If you had any doubt on the potential of the cellular phone as the main platform for the future, consider this: there are about 1.5 billion television sets currently in use in the world ; in the meantime, 1 billion people are connected to the internet. How many cell phone users ? 3 billion. In some western cities, equipment rate is well above 120% on average, and some emerging countries are enthusiastically bypassing the old fashion land line infrastructure to go directly to the cellular network. In Japan, coupons are sent though mobile phones ; in Estonia, parking fees are paid remotely by phone.
Now, let’s zoom in a well documented country like the United States (let aside the poor quality of the US cellular network compared to the GSM which is far better in Europe — and outstanding in Nordic countries). On each customer, US carriers like AT&T, Verizon, Sprint Nextel, get an average of $40-50 for the basic monthly plans, plus $30-40 for web browsing. A business generating $70-90 per month, that’s a lot. Especially for a sector which was still in infancy twenty years ago. Compared to cellular generated cash-cow, newspaper industry looks like a mom and pop grocery store : even the very successful online version of the Wall Street Journal brings about only $11 per reader and per month (50/50 between subscription fees and ads). This eight times less than the cellular industry.
For Google, Yahoo and Microsoft, the next big profit frontier is organizing streams of advertising on our mobile phones. Not all cell phones of course. A large group of talkers — those who have a professional use of their device — will still be willing to pay. But a vast crowd — the young, the low yield users — will agree to trade a free call in exchange of ads and services. In the coming years, we’ll see the emergence of incredibly sophisticated ads-flow. They will be the result of a massive convergence : the ability to serve an ad tailored for :
a) the context ; b)the profile of the viewer ; c) its social network, d) what he does and where he does it.
The first item is already under way with Google Ad Sense which serves a banner in accordance with the content of the web page. That’s sounds almost trivial compared to the next steps, when advertisers will be able to target us individually, geographically and on a time sensitive manner.
Achieving the noble purpose of saturating our synapses with messages requires a large dissemination of some key technologies. Hence Google and the Open Handset Alliace, a collection of thirty brands involved in the cell business (handsets manufacturers – Samsung, but not Nokia or Apple -, mobiles operators – no French one -, hardware companies, internet software or services companies…). Put together, those players represent a fair market share. Within less than a year, they will create a range of services we never thought of. The first iteration of Android, the main software, is already spectacular – Iphone will have hard time to preserve its edge.
On this version 2.0 on the cellphone industry, one company will be the main money collector : Google. The Mountain View giant will do it the usual way, one cent at a time, but he scale will be immense. Actually about thee times the pool of internet users + roughly half of the average bill of each mobile phone users. A lot of money.
> See a preliminary demo of the Android platform which will be at the heart of the Open handset platform. The video is rather compelling (even though, Google’s chief Sergey Brin and Android main architect Steve Horowitz are not competing in the best actor category). See here.
> Why the clash seems unavoidable between the cellular phone operators and the Google bandwagon. Story in Bloomberg