Wireless Wonders

No news, just comment about mobile phones and services, from a veteran practitioner...3G, GPRS, WAP, Bluetooth, WiFi, etc...

Sunday, April 17, 2005

A data-only world...

In a recent discussion I participated in, the importance of the mobile as the focal point of device convergence was debated. There can be no doubt that an increasing number of features will gravitate towards the mobile phone in our pockets. However, this should not be the only model...

One question I have is whether there is a business model that separates voice from data. Could an operator sell voice connections separately from data connections and essentially see the latter as a way of attracting customers with data-centric needs who don't want telephony. In other words, I have a phone that I'm happy with on one network, but I want to connect my PDA, or other data-centric device, through another network.

I have made some assumptions. One is that this data-only network provider will give me a compelling data package, which probably means two things. First is an attractive price, probably flat-rate. Second is very little restrictions on traffic (i.e. an open network), although I recognise that there probably needs to be some restrictions (afterall, wireless is still a relatively precious resource).

The second assumption is that this offering makes sense to the provider because of the amount of business they can attract to their network, which I believe could be greater than imagined. Or, sufficient enough to make a profitable business out of connectivity packages without too much slicing into the value chains associated with the traffic going over the connections.

The third assumption is that users will want data-only packages because they have data-only devices. This contradicts the current model that I opened with, which is that everything must converge on the voice device (the phone).

We can probably debate the "user device preference" argument until the cows come home. Some users will argue until they're blue in the face that what they really want is a PDA/MP3/phone/WiFi/kitchen-sink device. Others will argue that they prefer a separate phone to PDA and don't want to give up their iPOD, etc.

I don't want to get into that argument, because it is somewhat misleading. What I am interested in is challenging assumptions, mine included. Let's look at one recent example of integration, namely the camera. The number of camera-phones sold now outstrips the number of digital cameras. Some commentators have argued that this is further evidence of the trend towards the phone as the convergence focal point.

However, what does this really mean? Are camera-phones replacing digital cameras? Well, market analysis might yield certain answers to that question, but camera-phones and digital cameras are not the same thing. Any useful digital camera has a decent lens and sensor not found on camera-phones. And don't get confused by mega-pixels. This is really about how big, or fine resolution, an image can be, not about its quality.

I'm not denying that some people will be happy to snap pics on their mega-pixel (or less) camera-phone, but generally speaking, in terms of our current photo habits, including sharing and printing and so on, a camera-phone does not replace a digital camera.

Two issues arise from this consideration. Firstly, phone-centric convergence has limitations. In this case, adding a proper lens (with zoom) and sensor to a phone is problematic, not to say costly, which is another general limitation of course. Silicon integration does have cost implications, as well as power consumption ones.

The second issue is would digital camera phone users still want the wide-area connectivity of a camera-phone if it were possible and affordable? In other words, if a camera could connect to the 3G network, would users want this? The real issue is what would they pay for it? However, before answering that question, what if a camera supplier knew that such a model were possible within which they controlled the value chain and not an operator. That is, their devices are connected through the open data-centric network provider mentioned earlier. Would such a possibility allow innovative new business models to emerge for selling digital cameras, probably based on some kind of service model rather than a pure equipment sale model.

[One might ask the same question about other devices, such as music players, video players, portable games machines and so on.]

Would then, this create a virtuous circle for the network provider? By allowing value chains to emerge and thrive unhindered by operator intervention, facilitated by affordable and flexible connectivity, would the provider see a gold rush on connectivity?

I have probably just proposed more questions than I have answered, but that's the nature of this blog entry: thinking aloud in "print".

I shall return to this theme in further postings, because I've a lot more to say about it and it probably deserves a much more detailed treatment than a typically pithy blog entry.

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