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SIME Talks Season 2 Episode 7: The Mobile Edition – Location Based Services
Posted by mahesh in Blog Innovation Knowledge | Mar 31, 2010 @ 20:57Mobile is the future, no one really is contesting that. The value chain is getting very interesting with handset manufacturers / OEM’s and software providers getting a strong hold of the value chain which was once the uncontested territory of the operators. Traditionally operators have always held the billing relationship with the consumers, and hence were the gatekeepers to the money. However, the concept of app store seems to be have caught them napping. Google, Apple and RIM / Blackberry have caught the pulse of the market from the likes of Nokia, Motorola, Samsung and Palm (do you even remember them?).
In this SIME Talks edition, we do a quick introduction of the mobile value chain, from the operators point of view, and go into 1 concept that is making the right noise in the mobile arena.
The Mobile Value Chain
i. Handset Manufacturers – folks who produce the hardware, the intelligent chip for the phone to work with operators.
ii. Software Providers - software for the mobile phone to talk to the hardware. With handset manufacturers controlling their own proprietary operating systems (OS), pure software plays like Microsoft Windows mobile are left in the hunt without any takers from handset manufacturers who want to control and own their OS. Nokia’s OS Symbian, Apple’s proprietary OS, Google’s Android are some examples. Interesting, Microsoft does not want to be left out of the race which they were coming in second (after Symbian) once upon a time are going upstream by manufacturing their handsets soon. Google works with HTC (Hardware manufacturer) to ship their Android OS, although they are coming with their own GPhone too.
iii. Operators – the front end of consumers. The folks who speak to the consumers, shape the experience of the phone and hence control the billing relationship.
Now, the landscape has changed thanks to 2 key developments that have turned the market upside down.
i. With a big surge of smart phones in the market, the concept of customization of the phone through the App store seems to have caught the operators by storm, with a big slice of the revenue pie taken off their control. Apps that can bypass the walled gardens of the operators have left them in a pickle.
ii. The surge in data usage to use the apps from handset manufacturers (and the open market) leaves the operators to invest heavily in their infrastructure to support their consumers without actually able to charge them for more due to reduction in pricing plans of data usage.
This concept of operators being left with no control is called a “dumb-pipe” phenomenon, just supplying the bits pipe for users to use their apps.
The Bottom of the Pyramid is a different story
Developing markets have a completely different story. Dominated by voice, calls and SMS’s are given for cents and pence, and lack of good data infrastructure leaves the ARPU (Ave. Revenue Per User – the most important metric for the operator) quite low. That said, there are 3B people who still do not have a phone and their first internet experience will be through the mobile in the next 5 years leaving operators some hope of investments in new markets.
The story is dismal, but one operator who seems to be bent upon beating the race and trying new things is Vodafone. From shopping on internet concepts, coming up with their own App store and integrating a host of services, Vodafone is innovating at the speed of life to retain their market. Vodafone 360 is such a concept that wants to provide an integrated experience for all its consumers irrespective of the hardware / software running on the phone to give you a social and utility experience based on your location.
In this SIME Talks edition, we feature one such service Vodafone has put its money on – Location Based Services (LBS). LBS basically is an umbrella term for all services (social, utility) that works based on where you are / where you want to be. Through GPS enabled phones (in the hardware) or through native Maps application on phones (think Google Maps on your phone), software developers add a layer of intelligence on the maps. From tracking where your facebook friends have “checked-in” to finding the nearest Italian ristorante near you, location based services is your ‘glocal’ friend.
Wayfinder AB is a Swedish company that offers navigation help on your phone and was acquired by Vodafone recently. Tommy Ahlers (who founded Zyb, a Danish mobile social networking company acquired by Vodafone as well) talks here about location based services, Vodafone 360 and some personal stuff that we think is interesting for you to watch.
Tommy Ahlers about location based services at SIME Stockholm 2009 from 23tv.de on Vimeo.
More to be featured in the mobile edition in the upcoming SIME Talks edition.
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