As mobile phone content explodes, the Walled Gardens crumble…
Over the past years, we have seen the Wireless industry undergoing a significant change – the service providers’ walled gardens have continued to disintegrate with the explosion of the content and applications available for Mobile phones. In my opinion, a couple of factors have contributed to this phenomenon.
With the introduction of phones like iPhone and G1, the web browsing experience has moved away from a simple WAP-based access to a more PC like experience (though not there yet!!). Today, with browsers on many smart phones providing a near-PC web experience, not only has the mobile web usage grown but the number of channels through which the content on the internet can be consumed has multiplied. With consumers seeing more and more options to obtain and consume media on the phone off the deck, service provider’s control on the content being served has diminished considerably.
Mobile App Stores (lead by Apple and Google) are evolving and customers can now get access to thousands of applications. These App stores have created a distribution platform that connects the application developers directly with their consumers. On the other hand, the Service providers, who until recently, controlled what content and applications are made available to their customers, have started to lose control over marketing and distribution of applications and content.
As the Walled garden continues to crumble, the wireless operators should not become mere “conduits” to mobile content and applications like the Broadband service providers are in the traditional Internet world. I see this as an opportunity for the Wireless service providers to not only drive up Data revenues and introduce new Ad-based revenue streams but also to create new business models to remain competitive in this market place. I also see this as a potential opportunity for application developers and other companies to produce innovative content and applications that would attract consumers. What do you think the Service providers will need to do to retain their revenue streams from content sales and media delivery?
Comments
Any thoughts regarding the mobile user experience? The benefit of a walled garden is that it is controlled, but innovation is stifled. As innovation explodes when walled gardens crumble, the user experience is difficult to manage. What do you think about this trade off since it would affect uptake of these new services?
Posted by: Jeremy Kloubec | November 20, 2008 03:43 PM
This is an interesting question and there are no easy answers for this one. I believe the collapse of the Service Providers’ Walled garden is a natural evolution driven by customers’ needs. Though this evolution is resulting in the operators’ gardens becoming more “open” in terms of the content being served, I think the power of controlling the user experience too is shifting from the mobile operator to the handset manufacturers. Handset makers are increasingly taking control of the user experience so as to create an exit barrier and lock in the consumers to their brand.
Mobile operators will have to strike a balance between accepting this openness and their control over the user experience and look at new opportunities to unlock revenue streams (like mobile advertising) as they are in control of the most ubiquitous communications medium available. They will also need to accelerate their innovation and create more value added services that will keep them in control of the user experience.
Posted by: Sandeep Chandrasekar Seshadri | November 23, 2008 06:35 AM
Currently there is no such thing as a walled garden among the GSM operators in India! The value to the user will, and is coming from the value provider, companies such as yatra.com or irctc.co.in. Surprising that they are no different from the value providers online :P
Posted by: Werner Egipsy Souza | December 3, 2008 02:15 PM
Hi Werner, Thanks for providing the Yatra.com and IRCTC examples. These are perfect examples of services that are beginning to be optimized for addressing the growing mobile population in India. But the Wireless operators in India, following the tradition like every other operator, have managed to create a walled garden around their content offerings. A few examples would be “Airtel Live!” (provided by Airtel, the GSM operator), “Vodafone Live!” (provided by Vodafone, the GSM operator) and “RWorld” (provided by Reliance Comm., the CDMA operator).
Airtel customers, for example, still generate significant revenues for the operator by purchasing content like ringtones and games through Airtel Live! The operators are continuously trying to enhance their on-deck offerings so as to not lose the revenues to other providers as the 3rd party sites are becoming optimized for direct access through the Mobile Web.
As the mobile devices evolve to provide a more optimal user experience for browsing and as the Internet sites become optimized (like Yatra.com) for mobile access, we will see these walled gardens slowly disintegrate.
Posted by: Sandeep Chandrasekar Seshadri | December 5, 2008 06:43 PM