Peter Cochrane's Blog: Don't mess with mobile users

Give them what they want - or watch them go elsewhere...

Written in my home office just outside Woodbridge in the UK and dispatched via my home LAN and broadband connection

When I look at a mobile phone I see a fixed-line phone with the cord severed and an antenna glued to the top. If ever there was a story of incremental change the mobile phone is it.

In the early days, more than 20 years ago now, the concept was a phone attached to the dashboard of a vehicle - in the style of police and taxi walkie-talkies. No one really envisaged that a phone in the hand or pocket would be a big deal.

Early users were berated as weird and told to get a life. I know because I was very often the butt of such comments. But slowly and very surely the number of users grew until the magic marketing penetration of 30 per cent was achieved, followed by the rush to buy.

This was really driven by the move to pay-as-you-go and the sidelining of the complex contracts that still dog the industry today. The rest, as they say, is history. Or is it?

At no point during this growth in mobile communications did the industry do any more than try to replicate the fixed-line history of the telephone. It was about connecting people by voice.

Text messaging came from stage left as an engineering facility brought to the fore, exploited, and promoted by youngsters. It was never intended as a service, and it created network mayhem with billions of extra connections that rapidly overtook voice calls.

This pattern has been true of the entire history of mobility. Anything and everything that has been a big deal came from outside the industry, from the edge - from the customers and small companies.

Good examples would be ringtones and sporting services, gambling and games. And guess what? Today the industry is resisting VoIP, wi-fi, YouTube and just about everything else the customers are demanding.

At the same time it continues to peddle lame-duck service ideas such as broadcast TV and movies. Will they ever learn? Customers now call the shots.

Like it or lump it, the tail is now wagging the dog and customers are pushing hard for what they want, and sooner or later they will get it. In the vanguard of this continuing revolution is the iPhone.

Whatever you think of it, the iPhone is the first real example of a user-centric mobile device. It represents the first time someone has sat down and said: "Let's consider what the customer really wants and what they really need - and even better, we will build in the usability they crave."

The iPhone may not be perfect. But its sales figures, the unseemly scramble by every other mobile device producer to copy the concepts, and the amount of ballyhoo and criticism it has generated clearly show it is on the right track.

What has not been realised, at least not by many, is that these new user-centric devices and the services they promote run counter to the backward-looking mobile operators who are as desperate to hold on to their old thinking and business model as the fixed-line operators before them.

Well, it won't work. Change is happening and there is more to come. Resistance is not only futile, it will be very damaging.

What users want is seamless communication and services at all times and in all locations, with lots of bandwidth whenever they want it, and access to everything they choose, and all at a reasonable price. There was a time when operators could demand $35 per month for every service: fixed, mobile, broadband, wi-fi, cable and satellite.

But we have now entered a period when all these services will be bundled for $35. And worse, the downward pressure on price will continue at 17 per cent per year or more.

What is the answer? Give the customers what they want. Find what they are willing to pay for. That will not be basic connectivity and access but services and networking. The good news is that there are countless services that people will value and pay for. All the industry has to do is take advantage of those new demands.

But, like music industry executives before them, operators will probably resist to the last, and most likely have a near-death experience as a result. In the mean time there is a new and growing threat from the mobile device producers and their customers.

As sure as eggs are eggs the mobile operators will lose control. If they try to strangle the services that people want, the customer base will migrate to wi-fi and the like.

If mobile operators try to control handsets, then back-street industries will provide the software and chipping services necessary. As always it will ultimately be: Customers 1, Industry 0.