Why are so many startups at Demo07 trying to perform so many unnatural acts with mobile devices? The short answer: People are fed up with the closed nature of the existing carrier networks, and the continuing limitations of existing handsets.
Ask yourself, which of the following capabilities should your phone company be offering:
- Sending and receiving rich voice messages (BUZ)
- Group voice message distribution (Brevient)
- Easily sending, receiving, and posting audio, images and videos (DARTdevices, Eyejot, iqzone, Vringo, Yodio)
- Easy access to Web-based applications, content and email through your phone (Bling, Teleflip, GoWare, Mobio)
- Accessing remote PC applications (Wyse)
- Seamlessly linking to WiFi networks (Devicescape)
- Conducting voice calls without having to pay using minutes (Nuvoiz)
Which of these features do they offer today? Likely none. Why? They don’t yet realize that the world has changed dramatically.
Back near the turn of the century, a mere four or five years ago, startups would come to events like Demo with similar aspirations to this week’s demonstrators - but they inevitably tried to play within the system. Entrepreneurs would describe their business plans, then invariably state a minor stumbling block: They needed to sell one of the existing carriers or handset manufacturers on their offering. One memorable example was former antitrust lawyer Gary Reback, of Microsoft and Netscape browser wars fame, who once touted an open application platform for cellphone networks. (The company, Voxeo, now makes Interactive Voice Response and Voice Over IP systems, but Reback is no longer on the management list.)
In subsequent years, the walled courtyards of the cellphone carriers’ networks (they’re not pretty enough to be called “walled gardens”) have clearly stifled innovation to the breaking point. Look how long it took domestic carriers to adopt ring tones, now a $3 billion market: NTT DoCoMo was fully three years ahead of the U.S. to this market, yet the telcos stood by the sidelines waiting until it was a “proven” market need.
In response to this muffling of innovation, startups are now aggressively playing outside the system, often barely using the cellphone networks for anything but simple data and voice transport – and sometimes not even voice.
How should the carriers and handset manufacturers respond? There are two imperatives:
- Handset manufacturers will move more aggressively to support new features, opening up their devices to new applications by supporting more flexible APIs, and changing their mindset about phone design to a more flexible, software-based approach. If they don’t, Apple’s new entry will likely eat their collective lunches, iPodding the market into oblivion.
- Carriers will grudgingly incorporate more open APIs and more aggressively roll out new features, or they’ll find they’re eventually just data transport for Skype calls – if users haven’t already moved wholesale over to WiFi networks by then.
You’ll know that this seismic shift has finally occurred when you see one of the traditional carriers and/or handset manufacturers showing new devices and services at Demo – because they want to woo the developer and partner community to their new open mindset.
Of course, the incumbents may choose not to respond to these market challenges, assuming that the world is still the same as it was in years past. But they’ll do so at their own risk.