2010-01-20

Mobile Predictions for the next decade.

Okay, time for some predictions on the next decade for the mobile industry and telcos in general.

None of you are going to remember any predictions I make now in 10 years anyway so I feel confident that I will not be confronted with any failures to see clearly into the crystal ball when 10 years have passed. :-). (Actually, if someone would remind me of these predictions in 10 years I'd be grateful, because I will most likely forget about them).

Clever teleco companies become banks.

Two things will will drive telcos in this direction: a) an increased presence of telcos in emerging markets where banking is practically unavailable to large portions of the population, and b) the pressure to get Payment 2.0 done.

By Payment 2.0 I mean payment systems that make charging for content on the web frictionless and financially feasible. The systems we have today are arcane, clumsy and only suitable for charging relatively large amounts. Payment 2.0 probably cannot emerge from banks or credit card companies themselves because they are too heavily invested in the status quo. It probably has to come from outside the banking sector because only those outside will have the ability to think of payment in ways that challenges current truths sufficiently.

Payment 2.0 necessitates banks that challenges our (and the regulatory bodies) perception of what a bank is.


Mobile phone becomes the mobile computer.

While the mobile phone has already become a mobile computer we still tend to think about smart phones primarily as phones, so this prediction is about a change in perception. Thinking of smart phones primarily as telephones is artificial and limiting. For instance it prevents people from reasoning about the role of the smart phone in emerging markets. Smart phones will be vital in emerging markets because it is a cheap, robust, small (usability-challenged) computer rather than a clunky, expensive phone.

(Gut feeling: the $100 smart phone will become a reality in early 2011. The $50 smart phone in 2012. Android will rule the west, but eventually some Chinese OS platform will rule emerging markets in Asia with leaks into the European market)

The radio bottleneck will be resolved.

The big bottleneck for cell phones are the cell towers and the radio spectrum. Ideally, larger chunks of the radio spectrum should be just baseline IP-connectivity and none of this GSM or CDMA nonsense to make higher density of mobile IP clients possible. However, chopping up spectra and selling them is a much loved pastime of governments and easy money, so it isn't going to happen. Instead we will see more use of femtocells and related technologies as well as mobile phones that have more seamless transition between different networking technologies.

However, this will only start to accelerate as telcos are incentivized to address it, and the incentive will be when flat rate is the only kind of mobile networking plans consumers will be willing to buy. (The incentive being to offload the GSM cell towers since they are essentially scalability dead ends).

Additionally, non-telco entities will move more aggressively forward in providing wireless connectivity. Probably for free or at reasonable flat rates. These will be tied to organizations that have widespread physical presence, such as retail chains and francises. At this point slow-moving telcos will start to hemorrhage due to a combination of losing last-mile advantages and no longer being top dog in backbone capacity (which is a different topic altogether).


Telcos will have to redefine their identity.

In the coming decade telcos will have to reinvent themselves; their main sources of revenue will not be voice or messaging. They will also have to transition from being in a stable business where a reactive mode of operation is the most cost-effective to finding themselves in a more volatile situation where proactivity and placing more bets and accepting more failures will be necessary.

In practical terms this means "more build than buy", "fail fast and agile" over "formal and conservative". It also means that products that do not contribute to the bottom line directly will become more common (for instance products that are a net loss, but which have other beneficial effects such as brand building and increasing user affinity).

It also means that the sole reign of the pure MBA is coming to an end. In particular as there will be less need for people who can optimize the bottom line of a predictable business and more need for people who can predict the innovation and execution efforts needed to not become irrelevant.


At least one large telco will screw up and have their lunch eaten.

This is inevitable. In every class there are kids on both sides of the bell curve and I predict that at least one large telco will be in denial long enough not to make the transition to a proactive frame of mind.

Some non-telco will secure the assets, send most of the employees packing and resurrect the business with a leaner organization that has no organizational legacy tied around its feet like a boat-anchor. The real question is: Branson, Bezos or Schmidt?

1 comment:

  1. I second your prediction about telcos replacing consumer banks.

    In Somalia, which lacks any kind of government-sponsored central banks, the functions normally performed by banks (storing money and brokering transfers of money between parties) are performed by the same institutions as those which run Somalia's cell phone networks.

    I hestitate to call these instutitions "telcos", since the bulk of their business is arranging the safe transfer of funds. They offer cell phones as a means of accessing their banking services much as a Western bank offers an ATM to its customers, and the ability to make voice calls is sort of a side business much like a bank which sells postage stamps at its ATMs.

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