second. To put it another
way, this industry earns another million dollars of revenues - every 4.5 minutes

Lets Talk Money

So how big is it? SMS text messaging passed 100 Billion dollars in annual revenues
two years ago and has now passed 119 Billion dollars in annual revenues for 2010.
How big is that? For context, the global music industry is worth about 20 Billion
dollars. Hollywood box office revenues are about 25 Billion dollars. Videogaming
software income and console sales, combined, are worth about 40 Billion dollars.
Internet based content incomes, such as paying for premium content like
multiplayer gaming like World of Warcraft or Second Life, and various adult
oriented services etc (excluding advertising income), is worth about 27 Billion
dollars. Add all of those together, global music, global videogames, global cinema
box office revenue and global internet content revenues and we are at 112 Billion
dollars. SMS text messaging alone is worth 119 Billion dollars. And while music
industry is in a death-spiral and most media are losing customers and losing a lot of
money in 2009 when the global economy suffered, SMS text messaging revenues
users by 11%, grew traffic by 27% and grew revenues by 7%.
Or to take another industry, SMS text messaging generates as much revenues
as total worldwide radio broadcasting industry. That is a lot of money. And if we
hark back to email, for comparison, internet based email earns less than 5% of what
SMS earns. Yes, SMS text messaging is 20 times larger by revenues than email.
The little brother has truly grown past its older sibling.

Everyone Will Use It

But yes, how far can it go? We all have that parent or uncle or boss who hates SMS
(probably hates all mobile phones) and totally refuses to use SMS. It seems like
there would be a part of society who will 'never get it'. For that, we now have
absolute evidence. Research & Markets just reported in February 2010, that
Finland's total user base of SMS has reached... 90% of the... total ...population !!!
Not 90% of the mobile phone 'subscriber base', not 90% of mobile phone 'users'. In
Finland SMS has now reached an active user base that is 90% of the total
population!
Finland is where it all started, and now 17 years later, we are at the point
where nine out of ten Finns are active users of SMS text messaging. Why is this
such an astonishing number? We need to look at the total age pyramid of Finland to
get its significance: 8% of the Finnish population is too young to finish first grade
in school. So 8% of the Finnish population can not be expected to use SMS because
they have not yet learned to read and write.
Now it truly gets astonishing. Yes, 92% of the total population of Finland have
once learned how to read and write (Finland was one of the first countries in the

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Chapter 8 - Mobile Messaging 137

world to reach 100% literacy, even the USA is not at 100% literacy). And now
Reserach & Markets measures that 90% of the total Finnish population are active
users of SMS. That means, that out of the population which is 'old enough' to know
how to read and write, a massive 98% of that population uses SMS! That is truly a
massive statistic. It is for all practical purposes 'everybody' because - in that last 2%
who do not use SMS but who are old enough to have gone to school at some point,
we have people with permanent disabilities that they cannot ever use SMS - they
are either totally blind or 'legally' blind, and/or have amputations in
arms/hands/fingers and unable to use a phone keypad. That last 2% includes those
who have mental disabilities that they cannot learn to read or write. That last 2%
includes the old and infirm, including those who are so old their eyesight cannot
handle looking at a phone screen even with eyeglasses, or their hands are so hurt by
arthritis they can't hold a phone. And that last 2% includes those who have reached
those stages of old age like Altzheimer's that they can't remember people anymore
and can't thus use a phone.

SMS Text Messaging Users and Total Mobile Subscribers

3 Subscribers
SMS users
2

0
8
99

02

03

04

05

08

09
00

01

06

07
9
19

20

20

20

20
19

20

20

20

20

20

20

Source: TomiAhonen Almanac 2010

Yes, Finland is where it started and today, out of all people who know how to
read and write, and who have the physical abilities to read, to write (and to
remember), we have essentially 100% adoption of SMS text messaging.
I told you its addictive. And if so, it means it is only a matter of time before
everybody will be doing it. If Finland is at this point today, you can be 100% sure,
Sweden, Norway, Denmark, Israel, Singapore, Italy, Austria, etc are only a few
steps behind. The rest of the world will follow. Every country it will become true,
even in the USA and Canada, that every economically viable person who knows
how to read and write, will sooner or later discover the immense power of mobile

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138 And myth of MMS being a failure

phone based messaging - and will use it. And then its only a matter of time before
they become addicted to it.

Gotta Take A Break

So, your young adult friend just excused himself or herself and went to the
bathroom. Did you notice that the young adult took their phone with them? And
again, yes we all do it. Purple Gossip measured the UK public in 2010 and found
that 75% of the British take the mobile phone to the bathroom, which mirrors
similar stats the world over.
We do not talk on the phone while in the toilet. If its a public restroom like at a
restaurant, and someone happens to be listening - they won't hear your friend
talking on the phone, no. We don't take the phone to the toilet to make phone calls.
No, we use the phone in the bathroom to read and send messages.
We can feed our messaging habit privately without drawing any attention.
Nobody gets to eaves-drop on the discussion. And if the phone keypad and other
'beeps' are set to silent, nobody will even know what we're doing in there. As to
teenagers, they are brazenly willing to send SMS text messages to someone else
while they are talking to you. I am not kidding. 48% of British teenagers admit to
doing this, sending text messages simultaneously while carrying on a conversation
with someone else like their parents, teachers etc (Carphone Warehouse 2006).

Business Communication

Then we have those, still many 'luddites' in North America still, and occasional
senior management in miscellaneous other laggard countries - where they wonder
whether SMS is suited for business communications. This myth was destroyed early
in the past decade in the UK, where typically very conservative British business
executives discovered SMS and started to use it in business. Early statistics from
the MDA (Mobile Data Association) reported that the majority of UK based
executives used SMS for work - receiving as many as 40 work related SMS
messages daily - and that British executives considered SMS their most valuable
time-management tool. Think about it, the only resource a manager cannot
replicate, is his or her own time. And if 'conservative' British executives felt SMS
was their most valuable time-management tool, perhaps you should consider it too.
Mobile phone based messaging is so powerful and necessary for modern high-
speed management, that Barack Obama insisted he had to get to keep his
Blackberry. That was in the Spring of 2009. Now consider Britain - UK former
Prime Minister Tony Blair was using SMS in his government meetings back in
2004, five years before Obama brought it to US top government use. And how did
Blair use it - he had approved the use of SMS during meetings, between Cabinet
members, to allow them to communciate silently across the table - without
disturbing the meeting. This is modern management. Not 'forbidding the

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Chapter 8 - Mobile Messaging 139

Blackberries' as we still hear of some US CEO's decreeing - but rather to embrace


the modern high-speed communications. But did Tony Blair invent this innovation?
No. The Slovenian Prime Minister was using SMS back in 2000.

Speed

Why SMS, why not email? Think about it. How urgently do you respond to emails?
The New Zealand Herald compared delivery speeds and found that a typical SMS
text message is read within 4 minutes, but a typical email is read within 48 hours.
How much faster is that? SMS text messaging is 720 times faster than email!
To put this in context, in the early 1800s, the fastest way to cross the Atlantic was
by fast sailship and if you were lucky with the winds, you could cross the ocean in 3
weeks. Then 150 years later we witnessed the Concorde, able to fly supersonically
over the Atlantic and make the crossing in a little over 3 hours. Is that 720 times
faster? No, even that speed difference is only about half the speed advantage that
SMS has over email. What business executive can justify the primary use of such
an archaic communication method which is 720 times slower than its more modern
rival? What business travel organizer says, "No, Mr Ahonen, you should not fly
from Hong Kong to San Fransisco by jet, please take a ship... a sail ship." The
world would grind to a halt! Yet some executives suggest SMS is not for them?

Internet Not Optimal For Messaging

The internet is obviously used for messaging, yet it is not optimal for messaging.
You have to be connected. You have to have an expensive PC, which more often
than not, is a desktop PC, so it is very immobile, and even if a laptop, its heavy and
you don't carry it everywhere. But if you do take it with you, you then need to find
connectedness, a WiFi hotspot or a broadband connection etc. It is not very
convenient if you want to send messages. It is even less convenient to receive on, as
it is not always connected (and not permanently carried). So even if YOU are
connected and can send an email (or tweet or IM instant message etc) - your
counterpart is not necessarily connected at the same time.
So yes, the internet can do messaging, and is better at it than other media and
communication systems but it is not optimal for messaging. The internet is a
compromise as a platform for messaging. Much as that may seem at odds with the
popularity of eMail, instant messaging and all popular social networking sites. It is
still true, the internet is not the optimal messaging platform; mobile is.

Mobile Is Best At Messaging

Now fast forward one decade, and we have mobile messaging from our pockets. I
am not talking about the 4% of mobile phone users worldwide who have a
Blackberry. I mean the 80% of the mobile phone user base who are active users of

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140 And myth of MMS being a failure

SMS text messaging - 4 billion people on the planet already are active users of SMS
text messaging. Twenty times more than all users of the Blackberry!
So now, we have the channel which is optimised for messaging use. The phone
is connected always. The phone is carried always. We can send messages absolutely
anytime and from anywhere and better than that, our messaging counterpart will
also have their phone with them at all times, and it is connected at all times.
The device is optimal for messaging too. The screen is so small, our messages
are truly private. Try doing private emails at Starbucks on your laptop. The keypad
on the phone is optimized for messaging. You can do SMS single-handedly, and
heavy users (young users) are fully capable of holding the phone out of sight, in
their pocket or under the table, and still send messages. Most laptop users can't do a
full email transmission without looking at the screen. So my point is, that the
internet was yes, a far better communication method for messaging than had existed
prior to it. But today, mobile is far better than the internet. No wonder email growth
in users is stagnant while SMS text messaging growth is exploding.
SMS is the most discrete form of communication and it is the fastest form of
communication. No wonder kids use SMS to try to cheat in tests. No wonder
business executives use SMS in management. What started once as a 'teenager
thing' has now reached the total population, every age of those who know how to
read and write. And its not a consumer thing anymore, it has a valid place used in
business the world over.

Premium SMS

But the most widely used data application is not just a messaging platform for
person-to-person communication. The first commercial or 'business' use of SMS
was in Business-to-Consumer use, when Merita Bank of Finland (now part of
Nordea Bank) offered banking balance alerts via SMS in 1995. We would see total
banking solutions via SMS from the Philippines within a few years. Aamulehti the
Finnish daily newspaper offered SMS based headlines from 1996. The first SMS-
enabled vending machines were installed in Finland in 1998. Today most of
Finland's vending machines accept mobile payments, the total count of such
vending machines is past 1,000. Globally vending machine vendors are falling in
love with the idea from Poland to Hong Kong.
1998 was the year the first paid 'premium' content was delivered via 'premium'
SMS. That first paid premium content sold to the phone was the ringing tone,
offered by Saunalahti (now part of Elisa) in Finland.
In 1999 the first SMS-enabled mobile parking systems went live in Norway. In
2000 Finland offered the first SMS based advertising on MainosTV 3's mobile
phone news headline service, totally free but advertising sponsored. 2000 saw the
first use of SMS to pay for train tickets in Austria. 2001 brought us the first use of
SMS based Check-in by Finnair. In 2002 we saw the first use of city public

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Chapter 8 - Mobile Messaging 141

transportation by SMS when Helsinki Public Transport offered its tram and subway
single tickets via SMS.
The list is too long for me to cover every example. Since then we've seen
SMS-enabled payments of video rentals, lotteries, movie tickets, gym lockers, etc.
SMS has been used to deliver alerts from libraries reminding you that your book is
due, to hairdressers and dentists and doctors allowing you to book and reschedule
appointments. SMS can be used to pay for the London congestion charge and is
now used widely around the world for various charities such as relief after the
hurricane that hit Haiti - the US Red Cross reported that they raised 41 million
dollars of contributions to Haiti via SMS.
Finland was the first country to adopt SMS as the nation's primary alert
method for disaster communications and SMS has since been used across the globe
to deliver national emergency warnings of anything from Tsunamis to the Bird Flu
in countries as far apart as Indonesia and Guatemala. SMS 'notification' is legally
binding as the required notification of a divorce in some Muslim countries. SMS
acknowledgement is now legally binding as an electronic signature in contracts in
Spain. SMS can be used to make your tax return, as first done in Norway. Estonia
becomes the first country to accept SMS votes in a national election this year.

SMS sent per month by active user

120

100

80

60

40

20

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: TomiAhonen Almanac 2010

Adoption Levels

Some adoption numbers tell the tale in perhaps a more compelling way. United
Airlines just announced that it is adopting mobile phone based check in, in the

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142 And myth of MMS being a failure

USA. A half dozen airlines in North America already do so (I believe Air Canada
was first on that continent). But where they just are starting on this journey, we've
seen mobile check-in in Europe and Asia for most of the decade, on airlines from
Lufthansa to Japan Airlines to Norwegian. How about the leader? Finnair reported
in 2009 that over half of its passengers, on its busy routes, use its mobile phone
based check-in, which now includes multiple ways to access the services not just
SMS, but also MMS, WAP, HTML, 2D barcodes (QR Codes), Java and
smartphone apps and the new interactive SMS technology, iSMS.
What of the public transport? Helsinki public transport reported in 2008 that
55% of passengers who bought single tickets on the trams and subway, used its
SMS based tickets. When Sweden noticed its bus drivers were often robbed for the
cash they would carry, Sweden removed cash payments as an option to pay for bus
tickets, and ended that crime. Today the most used way to pay for bus tickets in
Sweden is mobile. In the mobile money chapter later in this book I will discuss
SMS based banking solutions from the Philippines to Kenya.

SMS As Mass Medium

What of content? SMS delivers news, entertainment, information and advertising -


74% of mobile phone subscribers in India receive SMS based advertising (Gfk &
Limbo 2008). a third of all SMS messages delivered in India are now content,
advertising or other premium SMS messages such as votes for reality TV shows
(MMA Forum Asia 2010). Its not just media content delivered to the phone. SMS
is used as a powerful interactive channel for older legacy mass media like TV,
radio, print etc. 21% of UK television viewers vote regularly on reality-TV shows
(M:Metrics 2006) which an impressive number until we go to Asia where we find
numbers like India, where 44% of the mobile phone subscriber base has voted on a
TV show using SMS (Vital Analytics 2009).
And while I have been an advocate, active user and student of SMS for over 15
years, this messaging system keeps surprising me too. SMS messaging is the only
mass media channel that will reach us in our sleep. Yes, we may fall asleep to CNN
or MTV on the TV set - but that won't wake us up if something happened. We can
wake up to the clock-radio beside our bed - and thus wake up to radio - but we have
to set the alarm ourselves. Radio cannot turn itself on and wake us up. SMS reaches
us when we sleep. Lightspeed Research tells us that 53% of the British population
sleep with their phone ringing on, and the phone in bed with them. Very literally
SMS text messaging is the only mass medium that can reach us while we sleep and
wake us up in terms of an emergency or any kind of breaking news.

SMS Will Become Bigger Than Voice

And then we talk of our 'mobile' (or our 'cell') being a 'phone' ie mobile phone or
cell phone. Yes, the 'phone' part of mobile comes from the fixed landline side,

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Chapter 8 - Mobile Messaging 143

where what was originally called the 'voice telegraph' soon earned its own name as
'telephone' from the Greek as tele + fon, long distance talk. Its a talking device, a
phone. Sure it is. Except what was true of the fixed landline, is not true of the
mobile. I am trying to learn to call it a 'mobile' and not a 'mobile phone' or
'cellphone' for that very reason. We are seeing an increasing proportion of mobile
phone owners, who have the device for other than its voice call purposes. They
consider SMS text messaging as the vital feature of the mobile, and voice calls as
an optional extra. Lightspeed Research tells us that globally 87% of the population
with a mobile phone do not originate voice calls but do send SMS. They tell us that
in the UK 11% of mobile phone users behave like this, and in the USA, 13% of
cellphone owners do not originate voice calls while sending SMS text messages
(Lightspeed 2009). In India the proportion is now 90% using SMS, and only 66%
originating voice calls (Yankee Group 2007).
I am not saying that voice calls are ending. We communicate in different ways
when we use voice, and when we use text messages. But there is a growing part of
the total phone ownership who do not originate calls. If they don't use calls - we
should not call it a mobile 'phone' should we? And of course, this is an economic
opportunity. In South Africa Vodacom introduced their 'call me' service. A free
SMS text message that can be sent by anyone to anyone. It only says 'call me' and it
is sponsored by advertising. But if you are poor or something has happened and you
are for example out of credit on your pre-paid mobile account - then send the 'call
me' message to your relative or friend, and

MYTH 4 - MMS IS NOT A FAILURE


IS FASTEST TO REACH 30 BILLION DOLLARS

Then if SMS is the big success story of the past decade, the biggest mobile success
story for this new decade will probably be MMS. What? Silly stupid limited and
expensive picture messaging? No, its not just picture messaging, MMS stands for
'Multimedia Messaging System' and is a runaway hit. For some media execs tasked
with mobile strategies, the MMS story may even be an inconvenient truth; for some
inside the mobile industry, its an inconceivable truth. MMS a huge success?
There is a whole slew of arguments of whats wrong with MMS. Most
cameraphone pictures are not shared, they are shown by sharing the cameraphone
itself. Many users feel that since they personally don't use MMS (and confidently
claim that none of their friends use MMS), there is no chance. Many experts think
that there are far better solutions, like sending a picture as an email attachment.
There are those who feel that the right way to do picture sharing is on a picture
sharing social website like Flickr or Facebook. Others say pictures are best shared
via Bluetooth for free. There are those who say that cameraphones are bad cameras.
There are those who say MMS settings are wrong. Or that the network cannot
support it (even strangely the early iPhones did not support MMS; they do now).
There are those who say MMS is expensive.

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144 And myth of MMS being a failure

These are all valid points of view. There is plenty of evidence to support most
of those opinions. Yet inspite of all of those 'faults' - MMS is a success. Not that
MMS is 'starting to generate interest' (like say smartphone apps or location-based
services). Not that MMS is 'getting accepted as a major growth area' (like say
mobile phone internet browsing or mobile advertising). No, MMS is established as
a success. A huge, global success. In fact, MMS is the second best success in
mobile data, behind only SMS! All the facts support this. But before we can move
further, lets make one thing clear.

Is Not Picture Sharing Service

MMS is not the 'Picture Messaging System' else it might have been called PMS.
The industry took SMS, and added four critical elements to it - allowed longer text
than the SMS limit of 160 characters - so media brands can do longer news or
entertainment articles. Allowed sounds, so MMS can be used to deliver radio and
music recordings related audio content. Allowed pictures, that media brands like
newspapers and magazines could add images to their news stories. And similarly
allowed picture stories, ie cartoons for example to be delivered. And MMS added
video clips. So television and cinema content could use MMS to deliver clips from
their video programming, from soap opera previews to hollywood movie clips.

Installed Base of Messaging Capable Phones by Type

100%
90%
80%
70%
Non Messaging
60%
SMS Capable
50%
MMS Capable
40%
30% eMail Capable
20%
10%
0%
98

99

01

02

05

07

08
00

03

04

06

09
19
19

20
20
20

20

20
20

20
20

20

20

Source: TomiAhonen Almanac2010

Lets examine the evidence. By 2007 MMS has passed the 10 Billion dollar
annual revenue level. Yes, Portio Research was the first major analyst to give a

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Chapter 8 - Mobile Messaging 145

public domain count of MMS revenues worldwide to pass that level, hitting 14.5
Billion dollars for 2006 (Portio 2007). What? From zero to 14 Billion dollars in
four years? That is the fastest growth from zero to 10 Billion dollars ever. Ever. Far
faster than SMS text messaging even.
So this year 2010, MMS will be worth 31 Billion dollars if you prefer Portio
Research's numbers, or 32 Billion dollars if you prefer Research & Markets
numbers. Either way, thats bigger than the music recordings industry revenues - a
media industry that is over 120 years old; and bigger than Hollywood movies box
office income, an industry that is 100 years of age. And MMS is only 8 years old.

Asia is MMS Leader

The biggest market for MMS is clearly Asia. As far back as 2008, 48% of Asian
mobile phone subscribers were using MMS according to a TNS survey across 29
countries in the Asia-Pacific region. The big reasons for MMS rapid adoption and
use can trace back to the fact, that there is low PC ownership but very high mobile
phone ownership. For the users in Asia MMS is usually their first experience with a
multi-media capable service, so receiving news, entertainment, soap opera updates,
movie trailers, discount coupons, etc via MMS is a compelling offering.
The revenues of MMS in Asia have already grown past SMS revenues in Asia
already, as IDC reported in 2009. A perfect example of how this is used comes
from China. Morgan Stanley counted in 2009 that 40 million Chinese consumers
were paying for the type of branded twice-daily news headline service either on
MMS or SMS, that comes from the main newspapers out of China. As those
newspapers have a total circulation of 109 million, MMS/SMS daily paid headline
news had already cannibalized 39% of Chinese newspaper audiences.

MMS vs SMS Reality Check

Yet there is that persistent myth that somehow MMS is a 'failure'. Just because you
do not send pictures from your cameraphone to your friends? Is that why? The
problem for MMS is of course SMS. MMS sits in that unprecedented shadow of
that giant global revenue juggernaut we know as SMS. Even in 2008, Abi Research
reported that only 2.5% of all mobile messaging traffic globally was MMS. SMS
text messaging is almost all of the rest. The CTIA just this May said that in the
USA a similar proportion exists, where MMS traffic is about 2% of the level of
SMS traffic. The MDA has similar stats from the UK.
If you want to say that in the USA the total amount of MMS traffic is 'only' 2%
of SMS traffic, and worldwide at about 2.5% of SMS traffic, that therefore MMS is
a failure - I say that is the wrong comparison. SMS text messaging is the world's
most widely used data application, its hardly fair to compare MMS of 8 years of
age, to SMS which is 17 years of age. What we can do, is look at MMS in absence

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146 And myth of MMS being a failure

of SMS versus other industries, or compare MMS to how SMS did in its first 8
years. Thats a fair measure.
Twelve years after SMS had launched, it passed 1B active users worldwide
(Informa 2005). It took SMS text messaging eleven years, to 2004, to pass 30
Billion dollars in annual revenues (Portio 2009). MMS took only 6 years to pass 1
Billion users, and in 8 years passed 30 Billion dollars in annual revenues. If you
think SMS text messaging is 'big' and a 'global success' and that it drives the
revenues and profits of the mobile industry - MMS is ahead of SMS in both total
global users, and in total global revenues, in the comparable point in time.
But that is still an unfair comparison. MMS will not replicate SMS. Most of
SMS text messaging is person-to-person messaging and has always been. SMS is a
sub-optimal media platform. MMS is exactly the opposite. It is not needed many
times per day for person-to-person messages, and MMS is arguably sub-optimal as
a person-to-person messaging platform; but MMS, differing from SMS, is
magnificent as a media platform. MMS right from the start became a media
darling and in all major markets where its a big success, starting with China, MMS
delivers more of its revenues as Application-to-Person messaging. That is the
exceptional ability of MMS and we should understand that.
Then if we compare MMS to the world of media, we get astonishing numbers.
The world has 480 million newspapers including paid and free editions. MMS at
1.7 Billion people using it, is over 3 times bigger. The world has about 850 million
paid TV subscriptions (cable TV and satellite) and MMS is twice that size. The
world has a total of 1.4 Billion personal computers - not all of those are connected
to the internet by the way, as is frequent in Africa, Latin America etc, yet MMS
active user base is significantly bigger. There are 1.6 Billion Television sets on the
planet - but MMS is used actively by more people than own a TV set. Behind only
FM radio and SMS text messaging, MMS is the world's third most widely used
mass media platform. But radio cannot do pictures and videos. SMS cannot do
pictures and videos. MMS can! It is a media executive's dream platform.
So then consider. In only 4 years MMS rockets from zero past the 10 Billion
dollar annual revenues level - a world record in any industry. In only six years,
MMS passed the billion person active user level - another world record. The nearest
industry to rival that apart from the mobile phone based services is WWW internet
browsing, which was launched in 1989. It took the worldwide web, browser-based
internet, which hit a billion users in 2005 - yes, it took the Worldwide Web 16 years
to reach a billion users (far faster than the internet or email, obviously). That was
the 'world record' prior to SMS and now totally smashed by MMS. Six years to a
Billion users! MMS is a media giant. It is worth over 30 Billion dollars this year,
meaning it is bigger than music recordings (the original second mass media content)
and cinema box office (the third mass medium). And consider all paid content on
the internet, Morgan Stanley told us last year that all paid web content was worth 27
Billion dollars. MMS alone has passed the total worldwide internet paid content
industry in value already.

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Chapter 8 - Mobile Messaging 147

Mobile Phone Messaging by Type, in 2009

Type Launch Users Pct of Subs Revenues

SMS 1993 3,600 M 78% $100 B


Mobile eMail 1997 330 M 7% $ 12 B
Mobile IM 1998 191 M 4% $ 3B
MMS 2002 1,700 M 37% $ 30 B

MMS Users

The highest usage number for MMS I have seen is Norway, where TNS Gallup
reported in 2009 that 84% of Norwegians use MMS. Aenas measured in 2009 that
62% of the British send MMS messages. Of Americans, Jagtag reported 40% used
MMS in 2009. As I said earlier, China Mobile the world's largest mobile operator
out of China (alone almost twice the size of the total US mobile phone user base)
reports 28% of its user base subscribing to MMS (please remember the modest
level of wealth in China and that the phone population is far less capable). And the
TNS Survey of 29 countries in Asia-Pacific in 2008 found 48% of Asian mobile
subscribers using MMS.
My consultancy reported that the global average for MMS use is 37% which
gave us a number of 1.7 Billion active users of MMS at the end of 2009. 1.7 Billion
users of MMS means more than total personal computers on the planet, more than
total users of the internet and more than total global number of television sets in
use. Behind only SMS, MMS is the world's second most widely used data
application. Compared to Facebook, MMS reaches a 3 times bigger audience - its
lead is radically bigger compared to smaller social networking sites like MySpace,
Twitter, Flickr etc. The same is true of the total installed base of all brands of
smartphones. If you only think of apps for Apple's iPhone including the total
shipments of all iPod Touch and iPad devices, MMS will reach an interactive
multimedia mobile phone audience... that is 20 times larger.

SMS Based Telematics

I want to finally mention a big growth opportunity for this decade, which is SMS
based telematics and remote control applications. What can't you do with SMS?
You can use premium SMS to open public toilet doors in Copenhagen as reported
by Textually. Jan Chipchase mentioned on Twitter earlier this Spring that SMS is
used in India, where farmers can use SMS remote controlling to turn on and off
their irrigation system on the farm. The solution by Tata the mobile telecoms
network can save long walks. In Finland we've had saunabath heater systems for a
decade already that you can turn on your saunabath via SMS,.Similar systems exist
to turn on your home air conditioning via SMS.

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148 And myth of MMS being a failure

What of the music in a restaurant or bar? There are SMS controlled 'juke
boxes' that let you select what song plays next. Paris has many, the original idea
came from Israel. Then those night-time city street lights.. A lot of energy is wasted
keeping lights on where the streets are not used much. In Germany they have started
to keep lights off on little-used streets at night, where the local residents can send an
SMS and have the lights turned on, with enough time to get home with light.
Don't feel like signing a paper document for a legally binding contract? No
problem, Spain already accepts SMS signatures as legally binding. And want to
'mail in' your vote in an election, remotely, using SMS? Estonia is the first country
to allow that nationwide now in their national elections.
There seems to be no end to what we can do with SMS. I only talked about
you sending commands out to services and gadgets. I didn't even mention anyone
else sending alerts and info to you, such as your library, your dentist, your
hairdresser, your car garage, etc. SMS can be used so that your plants can send you
alerts when they need to be watered, and SMS can be used to translate what your
dog is saying, when the dog barks.
I have not even touched on any payments by SMS from parking to vending
machines to public transportation to gosh, moving large amounts of money
internationally, to even receiving your full paycheck on a mobile banking account,
that is run by SMS, or submitting your tax return via SMS as first done in Norway
and now possible also for example in Estonia.

My Tree Needs A Mobile Phone

And what of forestry? Trees don't tend to call other trees. Trees don't send messages
to other trees. Trees don't surf to the Playboy pages to look at pictures of naked
trees. And more practically, trees don't go to the Weather Channel to see when the
next rains are coming. Trees don't move around, even if somehow you could teach
trees to talk, they they have zero need for mobile phones, they are rooted into one
place, where they grow to full size in 20 years and then are felled by some
lumberjacks for a death-journey to some sawmill.
Yeah, thats true. But go to Sweden or Finland and learn about forestry
management in the countries of the highest computer penetrations, highest per-
capita rates of engineers, the highest mobile phone penetrations, highest European
rates of 3G telecoms, highest internet uses, and highest broadband uses and highest
broadband speeds. And in that part of the world that is most tuned into 'green'
values, where forests are never cut en masse, but forests are carefully 'maintained'
where more trees are planted than cut, and from any forest, only the exact right age
trees are felled. What does this region do with the most advanced forest
management skills, tools and techniques, in the most ecologically responsible way?
They tag every tree to be felled with a GPS-GSM chip. Yes. So when they are
to be cut, every tree is given a mobile connection. Each tree in the forest is
individually tagged, so they can monitor it, and then that the right tree is cut at the

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Chapter 8 - Mobile Messaging 149

right time, and after it is cut, that the right parts of the right tree go to the right
sawmills. Not sawmill. Not singular. Sawmills. Plural. Yes, a standard pine tree
produces different quality wood that typically is processed in 6 different types of
sawmills, to optimize its utility. Part of the tree goes into high quality wood like
furniture or sporting goods (tennis rackets, hockey sticks, skis, skateboards etc),
other parts go into construction wood, others into newspaper, part goes into pulp
etc. And whereas in say Canada or the USA often forests are just cut every tree flat,
taken out to one sawmill, in Sweden and Finland the forests are never felled in total,
so the forest remains vibrant while individual trees only are cut. And to manage
this, yes they need the best technology. They will not attempt to 'wire' the forest
with 'fixed telecoms' or 'broadband'. To do intelligent forest management, they use
mobile telecoms - GSM and GPS - to ensure the right tree is cut, and after its cut,
the right tree goes on the right truck, and then when that truck brings trees to
sawmills, the right trees are removed from the truck to the right sawmill, etc.

Mobile Will Connect To Anything

Now think about this - if we can add commercially valuable utility to the
management of a forest. Literally connecting a tree to the mobile network - a tree
which does not 'phone' - cannot speak, cannot read a text message, cannot type. A
tree which does not move about for 20 years, is literally rooted to one spot. If
forestry management can gain commercial benefits out of mobile, then definitely
anything you do, whether its for people or animals or any inanimate objects, your
business can benefit from mobile industry today. Like Holiday Inn Hotels in
America right now this week, who have started to enable hotel clients to use their
phones to operate the electronic locks of their hotel rooms. Brilliant, magical
solution. Or like the farmers in Iceland and Canada who connect with their cows
with an old Nokia phone hanging where the cowbell used to hang, and when the
farmer wants to milk the cows, he sends an SMS text message to the lead cow, who
hears the beep-beep, and knows its time to come home to be milked. I am not
kidding. Farmers call the cows. This is a magical industry.

Ghosts, Dead Relatives

Mobile is so magical, there are services that let people hunt for ghosts and haunted
houses with their phones. There are sensors we can install in our plants, so the
plants send us a message when they need to be watered. And mobile will even let us
connect with our dead relatives. Not that they will respond. But it started in Japan
and is now spreading, where at cemetaries, you can have a mobile website
dedicated to your dear departed. Visitors to the grave can use their phone to visit the
memorial mobile website, see the pictures from the burial service, read about the
person's history - and leave greetings at the spot, having visted the grave. I know it
may seem a bit morose, but people do love this, as the close family will also see

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150 And myth of MMS being a failure

from the mobile website when a family member has gone to visit grandpa's grave,
etc.
And while we are on those SMS alerts, think of these. In South Korea the
mobile phone 'love detector' will monitor tension in the person on the voice call and
send an alert to you telling you if your partner is telling the truth and if there is still
romance in that person's voice...

WHERE NOW?

Well, the definitive book on mobile messaging is by the pair of gurus, Russell
Buckley and Ajit Jaokar. I think few other books manage to capture the full
potential of mobile messaging. As to my books, the messaging chapter in this book
updates and supercedes similar chapters in previous books, I wouldn't suggest
buying any of my books if you want to get more on specifically messaging.

Using Mobile Messaging


Ajit Jaokar & Russell Buckley
futuretext 2003

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Chapter 8 - Mobile Messaging 151

Case Study 4 from Finland


Finnair Mobile Check-in
Finnair was the first airline to introduce mobile phone based check-in
back in 2001. Now we have updates that up to half of Finnair's
passengers on some routes already check in with mobile phones.
I liked the idea and discussed it in my 2002 book, m-Profits. The
concept spread and I've occasionally returned to the idea, from
reporting that many other airlines from flag carriers like JAL in Japan
to Lufthansa in Germany and even discount airlines like Ryanair and
Norwegian adopting the concept.
A while back I heard from Book It CEO, Jukka Salonen in Finland.
Book It is the company that has developed a more intelligent SMS
based interctive system that deploys many innovative services. And
they run the advanced version of the Finnair mobile check in today. It
has evolved a lot since the first SMS text messaging based mobile
check-in that I reported about in 2002, and today includes MMS
messages and 2D barcodes and is operational in several airports outside
of Finland as well, such as Stockholm and Copenhagen. But the most
amazing numbers. Book It reports that now on some of Finnair's busiest
business routes, over half of the passengers use mobile check in.
Now Book It reports that their latest innovation with Finnair is the
instant upgrade offer. They wait until the last ticket sales have closed at
the airport, just before the plane is ready to board. At that point they are
now able to send an upgrade offer to all registered mobile check-in
users, counting how many seats are available in Business Class (if any)
and then send an instant upgrade offer to those frequent fliers in
economy class who have checked in via mobile. They can pay for the
upgrade by credit card or by frequent flier miles. And Finnair can
manage the price of the offers, based on how many empty seats there
are in Business Class dynamically by flight. This is the future of
customer service management in the airline industry.

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152 And myth of MMS being a failure

Tomi is available to speak at your event


Over 250 presentations at public events
Thousands of private workshops and seminars

Vodacom South Africa

Ericsson & Telcomsel


Indonesia
The Strategy Association of International
Keynote at Broadcasters Awards Dinner
GSM World UK
Congress
France

Siemens Oman NokiaSiemens Egypt

MoMo Sao Paulo Vodafone UK

RIM
Mexico

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Chapter 9 - Media Content on Mobile 153

"It must be remembered that there is nothing more difficult to plan, more doubtful of
success, nor more dangerous to manage, than the creation of a new system."
Niccolo Machiavelli

IX
Media Content on Mobile
Information and Entertainment

After showing that mobile is a new media channel, lets also devote one chapter to
the various typical media content types for mobile. First just an obvious reminder.
The industry's standard service creation tool is the Six M's (originally Five M's) as
developed with Joe Barrett of Nokia, Paul Golding of Motorola and me. The Six
M's are the industry standard tool for how to develop mobile services and are used
by all the major players in the industry, and the tool is referenced in over a dozen
books already. I've discussed it in most of my books already. So I will not waste
your time explaining it again. But for those who don't know, here is what the Six
M's are:

The Six M's are

Movement
Moment
Me
Multi-User
Money
Machines

Those are used to take any digital service or application concept, and attempting to
enhance the idea, to find aspects that make the service or application particularly
suitable for mobile. They are the engine for developing billable services in mobile.
But like I said, they are used by all the big players and the tool is mentioned in
countless books already. And the tool is not limited to media, it can be used for any
mobile services, mobile money services, telematics, communication services etc.
But while we are on the topic of media for mobile, lets look at some major
categories in this chapter.

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154 Information and entertainment

Mobile News

Finnish newspaper Aamulehti was the first content provider to offer any kind of
content via mobile data, when they released their SMS news headline service in
1996. This is something I consider a still a more experimental service and one that
didn't have a valid business model, as it did not use the premium SMS version, so
the cost of the news messages was that of basic person-to-person SMS. It was
perhaps more an early step by the newspaper group into experimenting with mobile
as a content delivery platform. It was, however, the first media content we could get
on phones.
Since then mobile has rapidly utilized the benefits of the speed inherent in
mobile delivery, and the unique aspects of 'personal', 'permanently carried' and
'always connected' as well as the 'built-in payment channel'.
How many people consume news on a phone? There has not been a
comprehensive global count recently, but the percentage of mobile phone users who
consumer news on a phone, range from the low end of 7% in Spain to 14% in
Britain (ComScore 2010) and 13% in the USA (M:Metrics 2008), with significantly
higher numbers in Asia such as 34% in Japan (Japan Mobile Marketing Laboratory
2009) 23% in India and 35% in the Philippines (source Asia Digital Marketing
Yearbook 2008).
I know this is by no means a total representative sampling, but if we just use
very ballpark numbers, that 10% number for the Europeans and North Americans,
and then use the lower end of 20% as representative for the rest of the world; then
as a very rough estimate of how many people consume news on a phone, we get a
ballpark number of 950 million people paying to consume news on a phone. Most
of those news services, by the way, are delivered as SMS and MMS messaging
based breaking news and news headline services. So if we eliminate free
newspapers from the daily circulation, the number of people on the planet who pay
for news on their phone, is twice as big as the total number of people willing to pay
for a newspaper. Paying users of mobile news is twice the number of people who
pay to buy a daily newspaper. Makes you think?
And what of cable news? The total worldwide population of TV owners who
use cable/satellite paid subscriptions is about 900 million. Not all of those got their
cable/satellite because they wanted CNN or Sky News etc.. But the total willing to
pay for premium TV services, including 24 hour news, is already less than the
number of people willing to pay to consume news on a phone. It is very clear, that
mobile is truly a mass media channel today.
Many of the newsmedia giants are now busily deploying fancy iPad based
wireless media content, to often very disappointing commercial results. We should
look at the unique aspects of mobile, and use the power of mobile to create better
new news services unique to mobile, delivered to phones. A great example is
iChannel, NTT DoCoMo's idle screen based personally customized news headline
service. In just 18 months from launch it was adopted by 16% of the Japanese

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Chapter 9 - Media Content on Mobile 155

mobile phone operator/carrier's customer base. This is not a free service, they pay
about 200 Yen (about $1.70) per month for the mobile news service. I loved the
concept so much, I had it as the first case study in my previous hardcover book,
Mobile as 7th of the Mass Media. And NTT DoCoMo love it too, they are now
rolling it out onto their international partners from Guam to India.

Music The First Premium Content

It is now twelve years from the first downloadable content that was made available
to mobile phones. Before there was an iPhone, before there were N-Series and
Walkman phones, before the Razr and the Blackberry. Before any of the operator
portal services such as Vodafone Live and even before Japanese NTT DoCoMo's
radical i-Mode. It was the autumn of 1998 when the first downloadable content was
launched commerically for mobile phones. People laughed and most said it would
never be a 'real business'. The first content was the humble ringing tone, launched
by Saunalahti (now part of Elisa) and first downloaded on the Radiolinja (also
Elisa) network, onto only five models of only Nokia branded phones, that had that
peculiar feature, that they accepted 'user-installed' ringing tones. The mass-market
phone model that was most popular at the time, was the Nokia 5110 and that phone
was the most used to consume mobile content in its first year.
I remember the moment well, as I was employed by Nokia at that time as a
young executive, and used one such downloadable ringing tone as a surprise gift to
a friend back then, in late 1998. I thought it was cool, but I never ever thought it
would become a billion dollar business, nor that such ringing tones would be sold
much beyond us mobile-crazy Scandinavians. I was imagining 'real' music on
phones some day, yes, but ringing tones as content.. cute but certainly only a fad,
and not for all countries, was my gut feeling. How wrong I turned out to be.
I spoke with Saunalahti (then re-named Jippii) CEO Harri Johannesdahl about
the ringing tone business about a year later when we were setting up my Consulting
Department for Nokia, and by then I had changed my mind. The money was
amazing. I discussed the business case very enthusastically in mobile internet
conferences from Ft Lauderdale Florida to Singapore. The ringing tones were sold
at 3 times the premium over person-to-person SMS text messages. So one ringing
tone in 1998-2000 cost about 45 cents. The actual transmission cost - using SMS as
the bearer - was about one penny, so even after the mobile network operator
(carrier) took an enormous cut in its profit - something like 9 cents in bulk at the
time, it still left a phenomenal profit margin of 78%...
The total costs of setting up the business was so modest, that Saunalahti broke
even after 10,000 songs were sold. In fifteen months they had sold a million songs
and for the internet service provider, that Saunalahti/Jippii was at the time -
Finland's largest indepenent ISP mind you, they were big in that market, more than
half of all of their total revenues were generated by this 'silly' mobile music
concept. Like Japanese Cybird would become famous in 2001, when Wired

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156 Information and entertainment

magazine told the world of the Japanese internet provider to turn profitable by
making its money on the new mobile industry, actually the very first company to
manage that was of course Saunalahti in Finland two years prior to that. As we
would see, ringing tones would propel famed artists to enormous profits - such as
the rap artist 50 Cent with his hit In Da Club, which in 2003 earned more as ringing
tone than all other music formats combined - and most annoyingly of course the
Crazy Frog - to the tune of 500 million dollars of global sales of their ring tones
and related services in 2005. While the tech pundits drooled over Apple's iTunes
music store for the global tech hit, the iPod, just one ringing tone earned more than
all of iTunes global sales that year.
After ringing tones we've had about a dozen new music formats which I
discuss in more detail in the music chapter of my book Mobile as 7th of the Mass
Media. Today there is no doubt mobile is the future of music. I just met with
Malaysian music label RRecords (with artists such as the Malaysian girl band the
Senoritas) and heard that they monetize digital music through ringback tones. And
bear in mind, ringback tones were only the second new format of mobile music. We
have over a dozen such inventions already.
One of the newest mobile music formats is Mood music. Mood Music was
launched by Dada Entertainment of Italy. It takes the Facebook or Twitter type of
social networking update of "how do you feel right now" and mixes that with
music. Now rather than writing how we feel, we can select a song that speaks to our
mood. And our friends will know what that song means of course.

i-Mode Turned Eleven Years Of Age

As ringing tones were below the radar and spread very stealthily in Scandinavia, the
second big innovation in mobile content was NTT DoCoMo's i-Mode, which
launched in 1999 with a big splash. This was the prototypical mobile operator
(carrier) portal service, and brought essentially every form of digital content to the
Japanese market. There were news, games, music, pictures, games, jokes,
horoscopes, games, puzzles, games, advertising, games, adver-games ...and did I
remember to mention games? DoCoMo's i-Mode could have been a quirky 'Only in
Japan' phenomenon, had its content been all local domestic Japanese content - of
which there is an abundance, naturally. What is very amazing, is that right from the
start, NTT DoCoMo was able to entice several global media brands to launch on
this weird mobile phone innovation in Japan. Disney was there on day 1. So was
CNN. And MTV joined also on the first day of i-Mode in Japan. There were dozens
of major Western brands on the launch of this weird Japanese experiment.
Again, today, it is no surprise that of NTT DoCoMo's customers, almost all use
i-Mode. More than half of Japanese mobile phone owners download games to their
phones, etc. But back in 1999 there was no precedent to this. They built it, and
hoped they would come. And boy did they come.

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Chapter 9 - Media Content on Mobile 157

Total Mobile Data Revenues

300

250

200
Value-Add Services
150 Mobile Messaging
100
50

2008
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

2009
Source: TomiAhonen Almanac 2010

Game On

And yes, did the mobile phone games take off indeed. If you are now amazed by the
seeming addictiveness and pervasiveness of mobile gaming on the Apple iPhone -
spearheaded by Angry Birds obviously, in Japan this is not any surprise at all. You
might not have paid much attention, because up to 2008, half of all mobile gaming
revenues worldwide were generated in only two countries - Japan and South Korea
(both videogaming-mad countries in general).
It was not just the gaming-crazy domestic market and very gaming-mature
customers with advanced gaming consoles. It was also the business model
pioneered by i-Mode which drove the early success of all content in Japan and very
much so gaming. NTT DoCoMo made a content revenue-sharing deal where they
only took 9 cents out of every dollar. The Japanese rivals (KDDI and J-Phone,
which is now Softbank) both soon copied the model and South Korea was the first
foreign country to adopt a similar revenue-sharing level as Japan. For contrast, at
the same time, most European and American mobile operators (carriers) talked of
50:50 deals in content. You can understand that content owners were far more eager
to deploy onto the services in Japan (and South Korea) than the rest of the world,
under those terms. But it was not just Japan, obviously. Gaming took off in many
Asia countries very rapidly. In the Philippines for example they passed the half
million game downloads milestone in 2001.
While Japan innovated with the overall content revenue-sharing deal, South
Korea took the next, even bigger step, for mobile phone gaming. They invented

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158 Information and entertainment

what EA (Electronic Arts, the world's largest videogaming producer) calls the
'Asian Model' for gaming revenues. This is now often also called also the freemium
model ie part free, part premium. The Koreans offered the gaming experience for
free, with personalization features at a premium cost. Even though typically only 10
percent of all gamers are willing to buy premium content, the economics of mobile
are such, the numbers so huge, that this is easily the most lucrative gaming model.
I've chronicled some of these with for example the Kart Rider case study in my
fifth book Digital Korea with Jim O'Reilly. EA now says they will base all their
future multiplayer games on the 'Asian Model' and have already launched some
titles on this principle. But back to mobile gaming? Now as Taiwan and China and
Singapore and Hong Kong and Malaysia and Thailand are getting heavily into
mobile gaming; and as Europeans and Americans also are increasingly getting the
mobile gaming bug, the total value of downloaded and networked videogames on
mobile, were at the 10 billion dollar level globally in 2008.
An important element is the virtual properties such as virtual gifts and
personalization. Morgan Stanley told us that in 2009 the value of the virtual
properties, gifts and personalization that was delivered on mobile networks alone
(excluding massively multiplayer online PC games) was worth over 2 Billion
dollars, with Chinese QQ by TenCent the biggest of the lot. And that 'one in ten
pays' model? Still holds rather strongly even in China, by Morgan Stanley's
calculations 9% of QQ's users pay for premium content. For those who want to see
more gaming examples, there is a whole chapter on mobile gaming in my book
Mobile as 7th of the Mass Media.

The Advent Of Advertising

Well, where there is content, there is an audience. And where there is an audience,
there is advertising. While NTT DoCoMo was still figuring out how to enable
advertising onto its service (which they resolved by launching a joint venture with
Japan's largest advertiser, Dentsu, to form D2C), the innovation switched back to
Finland. The Finnish commercial TV broadcaster, MainosTV3, launched the first
ad-funded and totally free news service to mobile phones in the spring of 2000. The
daily news summary was provided via SMS text messaging, and the subscriber
would also receive one SMS advertisement every day. By the time I was chairing
the world's first mobile advertising conference in London a year later in February
2001, there were mobile advertising concepts already in many countries such as
Germany, the UK, USA and Spain. I will have a chapter examining mobile
advertising on its own in this book, so I will not discuss it here further.

Mobile, Tv And Video

Then in 2001 another innovation happened in Europe, with simultaneous


inventions. In the UK, MTV Networks Europe launched the world's first television

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Chapter 9 - Media Content on Mobile 159

program that allowed live viewer voting. The show was Videoclash, and viewers
were given the choice of two videos, and to pick which should be shown next. This
is genesis to the concept of SMS-to-TV programming, and the very real parent to
what then evolved into American Idol, Big Brother and all other reality TV voting
on TV. The same principle then was evolved into all forms of real time live
television gaming. How big? Just the SMS-to-TV programming is worth over 2
billion dollars today worldwide and many cable TV channels get from 80% to
100% of their income from SMS interactivity. In a very real sense, the convergence
between broadcasting and mobile started with this innovation in the UK by MTV.
But most of us would tend to think, if 'television' and 'mobile' were put into the
same sentence, that it means we are watching television on our mobile phones - as
is today possible on almost all networks around the world. By coincidence, that too
was launched in 2001, but in Finland. It was again innovative commercial television
broadcaster MainosTV3 in Finland, who teamed up with a video transmission
specialist company in Finland called Sopranos, who produced the world's first
television clips, that could be viewed on a mobile phone. MainosTV3 offered
highlight clips from the nightly TV news through this innovation. In 2001 there was
exactly one phone model in the world, that had the color screen and a powerful
enough CPU to handle the tiny video clip - this was the brand new Nokia 9210
Communicator (the first color Communictor) - and to watch a 30 second clip,
would take about 2 minutes for the grainy poor quality and lousy sound clip to
download over the fastest cellular technology of that time, called HSCSD (a
technology that was called a "2.1G" technology, far slower than so-called 2.5G and
3G technologies we have in use today).

Mobile Media Markets Regionally by Revenue

40
35
30
25
20
15
10
5
0
t

g
st

t
a

ed

a
es

s
in

ic
ad

ric
Ea

Ea
nc
W

op

er
Af
n

Am
va
e
Ca

le
e

l
ve
p
p

d
ad
ro
ro

id
de
&

tin
Eu

M
Eu

AC
SA

La
ia
As
AP
U

Source: TomiAhonen Almanac 2010

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160 Information and entertainment

As the networks got faster, and other technologies came online like digital
broadcasts to mobile phones from South Korea, more 'true' and live TV became
possible on mobile. But for all the excitement around mobile TV and video, this
sector of the mobile content industry has had a troubled history. Many mobile TV
formats and shows, such as produced-for-mobile 'mobisode' (mobile episode)
shows like Kiefer Sutherland's "24", have proven commercial disappointments if
not outright failures. In South Korea and Japan the broadcast digital mobile TV
systems have yet to turn a profit and in some countries the industry has been
deemed so much a failure, that the digital TV broadcast frequencies have been
cancelled and the frequencies refarmed to other spectrum uses, like in Spain.
Yet all is not lost in mobile video. I will discuss SeeMeTV later in this book as
the prototypical user-generated video service for mobile 3G networks. Another
obvious success story is Qik the video blogging service that now comes pre-
installed on many premium cameraphones and smartphones. Qik is a bit like
podcasting but with video. Its a bit like YouTube but is both live broadcast and
automatically archived for recorded viewing later. And its already being used for
various citizen journalism uses.

Other Including Adult

Yes, there is lots more in mobile content. Yes, there are the jokes, cartoons,
horoscopes, daily greetings and religous sayings; etc. There is a big billion-dollar
industry in mobile gambling alone. Mobile education services are another that is
nearing a billion dollars globally. Search is there on mobile phones. And yes, of
course adult entertainment is there as well on mobile, but not that big as the music,
gaming and TV sides of the business. Adult content is less than half those, at about
4 billion dollars worth worldwide. As many media analysts have said, any new
mass media starts making money with adult-oriented content, and then becomes
more mature when it discovers its own other opportunities. That mobile has so
many larger media formats than adult entertainment, suggests that mobile is far
more mature than for example the internet, where adult entertainment is still the
second largest content revenue source after advertising revenues.
And we can still innovate in the voice areas with content. In many parts of the
Emerging World there are poor people living in villages where there is no
traditional media at all. No TV coverage, no newspapers, no internet, no fixed
landline and even no FM radio coverage. But increasingly there is mobile telecoms
ie cellular telecoms reach. I will explain this more in the Case Study after the
Digital Divide chapter.

Print Media Goes Mobile

The Hockey News is a Canadian weekly print magazine dedicated to all the news
about ice hockey. It has a proud history and is a staple among fans of ice hockey

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Chapter 9 - Media Content on Mobile 161

worldwide. However, like most print titles, they have been seeing an erosion in the
print circulations over the past few years.
To get with the times, The Hockey News introduced a mobile phone version,
designed by Toronto based Polar Mobile. Its CEO Kunal Gupta tolds the Mobile
Media week conference in 2009 that they achieved 300,000 new subscribers on
mobile who did not cannibalize print sales or web sales. And where almost all print
titles globally see a decline in circulation numbers, THN has achieved a healthy 5%
growth in circulation after the launch of the mobile version. One more tidbit -
Polar Mobile have released four versions of the WAP based service since launch.
You have to listen to readers, and adapt a lot if you intend to succeed in mobile..
Meanwhile in 2009 a similar story came out of India. The Economist weekly
newsmagazine was looking for innovative ways to generate more sales in India.
They had a modest marketing budget and decided to try SMS. The Economist
introduced a daily Economist newsflash ad, with a short snippet of news from the
current issue or a summary of the headlines etc. Every day at 11 AM. The success
rate - phenomenal. They increased India circulation by 39%, they increased
subscriptions by 26% and news stand sales by 15%. Where the media barons are led
to the glorious sexy Apple iPad in 2010, where they find a barren landscape and no
success, there is a huge opportunity to find new paying customers, make revenues,
and simultaneously increase print issue circulations, when done with basic mobile
services, on SMS, on MMS, on WAP. Later in this book I give the best example of
a mobile phone variant of a print staple - the teen/youth fashion magazine, in the
case study about Girlswalker from Japan.

MTV In Mobile

Meanwhile arguably the strongest youth media brand, MTV, found early that
mobile was their target audience's preferred media and MTV has been innovating
regularly in the mobile space. I already mentioned Videoclash, the TV show that
invented TV viewer voting via SMS text messaging, now the staple on all types of
reality TV formats from Big Brother to American Idol.
I got a good overview into the thinking of MTV's mobile initiatives when my
dear friend Luciana 'Lu' Pavan spoke in London in 2008. She gave several good
case examples and lessons MTV has learned about mobile and media. First on the
'big question' of "will all TV content migrate to mobile phones?" Lu doesn't think
so. She said that while MTV runs lots of shows on mobile and often runs
simulcasts, a mobile screen is not a substitute to the larger 'real' TV screen,
mobile is an additional delivery channel.
One of MTV's innovations from 2005 was the live 'backstage pass' to the
Video Music Awards via the video ability of 3G mobile phones - sold as premium
content obviously. MTV has had lot of chances to play with the format, so now they
offer such elements as the red carpet view, behind the scenes 'spy cams' and
exclusive extended interviews that are only available on the 3G mobile TV

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162 Information and entertainment

simulcast, while the main Video Music Awards show (or some other major MTV
extravaganza) is broadcast on the main screen. I quoted Luciana in my book,
Mobile as 7th of the Mass Media, about the need to use separate TV crews when
creating broadcast TV content, and when shooting the same action for the mobile
screen. But MTV has also found there is content that can be simply chopped up and
'looped' and run in continuous repeats. Kids love Spongebob the cartoon and this
works fine with short Spongebob clips looped, and kids don't mind seeing the same
clip again a little while later.
Luciana reported that now that their producers, directors and scriptwriters have
been experimenting with mobile, they also are starting to understand the particular
strenghts and limitations of that alternate channel, and are now planning for the
mobile elements when a new show is being planned. This to me was a 'watershed'
moment and I believe we will see very much more innovation in the mobile space
on all major MTV properties on their various channels from MTV and VH-1 onto
Comedy Channel etc.
Lu also described a hot new reality TV show on the MTV networks. It is
sponsored by the deodorant brand Axe, and builds on MTV's long heritage in reality
programming and now include such staples as Punk'd and The Hills. Anyway, in
Gamekillers, the idea is to test out young men and their ability to get the girl (as has
been the theme for a long time in the Axe deodorant commercials). The point is,
that the game contesting men are placed in contest against each other (real
contestants) but the women are not 'random' real women, they are actresses, with
storylines. A certain girl is out there for example to mess up the flirting situation
between the contestant and target woman, etc.
Another reality TV show is Meet or Delete. The idea is, that girls will sample
prospective first date boys, by accessing the hard drives of the laptops that the boys
have. MTV gives the boys the laptops and the boys behave like boys, download
games, surf the web, probably visit adult sites and porn sites, etc - and the boys
don't know, but the girls will have access to the history of what the boys have done
and have stored on their PCs. I guess this kind of reality TV was bound to happen...
Apparently Meet or Delete is very popular right now. I can imagine the women love
it, am not so sure if the men like it as much.

Mobisodes Or Snack Bits?

Then Luciana discussed what length and types of formats work and don't work in
mobile. Again she drew on years of experimentation in dozens of countries where
mobile TV concepts have been launched by MTV during this decade. She said that
the tolerance of how long viewers are willing to watch mobile TV is growing
longer, somewhat in synch with the growing screen sizes of modern mobile phones.
People are far more willing to watch mobile TV on a 3 inch screen than a 2 inch
screen, etc. She said that earlier they needed 5 minute clips, but today even full 30
minute episodes of their reality soap opera series, The Hills, work fine on mobile. If

This eBook is available for free download Tomi T Ahonen


Chapter 9 - Media Content on Mobile 163

content is longer, like a video awards show or a movie or say Jackass, then it makes
sense to chop it up into shorter bites. A 90 minute movie works very well in 15
minute segments for example.
And what of the future? As just about with anything dealing with the future of
mobile, even MTV will go to Japan to see what the future looks like. Today the
mobile TV variant of MTV in Japan (on mobile phones that is) is totally free, ad
sponsored, called MyMTV. It includes blogs and artist websites and full viewer
interactivity. Where it used to be in the rest of the world, that artists released their
brand new songs on MTV first as music videos, before the songs were offered for
radio, or released for sale; Japan has now moved beyond that. In Japan all artists
now release their newest video to MyMTV first - yes on mobile first - even before
the video is shown on the television channel of MTV.

AND WHERE NEXT?

Yes, the definitive book on media use of mobile, and mobile as a new mass
medium, is obviously my previous hardcover book, Mobile as 7th of the Mass
Media, 322 pages of nothing but answering the question of how to make media
succeed on mobile, with several media content-specific chapters like one on music,
one on gaming, one on advertising etc; and 16 case studies. And if you wanted
more for media and mobile, I'd put my previous mobile content/services/apps book,
M-Profits, ahead of the rest out there. That book covered over 180 commercially
launched mobile service concepts, most relating to media.

Mobile as 7th of the Mass Media


Tomi T Ahonen
futuretext, 2008

M-Profits
Tomi T Ahonen
Wiley 2002

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


164 Information and entertainment

Case Study 5 from China


Puma Racing Adver-Game
Puma, the running shoes brand, set up a racing game for mobile that
coincided with the Shanghai F1 race this past autumn. First cool
gimmick the race track is in the shape of the puma logo - you know
the jumping wild cat, with the tail extended. Better yet, it was a
multiplayer game, allowing four gamers to race against each other on
this track.
The advergame included rewards for success, so top 3 best scores
each week would win Puma merchandise. But also those who were
most active in spreading the advergame virally, were rewarded with
Puma merchandise.
The game featured a good tie-in with the bricks-and-mortar stores,
by creating "footfall" ie visitors to stores. There are 350 authorized
Puma dealers in China. Each person who downloaded the game,
received as a bonus, a coupon delivered via MMS that offered them a
free item of mobile content, if they visited one of the authorized
stores. And yes, of course, they included the store-finder part to the
service including a map etc.
The game was called F-Wan which sounds a lot like "F1" ie
Formula One, but also in Chinese it means "play". So this was Puma's
"Play" campaign.
It has "communities dominate" all over it. It is gaming, it is cleverly
sponsored (puma-shaped race track), it is viral, it is multiplayer, it
bridges the virtual and real, and it is fun. A very well designed
engagment marketing concept.
The campaign was created by Phonevalley and Zenith China. How
did it do? The campaign netted over 200,000 gamers who in turn used
their MMS coupons and offers to drive Puma sales in their branded
stores up by 30%

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 165

"Nobody is as clever as everybody."


Alan Moore, Author and CEO SMLXL

X
Mobile Social Networking
Empowering digital communities

Business Week in its special issue dedicated to customer community power on June
20, 2005, said that community power was the biggest change to society since the
industrial revolution. That puts digital communities ahead in importance to such
massively disruptive inventions as electricity, the automobile, the telephone, radio,
television, credit cards, the computer, the internet and e-mail and yes, the cellphone
as well. Time put the "You" of user-generated content onto the cover of the Person
of the Year issue in 2006. User generated content, i.e. digital communities.
The Economist featured the same topic on its cover and special report on April
2, 2005 and warned in its editorial that "Many firms do not yet seem aware of the
revolutionary implications of newly empowered consumers." They then concluded
with this chilling warning: "only those firms ready and able to serve these new
(connected customers) will survive." Not only is this the biggest change, but if you
do not learn to understand community power, your company will not survive. I will
not spend much time on the basics of social networking. This chapter will focus
more on the impact of social networking to cellphones as the 7th Mass Media
Channel. By 2009, Google CEO, Eric Schmidt, when interviewed by Charlie Rose,
said user-generated content was the "defining aspect of humanity" for the next two
decades. And except for some geeks and nerds, this whole opportunity did not even
exist ten years ago.

Communities Dominate Brands

Alan Moore and I set out to explain this phenomenon in what many consider the
seminal book about the phenomenon, and certainly the first 'business book' of social
networking, Communities Dominate Brands, which had its first edition published
in 2005. In it we also became the first published authors anywhere to state what
today in 2010 seems obvious, that all social networking will migrate to the mobile

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


166 Empowering digital communities

phones. Today Facebook says so, Twitter says so, YouTube says so. But it was not
by any ways obvious in 2005, years before anyone had seen an Apple iPhone and
few believed the internet would be even viable on the phone.
There are ever deeper levels of user-involvement in social networks, as they
are used on mobile phones. It starts with basic interactivity, like that of SMS voting
on reality TV formats like Pop Idol/American Idol, Big Brother house, etc. More
immersive and intense involvement becomes out of user-generated content such as
citizen journalism as in Ohmy News in South Korea and i-Report on CNN, as well
as user-generated blogs on mobile or 'moblogs' and videos such as video blogging
with Qik. The deeper the involvement in the community, the more addictive it
becomes.

Do-it-yourself music video

What is the end-state? If we merge video camera-phones with the passions of


bloggers and citizen journalism, and give digital tools, why not shoot your own
music video? Seattle based rock band, Presidents of the United States of America
have done that already in 2005. They shot the music video for their hit, “Some
Postman” using only the simple videocams on their SonyEricsson cameraphones.
The issue then becomes one of content rights and mindset. The old media
mindset is one of controlling media, and thus maintaining a high price. As it is
exclusive, we can charge more. In the internet and mobile phone economics, this is
extremely shortsighted, as Ajit Jaokar and Tony Fish argue in their book Mobile
Web 2.0. They point out that this is a fundamental difference in old media thinking
and the web experience when user-generated content is involved, writing:

Indeed, we believe that the requirements of the media/content industry are


in contradiction to the 'network effect' application. In the former (media
industry), you must restrict the free flow of content in order to make it
more valuable. In the latter (applications benefiting from the network
effect), you must actively encourage the free flow of 'user generated
content'. Note that this is not an argument for the 'Napster mindset'. We
are not advocating swapping of 'Hollywood' content but rather seek to
encourage the free flow of 'user generated content'.
Ajit Jaokar & Tony Fish, Mobile Web 2.0, 2006

That phenomenon of user-generated content is already in full swing,


influencing the success of music artists and soon all media. Today hundreds of
bands have already used cameraphones to capture video for their music videos and
often then upload these to video sharing sites like YouTube. The British dance label
Ministry of Sound actually invites fans to submit user-generated versions of videos,
which they pioneered in 2006 with the dance hit “Put your hands up for Detroit”
by Fedde Le Grand.

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 167

Mobilize Communities

The opportunity exists to turn almost any club or group into a mobile social
network. A great example of mobile service is the Real Madrid football (soccer)
club's fan club. Real Madrid the winningest major league football/soccer team in
the world. And they have loyal, fanatical fans. So of course, as Spain is one of
Europe's leading mobile markets, there is a Real Madrid fanclub on mobile. It offers
all the usual suspects from fan newsletters to game scores and stats to player
profiles, fan chat and commentary, sales of team jerseys etc. And the monthly
subscription fee - 12 Euros. How many paying users? They have now passed
100,000 paying users! So Real Madrid's mobile service earns 14.4 million euros per
year (22 million dollars).

Mobile Social Networking Users

200
180
160
140
120
100
80
60
40
20
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: TomiAhonen Almanac 2010

A potentially lucrative opportunity is to build a mobile variant of an online


community. It may be a mobile variant of something that existsn online, such as the
example of SeeMeTV, a video sharing service for mobile not unlike YouTube. But
as videos on SeeMeTV are only able to be viewed when paid for, it also introduced
the opportunity to have a revenue-share with the person who created the video. On
SeeMeTV and various clones like LookAtMe and MeTV, each original video
creator is paid every time his/her video is viewed.

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168 Empowering digital communities

More Mobile Social Network Success: FrenClub in Asia

I heard from my friend James Peh and he told me of his latest venture, Frenclub.
Frenclub (yes, note spelling, it is not Friend Club, its shortned to Frenclub) is a
mobile social network here in Asia in several countries including Malaysia,
Indonesia and the Philippines. Frenclub has the typical friends-oriented social
networking such as profiles, chat, etc. They work on a very simple level of the
technology. You don't need 3G, these work on basic SMS. They do have an age
limit of 18, but younger members may join with parental approval.
How is Frenclub doing? They have over 2 million subscribers and they are
earning over 8 million Malaysian Ringgit in revenues this year (about 2.3 million
USD). Now, while that may seem low compared to many Western companies in the
social networking space for mobile, that we have talked about - average revenues
being essentially 10 US cents per subscriber per month - note these are in markets
with far lower standards of living, where the average SMS text message costs about
1-2 US cents per message. If we consider purchasing power parity, the spending is
equivalent to about a dollar per month of spending per subscriber in a Western
market economy. Yes, once again we see that mobile is a magical money-making
machine.

Or an Original Concept

Creatively the most difficult but also the option with the greatest upside potential is
to develop an original mobile community concept. Creatively most challenging, but
potentially the most lucrative opportunity arises from original communities
delivered primarily (but not necessarily exclusively) on mobile.
A good example also is British AQA, Any Question Answered, which does
just what it says in the title. They are a paid SMS based service that will answer any
question. You have your sports argument at a pub, send the question to AQA and
get your answer. Or you need to know what is the height of the second tallest
mountain or whatever, they have it. But the users will of course try to stump the
service asking those eternal questions like what happens if your vehicle is travelling
at the speed of light and you turn on your headlights or which tastes better, bread
that is cut in triangles or bread that is cut in squares etc. And more than that, when
drunken young adults have a laugh at the pub, then they send in the questions like
asking AQA which of the three girls sitting with the boys at the table is the sexiest.
Obviously AQA won't know these girls, yet they will answer. And their answers are
often very funny and entertaining. Each answer is free, each question costs one UK
pound. Easy. And this model is viable you ask? Anyone could just Google for
answers? Yes, this makes oodles of money because it is entertaining as well as
informative. 4 Million pounds per year (7 million dollars) in revenues out of silly
answers to stupid questions. If the same level happened in America, thats about 35
million dollars in income.

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 169

Add Some Games

Another success story is Itsmy the mobile-only social networking site. The service
is ad-funded and offers users a mobile home page, mobile video, and a personal
mobile address as well. It has become one of the ten most popular mobile websites
in several countries such as the USA, UK and India. They had 2.5 million users in
2008 who generated 250 million page views per month. We met up with Itsmy's
CEO Vince Staybl at the Forum Oxford Conference where Vince sayd this about
their mission: "We want to entertain everyone. Mobile. Everywhere." So one of
their fun games is a free mobile tagging game to allow members to post graffiti
onto their friends' mobile websites. Look at the numbers. In just 8 weeks, they have
reached 1.5 million tags of graffiti created, out of a total user base of 2.5 million.
How satisfied? 95% of users loved the way they could use tags to stay in touch
with friends, and 61% of Itsmy members connected with new friends using this
game. Vince said that moble social games are a new revenue-generator for their
company. They plan to launch 50 games per year. How can a free game be a
revenue generator? Yes, we already covered that in the previous chapter - its the
freemium model again, of course. The basic level of the game is free. Premium
content, gifts, personalization, ego-services etc --that is how you make money with
mobile social networking. It is why mobile social networking finds many ways to
make money, while the internet based social networks struggle with only
subscriptions and advertising models.

Not Exclusively Mobile

I need to also be very clear, that while I am a passionate believer in an ever more
mobile future, please do not misunderstand me. Most digital interactive services in
particular in the Industrialized World will work best if they are multiplatform
services, like Cyworld and Flirtomatic and Twitter and QQ by Tencent. The
creative effort becomes even more demanding as it requires an understanding of
multiple competing technologies (broadband internet, wireless data, digital TV,
multiplayer gaming and mobile telecoms), each of which is evolving at breathtaking
speeds.
In the Emerging World, then the discrepancy between the modest number of
PCs and broadband connections, compared with the rapid spread of smartphones
and featurephones, makes social networking far more likely to be exclusively on
mobile like we see on services like Frenclub, Mig33 etc.

They Buy Extra Fun From Us

UK based Flirtomatic has been a global innovator in both the mobile social
networking space and in the virtual gifting space. They have helped introduce new
business concepts for mobile as I will show in the money of mobile chapter later. A

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170 Empowering digital communities

good point to bear in mind, Flirtomatic abandoned their subscription fee two years
ago "as unnecessary"... This is a magical money-making machine!
Flirtomatic CEO Mark Curtis says their users "buy extra fun from us". This is
totally in line with say Vince Staybl the CEO of Itsmy from Germany who says
"We want to entertain everyone." Cyworld's parent SK Communications CEO Dr
Hyun-Oh said of his view for Cyworld's evolution "I dream about how to further
engage and make reationships with each other more rewarding." We are human
beings, we need to connect and the moble phone is the first and best connection
device. Social networking services on mobile are then the most compelling services
on this platform.
Beyond the social networking "clubs" there also are closely related concepts
such as user-generated content. SeeMeTV is another magical money-making
machine, far far FAR more so than its larger and better known online internet
cousin, YouTube. On SeeMeTV each creator of original content gets a revenue-
share every time his or her video is viewed by someone. The average video earns 12
UK pounds (14 Euros, 18 US dollars) to its creator. This is not this month's hottest
video on YouTube. This is an average video.
The various hot areas of social networking, from multiplayer online gaming to
dating services to music fan clubs to job-search to US presidential politics, all are
finding the mobile side of social networking the most compelling aspect of their
business. And what kind of numbers. Look at Mobage Town of Japan. In 2008
when they had "just" 10 million users, they generated 200 million dollars of
revenues annually from them. Thats 20 US dollars per subscriber per year or 1.67
dollars per month. Most of that is personalization and virtual content, not
advertising. Similar numbers come from South Korea where Cyworld Mobile
reported in 2007 they earned 14 dollars per mobile Cyworld user per year and again
most of that is not advertising. Compare that with Facebook on the internet, which
earns about 2 dollars per user per year. Or YouTube which only earns about 40
cents per user per year. This is "night-and-day" comparison between the struggling
social networking services online and the thriving ones on mobile.
Of the globile mobile data opportunity worth 250 Billion dollars, the hottest
area is mobile social networking. The subsector was born in 2003. Today mobile
social networking delivers 8.9 billion dollars of revenues. This is not just the
fastest-growing billion-dollar industry of today, it is also the fastest-growing
business opportunity of the economic history of mankind. You are personally
witnessing the biggest money-making bonanza ever seen.

Crowd Sourcing

You can use a community to do work for you, such as test your applications like
they do with Mob4Hire. I heard this from an old friend, Paul Poutanen that I met in
Calgary a few years ago. He's involved with a company called Mob4Hire. And the
idea is very simple, exactly as it says in their name. For mobile applications - and

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 171

yes, 700 carriers/mobile operators; 7,500 handsets, 10,000 developers - there is a


clear need to do testing of mobile apps, and why not hire a "mob" or a digital
community to do it. Crowd sourced mobile application testing. Great idea!
The obvious crowd-sourced mobile media product is news, in citizen-
journalism. We see it increasingly in all legacy newsmedia who are all inviting
audience members to send in paparazzi cameraphone pictures and videos of
breaking news. Citizen journalism highlights the need for curation. Ohmy News is
the world's first commercial citizen-journalism based newspaper, out of South
Korea. The CEO and founder of Ohmy News, Oh Yeon-ho wrote about the nature
of citizen journalism contrasting it to blogging in 2006 with these words:

Writing a news story requires a good deal of time and consideration. It is


much more difficult, for example, than leaving a comment or posting a
blog entry. Though we are an open platform accessible to everyone, not
everyone can write a news story. Only those citizen reporters who are
passionately committed to social change and reporting make our project
possible. The main reason that citizen journalism has not grown and
spread more rapidly is the difficult task of finding and organizing these
passionate citizen reporters in waiting.
Oh Yeon-ho, CEO and Founder Ohmy News 2006

Meanwhile in Japan

Then if we look at the most advanced mobile market, Japan, how is Mobile Social
Networking doing there? A survey by the Japan Mobile Marketing Laboratory in
August 2009 found that 52% of Japanese mobile phone owners access blogsites on
their mobile phones, and 33% access social networking services. The three biggest
mobile social networks in Japan, Mixi, Mobage Town and Gree, all which had
between 21 and 22 million users in the Autumn of 2010. The more intersting
observation is that while the social networking is available both on PCs and mobile
phones - and Japan has some of the fastest and cheapest broadband connections in
the world - only 2% of Japanese users access the social networks exclusively on a
personal computer. 22% access the services using both a computer and a mobile
phone, and amazingly 76% will only use a mobile phone to access their social
networking service.
All three social networking services offer advertising and premium content and
services such as virtual goods and virtual currencies. None of the three earn a
majority of their income from advertising. Not only do all three services make
major revenues - between 250 and 350 million dollars annually for each of the three
last year - but all three are profitable. And most revealingly on the maturity of
social networking as a legitimate established business, all three Japanese mobile
social networks are now listed on the Tokyo stock exchange!

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172 Empowering digital communities

And then there is Cyworld

The grand-daddy of mobile social networks is however in South Korea, where the
whole blogging, virtual worlds, social networks, citizen journalism etc was started.
The most advanced mobile social and virtual world is called Cyworld which I have
profiled extensively in my earlier books, in particular in Digital Korea. On Cyworld
gamers can create their own rooms in their home pages and create their own
avatars. Members can also upload pictures, blogs, share diaries, listen to music etc.
Similar to Habbo Hotel which only targets only the youth, Cyworld has managed to
cross the age divide. Cyworld is already used by over 50% of the total Korean
population, and over 90% of the youth of the nation. Politicians post their policies
on Cyworld. Housewives share cooking advice on Cyworld. Mobile blogging alone
generates 3.40 dollars per user per month of data revenues to the carriers in Korea.

Will all end on phones

In areas of digital community behavior, we see a clear migration to cellphones.


From blogging - already a third of all Koreans use cellphones for mobile blogging -
to dating to chat to smart mobs to TV-interactivity, in all walks of life, the
migration of community activism is going to cellphones. I do not mean that
communities will stop using the web, such as on Ebay or giving ratings on Amazon
or joining friends finders services. However, the preference and most intense
activity will migrate to the cellphones. If you are interested in community behavior,
you will need to observe that transition to mobile phones.
Alan Moore and I put it this way in our book Communities Dominate Brands,
in 2005: "Community power is inevitable and companies that ignore communities
will wither and disappear, to be taken over by the new players who understand the
relevance of this new customer power."

WHERE NOW?

So, you want to read more specifically about mobile social networking? There isn't
that much which is in any way relevant, almost all published books in this space are
pretty much rubbish, as they tend to be rapidly rehashed books about the internet
social networking space who don't understand mobile. Obviously my Pearls Vol 2:
Mobile Social Networking is the definitive treatise and has 50 case studies of
mobile social networking success and innovation worldwide. Ajit Jaokar's and Tony
Fish's Mobile Web 2.0 is quite technical and treats only a small part of the total
picture, that of the 'Web 2.0' concept migrating to mobile, but in that focus, is an
excellent book. And you can't go wrong with my book with Alan Moore,
Communities Dominate Brands, the first in the world to argue that all social
networks will migrate to mobile.

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 173

Tomi Ahonen Pearls Vol 2: Mobile Social Networking


by Tomi T Ahonen
ebook format
only from www.tomiahonen.com
has 80 tables and charts of data
9.99 Euros

Mobile Web 2.0


Ajit Jaokar & Tony Fish
futuretext 2006

Communities Dominate Brands


Tomi T Ahonen & Alan Moore
futuretext 2005
world's first book on the business of social networking

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


174 Empowering digital communities

Case Study 6 from UK


My Art Space
A couple of UK museums got together with 100 local schools, and
deployed a school-kids' museum-visit enhancing experiment, with
mobile phones. The aim was to make the museum visits more interactive
and more fun for the kids, and naturally also to help the children learn
more during their visits to the museums.
They did just about all the logical 'Communities Dominate' types of
things, so they asked kids to rate works of art, to take pictures of their
favorites, to comment and blog about them, etc. The UK schools knew
that most kids will have cameraphones already, but for those who did not
own one, the museums provided loaner phones. And obviously they
designed various missions and projects for the kids, kinds of treasure
hunts and of course lots more information about the various works of art.
Do you think kids prefer this, to a static old-fashioned passive
museum visit experience? They loved it. Loved it so much, that the
average museum visit lasted 4.5x longer! Can you imagine how powerful
this is for education, if you can get kids to voluntarily spend four times
more time learning about the object of the visit?
A normal visit lasted on average 20 minutes, these kids using the My
Art Space mobile museum experience, stayed on average 90 minutes in
the museum - plus had tons more lively discussion about the visit
afterwards in their school work.

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 175

Excerpt from Tomi's 9th book


Tomi Ahonen Pearls Vol 2:
Mobile Social Networking
By Tomi T Ahonen
with foreword by Mark Curtis
CEO of Flirtomatic and author of Distraction
171 page eBook

only available from Tomi T Ahonen's


website:

www.tomiahonen.com

Cost only 9.99 Euros


for immediate download
available in ebook format only

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


176 Empowering digital communities

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 177

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


178 Empowering digital communities

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 179

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


180 Empowering digital communities

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 181

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


182 Empowering digital communities

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 183

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


184 Empowering digital communities

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 185

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


186 Empowering digital communities

This eBook is available for free download Tomi T Ahonen


Chapter 10 - Mobile Social Networking 187

Opinions on Tomi's ninth book:


Tomi Ahonen Pearls Vol 2:
Mobile Social Networking
171 pages ebook 2009

available only in eBook format


only from Tomi's website

www.tomiahonen.com

cost only 9.99 Euros


for immediate download

"After reading Pearls Vol 2, I was inspired to post a blog of 10 new


ideas for making money in mobile."
Aaron Chua, Head of Incubation,
Interactive Digital Media, Singapore

"I find Tomi's Pearls Vol 2 very useful and inspirational, especially
seeing so many successful ventures in the MoSoNet arena."
James Peh, CEO
Frenclub, Malaysia

"A must-read."
Russell Buckley, VP Global Alliances, Admob,
Global Chairman, Mobile Marketing Association

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


188 Empowering digital communities

Note Tomi's Pearls series of ebooks is a collection of his best-loved


'pearls' ie real commercially-launched services that he has shown in
his presentations. Each Pearl fits one slide and tells the story of one
successfully launched mobile service or application

Tomi's Pearls Volumes each runs 171 pages as an eBook, but


formated for the small screens of smartphones, so you can carry the
50 best case studies in your pocket. Each of Tomi's Pearls series
covers one relevant topic in mobile services and apps. The first
Volume is on mobile advertising, the second on mobile social
networking and the third on mobile money and banking.

The eBooks cost only 9.99 Euros each, and are only available through
Tomi's website so visit www.tomiahonen.com and see more

This eBook is available for free download Tomi T Ahonen


Chapter 11 - Mobile Money 175

"Progress is impossible without change, and those who


cannot change their minds cannot change anything."
George Bernard Shaw

XI
Mobile Money
Mobile will replace cash

I was scheduled to give a presentation about mobile money, to the annual


international Mint Directors Conference - the people who actually mint ie
manufacture coins worldwide, a conference where the national mints and national
banks send their CEO's to talk about the money manufacturing industry. The first
day of the big event held in September 2010 in Canberra Australia, was examining
the future of money and I had prepared some interesting cases to show the audience.
What I was not prepared for, was that 15 minutes before I was set to go on stage - at
the time when I was being fitted for the wireless microphone, I was told that I 'was
not going to be seated' ie I would not be allowed to speak to the conference.
I was never given a reason why. The Chairman of my session, the CEO and
President of the Canadian Mint (who ironically had actually invited me to come and
present to the conference), a Mr Ian Bennett, never came to explain what compelled
him to censor me in front of his audience. He did acknowledge me, sitting in the
audience and Mr Bennett did promise the room of about 500 prestigious
international bankers that he would publish my paper. But he never told me why he
censored me.
I do think I know why. I think the developments during 2010, after I was
confirmed as a speaker in late 2009, had moved so rapidly, and in an unfavorable
direction considering the future of coins and cash, that Mr Bennett probably felt
afraid, that if I was allowed on stage, the gathered press would tell 'Tomi's story
about mobile money' rather than what the Mint Directors would want to be told,
about the reassuringly comfortable future of coins. So since Mr Bennett censored
me, I have taken every opportunity to tell the 'forbidden story' about what is
happening with mobile money - and why it is now threatening the very existence of
cash as a monetary instrument.

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176 Mobile will replace cash

The Advent Of Mobile Money

So now we have mobile money. The first case of a mobile phone being able to be
used to handle a payment was in 1998 as an experiment in Espoo Finland just
outside of Helsinki, where two Coca Cola vending machines were installed with a
mechanism to accept payment by SMS text messaging. So rather than depositing
coins to the vending machine, a user could send an SMS text message to a special
phone number (unique to that specific vending machine) and the vending machine
would momentarily receive the electronic command that money has been paid and
release the intended soft drink. Meanwhile the payment would appear on the phone
bill.
The innovations spread rapidly. By 1999 Norway introduced the first systems
to handle the payment of parking meters by mobile using SMS. Austria offered the
first case of train tickets paid by SMS in 2000. Soon lotteries, cinemas, fast food
restaurants like hamburgers and pizza, taxis, etc would accept mobile payments.
Croatia became the first country where you could live your whole day with every
normal opportunity where you could use cash, was now also enabled for
mobile/SMS payments. I was just in Brazil last year and saw that on the beaches of
Rio de Janeiro you could pay for your ice cream by mobile phone. On another trip
last year to Mexico, I was at a convenience store, and I saw that the person just
before me paid by mobile phone.
Banks would also move into the mobile space, albeit quite cautiously. The first
bank to offer alerts of bank account balances etc via mobile phone using SMS was
Merita Bank (Now part of Nordea) of Finland back in 1996. There was a rush of
WAP related banking services in the early parts of the past decade but many were
short-lived projects. The movement of banking to mobile progressed slowly and the
innovations came more from countries where the legacy banking industry was not
well entrenched and the banking thinking was more modern. So in Europe the
Czech Republic was an early leader in banks adopting mobile services. And a major
leader soon came out of South Africa, where for example years ago it was normal to
get SMS alerts when money was withdrawn from a bank account or credit cards.
I witnessed it myself when a colleague illustrated it to me at a cash
machine/ATM in Johannesburg. He had his phone with him at the cash machine, he
punched in the commands to withdraw money from his account. Before the cash
machine had even started to count the money for dispersing from the machine, an
SMS text message arrived to his phone, beeping, with the alert that x amount of
Rand was being withdrawn from a cash machine at this address..
Then the first national mobile banking solutions appeared in the Philippines
with the operator (carrier) Smart launching Smart Money and its rival Globe
launcing G-Cash. Soon after that, Howard Rheingold wrote of the near future where
consumers would change behavior, guided by their phones. Howard wrote of the
mobile in shopping in his book Smart Mobs:

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Chapter 11 - Mobile Money 177

(Mobile phones) amplify human talents for cooperation. They also change
the way people shop, how they gather information on products they want
to buy and where they decide to make that purchase.
Howard Rheingold, Smart Mobs, 2002

When we think of various monetary instruments, like coins and banknotes of our
cash, discount coupons and offers, credit cards, etc, we start to replace a range of
utilities in our wallet. Actually we can do much more, such as digital replacements
of our identity cards, which started with loyalty cards offering mobile variants. As
the mobile payment expanded, the industry started to talk about a broader term, the
mobile wallet.
The first fully modern mobile wallet was launched in 2004, by who else, NTT
DoCoMo of course, and branded as O-saifu Keitai (mobile phone wallet) using the
FeliCa contactless technology as part of the solution. This not only offered the user
full mobile payments, but also the mobile banking, mobile credit cards, mobile
payment history records, identity cards, and even the ability to provide electronic
passkeys for accss to offices, homes, hotel rooms and replacing car keys. The whole
mobile wallet solution operated both wirelessly on the cellular radio network, and
via contactless 'near field' communications like modern contactless payment
systems. The most famous use of the Felica enabled Japanese mobile wallet phones
is that when Tokyo subway users go to the trains, they just touch their phones onto
the Felica readers at the turnstiles into the subway train system, and the one journey
fee is automatically deducted from the account.
If you are not sure about using your own mobile phone as a payment
mechanism, then what if we give you an incentive? What if you get a financial
incentive to use the mobile payment option? In India your utilities (gas, electricity)
will give a 5% discount if you pay directly by mobile rather than cash at their
dealer. In England Orange the mobile network (carrier) will sell you two movie
tickets for the price of one any Wednesday if you pay for your cinema tickets by
(Orange network) mobile phone. Do not kid yourself, money is already migrating to
a phone near you. Soon you too will receive your salary - and pay your taxes - and
pay your mortgage etc - on your phone. Kenya was in the news in 2007 when they
set the limit of one monetary transaction from one mobile phone to another at... one
million dollars. Yes, you can pay for your house or car with a phone.

Virtual Money

So then we have the concept of virtual currencies. These are best known for the
virtual gold inside 'massively multiplayer online games' ie battle games like
Everquest and World of Warcraft, where literally millions play simultaneously in
vast virtual universes of quests and battles and adventures. And the games have
their own 'monetary system' ie virtual money, to help handle the economic issues.
You can buy certain items like weapons and ammunition and items of sustenance

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178 Mobile will replace cash

like food, water, healthcare, etc. Gamers can find gold or treasures that have
monetary value, and in many cases they can sell items inside the game as well. A
monetary system is quite essential for such virtual worlds as Second Life for
example. And then the more stunning part - for major online worlds like World of
Warcraft, Lineage, Second Life etc, there is an 'exchange rate' either formally or
informally, that allows virtual currencies to be converted into real money, ie US
dollars etc. So if you know how to discover (or earn) some gold inside a wargame,
you can then convert that virtual gold into real dollars that you can use in the real
world at McDonalds or go to the movies etc.
But that traces back to humble roots of a childrens online playground called
Habbo Hotel, by Finnish company Sulake. This is the 'Second Life for Children' but
actually pre-dates Second Life by many years. While most adults are blissfully
unaware of Habbo Hotel, Habbo has become the biggest virtual world on the
internet, and has a total population of 175 million Habbo Avatars created. Note that
the average age of Habbo Hotel users is about 15 years, so this is a youth
playground. If that was a country on the planet, Habbo Hotel would be the sixth
largest country by population. And like real countries, there is an economy inside
Habbo Hotel, fuelled by a virtual money system.
What is the mobile dimension to this story? Kids don't have credit cards or
banking accounts. But they do have mobile phones. So Habbo Hotel allows kids to
make payments for goods inside Habbo Hotel, by paying via SMS - using
something we call 'premium SMS' ie SMS text messages that have a higher-than
normal list price. All teens have mobile phones and can use their balance on their
phones to make these kinds of payments. Habbo Hotel uses the premium SMS
payments to sell Habbo Hotel money to the kids, which then can be used to buy any
items of virtual goods inside Habbo Hotel, like a cool t-shirt or some funky shoes,
or a wild haircut, or a nice poster to the wall of the virtual room.
Sulake the Finnish owner of Habbo Hotel earns about 75 million dollars of
revenues in 2010 out of teenagers the world over and have reported profits for
several years now. I have loved Habbo Hotel since it was a case study in my fourth
book Communities Dominate Brands and now for example the concept of the
Farmville types of virtual worlds in Facebook are adaptations of principles Habbo
Hotel pioneered at the start of the decade, and virtual worlds all around the planet
are using those ideas to generate revenues and profits.
This then turns into something of a weird behavior pattern. In some worlds and
some users, they can spend more on the virtual good for their avatar, than on the
same 'real world' good that they can buy for themselves in the real world. In South
Korea, the biggest virtual world is Cyworld (about half of the total South Korean
population has already created an avatar of themselves inside Cyworld). and that is
quite normal for some users to spend more of their money to decorate their avatar,
than what they spend on real clothes, haircuts, make-up, etc on themselves.

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Chapter 11 - Mobile Money 179

M-Pesa

So while the industrialized world moved slowly to mobile money, in countries of


the Emerging World, mobile money could spread very rapidly. They tend not to
have a strongly entrenched legacy banking industry to try to block monetary
innovations. A perfect example is M-Pesa of Kenya where my dear friend Susie
Lonie of Vodafone has been involved setting it up for the Vodafone Kenya affiliate
Safaricom. M-Pesa launched in 2006 and as the real banking use in Kenya was very
modest, M-Pesa brought considerable payment benefits to 'the unbanked' which was
by far the majority of the Kenyan population.
M-Pesa was actually not a full mobile banking solution. It was more a deposit
and payment system. An M-Pesa user could deposit money to M-Pesa, could
withdraw money from it as cash, and could move money from one M-Pesa user to
another ie make a payment. The adoption rate has been phenomenal. In just three
years, mobile banking users in Kenya have passed traditional banking users - 58%
of all banking users were already using mobile banking by the summer of 2010.
Now, just in terms of daily economic activity in a poor African country,
imagine the benefits. If you had to go to the neighboring village to pay the teacher
where your kids went to school, it might take you several hours by walking or
perhaps by bicycle to go there, make the payment, and return back home. And you
risked being robbed along the way. Remember most countries in Africa have an
average wage of under 2 dollars per day. Even very modest sums of cash are very
attractive for robbers. But now, with M-Pesa, you could pay just by pressing a few
buttons on your phone. The teacher in the other village would receive the money on
his or her phone, and could go to any M-Pesa authorized retail merchant, and
withdraw the money as cash if needed, and obviously, as the teacher could use M-
Pesa to pay as well, the teacher would not even need to withdraw the money as
cash. Again, the statistics are amazing. In less than four years, by September 2010,
an astonishing 20% of the total Kenyan economy was transitting a mobile phone
banking account. The authorities in Kenya project that it will pass 25% of the total
GDP by the end of the year 2010.

Every Phone Is Also Payment Terminal

Here is the really 'big idea' about why mobile payments are far more potent than
traditional electronic payments. Every mobile phone can become a payment
terminal! Imagine two people at a market. One is a seller, one is a buyer. The seller
has a nice piece of antique furniture. The buyer wants to buy it, but doesn't have
enough cash. The buyer does have plenty of credit on his credit card. The seller also
has a credit card of the same type - lets say both have a Mastercard credit card. Why
can't I just move money from my Mastercard to yours? With us just touching our
wallets, or something?

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180 Mobile will replace cash

That is how cash works. I have cash, I give it to you. Now the crazy part is,
that you have a Mastercard, and I have a Mastercard, and I have enough credit on
my Mastercard to buy that piece of furniture. But you cannot use your Mastercard
(plastic card) to receive money from me, at that point in the market. You need to go
and get a 'payment terminal' to connect to Mastercard's system, to verify my card
and that there is enough money, etc. That system is expensive.
But every mobile phone can make payments without any further changes
today. And every mobile phone can accept payments, without any further changes
today. It is only up to the mobile operators/carriers to enable such systems. The
device can already do it today. So lets go back to Kenya.
In Kenya, if you are the merchant, you just take out your mobile phone, give
your number to me, and I send the money to you. Ten seconds later you have
received the notification on your mobile phone that your account has been added by
x dollars paid by so-and-so, and you know I have paid you. I know my account has
been deducted. The monetary transaction has been completed, that easily.

Wanna Buy My SIM Card?

Which brings us to the SIM card merchants. The basic model is a one-directional
money situation. In almost all countries where prepaid phone accounts are popular,
there is a large eco-system of prepaid top-up services, where you go to a local
merchant, like a news stand or grocery store, and buy some balance to add to your
account. You may deposit more minutes/messages to your current SIM card, or you
can buy a new SIM card, depending on your situation and need.
Now, what happens. In a village, there are many who need top-ups, and the
SIM card vendor keeps collecting cash from the villagers. He is soon in the
situation, where he has too much cash in his shop, he has to go to the bank to get rid
of some of it. This is what I mean by it being currently a one-directional system.
Wouldn't it be nice to have the same customers come in and 'withdraw' the cash?
This is why M-Pesa merchants (and G-Gash and Smart Money merchants in
the Philippines etc) will act as the cash dispensers. So you decide that your SIM
card which currently contains 25 dollars in value, is too much, and you want to
'withdraw' 10 dollars, like going to a cash machine/ATM. You go to the merchant,
you authorize your account to withdraw 10 dollars. The merchant receives that
money digitally from your account (into his merchant account) and he gives you the
cash (minus a handling fee). So now, we have in effect a virtual cash machine/ATM
network that covers tens of thousands of merchants nationwide. All who regularly
take in cash when topping up SIM cards and selling new SIM cards, but now can
get rid of some of that accumulated cash, by paying out the cash to their customers.
And in effect, the merchant then was able to 'move' money from his cash in his
store, to his merchant account as digital money. Its actually an easier - and safer -
way to get rid of his excess cash, than walking to the nearest bank branch wtih the
cash. Brilliant, simple, elegant.

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Chapter 11 - Mobile Money 181

And the point - every single mobile phone becomes a payment terminal! Every
phone, your phone and mine. We don't need to be 'authorized' and go through all
sorts of business approval processes, credit checks etc that payment terminals
typically require. As a monetary instrument, not that we can pay with the phone
(like with the plastic credit card) but that every phone can act also as the payment
terminal, this is something no other digital technology can hope to match. Your
credit card cannot handle my payment. Your debit card, your contactless card can't
do it. Your internet payment, even Paypal - can't do it unless you have cellular
connectivity - in essence forcing your iPad or netbook or notebook PC to behave
like a mobile phone. And how many of the hundreds of millions of portable PCs
actually have a cellular 3G connection? Most rely on WiFi, and that means its not
everywhere at any time. Mobile phones can act as the payment processing devices
anywhere, anytime, for anyone. Even for a 13 year old young entrepreneur who is
years away from qualifying for a credit card..

Do You Want Plastic, With Your Credit?

So what happens when the existing digital payment systems migrate to the phone?
We can see that future existing already today, in one country: South Korea. Of all
advanced industrialized world countries, South Korea is now the most advanced in
mobile money. They have already gone through the full integration and
coordination with the telecoms industry, the banking industry, the payments
industry and the credit cards industry, with full government support and approval,
including the necessary legislation etc.
So today all major banking services can be deployed on one SIM card on your
phone. The SIM card is particularly secure and unique to one South Korean citizen.
And upon that SIM card, you can then have various banking and credit card entities
'authorize' their payment solutions. So if for example Visa has approved your credit
card application - it will be enabled on that SIM card on your phone. But on the
same SIM card you may also have Mastercard or American Express, etc. And your
various banking solutions. All independently approved, separated so that rival
services cannot access your info, but why would we need to carry ten different
plastic cards, when one digital identity is all we need?
So now they have that funky question that South Korean credit card companies
will ask you on the phone. When they approve you as a first-time credit card
customer, and obviously they have instantly approved your credit card within
seconds, onto your phone, so it now acts as a valid credit card in any point of
purchase in South Korea - the customer service representative will ask you on the
phone, "do you want plastic, with your credit?" This bewildering question means,
"Do you want an old-fashioned plastic format credit card, to be mailed free of
charge, in about 2 weeks, to your home address, as your backup credit card system"
That they ask this, tells us something very revealing. In South Korea most
consumers today will not even want to receive the old-fashioned plastic credit

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182 Mobile will replace cash

card. They have no need for it in Korea. You don't need that in South Korea where
essentially any merchant who accepts credit cards can take the payment via the
phone. Here's the rub to us who think we live in advanced countries. For South
Koreans, only if you happen to travel abroad to an 'old fashioned country' like say
Germany or the USA or France or Britain, where they 'still use plastic credit cards' -
then the Korean company will happily send you the free plastic credit card, free of
charge, to your home address.
This is so advanced, that by 2007, one quarter of all Visa card holders in South
Korea had no plastic card at all. I am sure its well past half of all Visa card users in
Korea today. But think about it - the time of plastic cards is coming to an end too.
Why not? If your phone can truly do everything your plastic card can (and much
more), why bother with the plastic. Soon we will not need the wallet anymore!

Time Value Of Money

Everyone has a payment authorization device in their pocket. Everyone also has a
payment processing device in that same phone. Payments can be done instantly
between any two people on the planet (soon, obviously we are still in early steps on
this level of integration but giant companies such as Vodafone, Nokia, NTT
DoCoMo, etc are already deploying such solutions). The whole economy benefits,
payments get processed far faster, allowing for more rapid 'velocity' of money in the
economy. You get paid faster, your wealth increases, you can process payments
faster, and the economic drain of handling payments diminishes.
M-Pesa has become a total transformational change to the Kenyan economy.
Rival m-banking systems were of course soon released by the rival mobile
operators also in Kenya. In three years, half of all banking accounts in Kenya were
now mobile banking accounts. In four years, mobile banking has captured 25% of
the total economic activity in Kenya. And M-Pesa is being rolled out in other
Vodafone affiliates from Tanzania to South Africa to India. No wonder Susie Lonie
and the team at M-Pesa won the Economist award for this innovation in 2010.
Now while so far M-Pesa has been only a very stripped down mobile payment
system, they are now in the process of upgrading the system to a full bank which
means acquiring a banking license in Kenya etc. So if you think this was somehow
enormous change, do bear in mind, that was when M-Pesa did not even offer full
banking services. Now that they will upgrade the service to full banking - and many
of their M-Pesa users will no doubt also apply for future 'real banking' services such
as loans, credit cards, etc, imagine how much more significant M-Pesa will become
to the local economy.

Crime And Cash

So then lets fast-forward to today. Now we have mobile payments enabled in


various countries across various businesses and industries, on various technologies.

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Chapter 11 - Mobile Money 183

And we will see interesting developments. I think the most fascinating is the one
with crime.
Cash always attracts criminals. In Estonia the government observed that the
parking meters were particularly prone to crime, anything from vandalizing parking
meters to robbing those who collected coins from the meters, to more sophisticated
parking crime by the mafia, such as the scams suggesting that the parking meters on
one street are broken (when they weren't) and a criminal, dressed up like a
policeman, would then collect cash payments from car owners and issue official-
looking receipts for supposedly legitimate parking. Then the criminals vanished, the
car owners returned at the end of the day to find parking fines for all cars on that
street - and obviously the 'receipts' for parking turned out to be fakes.
Well, the Estonian government noticed that all Estonians had a mobile phone
and they had long since deployed mobile parking solution. So they simply
terminated coins as acceptable payment for parking. And overnight, this one form
of crime vanished, and the government got more of the real payments relating to
parking, and eliminated some of the costs that were involved in collecting the coins
from the parking meters nightly.
I should point out that not all parking payments in Estonia are done by mobile.
You can also pay by credit cards, debit cards, etc. But about 75% of all parking
payments are now done by mobile - and none by cash. It became very literally the
first country, where one small industry (parking) has now abandoned cash as a
valid payment mechanism - in favor of mobile payments. This has never happened
to cash before, anywhere. We see this moment as the 'beginning of the end' for cash.
Now it is only a matter of time.
Then we had a similar instance of a crime wave hitting Sweden, with bus
drivers targeted for the cash they carried to give change to those who paid bus fares
by cash. And again, since all Swedes already have mobile phones, and since
Sweden had already deployed mobile payments, the government decided to look
into the Estonian parking example. It was an easy decision. Rather than the very
expensive technological solutions of building bullet-proof glass encasements
around bus drivers, simply eliminate cash as a payment method, and allow mobile
payment in the busses, and that removes this opportunity for crime. Simple, elegant,
obvious.

The End Of Cash

So, now we can see that there is the beginning of a trend. We will see ever more of
this, in various little industries worldwide. But it is only a one-way street - nobody
is abandoning mobile payments in favor of cash. So we will see the gradual
transition away from cash. And then this August saw a second significant milestone
in the gradual end to cash. The Swedish Parliament became the first formal
government entity in the world, to commence discussions about the timing of the
ending of cash. Led by various Swedish activists who feel that manufacturing cash

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184 Mobile will replace cash

is a wasteful effort (ie there are green values in not killing trees for banknotes and
the manufacturing of various metals to create our coins), and there are various
bacteria that we transmit in our cash - so there is a health dimension to the problem.
Led by a member of the Swedish pop band Abba, there is a movement now in
Sweden to end the manufacturing of cash, so they have started the discussions of
when shall Sweden do it. Not if, but when.
I have since heard that ther are several African nations who are considering
similar initiatives. And if I know my Nordic Europeans, if Sweden thinks about it
now, very soon we'll hear the Finnish Parliament get into those discussions soon,
and perhaps the Estonians actually accomplish it before the Finns, and no doubt the
Norwegians and Danes will get into the act very fast as well. It may end up being a
race, of who ends cash first..
But there is no doubt that the time of minting coins and printing paper money
is coming to an end. It won't end in the next few years, it will take probably decades
for the end to come, but it is inevitable. And with these developments, I can
understand why the Mint Directors' Conference freaked out in September of 2010 in
Canberra and censored one of their announced speakers, 15 minutes before he was
set to speak. If governments had started the formal discussions of ending of your
industry, that might not be quite the theme the annual event would want in the press
the next day. Incidentially, the Director of the Swedish Mint was not in attendance.

Is The Ultimate Plastic Card

Recently the plastic cards industry has been innovating too. They now offer limited
keypads so you can type in clumsily your password. And they have innovated with
limited screens to show some information for you. What is the point to all that.
Sooner or later, we will use our phone for all that.
Image the power this brings. Think if MasterCard or Amex could offer an
intelligent credit card, with an active screen, an interactive keypad, an active
network connection AND a memory chip. What kind of superior services can be
deployed. Show available balances in real time. When you travel and see prices in
another currency, on your phone show the price in your own currency. Give
alternate links to do price shopping. Offer real time couponing. "Rather than the 1
litre of Coca Cola, would you like a 20% discount coupon for Pepsi" etc. And
mobile is becoming the virtual currency platform for many online services such as
Habbo Hotel (children's Second Life, has over 175 million registered users in 30
countries) and Flirtomatic and Cyworld.
Eventually everything we buy will be paid for by mobile. No country is there
yet, but in advanced countries about a quarter of the nation is at this level. So give
this trend at least 10-20 years. But it is an irreversible trend. And far more powerful
than credit cards or Paypal, we can build integrated and converged services on
mobile utilizing money.

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Chapter 11 - Mobile Money 185

If ever you felt that airline or retail loyalty card schemes have a wealth of data,
that is truly peanuts, copared to how powerful mobile money related data will
become. its like comparing a children's storybook to the Encyclopedia Britannica.
Eventually this industry will own all commercial transcation data. And arguably,
that is where the real value resides, the information. I will discuss customer data in
its own chapter later in this book.
This trend is in its very early beginning stages. Most banking and credit card
companies are late to this game. The national banking regulations are still evolving
to handle mobile phone accounts and what to do about things like instant loans (like
they have in Scandinavia, very popular, get an instantly approved loan and its sent
to your phone, and you can withdraw the money in cash at the nearest cash
machine/ATM if you want..). But think of how much broader this is now than all of
the impacts of the internet. Kids. Who do not qualify for credit cars, but can do
mobile payments - and then can also use their own phone to receive payments, such
as if they do small errands, or act as tutors and mentors for example, etc - receive
payments directly onto your phone account (and don't think its only small
payments, in South Africa and the Philippines etc its quite normal to get your full
paycheck paid to your mobile account).
The trend of cash and money migrating to mobile is an inevitable universal
trend. It is mostly slow-moving and we won't abandon our plastic credit cards and
our traditional cash and banking accounts for years to come, very likely at the end
of this decade mobile payments are still a minority player in the global money
environment - but an ever increasing minority player. Mobile money is in its
infancy but it is an unstoppable trend for many reasons. The mobile phone is
already considered more important to normal consumers than the wallet. Mobile
phones are far more powerful than plastic credit cards - have more security than a
plastic card, and far more importantly - any mobile phone can act alone,
independently of a 'terminal' as the payment system.

NOW WHERE?

Well, there aren't any books here yet. I am just about to finish my third volume of
my Pearls, which will be on Mobile Money, so if you can wait some weeks, that
should be done by then. If you received this eBook as a forward, you may want to
go see if my Pearls Vol 3 is finished already and get that.

Tomi Ahonen Pearls Vol 3: Mobile Money


Tomi T Ahonen
ebook format
tba
only from www.tomiahonen.com
has 50 case studies of mobile money & banking
(released shortly)
cost 9.99 Euros

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186 Mobile will replace cash

Case Study 7 from USA


Iron Man 2 m-Tickets

The Iron Man 2 movie in its theatrical release in the USA featured
mobile ticket sales linked to video preview clips. A clever multi-
faceted iPhone application offered such features as a count-down
counter, showing how many days and how many hours and how
many minutes left to the premiere of the movie, etc.
The clips and the app offered a chance to purchase and
download a ticket to the movie. The movie ticket was then delivered
to the phone via a 2D barcode (QR code).
The mobile ad campaign achieved a 6% click-through rate, far
in excess of what was expected on any similar online campaigns.
Even more impressive was the actual purchasing behavior,
where half of all who clicked to the coupons, actually made a
purchase on the phone, giving the campaign a very satisfactory 3%
conversion rate. Bear in mind, that the average for internet based
advertising is well under one half of one percent click-through rate.
This campaign achieved a 'second click' rate ten times better than
average campaigns on the internet. And a 3% conversion rate is
nearly unheard-of, on the internet today.
The Iron Man 2 mobile ad campaign was featured in Mobile
Marketer on 1 June 2010.

This eBook is available for free download Tomi T Ahonen


Chapter 11 - Mobile Money 187

To be added:

Excerpt from Tomi's 12th book:


TomiAhonen Pearls Vol 3:
Mobile Money and Banking
to be released shortly

please monitor Tomi's blog or website or Twitter for more information

www.communities-dominate.blogs.com

www.tomiahonen.com

Twitter: @tomiahonen

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188 Mobile will replace cash

(Please note this edition you are reading, is a late draft version from 2010. Please
return to Lulu to get your final edition of this free eBook in early 2011)

This eBook is available for free download Tomi T Ahonen


Chapter 12 - Beyond Reality 187

"Its kind of fun to do the impossible."


Walt Disney

XII
Beyond Reality
Augmented, Virtual and Improved Reality

The hottest story in the mobile innovation space in 2010 has been Augmented
Reality (AR). Previously the pervue of military uses, such as with helmets of
modern fighter pilots, AR entered consumer services with Layar, the Augmented
Reality Browser. But its not the first time that mobile has twisted our reality and
given something for us which was not based on just the real world. Years before,
we saw the emergence of Virtual Reality into the mobile space with many examples
already discussed in this book. I will spend a little bit of time on the first consumer
VR gadget and how it was adapted to mobile. And Augmented Reality is not the
final state of going beyond reality. We are just now witnessing the birth of what I
call Improved Reality for mobile. I will show you what an Irish company called
Movidius is doing in the Improved Reality space today.

Virtual Girl Friend?

I explained in the consumer behavior chapter about how youth are different from
their elders in six ways. One of those was that they grew up with virtual reality
adding to their 'real' experiences of their reality - something very much more rich
and complex than the 'plain' reality of their elders. The perfect example and
metaphor for that is the first VR toy, the Tamagotchi. Its 16 years from the birth of
the Tamagotchi. The main point being, that for a pre-teen child in the 1990s, the
first pet that they witnessed dying, was the Tamagotchi.
As the pre-teens grew up to be teenagers, they found a revived Tamagotchi on
their mobile phones in the V-Girl (and V-Boy) service, as released by Hong Kong
based Artificial Life in 2002. V-Girl was launched in countless countries and
offered boys the chance to have a virtual girlfriend in V-Girl and similarly for girls
to have a virtual boyfriend in V-Boy. Why would any teen want a virtual friend on
their phones? You can't hold the hand of a virtual friend, you can't kiss the virtual

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188 Augmented, Virtual and Improved Reality

friend etc? We studied the phenomenon and I've been reporting in various books
about what we learned. The young teens, who had not yet had a real boyfriend or
girlfriend, would use the V-Girl for 'practise' so that they would 'know how to
behave' when they would finally find their first real boyfriend or girlfriend.
In 2008, Artificial Life celebrated the sales of the four millionth download of
the virtual girlfriend for your mobile phone, V-Girl, across the several countries
where they offer the service. I can now add an interesting tidbit. My friend Ernst
Axelbank the CTO of Artificial Life has said that they found that the original V-
Girl mobile game was too interactive.
The gaming experience on mobile is different from gaming on the internet.
Again validation of my theory that mobile is the 7th medium, quite different from
internet the 6th. Furthermore in yet another example of mobile success, the service
really took off, when Artificial Life released a simplified version, where V-Girl
would require less keystrokes and interaction, and more of her "personality" and the
gaming experience was on the servers over at Artificial Life, and the individual
gamer would more react to V-Girl, that initiate interactions. I'm sure we have many
other experts in the industry who will testify that this is exactly the key to mobile
success. Keep it simple..

Virtual Hitch-hiker

Japan is a good market to study the exploration of the virtual reality space. For
example Honda motorcycles offer anyone interested to create an avatar of
themselves, as a Honda hitch-hiker. The avatar is created on your mobile phone.
Then you place your avatar to a hitch-hiking location somewhere in Japan, like at
the motorway near your home. Then any Honda motorcycle owner, who is
registered to take virtual hitch-hikers for a ride, when they pass that point, and if
they don't already carry a hitch-hiker, will automatically take your avatar for a
virtual ride. Perhaps you start in Tokyo and suddenly you receive a beep on your
phone, that your avatar has just been picked up by a Honda rider. And you can
monitor on your phone, where your avatar is now journeying. Perhaps the hitch-
hiking avatar lands in Osaka, where the Honda rider ends his journey and your
hitch-hiker is deposited, to await the next friendly Honda rider. In this way, your
avatar can explore and experience Japan for you, and send greetings from around
the country, courtesy of Honda motorcyle riders
Meanwhile we see virtual currencies (which were discussed in the mobile
money chapter) and its interesting and even at times bizarre phenomenon. Virtual
goods are sold in mobile services from Cyworld to Habbo Hotel, from Mobage
Town to Flirtomatic. And massively, to a truly Chinese scale, inside QQ, the
Chinese mobile social network operated by Tencent. The most bizarre lesson from
virtual properties, is that it is now quite common that there are some properties
inside virtual worlds, which will actually cost more in the virtual version than the
real world version.

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Chapter 12 - Beyond Reality 189

Star Maniac

Then I heard about this really cool TV concept in Japan from my 'Japan guru' Lars
Cosh-Ishii of Wireless Watch Japan. The TV show is called Number 1 Star Maniac
(Oshi-Ichi Star Maniac) and its format and technology was developed by Artificial
Life. So lets start with the basic premise. Imagine your typical TV quiz show, like
say Who Wants to be a Millionaire. A couple of people in the studio playing the
quiz game. But we also know from Pop Idol/American Idol, that millions will be
happy to join in TV shows for example through voting via SMS text messaging. So
why not combine the two. How can we bring hundreds of thousands of TV viewers
into a live TV show to participate.
That is where Number One Star Maniac comes in. In this show, there is a
studio host - a real person - who asks questions, but the participants are real TV
viewers who join in by creating avatars of themselves for the show.
So the quizmaster asks a question. The three or four possible answers are
displayed on the bottom of the TV screen, and each answer also has a
corresponding colour, say blue, red and yellow. The participants at home use their
phone to select one answer. Then after everyone has had time to answer, the game
will remove all who had picked a wrong answer, and leaves only those who
answered correctly. So a million start, soon only half a million are left, then two
hundred thousand, and so forth, until there are only a handful contestants left for the
final question.. As the game contestant numbers get reduced down, when its down
to 100 or so, then each remaining participant can see their own face and name
briefly on screen, and so forth.
This is the natural next step for game shows, to expand their participation. It is
also the natural next step past voting once per episode, to kick off the participant in
Big Brother or Pop Idol or Survivor Island. Now you can actually be in contest to
win the game, not just be the jury to vote off the contestants. This is far deeper
interaction. But what kind of involvement? When they ran the first episode of
Number One Star Maniac in Japan, within five minutes, they had 80,000 viewers
signed up to participate in the quiz show, far more than the producers had ever
expected. The show became a ratings hit and won its time slot for TV audience as
well.

Virtual Red Roses

I have featured Flirtomatic generously in my recent books and their CEO Mark
Curtis gratiously wrote the foreword to my 9th book, Pearls Vol 2: Mobile Social
Networking. Clearly I am a fan of Flirtomatic. But lets examine a bit more those
virtual gifts that Flirtomatic users buy and send to each other. Lets start with the
virtual red rose.
In 2007 Flirtomatic introduced their virtual red rose, a simple virtual gift worth
about 40 US cents. Out of their 100,000 members back then, they managed to sell

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190 Augmented, Virtual and Improved Reality

3.5 million of the virtual flowers in the first year! They earned 1.4 million dollars
just out of this one gimmick - 14 dollars per subscriber per year, just on one type of
virtual content. Then for Valentine's Day 2008 the red rose was old and familiar.
Not really romantic anymore. How to revive it? The gold sprinkle of course! This is
virtual. So its a tiny bit of design and programming to add the gold dust to the rose.
But Valentine's Day they doubled their rose sales due to this new sprinkled rose,
and yes, the sprnkled rose cost about twice the cost of the plain red rose. Its a
magical money-making machine, mobile is.

Melting On Arrival?

Or what about the ice cube that melts upon arrival to your phone. What? What good
is a virtual ice cube? You see it in the phone screen, you can't drop it into your
drink. And then it melts on arrival? So it literally disappears from your phone
within seconds, never to be seen again.
Who in their right mind pays to send such a gift? Not in their right mind,
remember, the Flirtomatic users "buy more fun" from Flirtomatic. They may be a
bit drunk when flirting. Ice cubes can mean many things from cooling a drink to
sensual sexual fun. An ice cube is fun. You are flirting, you may be in a pub or bar.
Your friend may be stuck in a meeting that is running late and is getting upset at the
boss who won't let them leave (send an ice cube! Show you care). Then your friend
is in the train that is crowded and hot (send another ice cube). Your friend finally
arives, orders a drink - you see her, you wink, she orders her drink, drowns it fast,
and with the phone hidden behind your back, you send another ice cube.. its fun.
Did it sell? They sold 5,000 melting ice cubes in the first week.

Augmented Reality And The Ford Ka

While I had witnessed the innovations in the virtual reality space, I had actively
ignored the Augmented Reality space. I did that because I had always thought
(stupidly) that the practical commercial possibilities of Augmented Reality would
not become possible until reasonably low-cost headsets and goggles and projector-
eye-glasses could be made.
How wrong I was. And how silly that I didn't see this coming. Because of
course - of course - the first tool to bring this Augmented Reality to mass markets
is.. the device with the camera and screen, that we all carry: our mobile phone, of
course! We all have it in our pocket. It has the connectivity and the intelligence and
the screen. And I've been calling for magic, the magical experiences with the phone.
Well, what is more magical, than looking at some space, where you know there is
nothing, you can go and walk over that space and touch it and feel it, and you know
there is nothing, and then you take out your phone, look through the phone, and you
see it.

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Chapter 12 - Beyond Reality 191

So what did it for me? The first AR mass market adaption that I saw, was the
Ford Ka campaign a little over a year ago. You walk on the street: there is no car.
You take out your phone, look at the empty street through your smartphone, and
there it is, the Ford Ka, as if it was parked right in front or you. You can walk
around it, even take a picture of someone standing in front or behind the Ford Ka.
In reality there is no car, but in the viewer of your phone, you see the street and you
see the imaginary car. This is Augmented Reality. Magical.
Augmented Reality yes. A magical experience, yes. 7th Mass Media, unique to
mobile? Of course. Observe that this does rather destroy the myth, that Augmented
Reality needs those special goggles. And that is a major step.

Layar The AR Browser

And then within weeks after I learned of the Ford Ka campaign, I heard from my
friends from the Netherlands, that their cool secret 'Tomi will love this' project, was
ready to go commercial. It turned out to be Layar, the Augmented Reality browser
(see above picture to fully understand).
How does Layar work? You point your cameraphone at some view in your
city. The normal view in the cameraphone screen is that of the city, like Amsterdam
here in the picture. Then you turn on Layar. You still see the exact same image of

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192 Augmented, Virtual and Improved Reality

the city, but superimposed upon the image, are specific dots with further
information - here is a Pizza Hut, here is a cash machine, here is the nearest toilet,
here is the museum, this apartment is for sale, etc. To do this type of 'Augmented
Reality browser' the phone needs both the GPS for precise location-positioning, and
the compass ability, so the phone 'knows' in which direction you are pointing the
cameraphone. You cannot have the dot of the Pizza Hut above the McDonald's...
Note that the 'media content' here is the dot that is only visible in your cameraphone
screen - and then we can add information - click here to get a coupon for the
museum, or click here to see the menu and prices at the restaurant, etc.
The innovations in creating what Layar calls of course 'layers' are
mindboggling. There are first of all the utility services to help us find things, the
shops, the restaurants, the cash machines, toilets etc. Then there are all sorts of
offers and coupons and advertising layers. Then there are stories about what we see,
ie kind of tourist guides, so more information about this statue and that church etc.
Then there are all sorts of games. And then there are the virtual characters that
apper in Augmented Reality, meaning that in your city you may see some monster
or magical creatures etc.
A perfect commercial application of AR that solves a real problem is the Ikea
AR app which they launched in Germany in 2009. Technically very modest and
working on most cameraphones and using WAP, the AR service would allow the
user to take a picture of a room in their home, onto which picture they could then
overlay the selected item of Ikea furniture being considered. How does that sofa
match the table and curtains, etc. Ikea had posters in their stores offering the
choices of sending an SMS to get the WAP link to the service, or using Bluetooth to
get the link. This very early AR service was used by 5% of Ikea mobile users as
reported by Mobi Ad News.

My Radar on the Boat is Broken

One of the coolest things for me personally so far out of AR is a German service
called Vesseltracker. It is intended as a 'poor man's radar' where your cameraphone,
using Augmented Reality - and connected obviously to the network. The harbor
area will have mapped out all ships with their real radar. Then they offer this info
also on maps. So the Layar system can combine these and give you the equivalent
benefit of a radar - by using the exact GPS positioining of your boat, and then
letting you look with the cameraphone slowly panning around your boat, and even
if it is a foggy day and you can't see anything in the real world, Vesseltracker will
accurately offer you the 'dot' and indicate which ship that is (its name) and most
importantly its distance from you and its direction of movement. Brilliant!

AR Butterflies

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Chapter 12 - Beyond Reality 193

Then coming back to our favorite test-laboratory of the mobile future, Japan. D2C
the mobile advertising agency of Dentsu and NTT DoCoMo have launched for
Japan a whimsical 'media platform' of augmented reality butterflies. You can only
see them through AR enabled phones, obviously. The butterflies are regionally
specific, so the butterflies in Tokyo are different from those in Hokkaido etc. To
catch one into your collection, you have to approach the butterfly (they fly so you
may have to chase the butterfly like the real thing) and then use your phone as the
'net' in a sweeping motion to capture the AR butterfly. After you do, you have that
butterfly added to your collection. And then you can for example mate butterflies
from different regions to create new wing color patterns etc. Blue and yellow
creates green, etc. This concept appeals particularly to the young and those who are
young-at-heart. I am not sure if it will be a big hit commercially, but it shows a bit
the kind of weird and magical that we can now create on mobile.
Meanwhile AR can be used to make almost anything 'analog' suddenly digital
and interactive. A great example was shown at the Nokia N8 launch, when German
print magazine Suddeutsche Zeitung exhibited one of the world's first AR editions
of a printed magazine. When a suitable cameraphone was held over a given picture
in the magazine, the view on the phone screen would be altered, such as showing a
'before and after' version, with the before picture printed in the magazine, and the
after version seen only via the phone; or adding speech bubbles, thought bubbles,
flipping pictures, adding videos, etc.

Adidas 1st Person AR

Normally Augmented Reality up to now has been what I can at best call a 'Third
Person' experience. We did not see ourselves in the AR environment. We saw
someone or something else. So it was like a movie that was designed by someone
else, with actors, and we just observed it. Augmented Reality was something
magical that happened near us but to others or to the environment 'out there' as seen
through our mobile phone viewfinder. Then I learned of the Adidas adaptation
which I believe is the world's first use of AR in the first person, where the AR
benefit is seen directly upon the viewing person himself or herself. So its a 'first
person' Augmented Reality experience where the user can see himself or herself
within the AR experience.
Adidas ran in five Asian cities including Singapore a campaign with three
primary interests. First, to drive 'foot-fall' into their stores, ie get visitors. Secondly
to promote their new line of very cool colorful T-shirts. And thirdly to also drive
individual store-visitor sales spending up per visit.
So they created a new user-experience asking prospective Adidas customers to
come and try their new Augmented Reality T-shirt simulator. The campaign ran in
the local newspaper which included a picture of the Adidas logo. The customer was
asked to take a picture of the logo with their cameraphone, and bring that image to
the store to take the next step.

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194 Augmented, Virtual and Improved Reality

When the customer came in to the store, they found a digital mirror. A digital
mirror uses a camera and flat screen display, showing you your image just like a
mirror would. The picture obviously is 'mirrored' so if you move your left hand, the
camera switches the view, so in the digital mirror you see yourself but as if your
right hand had moved - exactly like a mirror. But the benefit in a digital mirror is
that we can add digital elements from taking pictures to various virtual reality
elements, including Augmented Reality.
So there is some software in the digital mirror at the Adidas store, which
detects the Adidas logo in the cameraphone screen (or the paper printed version of
the Adidas logo). Then the digital mirror would project an overlay image, super-
imposed over the 'mirror image' of the person in front of the camera. Where we held
our cameraphone and the Adidas logo, there appears instantly one of the new
Adidas T-shirts.
But this is of course already 'contoured' so it looks like 'somebody' is 'wearing'
that T-shirt (but has his or her head and arms cut off).. When this image is moved
over your body, your head and arms show underneath the T-shirt, and it looks just
like you are wearing that T-shirt. Beautiful, magical. If the T-shirt is 'crooked', so
for eample your right shoulder is visibile underneath the T-shirt, then you just twist
your cameraphone a little bit in front of the digital mirror, and it will adjust the T-
shirt. Very easy, simple and intuitive.
Now, for one T-shirt this might seem excessive technology to 'try one T-shirt'
but now we get the fun of AR and digital. Of course Adidas had created a whole
series of cool T-shirts in funky colors and designs. Where if they were hanging on
the rack in the store, not every visitor to the store bothers to look through all T-
shirts. And not all will want to 'bother' to try on T-shirts. But now whenever you
lowered your cameraphone down out of view of the digital mirror, and then brought
it up again, the system swapped the next T-shirt for you. So just by flicking your
camera out of view and back, you had the next T-shirt to try on.
It was magical. You could instantly try on new T-shirts. By tilting your
cameraphone the image tilted in the mirror so you could see the T-shirt 'move' in
the digital mirror just like in the real world if you actually bothered to try on the T-
shirt. And to replace it with the next, just flick your cameraphone out and back. The
same Adidas logo still on your phone screen, now the digital image had replaced
the T-shirt with the next. Instant 'test-drive' of every new T-shirt in the Spring
fashion catalog, without the hassles of the changing booth. Magical!
I heard a little bit of the success rate when my friend Colin Miles of i-POP
presented in Singapore. The users of the AR-enhanced digital mirror were so
delighted many actually exclaimed their surprise and amazement outloud. We don't
usually hear that when clothing store visitors see themselves in the normal mirrors.
Better than that, 75% of all who used the digital mirror liked the experience so
much, they took a digital picture of themselves in the mirror wearing one of the new
Adidas T-shirts. 74 people who visited the Adidas store to try on the augmented

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Chapter 12 - Beyond Reality 195

reality T-shirts also ended up spending over 500 Singapore dollars on their
shopping visit. Adidas were extremely happy with the campaign.

Endless Potential

What can we do with it now? The opportunities are almost endless. We can expect
many games in this area, like hunting for ghosts perhaps or UFO's as AR is very
suited for showing things that do not exist in reality. It could be used to show new
buildings what they look like in their intended habitat, before they are built, or as
various options are considered. The beauty is that you can create 3 dimensional
images that you can then 'walk around' and see from all sides, as is now being used
in innovative ad campaigns such as Ford doing for some of its cars. And we can
well imagine AR used in museums, so if you see Churchill's desk in the real world,
you could then use your cameraphone to see the Prime Minister sitting at his desk.
Or you could see the bones of a dynosaur, and then through AR, see the same
dinosaur but what it looked like with its skin and in its habitat. The opportunities
are endless - what of the historical church, that was bombed in the war. Its been
restored now, but through your cameraphone, with AR, you could see the church
how it looked after the bombing, and see a recreation of the restoration perhaps...
This is evidence of how much the innovation in advertising is starting to
appear in mobile. It is a wonderful application of Augmented Reality for marketing,
and to me, I think we've crossed over into a new area of AR based marketing, from
'third person AR' to 'first person AR'. Obviously we, the consumers, think the
world's most important person or brand is 'me'. That is why direct mail two decades
ago wanted to send junk mail to us but by personalizing it by using our names. Now
we get to see ourselves inside an AR experience. This is why I call it 'First Person
AR'. Now it is 'me' who is experiencing AR. Very very cool. Congrats to Adidas
and i-POP

Improved Reality

And the mobile phone can do far more than augment (ie add to) our reality or offer
a virtual (alternate) reality view to the world. Mobile is a powerful platform to
improve (ie make better our) reality. There is the concept that Steve Litchfield of
All About Symbian calls 'megapixel microscopy' (a fancy term for saying you use
your cameraphone as a magnifying glass) so you can see very tiny items magnified
on your cameraphone screen. It starts to become possible at resolutions of about 5
megapixels if the camera has a 'macro' mode and gets quite powerful in the 8
megapixel to 12 megapixel resolutions.
Another way to offer improved reality is by adding calculated fields (in real
time) to video shot on cameraphones. This is not obvious in regular uses of
watching the video in 'normal' mode, but if you show the video in slow motion, or
zoom into a video image, then the graininess and jitteriness of the video becomes

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196 Augmented, Virtual and Improved Reality

apparent. A company called Movidius out of Ireland has prepared a video co-
processor for advanced mobile phones in use for video capture and replay, that will
among other things, provide improved reality video viewing. The slow motion is
clear, the zoomed images are sharp, and so forth. The chip will actually calculate
'missing' data from the video, and re-insert it while on the fly. The video can be
seen with the naked eye to be far more crisp and sharp than natively shot video on
the same cameraphone.
And if that was not enough, the latest magic trick that Movidius is doing, is
taking regular video, and in real time, convert it into 3D, that can be viewed without
glasses. The technology was demoed at the Forum Oxford Conference in 2010 and
Movidius expects its chip to be in actual mobile phones sold in 2011. Improving
Reality indeed, taking what was 2D, for example a movie saved on a MicroSD chip,
sticking it into the new high-end mobile phone with the Movidius video chip, and
seeing it in 3D. Without wearing any kind of goggles. This is Improved Reality, and
it seems truly like magic.

WHERE NEXT?

This space is too new to have any good books yet, sorry.

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Chapter 12 - Beyond Reality 197

Case Study 8 from Japan


Axe Wake-up Girl

As half of Japanese mobile phone users are that familiar with advanced
services that they access blog sites on their phones, we can see
innovative and exciting services.
Axe deodorant brand decided to launch a virtual girl to do wake-
up visits to sleepy young men in the mornings. The teenage and young
adult men would sign up to the service and pick any one of an avatar,
modelled after 14 real young sexy women in Japan, and that avatar
would then serve on the phone as the 'wake up alarm'in the form of a
sexy avatar in the morning.
The girls would have a sexy wake-up message in the morning,
which would include the reminder to use Axe deodorant. The men could
change the avatars as they wished, and collect all 14.
The campaign was created by Bascule for Unilever Japan, the
owner of the Axe deodorant brand. This campaign was one of the
celebrated cases of mobile marketing excellence, at the MMA Global
event in New York City in June 2010.
How does something like this succeed in Japan, you may ask?
They achieved 200,000 unique users of the wake up girls, and the
campaign generated an increase of Axe deodorant sales of 300%!
Coming soon to a phone near you..

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198 Augmented, Virtual and Improved Reality

Famous quotations by
Tomi T Ahonen in the
press over the years

Ahonen referred to the unexpected success of Japan's i-mode service.


Total Telecom 12 October 2000

"The biggest service to disappear off the 3G radar screen is video telephony,' Tomi Ahonen said.
Global Mobile Daily 26 February 2001

"The information sent to the phone can be personalised," said Ahonen.


Economist October 13, 2001

"By the end of this year mobile phones will overtake TVs," Ahonen said.
Mobile Wireless News June 19, 2002

Tomi Ahonen predicted that some people will happily carry two phones.
Cambridge Network News July 8, 2003

"Mobile web surfing today is not like fixed internet web surfing," says Tomi Ahonen
Business Week Oct 13, 2003

Tomi Ahonen is predicting rapid dramatic growth for SMS over


the next five years, in Americas as well as in Europe and Asia.
Wireless Asia December 15, 2003

Ahonen predicts that in the future, the phone will replace music players.
ITWeb November 10, 2004
"The mobile phone is the only device that 30% of the world's population carries," says Tomi Ahonen.
Financial Times 31 August 2005

Tomi Ahonen told Wireless Asia that Cellphones were replacing wristwatches.
Wireless Asia 1 Sept 2006

Tomi T Ahonen believes that even media business should be very very worried about iPhone.
Santa Fe New Mexican 13 June 2007

Tomi Ahonen calls Mobile the 7th Mass Media and he believes
that it will be more important to advertisers than the fixed web.
Brand Republic March 25, 2008

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Chapter 13 - Mobile Advertising 199

"The advertisement is the most truthful part of a newspaper."


Thomas Jefferson

XIII
Mobile Advertising
And Myth that nobody wants ads on phones

How to do clever mobile advertising now in 2010? Don't copy the web! Mobile
advertising is hot. So how do we do it? Today the vast majority of all advertising
dollars spent on mobile go to two major kinds of ads, SMS ('spam') ads and banner
ads to 'mobile internet' pages including WAP. And a rapidly growing 'buzz' in the
mobile ad space is the adver-app for smartphones, in particular all those cool free
Apple iPhone apps.

Copying Is For Wimps

Yes, we can copy ad concepts from the web (or any other legacy mass media like
print, TV, radio etc). Yes, we can copy. That is dumb. That is lazy - if your ad
agency comes back at you with 'banner ads' or 'SMS spam' ads - that is copying the
internet models, ie internet web banner ads and internet email spam. Web banner
ads themselves are web copies of print ads, and spam emails are the digital versions
of our home junk mail.
A new hot area of mobile ad 'innovation' [sigh] is 'preroll video' ads - ie used
with mobile (and web) video content. Preroll add means you are forced to watch an
advertisement before you get to see that video. This is again a copy of preroll on the
internet, which itself is a copy of the TV ad model, where our TV viewing is
interrupted to force us to view ads. We hate the format so much, that we buy TiVo
and similar PVR/DVR hard disk drive recorders to bypass viewing any video ads.
Now some 'clever' ad developers are bringing this punitive ad model to mobile.
Similarly the 'hot' idea of doing 'interstitials' - is yet another copy of a hated ad
format from the internet. Why on earth would we bother to 'innovate' by copying
something that is already hated online?

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200 Myth that nobody wants ads on phones

Mobile Is Better, Why Copy?

We examined the 8 unique abilities of mobile earlier in this book. Suffice it to say,
mobile can do everything that the interent can do, and then adds its own 8 unique
abilities by which we can do better. So there is no point in attempting to copy
legacy media. Its about as stupid as playing a radio ad on TV. Or showing a still
image of a print ad in the cinema.
The point is - that if mobile has 'unique' abilities - then you'd be pretty dumb
as a 'creative' executive in the ad industry, if you ignored those 8, that actually give
a chance to 'be creative', and only copied older formats. Its like not understanding
that cinema offered 'moving pictures' and you could design ads that had 'motion' -
far more compelling for many types of ads, than the still images we had in the older
media concept of print. You can't do motion in print. But if you just copy legacy ad
concepts and do not understand these 8 newer unique aspects of mobile as a mass
medium, you are telling the cinema owner to show a still slide as an ad. Or telling
the TV ad guy to play the radio ad on TV.
My point - I hope you are hearing this - if you copy banner ads, spam SMS, or
preroll ads or interstitials - you are being lazy and soon your rivals will do far better
things with this new mass medium - and they will win the awards, not you.

Interactive Advertising We Love

Let me show a brilliant interactive ad campaign that would work in any country. In
Japan Northwest Airlines ran a free mobile advergame. It was explained by my dear
friend and multiple-author Chetan Sharma in his brilliant book Mobile Advertising,
with his co-authors Joe Herzog and Victor Melfi:

(The cellphone ad campaign...) enticed consumers to engage in an


interactive "Guess the name of the city" quiz written in the style of
Japanese senryu poems. The answers are all cities in the United States and
Asia that Northwest Airlines flies to, North America being the biggest
market for Japanese travelers. Prizes include e-coupons that count
towards discounted fares and WorldPerks Bonus Miles. A further twist to
the campaign allows consumers submit their own senryu poem about
travel to the United States on Northwest Airlines. The best of these appear
on the site, and people can vote on their favorites, bringing customers
back to the NWA site time and time again.
Chetan Sharma, Joe Herzog and Victor Melfi, Mobile Advertising,
2008

Anyone could play, to enter you sent a free mobile message to the game. Because
we know the unique mobile phone numbers, the game could easily make sure that
any player could only enter one guess (per phone number). Nice daily and weekly

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Chapter 13 - Mobile Advertising 201

prizes of trips on NWA obviously. But here is the cool part - everyone who
guessed correctly received ...frequent flier miles on NWA ! This is awesome, who
would not want to play this game daily? The idea is bullet-proof. It would work in
any market on any airline. Winners get a small addition to their frequent flier
mileage bank. If you never had signed up to Northwest Airlines - well, there is of
course the mobile web site where you can sign up to start your FF account and start
to collect your miles and winnings. And what if the random Japanese family
considers its next holiday trip next year? If they have some miles already on NWA,
and don't even have a FF account on Japan Airlines or All Nippon Airways, who do
you think they'll prefer in purchasing the air fare? Very clever!

And Next Success Is Search?

Again, we could do traditional search word advertising on mobile, as a direct copy


of Google Ad Words. Sure, search is migrating from PCs to mobile phones and yes,
there will no doubt be a market for search word advertising on mobile too. But
please, reader of this book, do not go copying tired old formats. Lets innovate. Look
at Flirtomatic. They took the concept from Google Ad Words, and they've brought
idea of auctioned ads to the dating/flirting social networking service. They started
with the First Face. If you want to be the first picture all Flirtomatic users see when
they log into the service, that is easy to do. Bid on it. outbid the others, and you are
the First Face for the next 6 hours. You'll definitely gain new friends in the next 6
hours, fastest fingers first...
Another Flirtomatic innovation is what they call Flirt-Words, a variant on
Google's search related advertising. Flirt-words are auctioned words, rented for the
next 24 hours to the member who bids the most. Want to own "cool" or "sexy" or
"fun" for the next day, when Flirtomatic members search the service? If you win the
bid, you get it and be prepared for incoming messages from new friends. This is the
clever bit. The real money is in inventing what is uniquely possible on mobile and
making that work, not copying TV, internet, print etc formats.

Madonna At Wembley Stadium

I have been explaining for a decade now that the location-based mass-market
advertising concept is a myth. This is usually attributed to the Tom Cruise movie
'Minoity Report' where personalized ads are served directly to you when you walk
into a shopping mall. But for over eight years I have also been popularizing the
concept of what kind of location-based ads will succeed. I called it the "Madonna
Plays at Wembley Stadium" story and included it in my second book M-Profits in
2002, and the story has been very widely referenced since. The story has evolved
since 2002 and in my latest book Mobile as 7th of the Mass Media I devote two
pages to the idea, so I'll just summarize it here.

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202 Myth that nobody wants ads on phones

Madonna sets up a service to locate all mobile phones when they enter the
concert stadium area, like Wembley Stadium in London or Yankee Stadium in New
York City etc. When a fan enters the stadium, the network will send a free ad
message to the fan. She gives a free ringing tone to the fan as a gift, as a custom
ringing tone, only given to those who attended her concert. She also sends a screen
saver, of Madonna posing in front of the stadium, so it is clearly a unique picture
only from this tour.
Then Madonna asks the fan to join her fan club (and thus asks permission to
contact the fan later). Anyone who attends a paid rock concert will understand that
the artist would like to communicate with the fans, there won't be hostility against
this kind of one-time greeting. 95% of the recipients will agree to the fan club and
sign up (the remainder being perhaps corporate hosts or janitors and other venue
staff, who will also understand that this is part of working at the venue).

People Receiving Mobile Advertising

2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: TomiAhonen Almanac 2010

Madonna's benefit is that now she has the mobile phone numbers of her most
passionate fans, 20,000 of them at this major stadium. She repeats this across her
global concert tour of 50 cities and she will have the cellphone numbers of
approximately one million of her best fans worldwide. If the fans were willing to
pay 50 dollars for the concert ticket, then these fans will be wanting to buy
Madonna's next album.
So when Madonna releases her next album, she can send a message to her fans
to pre-order the album or even buy the songs directly downloaded to her phone. The
costs of promoting her next album will be slashed to 100,000 dollars as a global
total marketing expense (one SMS message sent to one million of her most loyal

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fans, at 10 cents non-discounted SMS price per message). Remember these one
million fans have all already given consent to receive messages from Madonna.
What happens when one million die-hard Madonna fans receive the same offer
of pre-ordering her about-to-be-released newest album, a week before it is
launched? It means that the album debuts on all major national charts at number 1!
Always before, all recording artists had to do massive promotions of new albums
costing millions. Just shooting a music video costs about a million dollars. The ads
in local rock and pop music magazines, the promotion tours to the major cities to do
radio interviews, pop TV shows, press interviews etc, is very gruelling and costly.
Now the effectiveness of all that, can be superceded by one permission-based SMS
sent to the most loyal, most passionate, and most influential of that artist's fans.
This will be the future of music promotion. And the same is true of her next
world tour. "Would you like the same seat at my new tour?" This kind of simple
SMS text message campaign will also sell out her next world tour, with any 20,000
seat stadium sold out with 20,000 messages sent at a cost of 2,000 dollars. Actually,
with a bit of clever marketing (sell two tickets to passionate fans with one SMS, to
enable them to bring a friend) - that one SMS campaign will sell the stadium out
twice, so one campaign of 20,000 messages will sell 40,000 tickets. At 50 dollars
per ticket, the gross ticket revenues are 2 million dollars, out of a total messaging
cost of 2,000 dollars. Obviously there are many other costs involved in producing
world tours for megastars, but in terms of selling tickets - mobile promotion is the
way to go. And yes, to seed that customer base, a location-based 'spam' SMS
campaign could be used to get the phone numbers from one world tour.
Moreover, it does not stop with pop and rock music. How about all other
events arranged at stadiums. Football. Baseball. Hockey. Basketball. Golf. Tennis.
Motor racing. The Kentucky Derby, etc etc etc. Anywhere that people gather in the
thousands to one venue for one purpose, for, which there is a charge for attending,
concerts, opera, the ballet, etc; these are all ripe for location-based ads. In addition,
the fans will love the advertising, not hate it.
We are now approaching these kinds of events-based marketing activities, and
I included a few that were events-related mobile advertising, already in this book,
such as the Sevens Rugby Tournament with Guinness Beer and Shanghai Formula
One race in China that had the Puma multiplayer racing game. Meanwhile we have
brand new stats from the UK, from O2 and Nokia's Navteq that this kind of events
venue location-based ads will achieve 20% click-through rates! Because the ads are
relevant to the venue - we go to the stadium or concert hall because we want to see
that rock band tonight - if the ads are relevant to that concert or artist, we will love
the ads.

MYTH 5 CONSUMERS HATE ADS ON PHONES


NO, CONSUMERS CAN LOVE MOBILE ADVERTISEMENTS

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204 Myth that nobody wants ads on phones

Now lets debunk another myth: that we all hate ads. Correction: we only hate
'interruptive' ads. We easily 'tolerate' and even enjoy useful ads like say Google
Ad Words. And if we find them entertaining, we can easily love ads. South Korea's
biggest mobile advertising company is Aircross. Their CEO, BJ Yang says we
should make mobile advertising fun, always, because as he says 'Mobile is a fun,
personal playground.' Fun. Personal. Playground. This is very powerful. So, lets
compare. On TV we hate ads so much - we actually purchase devices like a TiVo
box to avoid the ads. On the internet, with classic banner ads, they consider it a
'successful' campaign, if they achieve click-through rates of half a percent. Half a
percent. On mobile even the copycat banner ads get ten times that level, with click
through rates on basic (interruptive) mobile ads like banners at about 5 percent.
That is not what we want! We hate interruptive ads. When consumers are
given truly 'engagement marketing' based mobile ads, well designed (and usually
delivered on MMS) - they deliver between 25% and 45% response rates. Yes, 100
times better performance than internet web interruptive models. I mean global
stats, we find these from engagement marketing campaigns run in Japan to the UK
to Slovenia to USA. Not 'novelty' factor. In the UK, over 2,600 such campaigns
were run on Blyk - bombarding the youth with 6 ads per day, across 200 global
giant brands like Coca Cola and Mastercard. Thousands of such engagement-
marketing campaigns measured in half a dozen countries on three continents.
Response rates 'astronomical' at 25% to 45%, consistently - over years of such
campaigns.
By this success criterion alone, who is such a fool to authorize 'hated' banner
and spam SMS (and location spam and proximity bluetooth spam and interstitial
interruption and preroll intereruption) ads if 'engagement marketing' can deliver
from 50x to 90x better results?
But wait - they love the mobile ads? Really? Tomi you gotta be kidding, 'love'
- nobody loves ads. Even ad industry execs don't love advertisements. But Yes. I
really mean it. Really: love. Not my words. Jonathan MacDonald who used to be
with Blyk said that their biggest complaint coming from their customers - this from
teenagers who were under a deluge of a forced diet of 6 mobile ads they had to
consume every single day - the biggest complaint would be, by every ounce of logic
and reason, in fact it should be 'please don't send more ads to my phone'. That is
what conventional wisdom would suggest. And on TV and radio and the internet
and print, we'd beg and plead to receive less of the the interruptive ads.
But using engagement marketing? The opposite is true. The consumers, their
biggest complaint on Blyk - was that they wanted more of the mobile ads. That, my
dear readers, is evidence of love. You do not beg for more ads onto your phone, if
you already receive 6 per day, unless you really, really like the ads you receive.
And think about it, if your ads deliver such value as coupons of goods you use, of
prizes such as frequent flier miles, of a cool game you want to play and all sorts of
benefits etc, if these are all opt-in, and personalized, and relevant. Then if they're
made to be fun (advergames for example) - why would you not want more?

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Amazon Recommendation Engine

But lets take first a perfect lesson in ads that we all really like, from outside the
mobile space. I will prove to you, that totally normal people, all over the planet,
regularly request more ads, without even knowing it. I will prove to you, my
readers, that across millions of ads served, across hundreds of millions of
consumers, we show a desire of ads, if they are done in a way that we want. So lets
prove that the concept is plausible and indeed commerically a huge global success,
then we'll take it to the next step in mobile. Let me first prove it to you, by using
your own behavior as evidence. We all do this!
Lets look at Amazon. I love Amazon, not the least because I am an author and
Amazon helps me sell my books in many markets and regions where the local
bookseller might not know of me and my books.. But there is more to the book on
Amazon than just its covers. And the latest finding by Millward Brown study of
trust in brands in the USA, puts Amazon on top of all brands, ahead of long-
standing highly trusted US brands like Fedex, Downy, Huggies and Tide, etc. So
what is it about Amazon? Well, there are obvious shopping benefits. Amazon has
the biggest variety of books (and DVDs, CDs, etc). They have great prices. They
have consumer reviews and ratings. The 'look inside' feature lets you read a sample
of the book before you buy it, etc. All great things making Amazon a great
eBusiness retailer.
What I think sets Amazon totally apart, and is something far more compelling,
is their recommendation engine. You know, the Amazon recommendation engine
will know what kind of books you've bought from Amazon, and what kind of books
you've looked at recently, and based on that pattern, it will recommend books for
you.
And then, when you are at any book page on Amazon, on the bottom of the
page, there will be suggested titles for you, that are similar to the book you were
looking at. This is not user-generated content and this is not Amazon pushing the
book of the week or any 'conventional' advertising. There is an intelligent data-
mining algorithm that digs through millions of purchases by millions of people and
discovers patterns. So people who buy books about "3G" will also be drawn to
books about "UMTS" or about "Wireless broadband". Amazon's search engine is
not 'intelligent' enough to know that in telecoms engineering terminology, 3G is
more-or-less the same as UMTS which is a close synonym to wireless broadband.
Amazon doesn't care 'why' someone who buys books about 3G will also buy books
about UMTS or about wireless broadband. Amazon doesn't have to know why. It
observes the purchasing pattern.
Then Amazon makes recommendations to buyers based on those patterns. But
note, these very soon become (potentially) globally personalized. So in my case,
Amazon knows to recommend 4 types of books (and DVDs) to me, books about 3G
mobile telecoms, books about Formula One, books about ice hockey, and books
about James Bond. And similarly, Amazon will not recommend to me, books about

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206 Myth that nobody wants ads on phones

fixed telecoms broadband, books about rallye car racing, books about
football/soccer or books about Tom Cruise's Mission Impossible movies. After only
a few purchases and visits to some book pages, Amazon knows how to tailor its
recommendations to us, so much so, that nowhere else in the world, not even if you
are a regular visitor to a 'mom and pop' bookstore, can you get as personal
recommendations, that are unique to your specific personal interests. If you are
honest to Amazon in what you really like, it soon knows your interests better than
any other entity on the planet.

This is Advertising

Note that Amazon's recommendation engine delivers advertising to us. It is


advertising not driven by a book publisher brand, or by a given author, or by the
manager of the store, for example if they had ordered too many copies of some title,
and now try to promote it to get rid of the excess inventory. No, Amazon uses its
engine to just make recommendations to us. It advertises to us. Amazon really does
not care whether you buy Harry Potter or an obscure 7th mass media book by some
crazy Finnish ex Nokia dude. They want customers to discover good books and buy
those - and come back and buy even more books.
But it is advertising. Did you ever stop to think about that? That Amazon's
recommendation to you when you sign up today, is the most personalized
advertising currently available on the planet, aimed at you? It is 100%
personalized to your tastes, and the more you visit Amazon, the more that
recommendation engine learns about you, and delivers ever more relevant
recommendations to you. Automatically.

And this we Love

That while we 'hate' advertising on TV and radio and newspapers, billboards, the
cinema (and online and on mobile phones) - we love the advertising on Amazon?
We love it. We crave it. We want more of it (we actually click on those images of
books on the bottom of the page, which suggest more ads of books that are more
like the one you were looking at). Very many people have admitted to having
clicked on every recommended book around a given topic, until all Amazon
recommended books have been seen! I've done it, many times. If you are a
bookworm, I bet you've done it too. We asked for more and more and more of the
ads, up to the point where Amazon ran out of things to advertise to us (on that
particular day, on that particular topic).
This is advertising that we truly like, enjoy, want more of, and I dare say, we
love it. Probably you never thought of the Amazon recommended books as being
advertising but by every dictionary definition of advertising, they are pure
advertising. Amazon shows you that given book only to try to persuade you to buy
it. That is advertising. But it is not like any advertising that ever existed prior to

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Amazon. It is truly, for the first time in advertising history, a format of advertising
that we want more of? Imagine that? Who in the cinema yells at the screen and
says: "Don't start the movie yet, I want to see more ads before the movie starts." Or
who listens to radio, wishing there were more ads and less music? It doesn't happen
on any other media except now on Amazon. It is normal for us to go down to
recommended books and click on "more books like this."
If you still want to argue the semantics of 'is this love' - then let me give you
one more argument. I know many times I have done this, I know many many other
people who admit to doing this - and you may well have done this too. I often go to
Amazon - to see if there are new books for Amazon to recommend to me! I go not
because I know there are new ads, I desire the Amazon recommendations so much,
I go visit Amazon 'just in case' there 'might be' a few new cool books on a given
topic that is of interest to me. Is that not a sign we love something, if we are willing
to make the effort to explore the chance, that there might be more ads personalized
for our needs! Its a craving! We literally crave those ads.
This is a perfect example of what the future of advertising will be like. We
hate ads that are not relevant (why does TV show me an ad about baby diapers, I
don't have children). Amazon proves without a doubt, that we can fall in love with
ads that are truly relevant, are delivered when contextually relevant (while we are
searching for books) and most of all, that are very accurately personalized. Please
note that as more ads become this well targeted to us, we will build an increasing
intolerance of the older forms of intrusive ads.
Back to reality. You the ad exec have the option to approve a banner ad
campaign that is ignored, with lousy click-through rates and is often hated. Or more
intrusive interruptive ads like spam SMS that is really hated. Or you could learn
what is the first new original ad concept for mobile, called 'engagement marketing' -
and achieve click-through rates that are one third of all ads shown - and your
customers are so satisfied with your ads that they beg for more? What is wrong
with this picture? Who is the sadist marketing executive who approves interruptive
ads on mobile, when we have engagement marketing that is loved?

Don't Do Apps (Now, In 2010-2011, Do Apps Later)

Finally an important point. The mobile world is abuzz with apps, in particular the
ad industry of course raves about the coolest iPhone apps (and perhaps Google
Android apps). Yes, we know every ad exec has an iPhone. But there are 5.2 Billion
mobile phone subscribers on the planet. How many have an iPhone? If we count all
iPhones and iPod Touch devices and iPads ever made - its roughly speaking about
100 million. That means there is an iPhone or equivalent Apple device for about 2%
of all people worldwide who have a mobile phone today. Even in its very best
markets like the USA, the penetration rate of iPhones is still in the range of only
about 5% or so.

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208 Myth that nobody wants ads on phones

What idiot ad campaign manager allows any development of an 'iPhone app'


when it excludes access for 95% of the mobile phone owners in its best market,
and prevents access to 98% of the mobile phone owners in the rest of the world?
Huh? What moron ad executive authorizes that budget? Huh? SMS reaches 100%
of the audience. WAP - yes what was the joke a decade ago "WAP is crap" that
WAP yes, WAP, reaches 95% of the phones on the planet. MMS reaches 80% of all
phones. Oh, and we have voice services too. Any voice IVR enabled mobile
campaign reaches 100% of mobile phones - and 25% beyond that, reaching fixed
landline phones too! Who in their right mind approves an iPhone app before they
have a mass-market mobile ad campaign deployed - one using SMS, WAP, MMS
or voice. After those 'not sexy' mobile ad campaigns have been deployed, then you
can think about apps. Like Kraft the food giant in the USA says, "no phone left
behind." They start on the basics, doing mobile services for the masses. Then after
the masses are covered, an iPhone app may become relevant, not as the first step.

Blyk Lessons

So lets get into what is engagment marketing and for that, we need to learn from
Blyk. Blyk launched first in the UK as an MVNO in September of 2007. There was
some bizarre reporting about Blyk late last year and earlier in this year, where it
was said that Blyk had 'failed' in the UK. Nothing could be further from the truth.
Blyk had been so successful, that Orange, one of the big 4 mobile networks of the
UK, adopted Blyk as its white label technology to run all of Orange's mobile
advertising, mobile marketing, interactive advertising and engagement marketing
solutions. In the process, also Orange adopted Blyk as its engine for the related
customer analytics. Meanwhile Blyk has already launched in the Netherlands, and
India with several other countries about to go live. So first off, if anyone advising
you on mobile advertising suggests to you, that Blyk 'failed' - that supposed 'expert'
is incompetent. Fire the clueless person!
So what was brilliant about Blyk? It did prove that if you offered a clever free
calls and free text messages service for the youth segment aged 16-24, where the
youth were asked to view advertising, they would take the service and it would be
both a consumer success and a commercial success. Blyk UK required that users
receive up to 6 messages per day to get a modest allowance of 7 free SMS text
messages and about 2 minutes of free voice minutes daily as their allowance. Part of
the clever bits was, that the balance was adjusted on a monthly basis, so if you
wanted to call now, you didn't have to view ads now before you called. And if you
ran out of your monthly balance, you could top up on normal UK pre-paid rates,
bearing in mind, that in this age segment, pre-paid mobile phone accounts are the
norm in the UK. After 18 months of operation, Blyk reported 200,000 subscribers
in the UK, with minimal churn and extreme satisfaction with the service. In terms
of a new MVNO launch, Blyk was one of the most successful in any market of any
time.

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Chapter 13 - Mobile Advertising 209

That was all fine and well, but that is not why Blyk was brilliant. No, Blyk
was brilliant in establishing a repeatable system of successful mobile phone based
'engagement marketing', using the industry's standardized mass-market tools
(using only SMS and MMS). And more than that, it ran thousands of campaigns,
with hundreds of the most recognized advertising brands, and proved that
engagement marketing will yield a consistent response rate on mobile of between
25% and 30%. And most of all, Blyk taught the advertising community how to do
engagement marketing successfully. That is why we have to take some Blyk lessons
here into this book.

Engagement Marketing

So what is this mysterious 'engagement marketing'? Isn't it a synonym for


interactive advertising or viral marketing? No! While engagement marketing has to
be interactive, that is not it. Engagement marketing is far more than just interactive.
And while engagement marketing may have viral elements to it; it does not have to
be viral in nature. Interactive and viral marketing were invented for the internet, so
they are native ad formats for the 6th mass medium. Engagement Marketing is new,
original concept developed first (in mass market uses) for mobile, ie the first native
format of advertising for the 7th mass medium. Alan Moore coined the term
engagement marketing and he joined me in my fourth book Communities
Dominate Brands to explain what it is. To give a short definition, engagement
marketing is the process of extended communications between a consumer and a
brand, where the consumer provides a series of responses by which the experience
to that consumer becomes customized, to the point where the consumer believes the
communication is truly personal.
Interactive advertising is typically one campaign with one response. Give us
your opinion on this, click here to get this coupon, click on this adword on Google
search, or take part in this competition to possibly win an award, etc. Interactive
marketing can be far better than passive ads in magazines, radio, TV etc. But
engagement marketing is a far more deep and long-lasting communication process,
where the brand and the consumer get involved in a dialog. We calculated the
metrics at Forum Oxford using statistics from Blyk and found that a typical single
engagement marketing campaign will run about two weeks and on average have 6
iterations of a question-and-answer, yielding ever more precisely targeted
communications. As the dialog continues, the actual communications between the
brand and that one consumer become tailored so uniquely, that the consumer feels
the responses are personal and truly individual.
Lets contrast this with Amazon. Amazon can also get targeted, but Amazon
does it passively, only 'observing' what we do. Engagement Marketing is FAR
MORE POWERFUL, because in engagement marketing we ASK the customer and
we adjust based on the responses. For example, Amazon can only make
recommendations based on what is out there today (what we can go and look at) but

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210 Myth that nobody wants ads on phones

Amazon can not 'imagine a book' and see if we would go look at it. Engagement
Marketing can ask us, would we like Coca Cola which is red in color rather than
black, for example, or to eat hamburgers in Pizza Hut, etc.
With engagement marketing, the user - the recipient of the advertising -
becomes personally involved in co-creating the advertising experience. Recognize
again the specifics of the language. We are not asking the consumer to 'create' ads
for that (that too is possible and has been done for a long time on the internet, but
very few actual consumers are willing to try to be photographers or videographers
to make ads for us). We 'co-create' the process. In engagement marketing, the
consumer becomes part of - not the whole part - of the advertising experience. We
design a 'potential dialogue' The examples of ad campaigns running on an
engagement marketing principle are still rare but are starting to emerge. Engaging
with customers is a radical departure for most advertising and branding executives
around the world. Coca Cola Chief Marketing Officer Stephen C Jones explained in
2005:

Wireless technology has enabled the consumer to review and reject much
of the one way messaging they receive and resort the dialogue that's
relevant to fit the way they live. Experiencing a Coke or interacting with
an enthusiastic Coke employee on line or in person has always been far
more motivating than 30 seconds of anthemic brand worshipping. Its not
that TV and radio programs are irrelevant. Its the lack of ability to
develop a relationship with an ad that makes the medium a less viable
marketing tool.
Stephen C Jones, Chief Marketing Officer, Coca Cola

L'Oreal And Two Girls

Let me explain by an example I like to use in my workshops, and this example


comes directly from Blyk. This example illustrates exactly both the power of
engagement marketing, and the degree of design that is needed now from the ad
agencies or digital agencies. Lets take two 16 year old girls in England, who are
both BFF's (Best Friends Forever), and both are members of Blyk. The two girls
share all preferences, so they like the same things and same brands and same
activities. To keep this example simple, lets say the two girls like three things:
fashion, make-up and rock music (and boys obviously).
Now one girl decides to be totally honest with Blyk and tells she likes those
three things. The best friend decides to try to 'game' the system and keeps her
preferences less open, and only says she likes fashion and make-up.
Now, L'Oreal the make-up brand approaches the girls via Blyk and asks which
supermodel the girls admire. Blyk serves the girls an MMS picture message with
six images of supermodels that work with L'Oreal. Both of the girls pick one model,
lets say its Eva Longoria the actress from Desperate Housewives. After this point,

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whenever L'Oreal sends any advertising to these two girls, L'Oreal will select
images or video clips that feature Eva, no other supermodel. The girls will start to
observe that the brand is listening to them, to their interests, and adjusting its
communications to tailor to these two girls.
Note that when the girls opened the picture message from L'Oreal, that counted
as one of their daily allowance of 6 advertisements that they have agreed to receive.
When the girls responded to L'Oreal with their selection (and that was via SMS), it
counted as a second advertising message that they consumed that day. So after
viewing and responding to the supermodel question, the girls only had to consume 4
more ads that day to finish their quota of daily ads.
Next a few days later, L'Oreal sends a new image to the girls, asking about
which color the girls like. The girls receive an MMS message where they feature
the lips of Eva Longoria, painted in six separate colors that L'Oreal offers in
lipstick. Bright red, pink, dark red, black, etc. The two girls are 'goths' in their
fashion preferences, girls who dress in severe black-and-white outfits, long hair, etc,
and they of course select the black lipstick.

L'Oreal is learning ever more about the girls. From now on, all
communications to these two girls will feature not only Eva Longoria, but only in
black-and-white outfits. The girls are thrilled that all fashion communications from
L'Oreal are becoming so relevant and personal to their tastes. Very soon with this
process, the girls will naturally reject any marketing communications that is
'mainstream' and 'generic' because the ads on Blyk are so much more relevant and
to their particular tastes.
This is engagement marketing. The system is designed to be a dialog, and the
system 'learns' and offers choices that tailor the communications, very much in a

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212 Myth that nobody wants ads on phones

similar way, as the Amazon recommendation engine learns about our tastes and the
more we tell Amazon about our preferences, the better it can serve us.

Want More Ads?

So then we get to the mind-blowing bit to Blyk. Remember the two girls did not fill
the same profile. One girls said she likes rock music, the other did not say that.
Now, lets go back to L'Oreal. They know that many teenagers who are 'goths' tend
to like the Finnish rock band Nightwish (which plays a kind of lyrical melancholic
and almost operatic hard rock music). So L'Oreal decides to sponsor Nightwish's
next tour to England. It then goes into the Blyk system, finds those of its registered
users (who have already engaged with L'Oreal, like these two girls) and searches for
those who said they like rock music.
L'Oreal then sends an offer to all those who said they like black make-up and
who like rock music. To those - and only those - L'Oreal sends an SMS offer, that
the first 100 Blyk members to respond, get free tickets to see Nightwish perform
their rock concert, at the Earls Court theater in London.
First of all, any 'Goths' among the Blyk users who receive this offer will
absolutely love L'Oreal for this chance. They don't have to win the free tickets, to
gain great appreciation for L'Oreal. They are smart. They understand what L'Oreal
has now done. Rather than buy one 30 second TV spot on some random youth TV
show in the UK, for which the Goths would receive 'no value', rather now they have
a chance to see one of their favorite rock bands - for free - courtesy of L'Oreal. This
is seen as ultimately cool by the teens, and for L'Oreal, the cost is an utter bargain
compared to the costs of TV advertising in the UK.
Then take our two girls. The one who said she's into rock music, gets the offer
to win the tickets. But her best friend does not get the offer. They are likely together
when the offer arrives at the one girl's phone and the best friend waits in vain for a
long time but she never receives the awesome chance, to win rock tickets to
Nightwish at Earls Court. She is now angry, and calls up Blyk to complain.
Note the fact, the girl is complaining that she did not receive an ad which her
friend received. When do we see that on television ads or magazine ads or radio ads
or newspaper or billboard advertising? Never. But this is normal with engagement
marketing. So yes, what happens? The Blyk calling center staff advise the girl, that
she will never be served any ads that are not relevant to her. Blyk could not know if
she likes Rock music if she never said so - after all, she could hate rock music and
prefer rap music or country music or classical music, etc. The girl learns almost
immediately to be as truthful as she possibly can, so that her advertising -
including any offers such as these free rock tickets - will come to her.
So how relevant is this example. Former Blyk executive and author Jonathan
'JMac' MacDonald said in public while still employed by Blyk, that the number one
complaint Blyk was receiving, was that the youth wanted more of the ads! That is
what engagement marketing is all about. And Blyk co-founders, Pekka Ala-Pietila

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Chapter 13 - Mobile Advertising 213

and Antti Ohrling, have both said in public, that they founded Blyk based on
principles in the book Communities Dominate Brands that I co-authored with Alan
Moore in 2005. Thank you Blyk! That is the best possible endorsement one could
ever hope for, if someone goes out and builds a successful business on the thoughts
in a book.

Blyk Math

Ok now we know what engagement marketing is, and what it can do for
advertising. Now lets dig into the numbers a bit more. The Netsize Guide 2009
interviewed Blyk COO Leif Fagelstedt quoting several Blyk numbers. Based on
those I did an analysis of the advertising on Blyk up to that point and shared the
thinking on my blog and at Forum Oxford. The cumulative Blyk user base had
passed 200,000 at that point, so I used the half-way point for my math, ie 100,000
users on averge.
At that time, there were 200 advertising brands on Blyk, all global giant ad
brands like L'Oreal, Coca Cola, Mastercard etc. They had run a total of 2,000
campaigns so the average advertising brand has been so satisfied with their mobile
marketing with Blyk, that they have run 10 separate ad campaigns during the first
18 months. For anyone who doubts the appeal to advertisers of Blyk concept, this
one statistic should answer all doubters. Over 18 months that works out to more
than one new campaign every other month on average across all advertisers. If
global giant advertisers like Coca Cola and Mastercard etc run on average 10
separate ad campaigns for this small group of about 100,000 users, over an 18
month period - that is very compelling proof that the brands love Blyk and find the
engagement enormously rewarding.
I made some estimates based on anecdotal evidence that Blyk does not actually
send out 6 ads to every Blyk user every day and assumed the total advertising
traffic is 5 messages per day. This includes any response messages from the Blyk
users. So as Blyk now reports a sustained average response rate of 25%, that means
4 outbound messages from the brand to the user, and 1 inbound response messages
per user per day. By the above assumptions, Blyk has served at the average user
level 216 million advertisements over 540 days and also handled 54 million
response messages. The average consumer who started on Day 1 would have seen
2,160 ads and sent out 540 responses.
The average Blyk campaign delivered 108,000 ads and obviously the average
brand ran 10 campaigns and delivered 1.08 million ads in total on Blyk and
received over 250,000 replies. Each of the responses would (potentially) adjust the
communications delivered by that advertising brand to that one given customer,
from that point on. So the system would have to 'learn' from each response and
evolve. But receiving 250,000 responses each adjusting the future communications
to tailor them - thats a lot of engagement marketing. And that is far more 'adjusting'

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214 Myth that nobody wants ads on phones

to the messages, than what Amazon is capable of in its recommendation engine


today.
I then ran some scenarios at Forum Oxford with fellow experts in mobile
advertising to come up with a typical engagement marketing campaign parameters.
While these have not been officially verified by Blyk, I have several UK mobile
advertising experts confirm that these are realistic estimates. So we can safely use
these numbers as illustrative examples of a typical Blyk campaign and certainly
there will be many which fit this exact profile.

Typical Campaign Size Metrics on Blyk

My analysis suggests a likely campaign target size of 8,000 Blyk members (8%)
and if one brand engaged with that size of Blyk customers at the time, then it would
send 13.5 messages over a 2 month period. Practically thinking if we round it up to
14 it means for example running a one-ad-per-day campaign for two weeks and
then being "silent" for the next six weeks. Or having one week-long campaign this
month as the first half and a follow-up week-long campaign next month, to
complete the 2 month long campaign cycle. But yes average segment size 8,000
Blyk members and then you need to design a campaign that sends out 13.5
messages per user in a 2 month span. And you'd expect to get 3.5 messages in reply
on average per each such campaign from each average user.
That is radically different from desiging a national TV campaign or a web
banner ads campaign or a search words campaign. You have to write the "script" for
a dialogue that runs 14 outbound messages, receives 4 separate personalized replies,
in probably a one month total campaign span. That is what a typical Blyk campaign
looks like. Yes, we are re-inventing advertising.

Clones Are Coming

The greatest form of flattery is to be copied. Blyk has started to get clones. One of
the first was in Croatia, launched as Tomato Plus. Developed by OutThere Media, it
is run on the Vip mobile operator network. They give out 50 minutes of calls and 50
text messages per month, in return for up to 10 mobile ads per day. The service was
reported on MobHappy blogsite by Russell Buckley. Does this concept have end-
user appeal. Yes yes yes. 92% of their users are happy.
Secondly, do the advertisers get utility out of it? We don't have actual total
response rates but Out There Media (via MobHappy) says they get better response
rates than Blyk meaning its at least better than 30% and Tomato Plus says the top
response rates on their service go up to levels of 75%.
And again remember what is a click-through rate, what is a response rate, and
what is a conversion rate. Tomato Plus reports on a McDonald's campaign in
Croatia that delivered a 12% conversion rate! One in eight who received the ad,
showed up at McDonald's to redeem the coupon! Think about it. Tomato Plus gives

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Chapter 13 - Mobile Advertising 215

you free minute and text messages. The ads are so good that you don't think they
are bothering you, and then one in eight use one of the ads for a further discount at a
fast food restaurant. This is total win-win-win.

Response Rates

Then lets talk about click-through rates. On the internet the past 16 years we have
seen the growth and evolution of interactive advertising. The measure they use is
CTR (Click Through Rates). Wikipedia tells us that an average CTR is under one
percent and if you achieve 2 percent on an internet ad campaign, it is "very
successful". So you have to send 50 ads, to get one to click on it, and you have
success. And most ad campaigns need over 100 ads served, to achieve one to click
through. I have heard several advertising executives say in 2010 that the real CTR
on web ads today is far less than that, saying that a good campaign now can be
expected to receive about half of one percent CTR. But lets stay with the numbers
reported on Wikipedia.
On mobile we have a better measure, 'response rates'. This is a better statistic,
as it measures an active interest by the advertising audience to engage with the
advertisement or brand. Not just to click to the site and consider possibly to be
interested (we have all clicked on some ads on the internet where we immediately
saw, that it was a mistake, but those count as CTRs as well). And we have some
very interesting response rates from several countries across thousands of
completed ad campaigns. In Japan goo Research reported that response rates were
at 44%. In the UK, Blyk reported after 2,600 ad campaigns that it sustained average
response rates of 25%. In the USA response rates of 39% by car-customizing
company West Coast Customs. I showed the BMW campaign earlier in this book
with 30% conversion rate, Croatia gets over 30% response rates on Tomato Plus,
and we get an even more astonishing case coming at the end of this chapter, you'll
be astonished what conversion rates are generated on ads served on the girls fashion
magazine for mobile, called Girlswalker in Japan.

Less Noise, More Clarity

Understand what this means first, in terms of the volume of ads. We can shrink the
total number of ads sent out, by a factor of at least 10, compared to the internet or
TV or any legacy ad channel. And then, bear in mind the statistics, that bucking the
trend, mobile advertising is growing revenues this year, possibly doubling in total
value. This while mobile ad campaigns will be far less in total volume of ads.
Secondly that diminished volume means less clutter. Less noise. We can, and
indeed we must, provide targeted ads that are permission-based and very strongly
personalized. That means that even "generic" campaigns can seem far more relevant
than mass-market ad campaigns on TV or the web. And most importantly, on
mobile when using engagement marketing methods and with a little bit of better

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216 Myth that nobody wants ads on phones

design, the resulting campaigns are dramatically more powerful than any seen
before, on any media.

Second Click

Now, the above is ample reason enough for any astute CMO to shift advertising
budgets to mobile. If literally thousands of actual completed mobile ad campaigns
only do the "worst" of those stats, at 25% response rates, then it is still more than
ten times better than a "very successful" campaign online, and achieves far greater
level of true engagement than click-throughs. Now: the kicker.
We have the first study of second click rates on mobile ads. This is amazing
stuff. Amethon studied mobile ad campaigns and was reported somewhat
"negatively" that "only" one in three mobile ad campaign achieved a second click
rate. What does that mean? It means that overall for all mobile ad campaigns, the
average response rate is 3 out of 10. And now, the second, truly and fully "engaged"
level of involvement by the audience is one third, ie 1 out of 10. Wow. On mobile,
we achieve on average, two engaged clicks, which is still five times better than any
"very successful" internet campaign!
This is night-and-day, isn't it? You have to bombard 50 people to get one click
for an excellent campaign on the web and more likely you have to devastate the
audience with over 100 ads sent to find one willing to click once on your banner ad.
On mobile, an average campaign you only need to send less than 4 ads to get one
response, and with every 10 ads sent, you get a customer willing to make two clicks
by the average campaign !
This is NOT rocket science of some deranged futurologist with impractical
concepts. 200 giant brands do this with 2,600 campaigns across 200,000 youth
customers who love it so much they deliver 25% response rates. Anyone who
doubts the viability of Blyk to its target customers needs to understand this number.
Blyk will not go away. Soon every market will have a player like Blyk to deliver
this kind of targeted engagement marketing. A new way to do marketing
communications is being born. Blyk is showing us the way.

NOW WHERE?

Oh, boy, are there many utterly worthless or even misleading books about the
advertising and marketing space for mobile. There really are only two currently
published books that stand apart, and they are the opposite, they are brilliant. If you
want to read about how to do mobile 'advertising' ie marketing communications via
mobile, then the book you have to read now, is Chetan Sharma et al's Mobile
Advertising. And if you think of marketing in a more broad, customer relationship
management way, not just markcomms, then the must-read is Kim Dushinski's
Mobile Marketing Handbook. These are among the very best books written on
mobile, period. After you have read those, you may want a collection of Tomi's 50

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Chapter 13 - Mobile Advertising 217

best case studies of mobile advertising and marketing excellence, then read my
Pearls Vol 1: Mobile Advertising.

Mobile Advertising
Chetan Sharma, Joe Herzog & Victor Melfi
Wiley 2008

Mobile Marketing Handbook


Kim Dushinski
Cyberage 2009

Tomi Ahonen Pearls Vol 1: Mobile Advertising


Tomi T Ahonen
ebook format
only from www.tomiahonen.com
has 50 case studies of mobile advertising & marketing

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218 Myth that nobody wants ads on phones

Case Study 9 from Japan


Girlswalker
This book could easily take every example from Japan. Girlswalker is
a teen magazine for girls in Japan, available only on mobile. Its
gimmick is that they show what the cool girls of Tokyo are wearing.
Japan is a major international fashion hub, and Tokyo youth shoppers
are particularly fashion-aware. So various fashion followers tend to
monitor very carefully what the Tokyo girls wear and carry, to see
what trends will become popular soon in fashion. Not just in Japan,
but around the world.
Girlswalker was set up to capitalize on this phenomenon. Its
target audience is teen girls but not those living in Tokyo. The Tokyo
residents can easily see local Tokyo girls and what they wear, just by
observing the teens on the main shopping districts, shopping malls
and on the streets. But Girlswalker was designed to offer the teens
who do not live in Tokyo, a chance to see what the cool girls in
Tokyo are wearing today.
The youth mobile magazine became and instant hit and soon
spawned all sorts of real world extensions to the brand, including
fashion shows that feature only the teen girls as models (rather than
traditional supermodels). These then have added the ability for
example for members in the audience to point their phones at the girls
walking on the catwalk, and buy the item of clothing they are
showing - get it in the right size, color etc - and this being Japan, to
pay it right off the phone, one click.
So far so good. It is a clever teen mobile magazine concept. But
what of advertising. Here mobile advertising guru and author Alan
Moore has offered new insights when he lectured at Oxford
University in 2010. Alan said that the fashion advertising in
Girlswalker achieves 45% conversion rates! So for 100 ads served
on Girlswalker, they are so relevant to their target audience, that 45%
of the ads yield a purchase. This is magical. This is truly capitalizing
on opt-in, targeted, personalized and relevant communcaiton, where
advertising is seen to be so relevant, it is received as content. And
over 4 out of 10 ads will yield a sales.

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Chapter 13 - Mobile Advertising 219

Excerpt from Tomi's 7th book


Tomi Ahonen Pearls Vol 1:
Mobile Advertising
By Tomi T Ahonen
with foreword by Russell Buckley
VP of Admob and Chairman of Mobile Marketing Association
171 page eBook

only available from Tomi T Ahonen's


website:

www.tomiahonen.com

Cost only 9.99 Euros


for immediate download
available in ebook format only

The Insider's Guide to Mobile Copyright © TomiAhonen Consulting 2010


220 Myth that nobody wants ads on phones

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Chapter 13 - Mobile Advertising 221

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222 Myth that nobody wants ads on phones

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Chapter 13 - Mobile Advertising 223

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Chapter 13 - Mobile Advertising 225

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Chapter 13 - Mobile Advertising 227

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Chapter 13 - Mobile Advertising 229

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Chapter 13 - Mobile Advertising 231

Opinions on Tomi's ninth book:


Tomi Ahonen Pearls Vol 1:
Mobile Advertising
171 pages ebook 2009

available only in eBook format


only from Tomi's website

www.tomiahonen.com

cost only 9.99 Euros


for immediate download

"Pearls Vol 1 is a quick and lively read that offers plenty of ideas for anyone in
mobile publishing, development, advertising or marketing. Reading Pearls might
very well inspire you to create the next highly successful mobile service or
campaign."
- Book Review at WAP Review, 19 January, 2009

"Tomi has in past shared his pearls and ideas in many forums in public domain
so this is a good chance for anyone into Mobile advertisement to get their hands
on."
- Zahid Ghadiali Managing Director
eXplano Tech, London UK

"The Mobile Pearl concept is from Tomi Ahonen's excellent eBook Pearls Vol
1."
- Aaron Chua, Founding Member of IDM Interactive
Digital Media Programme Office, Singapore

"Tomi Ahonen shares 50 pearls (advice/ideas/tips) on Mobile Advertisement."


- Stephen Jones, independent mobile marketing consultant, UK

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232 Myth that nobody wants ads on phones

Note Tomi's Pearls series of ebooks is a collection of his best-loved


'pearls' ie real commercially-launched services that he has shown in
his presentations. Each Pearl fits one slide and tells the story of one
successfully launched mobile service or application

Tomi's Pearls Volumes each runs 171 pages as an eBook, but


formated for the small screens of smartphones, so you can carry the
50 best case studies in your pocket. Each of Tomi's Pearls series
covers one relevant topic in mobile services and apps. The first
Volume is on mobile advertising, the second on mobile social
networking and the third on mobile money and banking.

The eBooks cost only 9.99 Euros each, and are only available through
Tomi's website so visit www.tomiahonen.com and see more

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Chapter 13 - Digital Footprint 219

"Social media intelligence is the new black gold of the 21st Century."
Alan Moore CEO of SMLXL

XIV
Digital Footprint
Guarding our digital identity?

Lets move beyond demographics. Or perhaps we could say the industry is moving
from Futility to Utilty as it abandons the archaic methods of using demographics in
marketing.
So what is demographics? It is consumer data based on statistics relating to our
lives. Our age, our marital status, our address (typically the zip code/postal code)
etc.
Demographics were a powerful way to segment and target our marketing in the
last century, when we had nothing better. There are often significant statistical
correlations with our address or marital status or educational achievement level or
our age, to our propensity to spend on a given product or service. For example, a
married home-owner with kids, is far more likely to buy home and life insurance
than a single young adult or indeed a teenager. Equally a young single adult is more
likely to go out partying on the weekends in the hottest clubs with loud music etc. A
person with an address on Manhattan's upper East Side is likely to be very wealthy,
and ten miles up North still within the city of New York, in the ghettos of the
Bronx, the people living there are very likely to be very poor. If you want to
promote your newest model BMW or Cadillac Escallade, it made sense to target
those in Upper East Side Manhattan rather than those in the poorest neighborhoods
of the Bronx.
This was all very advanced marketing in the analog era of the previous
century. It was far better than Henry Ford's idea of one car for everybody ("Any
color as long as its black" about the Model T Ford, which Henry Ford actually
never said.)
For a while early in this decade there were some false promises of a change.
Now we know, and the change is total. In the digital interactive age of marketing,
we have seen the total shift of demographics from utility to futility.

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220 Guarding our digital identity

False Negatives

Demographics were far better than nothing, but they were also very imprecise.
When we had nothing better, it made sense to use demographics in marketing
segmentation and targeting. But take me for example. What good does it mean to
know that I am a man? If you sell ladies underwear, it is certainly a reasonable
assumption to think, that men don't buy your product, so to focus the advertising to
women, who are more likely to buy.
But this introduces "false negatives" into your customer prospects database.
Tomi is a man, therefore is not customer. Now, what if I am a cross-dresser (a man
who likes to dress in womens' clothing)? The demograpic data will not identify that.
It is very likely that the cross-dressing man would go to great lengths to hide this
tendency. Now, granted, there probably are not very many cross-dressers as a
percentage of all men, but even if its one percent or one tenth of one percent, if you
target by demographics, your segmentation system excludes real prospects for your
business.
Its not the only false negative. It is also possible, that I am in the process of a
sex-change operation. Yes, this is probably even more rare, but they do exist. What
was accurate once - Tomi Ahonen is a man - as a demographic measure, would be,
in reality changing and not to be true. Yet we tend to take demographic data as very
solid and stable. Men usually stay being men, women tend to stay being women,
etc.
But we don't need to be that sensationalist, I just wanted to make a point. In
reality, many men buy lingerie to their wives and girl friends as gifts. And even
more so, women buy clothes for their men. Why not? if I am excluded as a
customer, while the demographic facts are correct, and the analysis fits the majority
of my gender, there is a significant size of a demographic minority, which is now
locked out, as a false negative. But note, if you pursue demographics, you are very
likely to use proxy data for determining the gender of the prospective customer.

False Assumptions

Take age. Yes, we know that the youth tend to party and consume various youth
services and products. And yes, on the whole, as we get older, we tend to "mature"
and "settle down" and "get a life". Married, kids, home; all that. Fine. But lets take a
typical example. Lets take a married 39 year old woman, with two teenager kids.
Suddenly the 39 year old woman starts to behave exactly like a teenager 19 year old
girl, same parties, clubs, nights out, text messages into the wee hours and all that
etc.
What happened? She is suddenly single again, in the process of going through
a divorce. If your system "discriminates" by age, you are missing this type of
customer, totally.

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Chapter 13 - Digital Footprint 221

Again, this is not a criticism of classic marketing textbooks. They were right,
in the last century about trying to learn as much about customers as possible and
then try to offer them targeted services and products. It was far better than nothing,
and that early thinking about customers helped invent the whole business discipline
of 'marketing'. That is all good, and demographics were very valid - in the last
century. Today we have something far better. So much better, that it makes all of
the classic demographics based segmentation obsolete. I was explaining this trend
back in 2004 in my third book 3G Marketing with Timo Kasper and Sara Melkko.

Behavior Based Segmentation

The only thing which matters is actual behavior. How do we act. Not what we say
we want, not what we say we would do, but the actual behavior. And how can we
capture that? Only with digital interactive services. And the most complete and rich
data we get through engagement marketing methods, the tool which was first
described in my 4th book Communities Dominate Brands, with Alan Moore.
All marketing communications will soon be behavior based. All of it. Look at
Google Ad Words. It is the first mass-market ad system that offer contextual ads.
Not based on my demographics but based on what I am doing, just now. If I search
Nokia, it will offer me some links to phone websites. if I searched for BMW, I get
cars, if I searched for lingerie, I get Victoria's Secret etc. Google does not care
whether I am a man or woman searching for lingerie. They don't care what age I
happen to be, whether I am married or single, what is my postal code/zip code, or
whether I finished college or not.
This is only the beginning. You think Google Ad Words is radical, cutting
edge? It is not. Engagement Marketing is the true creative edge in advertising today
as I showed in the Blyk example in the previous chapter.

False Positives

In the future, all marketing communication will be targeted by our actual behaviour,
not needlessly limited by any archaic measurements of demographics. Oh, and that
zip code based segmentation in New York City? Yes, there are plenty of wealthy
people in Manhattan, on the Upper East Side. But there are also individuals living
there who can't afford any car, far less a BMW or Escallade, take the live-in maid or
au-pair for example. You can have false positives in demographics. And as to the
ghetto in the Bronx? yes, it may be a stretch, but there can be drug dealers and
pimps and other criminals, living in he ghetto, who have a lot of cash, are very
affluent, have a desire to have their "bling" and be quite capable of making
purchases equal to or even exceeding that of millionaries on the Upper East Side.
So we get a false negative.
I don't mean these as typical but every lost sale is your marketing actually
hurting you, if better methods exist. Now, I am not a cross-dresser nor

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222 Guarding our digital identity

contemplating a sex-change. But honestly, I am a fan of rap music. I am a 50 year


old white dude from Finland. I am totally off the demographic radar to get any
marketing about hiphop music. And I don't dress like rappers, I don't own a pair of
blue jeans and I don't own a pair of flashy tennis shoes. I dress even on casual days
in my designer suits and ties (and hats). If your marketing system
(segmentation/targeting) makes any assumptions about me based on demographics,
about my age, my ethnicity etc, about my education level, my income level, my
outwardly appearance, etc; it will never know to try to sell me some new rap music.
And if your system makes further such demographics-based assumptions on
what kind of clothing most rap music fans wear, you'll never sell me another
Armani or Brioni or Canali. Or if you are Armani or Brioni or Canali, and assume
something based on my music preference, you miss me again, as a customer.
But if you remove all demographic filters, and only measure actual
behaviour, you will find that yes, I do buy designer clothes -suits and ties for men,
not teeshirts and jeans and funky tennis shoes, and yes, I do listen to rap music (and
buy it), and even occasionally buy some ladies lingerie - as a gift obviously.
Demographics were a powerful marketing tool in the last century. Now we in
marketing need to get rid of that outdated concept, and start to do marketing based
on actual behavior. We have some rudimenatary methods on the interent to capture
customer data. That ability is far more enhanced on mobile. And as we learn to
deploy engagement marketing methods, we will learn far more about the real
preferences of our customers as well.

Internet Not Perfect Digital Footprints

We do need to examine the differences to be very clear. The internet targeting is the
false promise. The internet promised us a 'segment of one' and that we could gather
perfect customer insights. This was the marketing professional's dream. To know
not what people claimed in surveys, or some statistical averages of mass audiences,
but real individual actual factual usage of services and thus real info on the
consumers. What marketing professionals pursued like an eldorado, turned out to be
fool's gold.
On the web, the consumers regularly give wrong or incomplete data to profiles
and surveys. Many PCs are behind firewalls and IP addresses are often allocated
dynamically. The standard spy to track individual users and their data, the cookies,
are often deleted by users. Users can access our service from numerous PCs like
one at home, another at work or school, yet another at an internet cafe, etc.
Please understand, the internet is far better than nothing, but it is very
imprecise and unreliable. If you have a major branded must-go site, like Amazon or
Facebook, then yes, within that given service, you are able to probably capture
incredibly powerful and actionable data - witness Amazon book recommendations -
but still, the internet on the whole, across 1.8 billion users, is mostly a marketing
wasteland. What seemed like useful, turned out mostly useless.

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Chapter 13 - Digital Footprint 223

Digital Footprint Is Not Digital Identity

We as marketers should not obsess with digital identity factors. Remember,


demographics are worthless, and actually counter-productive. Get rid of them. Yes.
I mean it. Get rid of them! Do not even try to capture the digital identity of your
customer. Tell your audiences that you are not even asking for such information!
It is not actionable. It is quite simply worthless. It does not matter to your business
at all, what is my name, whether it is Tomi Ahonen or Tommy Ahonen or Tom
Ahonen or Tim Ahonen or Tiny Tim Ahonen or Tina Ahonen. You can't sell me
your service in any way differently based on my name, with the exception of name-
related services (a coffee mug with my name? then yes, I don't want to have a mug
that says "Tom" when my name is Tomi)
What we do want, is one perfect unique identifier. And we have it (and the
internet does not) and it is the mobile phone number, which is globally unique.
There has never been anything remotely as accurate to identify every person on the
planet, uniquely and accurately. The home fixed landline phone number is not
unique. With families, it is used by the father, the mother, the son and the daughter.
But each will guard jealously their mobile phones - we do not share our phones
even withour spouces. The social security number is not globally unique. Only our
mobile phone number is.
Please understand this, and internalize this. It does not matter one iota, what is
my name, my age, my marital status, my address etc. The digital identity and
demographic data is not actionable; certainly so poorly actionable when compared
with our digital footprint, that the identity is irrelevant. Don't annoy your customers
by repeatedly attempting to capture useless data. If you can communicate with your
customer electronically (and don't deliver goods to the home), don't even bother to
ask for a home address. Why do you need it. Who cares? Its useless (except for
deliveries if you actually sell real good delivered to the home like a book or DVD)

Digital Footprint Is Actionable

What do I mean by digital footprint? I mean, that we know - and the mobile
(cellular) network automatically tracks perfectly - what I do. Who cares what my
parents named me? Or where I (claim to) live? But if my mobile phone number is
123 456 7890, and that number visited a mobile website about Fomula One racing,
and that same phone number downloaded the movie trailer for a James Bond movie
and that same phone number paid for the London congestion charge 27 times in the
past two months - you can be sure the owner of 123 456 7890 is a James Bond fan,
watches Formula One racing and works in London (and drives a car to work, as the
person pays the congestion charge).
It doesn't matter at all, if I am a man or woman, if I'm 21 years old or 81 years
old, married or single. I am an F1 fan, love 007, work in London and drive a car.
We get (near) perfect digital footprints that are (almost) always unique to that same

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224 Guarding our digital identity

person, and not their spouce or brother or sister or parent or child. The digital
footprint is actionable! To this mobile phone user we can sell stuff. Send ads to
win free tickets at next year's Formula One British Grand Prix race. Or send ads that
offer free tickets to a private screening of the next James Bond movie before the
official premiere. Or help the London driver find parking or subsidise his
congestion charge payments if he takes coupons to Starbucks, etc. These are all
actionable. How I spell my name or what is my actual age, is not actionable.
When we target by our behavior and our passions, the ads are seen as valuable.
In Poland they used a famous TV celebrity chef to provide cooking tips as free
video clips, sponsored by the soup makers Knorr. I personally couldn't care less
about cooking but if thats your passion, you'll love this free service and the dozens
of free cooking tips and clips.

Captures Social Context

The real power comes from the social context, as Alan Moore tells us, "Social
marketing intelligence is the new black gold for the 21st century." Lets me illustrate
with a theoretical example as we don't have any major commercial uses yet. Take
American Idol. If one phone number voted in American Idol, we know the owner of
that phone is a fan of American Idol and was actively watching the show.
It is very likely that our Idols fan was also communicating about Idol - using
the phone and mostly SMS text messaging - with other American Idol fans. And
some of that SMS texting traffic would be during the broadcast of American Idol.
Not everybody does this, but especially among younger viewers it is very common
to send SMS text messages while watching TV.
If our Idols fan was sending text messages regularly during the Idols
broadcasts to four other people and one other of those people also voted a couple
times during the TV shows, we can be 100% sure, that this group of 5 people are all
fans of the American Idols show and they watch it simultaneously.
Note that we did not need to 'read' the text messages for 'content' (like say
Gmail does or Ad Words does). We didn't need individual members of our audience
capture, to 'consume' the content (ie vote on the show). We 'caught them' based on
their context of consumption. So this is not trying to measure our 'consumption' but
only the context of the consumption. We want to know who they shared with, when
mapped in the mobile telecoms billing data, against time and communication. We
didn't need location information. Now we get easily over half of the actual total
viewers in any country, who truly are loyal passionate fans of the Idols show.
Whether you voted for the show or not...
Even if I did not ever once vote in the show, but I was texting with friends
during the broadcasts, and some of my friends voted - then the social context of my
consumption reveals the pattern. We find out what you do, not by what you
consume, but who you consume it with. This is the ultimate technique into

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Chapter 13 - Digital Footprint 225

customer behavior! Why? because our social context is more important to


consumption patterns. We are influenced most by what our friends recommend.
This is the future of marketing. Extremely precisely targeted marketing,
aiming to engage with the true influencers (alpha users) in any given community.
Note these are not always the ones with most "friends" or contacts. You have to
monitor the actual behavior of members within the community to identify those
who influence the others. And an alpha user of one community is not necessarily an
alpha user in another community, etc. But this ability, the inherent ability to capture
our 'social context' of consumption and communciation, is probably the most
powerful of the 8 unique abilities of mobile as a mass media channel. Expect
enormous innovation in this space. New tools - like Google Adwords was for the
internet - will be developed to capitalize on this opportunity. Note that this goes far
far beyond the Blyk example I gave, which was 'only' engagment marketing.
Alan Moore is so convinced that this is the holy grail of marketing and
advertising, he thinks the next global Fortune 500 giants at the end of this decade
and in the next, will be built on this basis - that is what he means, when he says its
the new black gold. And if you doubt the power of the black gold, just travel to the
Middle East where the current black gold - oil - is building the world's tallest
buildings and the worlds' biggest shopping malls and a man-made island so big its
visible from outer space, etc. That is the oil, our black gold of today. Most of the
biggest corporations on the planet today are oil giants. In ten to twenty years, they
will be replaced - if Alan is right - with companies who built their empires mining
the immense wealth of consumer data of the social context. And that, my dear
readers, can only be driven only by mobile telecoms data in one way or another.
Why is the biggest data-mining consumer information juggernaut, Google so
obsessed about moving to mobile? Because they are smart, and they can do the
math, and they see this is their future, either they win in this, or they are history.
Same is true of NTT DoCoMo or Nokia or Telenor or Vodafone or indeed Apple.
They have to get to the consumer data to catch the social context of consumption.
If you are interested in inventing something truly life-altering (for the
marketing industry) then explore this seventh unique benefit..

Make It Permission Based

Then another vital point. Opt-in. Mobile is our most personal media. We will feel
very personally offended if our gadget and its service provider is abusive to us. All
marketing activities on the phone have to be permission based. Please do not
misunderstand me, I am not in any way advocating being abusive to your
customers. Use engagemnt marketing methods, which by definition invite
customers to participate. It has to be permission-based. Not to carpet-bomb
customers with interruptive ad harassment like we do on TV, radio, print and the
internet; but enticing them with compelling engagement. Like the Blyk example I
showed in the previous chapter.

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226 Guarding our digital identity

Make it easy to opt-in, and even easier to opt-out. Keep reminding your
advertising audiences that they can opt out of any campaigns and future
communications with a simple 'Stop' - and that stop message obviously has to be
free to the end-user. Make it very easy and transparent to opt out, that adds to the
credibility that you truly respect your audience and will not abuse their trust in you.

Jump Ahead One Decade

I told you about the Amazon Recommendation Engine in the mobile advertising
chapter. Now jump ahead one decade. Today this is the beginning. We understand
Amazon, but the advertising industry does not yet fully understand how that might
relate to other media and other marketing, advertising and sales. So it is not obvious
how Nike or Levi's or Wal-Mart or Ford might use this concept in their advertising.
But advertising will evolve and improve. The key lesson is - that it is absolutely
definitely possible to create radical new advertising concepts - that are loved by
their recepients. Remember the Girlswalker example with 45% conversion rates.

Phone is Always With Us

The one gadget that is with us at every point of our lives is of course our phone.
The phone travels with us from our home to our work and our leisure time and back
to our home again. It reveals very quickly who are our best friends and what kind of
telecoms traffic patterns we generate with whom.
It goes actually far further. The phone is our personal diary collecting our
messages and pictures we take along the day. It is our watch, our alarm; our
calendar and reminder. Many use the maps and navigation of smartphones. The
phone is soon emerging as a cash-replacement vehicle and is starting to become a
remote control device, to control the locks to our homes and cars, to control the air
conditioning and lights in our homes. A couple of years into the future and our
home robots, our plants, our pets will send messages to our phones to tell what is
going on at home (robots) or when they need water (plants) or when they need to go
out for a walk (dogs) etc
So yes, fast forward to the end of this decade. Almost all of the relevant
activity we do, will transit the phone in some way or another - by September of
2010, 20% of all economic activity of Kenya already did. Our wages, our
mortgages, our car payments, our grocery shopping, our utility bills, our taxes, our
convenience store purchases, our movie tickets, bus fares, airline tickets, hotel bills,
etc etc etc. By the end of the decade, it will be common for the mobile to be our
only wallet. Then lets go back to Amazon. How much more can Amazon learn from
us, when it expanded its offering beyond selling just books - so it now also knows
which DVDs we like, what music CDs we buy, etc. Now think about the digital
footprint. If all of our activity involves the phone - its with us in our car, its with us
in our important job interview, its with us when we have our romantic dinner with

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Chapter 13 - Digital Footprint 227

our loved one, its with us when we go partying and yes, even when we sleep the
phone is there in bed or on the bedside table with us. Its the last thing we see before
we fall asleep and its the first thing we see when we wake up. 150 times every day.
So data.. Increasingly almost every activity we do, we will be using the phone for it.
Imagine if the Amazon recommendation engine was actually 'embedded' onto
our phones. So it would know not just what we 'buy' using the phone - Tomi prefers
Pepsi rather than Coca Cola for example - and not just purchases, but collecting the
digital footprint of really of what we do - Tomi watches James Bond clips on his
phone and plays often a Formula One videogame - plus he Twitters and blogs on
his phone etc. The pattern of data is far more complete and compelling - Tomi's
phone disappears from Hong Kong and appears in Slovenia - we see his travel
patterns. In fact, since his phone appeared and disappeared at London Heathrow
Terminal 5 between Hong Kong and Slovenia, we actually know Tomi flew British
Airways.. The digital footprint is immensely valuable.

Future Of Best Advertising Is Mobile

Remember Amazon recommendation engine is advertising. Now think, if we collect


accurately usage patterns based on the phone - we get a far wider reach of data
points than Amazon can hope for. Or even what Google could hope for from our
internet Google-branded activities like Gmail, search, maps etc. And then what if
the advertiser first gets my permission (we have to have opt-in in engagement
marketing obviously) and then - my digital footprint is intelligently analyzed to
offer me recommendations.
So now, what if British Airways sees that their frequent flier Tomi Ahonen is
also a James Bond fan and lives in Hong Kong but regularly flies between Hong
Kong and London. Well, when the next 007 movie is released, BA could offer me a
discounted ticket on the flight to London for the first month of James Bond's next
movie premier in London. Even offer the movie tickets to the premiere for free
(consider the cost of movie tickets vs cost of intercontinental air travel) and tell me
they show a James Bond movie marathon on the flight. I would love BA for
noticing my passion and offering me that kind of personalized incentive. Note, I
would love BA for noticing that, even if I end up not using that offer. Today I get
'generic' offers from BA, this month they offer a free upgrade to First Class if I buy
a non-discounted business class ticket, etc. Boring boring boring! And understand,
this kind of insight cannot be collected on 'silo' websites on the web. Normally the
BA website would never find out that their frequent flier Ahonen is also a Bond fan
because if I happen to buy a Bond DVD, I do it on Amazon, and British Airways
website does not know what their customer Ahonen does on his visits to Amazon.
If we get targeted, relevant, valuable, useful, personalized offers (advertising)
that are well done, we will love them. Not just 'tolerate' them, we will love them.
Just like we love Amazon's recommendations and Blyk had its users love ads so
much, they were requesting more of them. It is not illogical, think of Amazon. If we

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228 Guarding our digital identity

get permission, then do truly relevant, targeted and useful ads, our audience will not
even think of it as advertising, they will think of it as valuable information and will
love it.

Voluntarily Onto The Digital Leash

It is clear that all kinds of companies and government institutions and other entities
are collecting data on us. So, first to be clear, it is a very good thing that companies
and other organizations like governments, hospitals, schools etc, do collect data and
then mine them to get 'business intelligence' to better understand their customers.
That is all good and prudent. And we can have truly magnificent 'improved' services
for us, based on that data being collected, as I just showed with Amazon, and how
its recommendation engine has made advertising seem like valuable content to us.
But if individual companies or organizations try to collect data on us, it will be
a poor picture of very modest value and usability. So if for example a museum
collected data on its visitors and then used it to target its advertising more
accurately based on 'demographic' data, that is indeed better than nothing. But it is
suboptimal. The best tool to get that information across all of our activities is
obviously the mobile phone.

Tomi, Thats Invasion Of Privacy!

Sound like invasion of privacy? Sure it does. But first - remember the cookies on
your PC. Nobody ever asked us to approve these spy-bots that we all now are
infested with. Secondly, technically, every mobile phone network has had this
capability for almost two decades already. Thirdly, they already do use this - with
'lawful intercept' ie when fulfilling a given country's legal system, the police request
the data and the operators/carriers provide it. Usually this requires a 'court order'
type of legal document for the police to gain this access. But the 'snooping' is totally
technically valid today and done around the world for such uses.
But think back to Amazon - we 'love' the recommendations that Amazon
makes for us. If advertisers could have accurate information on the actual behavior
of every consumer, and target ads accordingly, they could throw 90% of the budget
away at least, covering the part used in misguided advertising. Wanamaker's
conundrum that half of all advertising is wasted, but he didn't know which half -
becomes now finally possible to solve. And its far far more than half of all
advertising that is utterly wasted. Far more than half that could therefore also be
saved from advertising budgets, and re-targeted. We'd get far less advertisements
(which would be a good thing), and most of the ads we'd receive would seem to be
very relevant and address our actual needs and wants (which would be an even
better thing).

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Chapter 13 - Digital Footprint 229

Must Be Opt-In

Obviously we have to get those permissions. It means hard work. It will take time.
But it can be done. McDonalds in Japan has been seeking those permissions for
many years now, and how far have they come? Today 16.5 million Japanese
consumers have signed up for opt-in advertisements and instant-coupons from
McDonalds. That is one out of every 8 Japanese persons alive today (NFC Asia
Sept 2010). Considering Japan is a fish-eating nation, that 12.5% of the Japanese
population that have opted in to McDonalds mobile advertising is very close to the
total potential market size for McDonalds in that country.
It can be done, but they have been delivering coupons and value to Japanese
customers for years, meticulously seeking the opt-in permission. Every one of those
customers not only shops at McDonald's, they are accepting offers from McDonalds
- offers which the restaurant chain fan further 'mine' to discover true preferences of
its customers. It is incredibly valuable to McDonald's today. Can you imagine how
much more valuable this type of info is that 'what age is he' or 'she' or 'is he married'
etc. Demographics become totally useless as data, meaningless as being so
inaccurate, when we get mobile phone based behavior data.

We Are Not There Yet

We are only starting on this journey. Most mobile operators are still clueless as to
how powerful this data is. Most of them are not even capable of segmenting their
own customers to this level of detail, far less to sell you any data on them. But
advanced operators from Scandinavia to Japan and Singapore are already on this
path, far far along the way. And don't think 'privacy' is any protection. We lost the
battle with cookies years ago. The mobile operators, and various industries (like car
makers in this example) will get our permission - easily.

Mobile Brings Three Levels

On digital media we can get to the first level of consumer behavior data - what we
consume. On the internet this consumption info is almost always only limited to
individual merchants (ie Amazon can't tell me what I like on the BBC for example,
the Guardian can't give me recommendations on Disney etc). But like we see on
Amazon, the recommendation engine is a huge leap forward in customer insights.
Amazon would not (should not) bother to collect demographic data on its
customers, because behavior is so much more poweful and actionable and accurate
data.

Demographics Is Obsolete

You should not even bother with demographic data. If you have access to actual

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230 Guarding our digital identity

consumer performance data, then the demographic statistical data can only be a
distraction and a nuisance. The real usage behavior data is far more actionable than
demographics, and demographics have big false negatives and false positives types
of errors. So get rid of your demographic data, don't even bother to collect it. The
first, very basic level of actionable marketing data starts with customer
consumption data.
Do not ask your customers for their age, their education level, their marital
status, their postal code, or any such worthless information. Since you already have
permission, and you have the mobile phone number, then you do not need any other
identity data. Do the opposite, tell your customers that you will never ask for any
digital identity data, that will make your customers - and any privacy oriented
politicians and regulators - much less nervous about mobile data.

Consumption Data Is Basic Level

The first level (basic level if you will) of consumer behavior data in digital is the
'Consumption'. This is the what of our profile. For most in marketing, this is at first
glance 'the ultimate' data, isn't it. Thats the 'holy grail' isn't it. If we know Tomi
consumes Pepsi and not Coke, this is very powerful marketing data, isn't it. Are you
Mr Ahonen now suggesting something 'beyond' this, something... even better?.
Yes I am. Looking at consumption, is like primitive humans looking at the sky
and thinking the world ends after the clouds and the stars and sun and moon are the
limit of the universe, that revolve around us (as it seemed from that vantage point).
Obviously we now know there are stars beyond what the eye an see, and many of
what look like stars, are in fact galaxies consisting of billions of further stars,
countless of which have their own planets and moons etc... Yes, that is the degree
of sophistication we are talking about. To focus on consumption is the earliest 'cave
man' level of this marketing insight (haha).

Communication Data Related To Consumption Is Far More Powerful

The second level of Customer Behavior market researh data comes with
Communication. What do we gain from the communication 'dimension' to our
consumption? We gain all that we associate with 'viral' marketing. We can find out
who is talking about our brand, good or bad. Who sends links to our site, who is
generating buzz about us. It does not 'preclude' or 'invalidate' the consumption data,
but the 'communication' is far more powerful for anyone in marketing research. One
person bought our brand, did not talk about it. Ok. Another bought our brand and
talked about it. Better. A third person never bought our brand but likes it and talks
about it - wow. This kind of real customer insight can never be captured in
'consumption' data - because this customer has not (yet) bought our product but
clearly loves it (or hates it..)

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Chapter 13 - Digital Footprint 231

Where can we do this, capture, this, utilize this? This is 'cutting edge' market
research data, and for the most part we can find it in separate discussion channels
like Twitter. Facebook, blogs etc. So while both exist on the internet - we buy a
book on Amazon, we then mention it on Twitter. Mostly the two are 'co-existing' on
the internet but not part of the same consumption or communciation. It can be - we
can perhaps gather it to our own branded website, perhaps a 'fan club' etc. We have
paid services on social networking sites like the massively multiplayer farming
games that are the big rage on Facebook for exmaple. Any smart brand in digital,
and those consultants and experts and agencies advising the brands - will want this
'dialog' with the consumers. It is central to 'engagement marketing' which moves the
advertising/market communications beyond the mass market 'propaganda'
preaching of the past century.

Third, The Ultimate Dimension Is Context

We are now witnessing the birth of yet a deeper level of consumer insight.
Understand the power of this. Amazon recommendation engine is inherently more
powerful than TV or radio ads in selling books or DVDs, music etc. Consumption
data is more powerful than demographics or psychographics. Then we have
communication of consumption - far more powerful, because now we see true
influence. Now we have something even more powerful. Again I am not suggesting
to abandon consumption data or communication data.
The third dimension is the 'Context' of consumption. As we gain the ability to
collect accurately the 'social context' of our consumption - and various other
'context' elements such as time, location, and very very importantly - proximity
(which is not the same as location) - we get far more powerful tools. Please don't
misundestand me. I do not mean 'location-based advertising' - which is a very very
bad and discredited idea discussed in its own Myth chapter later in this book. I do
not mean to target 'based on where I am' but rather, to 'gather info based on how I
move' - and most importantly the context of my movement, who is there moving
with me in proximity (in the same car, in the same bus, at the same pub, etc).
The last, newest, and least understood of the elements is social context. The
best opportunities in behavioural marketing come from utilizing the social
networks of the users. Social networks are about interaction between people and
they can be used to answer questions on where, how and with whom people
communicate. Social networking services, such as Facebook and MySpace, have an
oil well of information. This information is used already to target advertisement to
users. However, according to Jupiter Research analyst Kevin Heisler, the targeting
potential is used still very inefficiently and there is huge potential in creating and
analyzing campaigns that utilize the inherent strengths of these interconnected
social networks. Thomas Labarthe at Alcatel-Lucent's Optism mobile advertising
unit told the global Mobile Maketing Association event on Manhattan earlier this
year, that these three forms of mobile data gathering are the near future of

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232 Guarding our digital identity

advertising (and kindly credited me). Its no longer just some obscure tech author
and blogger named Tomi Ahonen who is peddling these theories. A change to
advertising is a'coming.

Will Evolve And Improve Fast

But marketing is a global competence and adapting and growing fast. The giants
like Google and Apple and Nokia are rushing to get into this space. And the various
ad agencies from the Ogilvys and Saatchis and McCanns are hungrily studying this
space. Alcatel-Lucent's mobile advertising platform, Optism, was designed to
explore this dimension. SAP bought Sybase to get into this space. Today most
mobile data collection is at the mobile operator exclusively, through essentially its
billing system, but that will not last. There are too many 'outsiders' who are seeking
alternate ways to this info. The smartphone revolution is a big step into that
direction. Soon we will get at least part of the data off the phone, bypassing the
operator billing data.

NOW WHERE?

So yes, what to read now? The obvious must-read is Tony Fish's seminal volume on
this topic, entitled My Digital Footprint. Absolute ironclad must-read. And if you
still want more, then a perhaps-more theoretical treatise is Alan Moore's second
book, with Ajit Jaokar, Jouko Ahvenainen and Brian Jenkins, entitled Social Media
Marketing. And I happen to know from Alan, that he is finishing his third volume,
that becomes the definitive treatment of this topic area, sometime next year.

My Digital Footprint
Tony Fish
futuretext 2010

Social Media Marketing


Ajit Jaokar, Alan Moore, Jouko Ahvenainen
and Brian Jenkins
futuretext 2009

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Chapter 13 - Digital Footprint 233

Case Study 10 from the UK


Tesco Shopping Assistant
This is perfect use of the 7th mass media channel. Tesco's is the
biggest supermarket chain in the UK. They released a shopping
assistant application. It starts out very innocently. It helps you
organize your shopping list. As every shopper carries the phone in the
pocket, it is a good shopping aide. Their app is adept at helping you
add items to the shopping list, so you can take them from your past
shopping, or add them using 2D barcodes (QR codes) etc.
Then it gets magical and uses the power of the 7th mass
medium. You tell it which Tesco store you intend to shop in, so this
could be the Tesco's nearest to your home or your office or the big
shopping mall etc - or you simply say 'this store' and use the
GPS/location to identify which store you are at. Then the magic
happens. The Tesco shopping assistant will re-arrange your
shopping list items, by the order of the items in the aisles in the
store, ensuring you the shortest path through the store to your own
shopping. So in this store if Corn Flakes are in aisle 2 and Pepsi is in
aisle 4, you get the items re-arranged so, that Corn Flakes appears
before Pepsi, etc.
This is Magical! Its like the Tesco application on your phone is
reading your mind and helping make life easier. Who doesn't want
this?
And now the clever bit. Tesco's has already asked you
permission to market to you. And it has your profile, it knows what
you buy and don't buy. It won't show you any ads you don't want. But
it can now offer you targeted ads and coupons, based on exactly what
you like (and its near rivals).
So, lets use me as an example. Tesco's knows that Tomi
Ahonen is a Pepsi guy. Then that Tomi Ahonen is nearing Tesco's
store number 124. Why not ask Coca Cola to serve Tomi an ad for 2
for 1 purchase of Coke. And Tesco's won't release my name to Coke,
no spam from Coke, Tesco's owns this relationship and will nurture it.

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234 Guarding our digital identity

Tomi T Ahonen famous forecasts


Tomi T Ahonen significant public forecasts, where his view has been controversial
at the time, and often been the first in the industry to voice that view; that can now
be determined for accuracy. Please consider the timing of the forecasts as made:

1998: Mobile phone penetrations will exceed landline penetrations (correct)


1999: Ringing tones will be international success (correct)
1999: Saturation ceiling is a myth (correct)
2000: Mobile phone penetration rates will exceed human population in
industrialized countries (correct)
2000: US citizens will become active users of SMS text messaging (correct)
2000: Videocalls will bring major revenue in 3G (wrong, changed mind in 2001)
2000: Location-based services will become major source of revenues (wrong,
changed mind in 2002)
2001: Concept of location-based push "spam" ads is not going to succeed (correct)
2001: It will become commonplace that people will carry two phones (correct)
2001: SMS text messaging is addictive (correct)
2001: MMS will follow pattern of SMS usage (wrong, changed mind in 2004)
2002: Ringback tones will become billion dollar industry (correct)
2002: Mobile telecoms revenues will exceed fixed telecoms revenues (correct)
2002: Mobile content revenues will exceed internet content revenues (correct)
2002: More people will access internet on mobile phones than PCs (correct)
2002: Inspite of bad reputation of early launches, WAP to be success (correct)
2002: Inspite of success of Blackberry, more US users will use SMS than wireless
email (correct)
2003: Inspite of the telco bubble burst and 100 billion dollar 3G licences, 3G will
become commercial success (correct)
2003: Stand-alone cameras will lose market to cameraphones (correct)
2004: MMS picture messaging not follow SMS, yet will become success (correct,
note is change from 2001)
2004: iPods will lose musicplayer market to musicphones (correct)
2005: Mobile social networking is first killer application for 3G (correct)
2005: Blackberries better suited for consumer SMS texting than enterprise wireless
email use (correct)
2005: Engagement marketing on mobile will produce satisfied customers (correct)
2006: Apple will release 'iPod Phone' (which became iPhone) to combat loss of
market of iPod to musicphones (correct)
2007: iPhone will ignite US based giants of the media industries, the PC makers
and the advertising industry to enter mobile (correct)

(note more recent Tomi T Ahonen forecasts cannot yet be determined for their
accuracy)

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Chapter 15 - Convergence and the Cannibal 235

"Mobile First."
Eric Schmidt, CEO Google

XV
Convergence and the Cannibal
And the smartphone Apps Myth

Early on in the past decade when we were trying to understand the addiction that
consumers were exhibiting towards the mobile phone, we noticed that increasingly
the single most important gadget for consumers was the mobile phone. That yes,
they abandoned landlines in favor of the mobile phone. That some heavy users of
email would abandon the laptop when they received a good email experience on
their phone (ie using the Blackberry). That music consumers were abandoning the
iconic Apple iPod, for all its excellence in music consumption - in favor of much
simpler SonyEricsson Walkman musicphones. And camera users were shifting from
using point-and-shoot basic consumer cameras, to using only their cameraphones.
When I blogged about the shift from iPods to musicphones on my blog, I was
almost crucified by the Apple loyalists. I was later vindicated when the Apple CFO
Peter Oppenheimer openly admitted that the Apple iPhone was rushed into the
market, explicitly because musicphones like the SonyEricsson Walkman phones,
were cannibalizing iPod music player sales. Meanwhile of the big 4 camera makers,
Canon, Konica, Minolta and Nikon, the cameraphone revolution was so severe this
past decade, that two of the four giants, Minolta and Konica, have quit making
cameras altogether - because of cameraphones. Now we have studies showing that
people are starting to abandon their laptops and making do with their smartphones.
Something is happening here. One could say that it is universally true, that a
'compromise' device like a mobile phone with a camera, or mobile phone with MP3
player, or mobile phone with the internet, etc, will be inferior to a dedicated device.
Yet mobile phones sell up to 10 times more in annual units, than these dedicated
specialist devices. Why is that? So we found that there is something we coined in
Finland as 'Tavoitettavuus' (Reachability) and I wrote about it from my second
book, M-Profits in 2002. Studying Reachability, I have since come up with a
simple test, and a good explanation.

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236 And the smartphone Apps myth

Reachability

The thinking of mobility starts with McGuire's Law (the utility of any activity
increases with its mobility), but my friend and author Russ McGuire of Sprint in the
USA only caught half of the story. Yes, size is important, we appreciate the
portability and 'mobility' of what we have. A laptop is more useful to us than a
desktop, as its more portable. A netbook or perhaps iPad is probably more portable
and thus gives us more utility. However, McGuire's Law does not help us decide
between two pocketable devices. Why do music-playing phones outsell MP3
players like the iPod?
We do not insist on carrying our phone everywhere because we feel a need we
have to call someone (or send a message to someone). We carry the phone 'just in
case' if someone needs to contact us. This is 'reachability'. We don't want to miss
that important call or contact. It is not the same concept, as 'we want to carry the
phone, in case we need to make a call'. That is not reachability. Thus the device has
to fulfill the 'ringing in the pocket test'. The device needs to be small enough to fit
into our pocket (an iPad for example is way too big unless you wear some kind of
thunderpants like a clown in a circus) and while it is in our pocket, it still needs to
be permanently connected so that it is able to ring in our pocket.
Now lets go back to the cameras. A cameraphone of similar cost, will be far
inferior to the camera functionality of a stand-alone digital camera. If we are
wealthy and can afford the devices, and if cameras are important to us, we'll of
course get a 'proper' modern Canon or Nikon digital camera, probably with plenty
of accessories, like a tri-pod, a flash unit, some inter-changeable lenses, etc. And for
such users, they tend to think of the camera on the phone often as too poor in
quality, to even consider using.
That is only for the wealthy and the camera geeks. For 9 out of 10 people on
the planet, who have ever taken one picture, the only camera they have ever
touched, has been a cameraphone. The world's best-selling camera brands has since
2004 been Nokia. And ex Nokia designer Christian Lindholm, now of Fjord, says
"the best camera is the one you have with you." An expensive SLR style
professional Canon system is of no use if you need to take the picture now, after
that idiot drove his car into yours and you need to take pictures of the accident as
evidence that it was not your fault, and you left the fancy expensive Canon camera
at home. Then even if your cameraphone 'only' has a 2 megapixel simple camera
with no autofocus and no flash, taking that picture is better than nothing.
That is the point. We carry our phone because we know instinctively that
something may happen, and we need to be 'able to be reached'. Maybe there is an
emergency, maybe a change to plans, etc. And only a phone can 'ring in our pocket'.
The laptop cannot wake up from its sleep mode, and suddenly warn us, that there is
someone on Skype who wants to talk to us urgently. That urgent email cannot reach
our notebook or netbook PC if we are not in WiFi coverage. But the call or the SMS
message will reach our pocket every time, almost anywhere on the planet. Then it

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Chapter 15 - Convergence and the Cannibal 237

means, that when compared to any other pocketable device, we will prefer the
phone. And even if the 'functionality' of the phone for music or pictures or internet
surfing is worse than the stand-alone gadget, if the phone is the only thing we have,
that gets the emergency usage.
That is why I say, you start with McGuire's Law, and then you apply Tomi's
'Ringing in the Pocket Test'. That tells you whether the Kindle or iPad or whatever
gadget will sell in the millions or in the billions.
So if we compare a PSP to an iPod to a stand-alone digital camera to a mobile
phone. iPod and all other music-playing MP3 players total about 130 million units
sold annually (Apple iPods form about 50 million of those globally, selling very
well in the North American market but poorly in the rest of the world).
Musicphones or mobile phones with a media player sell about 700 million units per
year (over 5 times as many). Stand-alone digital cameras sell about 100 million
units annually. Cameraphones sell over 1 Billion units per year.
And to prove my point, ChaCha surveyed 1,500 US teenagers this year, and
found that if forced to pick one technology over the others, 61% picked their mobile
phone vs 18% picking the computer, 11% picking the TV set.

Mobile Is Cannibal Of Cannibals

But each new media channel tends to bring new benefits too. I explained earlier that
mobile is the 7th mass medium after print, recordings, cinema, radio, TV and the
internet. Mobile is what we call an 'inherent threat' mass medium because it can
technically and commercially replicate all previous existing mass media. This is not
usually true - when print existed and recordings arrived, yes you could do a 'spoken
book' but newspapers for example were not viable in recordings format, as were not
magazines and not the pictures that became such a big part of magazines and
newspapers. Similarly when cinema appeared, it could not offer us the ability to
consume books, nor to listen to our music records. None of the first 5 media were
'inherent threat' mass media channels. The internet was the first inherent threat mass
media, on the internet you could deliver books, music, movies, radio and TV
content.
Now we find that mobile is the second 'inherent threat' medium as we can both
technically and commercially deliver books, magazines and newspaper content (ie
cannibalize print); we can deliver music and videogames ie recordings content; we
can offer movies, radio, TV; and we can offer the legacy internet on mobile.
Remember, we don't need to do it as well on the newer medium, as long as it is
technically and commecially viable. Its clear that a major hollywood blockbuster
movie works 'better' in the cinema than on the home TV set, yet even though TV is
'not as good' as an experience, every movie ever made, has also been shown on TV.
So don't think that you don't want to watch a movie on your Blackberry. Neither
will I. But ask your kids, they already watch movies on their Playstation Portables.
Of course everybody wants a giant plasma screen TV to watch movies, but kids

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238 And the smartphone Apps myth

today are totally ok with watching TV and movie content even on the very tiny
screens on some iPods and basic cameraphones. It is techncially and commercially
viable.
And now we do need to listen to the media experts. Warner Music CEO Edgar
Bronfman said in 2005 that the future of music was on mobile phones (not on iPods
by the way). The past BBC Managing Director Greg Dyke said in 2006 that all
broadcast content, TV and radio, will be available on mobile phones. Maurice Levy,
the CEO of Publicis, the world's second largest media empire, said in 2006 that
within a couple of years "most of the information and most of the advertising" will
go through mobile phones. Its not that the mobile industry giants like Nokia or
Motorola or Vodafone or T-Mobile or Ericsson or Alcatel-Lucent are trying to
convince us that there is a mobile future for media. Its the biggest global media
brands, who have been saying for many years already, that the future of their media
content is on the phone. And not on the intenet, the 6th mass media. No, the future
is explicitly on mobile, on the 7th mass media.

Started With Music

And we see the transition. I showed already in this book how music has migrated to
mobile phones starting with ringing tones. Now, while we are on cannibalization, I
have to make one more point here. Note that the cannibalization does not work 'the
other way'. Its not possible to deliver all mobile content and services (technically
and/or commercially) that we have on mobile, onto any of the legacy six mass
media - including the internet. Not even from mobile onto the PC based 'real'
internet. Now you laugh, I know. You say, thats impossible Mr Mobile Phone
Consultant, we can do anything you can do on the phone, on the internet. And yes,
no doubt you believe that fully and whole-heartedly. It is so obvious, any digital
service or content can be put on the web.
But can you cannibalize mobile media? Is it technically and commercially
viable on mobile?
Ringing tones are worth 5 Billion dollars all by itself - thats 2.5 times more
than all music sold by Apple on the iTunes store annually, a significant chunk of
money - and not a secret, ringing tones are 12 years old - and all major artists
release ringing tones, from 50 Cent and Madonna to Lady Gaga etc. So? We have
ringing tones in mobile. What of PCs? Have you ever heard of anyone who installs
ringing tones to their PC? Who installs ringing tones to their TV set? Who installs
ringing tones to their newspaper? Who installs ringing tones to their radio? We can't
do ringing tones in any other media except mobile.
Absolutely concretely iron-cladly absolute proof, that ringing tones are not a
viable commercial media opportunity on the internet. Not viable. So there are major
'billion dollar' industries of digital content, that were invented on mobile, that work
only on mobile, and cannot be ported 'back' to any of the six older mass media,

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Chapter 15 - Convergence and the Cannibal 239

including the internet. Yes, mobile can cannibalize any legacy mass media
(including all of the internet), yet mobile has abilites that no other media can match.
You want more? I have hundreds more. Take ringback tones - worth 4 billion
dollars (Juniper in 2009), invented in South Korea and taking the world by storm.
Most of the digital music revenues out of China are now made in ringback tones. In
Turkey ringback tones are one of the hottest new advertising media. They are hits
from Japan to Russia and Israel. Yes, four billion dollars worth. Can't do ringback
on the internet, can't do ringback even on a 'sound' media like radio or recordings.
Only on mobile.

Other Services

Don't like music examples? What of Augmented Reality. We have Layar, who do a
whole media empire around their 'layers' of media content, advertising and
information and entertainment, super-imposed upon the real world, and one that is
only accessable through a smartphone with the Layar 'Augmented Reality Browser'.
Yes, the 'AR Browser'. What browser do you use on your laptop? Microsoft Internet
Exploder? Google Chrome? Perhaps an old copy of Netscape? We can do HTML
web browsers yes on a phone - thus we can easily replicate the PC browsing
experience on a mobile phone. However, on a phone you can do an Augmented
Reality browser - which is completely impractical on a desktop or laptop PC of any
kind (to begin with, the laptop camera faces the wrong way for AR browsing).
Show me one laptop that has Layar or any other AR browser on it. There isn't
one. Its not techncially and commercially viable on anything else except mobile.
Maybe in the future we'll have 3D glasses that can do it too, but not today. Not for
the mass media in any format. You can't do augmented reality on TV, not on radio,
not in print, not in recordings. And not on the internet on a PC.
We are doing magic in mobile today. Augmented Reality is a perfect example
of magic. So are services such as instant speech translators, of music recognition
services like Shazam. I mentioned the magic of the QR code ie the 2D barcode.
This industry is creating magical experiences for users in mobile. A bit like early
search engines seemed magical nearly two decades ago. Now we have such a
magical moment in media again. A golden age of media in fact. The mobile era.

Shift From PC To Mobile

In 2008 Rubicon Consulting surveyed iPhone users, and found that half of iPhone
users are shifting away from using a laptop computer. 28% said they "strongly
agree" with that statement. Now in 2010 we have the 'definitive' finding by Jacobs
Media and Arbitron, that smartphone users are systematically reducing uses of
stand-alone digital cameras, camcorders, GPS units, pocketable music players and
gaming units, and yes laptop PCs and even reducing the use of car radios.

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240 And the smartphone Apps myth

We see digital convergence and the related media content cannibalization all
over. This is nothing new. It happened with radio and TV and the internet in the
past, cannibalizing older media content and formats from print, recordings and
cinema. But lets examine today. Print? Where is it headed? Not to 2nd media
recordings or 3rd media cinema or 4th media radio or 5th media TV. Print is headed
to the internet (6th) and mobile (7th mass medium).
How about recordings. Consider music. With digitalization we got CDs and
DVDs and iTunes. Today major record shops like Virgin superstores and HMV are
shutting down and where is the content migrating? Not to print, or cinema or radio
(well yes, some to radio) or TV (also yes a part to MTV) but mostly to the internet
and to mobile. In Japan the music industry says that music CDs are a format for
over 40 year old people, anyone under 40 uses MP3 format music.
Cinema. Same story. Not going to print or rado. Yes, going to recordings
(DVDs) and to TV. But the big new direction is the internet and also, starting to
happen - also to mobile. Don't think of your old phone. Think of the iPhone. Yes, of
course soon movies will be as common on phones as they now are on PSPs and
video iPods.

Cannibalization Threat by Media Channel

Ability to cannibalize other media content


Print Record'g Cinema Radio TV Internet Mobile
Threat to be
cannibalized
Print Some No No No Yes Yes

Recording No No Some No Yes Yes

Cinema No Yes No Yes Yes Yes

Radio No Yes No Yes Yes Yes

TV No Yes Some No Yes Yes

Internet No No No No No Yes

Mobile No No No No No No

Radio? Not migrating to print, cinema or recordings. Yes, some radio content
was cannibalized by TV but that happened in the 1960s and 1970s and is pretty well
completed. No, the new migration is to the internet and to mobile.

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Chapter 15 - Convergence and the Cannibal 241

TV - not going to print, radio, cinema (well, except the occasional TV


franchise like Charliie's Angels or Sex in the City etc) but yes, going to recordings
(DVDs). And yes going to the internet and yes, going to mobile. MTV already
shoots all of its content like shows like Jackass with two camera crews, one
specializing on content for the TV screen and the other for the mobile phone screen.
Then the internet. It is not migrating to the legacy mass media for the most
part. Yes, a bit of YouTube will occasionally find itself on TV but no nobody is
trying to recreate Google search on a magazine or eBay in the cinema or Wikipedia
over radio or Amazon on a DVD. The internet is only headed to one other mass
media - to mobile. In fact the CEO's of the biggest internet companies from Yahoo
to Google have said that the future of the internet is mobile. Not a possible future.
The definite future. This is not some hyped up blogger with a silly idea. CEOs of
the biggest internet brands have said in public - repeatedly - that their industry is
heading to mobile...

No Migration In The Other Direction

Do you see the pattern? All media are migrating. Some have other legacy media
migrations too but all five legacy media migrate to both the intenet and to mobile.
And the sixth, the internet itself... is migrating to mobile.
What of mobile? It is not migrating backwards. We don't see mobile calls
handled via the cinema screen or SMS text messages delivered via DVDs or ringing
tones installed to our TV sets. And while the world consumes over 4 billion dollars
worth of "ringback tones" as background music when we call people on mobile
phones - this is twice the size of all digital music sold by Apple iTunes for all iPods
annually - we still don't sell ringback tones to use on our laptops when we access
the internet.
The global trend leads either directly to mobile, or first to the internet, and then
to mobile.

30 Minutes vs 30 Seconds

But then there are those who claim the future is only mobile. No no no no no. The
PC will not 'die' because of smartphones. Use my "30 min/30 sec" metaphor to
understand.
Now there are people who suddenly swing to the opposite extreme.. So yes,
Morgan Stanley wrote a great report about the mobile internet (echoing very many
themes I have been writing for many years) and one of the most widely reported
facts in it, was that the 'mobile internet' stage of computing will be 10 times bigger
than the PC/internet era of computing. So far so good. Now, some analysts have
jumped the gun, and now feel that brand new hot smartphones are 'so much' like
personal computers, that they will kill off the trusted old PC.

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242 And the smartphone Apps myth

No no no no no NO! No. That is totally a misunderstanding. When the movies


came, many thought they would kill off books. They didn't. Then when radio came,
people thought it would kill off records. It didn't. When personal computers came,
they did not kill off mainframe computers. And now that the mobile phone - in
particular the smartphone - is increasingly accepted to be the newest type of
computer - there are those who think it will kill off the PC.
It won't. There will be situations where the pocket computer/smartphone will
be more convenient, and other times when the PC will be more of use. So I have
been using a metaphor to explain why mobile phones will not kill off PCs. I call it
the 30 minute tasks / 30 second tasks metaphor. Here is how it works.

30 Minute Tasks and 30 Second Tasks

30 Minute Tasks 30 Second Tasks

Planned Unplanned
Sitting Standing/Walking
Create Consume
Big display Small display
Keyboard and mouse Keypad and camera
Concentrate Multi-task
Email SMS
PC/Laptop Mobile phone

Source: Tomi T Ahonen book Mobile as 7th of the Mass Media, 2008

30 Minute Tasks

We have 30 minute tasks. These are the kind that we plan to do. So for
example me now writing this book for you. I plann