[UPDATE 2010-10-12: I just dug up this old article I wrote 8 years ago and was amused by a few things. I recall thinking at the time that the only way for mobile devices to break out of the box was for there to be a substantial leap forward in their processing power and user interface. While I by no means would have predicted that the brand new iPod would evolve into today’s iPhone, my play on words in the title was prescient–it was an obtuse reference to Apple Computer vs Orange, the UK wireless network. Interesting that while embracing Internet standards, Apple has created a new walled garden of its own with the App Store.]

Published in New Media Age
By Daniel Lopez

When I first moved to London from the US back in 2000, I was inundated – in conferences and articles and corporate presentations – by apologies for the poor Internet penetration in Europe. These apologies were always immediately followed by exclamations of the incredible mobile phone penetration in Europe. I wasn’t impressed.

Europe and the US will achieve saturation of both mobile and Internet technologies in just a few years, so the short-term statistics aren’t that interesting to me. The reason I was disappointed was the seemingly shallow understanding of the directions the two technology platforms would take.

An incontrovertible reality of the mobile space is that a small number of mobile network operators act as gatekeepers for content and applications aimed at mobile users. This is unlikely to change very much with the arrival of 3G. The limited interface of mobile devices will probably always create a bias for user interfaces with multiple choices and walled gardens. Additionally, natural barriers make it nearly impossible for alternative carriers to arise, and the few operators that do exist will always have an incentive to maintain tight control over the user experience.

The result is that the mobile sector is a stifling place for content and application developers. Compared to the Internet, where in a single afternoon I myself could create a fairly complex application that is accessible the world over, it takes a lot of coordination between many different parties in order to deliver a very simple mobile application that is accessible through only a single operator. This costs money and time, and thus the mobile sector cannot possibly be as vibrant, diverse, or fast moving as the Internet.

To make matters worse, the ongoing economics are for the most part worse in the mobile world. If my little Internet site were to charge money for its services, it would have to pay a few percent to a credit card company for processing. It’s not unusual for a mobile service to “share” 50% of its revenues with a mobile operator that provides little more “value add” than pipes to end users. Mobile services will swallow this because they have no choice, but these economics will cause debilitating damage to the industry as whole if they continue for long.

The characteristics of mobile applications that distinguish them from Internet applications – such as knowledge of the user’s exact location and links with operators’ billing systems – require tight integration with complex systems that were not designed with the Internet’s famous flexibility, scalability, and open standards. These integrations are likely to become easier as newer systems are put in place, but for the time being, technology seems to be a limiter rather than an enabler. If your experience deploying mobile applications has been notably better from what I’ve been outlining above, I’d love to hear your story.

Despite appearances, I am not, however, announcing the demise of the mobile applications space. On the contrary, it has great potential, but comparing it to the Internet belittles the great accomplishments that allowed the web to grow explosively in the 10 very short years since its birth. Lest we forget, let’s take a quiet moment to reflect on what unique and fertile ground the Internet offers content and application providers.

Shazam, one of my firm’s portfolio companies, is accessed through the same 4-digit code across all 4 UK operators: 2580. Somehow, this achievement—which should be comparable to registering a domain on the Internet—is considered a tremendous feat because of how difficult this is to do. This simple fact speaks volumes about the difference between the mobile and Internet spaces.

[This copy was edited for length for print publication.]

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