Hey, you can't use that!!!

An interesting article in the NYT about how internet users in "developing countries" are harming profits and increasing costs of web companies...

Essentially, Web companies that rely on advertising are enjoying some of their most vibrant growth in developing countries. But those are also the same places where it can be the most expensive to operate, since Web companies often need more servers to make content available to parts of the world with limited bandwidth. And in those countries, online display advertising is least likely to translate into results. Perhaps no company is more in the grip of the international paradox than YouTube, which a Credit Suisse analyst, Spencer Wang, recently estimated could lose $470 million in 2009, in part because of the high cost of delivering billions of videos each month. Hence some web companies are taking the drastic step of cutting of services to these countries! Smarter companies are "effectively managing bandwidth" by making sites lighter, less features etc to reduce bandwidth costs

The recession has brought in a lot of prudent measures that were never thought of in the heady days of the boom where more users meant higher valuations.

I think this unique situation might be relevant to the Mobile Internet too very soon. More page views = more profits? Time will tell.

Article here courtesy NYT.

Disruptive Technology Alert !!

Skype has all the makings of doing to the Carriers what Napster and P2P networks did to the music industry...

Here are 2 interesting articles on Skype-

One from the NYT on iPhone's deal with Skype-

So Skype has come to the iPhone.

Skype, of course, is the free software (for Mac, Windows, Linux, BlackBerry, iPhone, etc.) that lets you place free "phone calls" (or even video calls) to other people who have Skype. That's now over 400 million people,so it's not so hard to find someone to call.

The calls have better sound than phone calls, and, in case you missed it, the calls are free, even to people in other countries. That's what makes Skype so irresistible to students and anyone with loved ones living abroad.

More here

The other one on T-Mobile blocking Skype from Moconews.

The times they are a-changin...

Opera Mini- Friend or Foe?

The Opera Mini browser has done more for the mobile internet than all the operators and device makers put together. With its awesome full web to mobile screen crunching technology, superior data compressing and rich experience, it has made the web accessible to everyone with a GPRS enabled handset no matter how feature rich the handsets are. And people love it- the billion page views that it serves month on month is a testament to its growing popularity. It’s surprising that the device makers, apart from Apple, have not been able to develop a worthy competitor to the Opera mini.

However, what peeves me is that content companies and carries have not been able to harness the potential of the Mini. The Carriers on their part have been silent spectators to the runaway success of the mini. Sure, they’re happy that it’s made a lot of people adopt the mobile internet and thus boost data volumes and internet plans. Again, this is another step that will lead to the operator becoming a dumb pipe in the long run.

More worrying is that content and media companies too have not realized that millions of subscribers have been consuming their content and services through the mini without any substantial benefit to these web media companies. You would say, hey, they are getting massive page views? Wrong! With the Opera Mini all the page views are meaningless since Opera Mini fetches all content through a proxy server that reformats web pages into a format more suitable for small screens thorough the Opera Servers based in the US or Norway. Thus, all the page views are just non-identifiable and not serve the basic purpose of any intelligible data that is traditionally known through normal web browsers which can be used for advertising.

Also, the monetisable services that are available in a wap/app format through the carrier decks are bypassed since users the Free to use internet services through the Mini instead! For e.g.- a well known matrimonial web services company in India runs its wap and sms services through carriers on a micro-payment revenue model. However, the same services are available to the user through the Opera Mini for Free!! Now why would anyone pay for the WAP/SMS services now?! Ditto for sport scores, infoservices etc..! Some smart internet content and services companies have thankfully taken this into account and are now identifying the browser type and serving only Mobile internet sites on the Mini like the popular Men’s Mag- Nuts or Loaded in the UK. Nuts mag offered the full web services on the Mini earlier but by the sheer traffic that it got through the Mini lead them into serving mobile users with the mobile internet portal only. Now users can download content from Nuts mag at a price- no more free web services and revenue leakages! Well done, Nuts.

This is a fine example of how web media companies and carriers can truly monetize the mobile internet through the Opera Mini. Sure, I might face some flak saying that it’s detrimental to the growth of the mobile internet etc but with the current economic climate and digital advertising hard to come by, some tough decisions need to be taken for the web companies and carriers to survive lest they get into the mess that the newspapers in the US have gotten themselves into.

How to Monetise the Mobile Internet

Should the mobile internet business model replicate the internet business model of free services monetised through ads and page views? It would be a shame if it does.

The mobile internet offers a much better model of monetising services than the internet because -

a. Consumers are exposed to paying for mobile entertainment services like ringtones, jokes etc... unlike the internet where consumers expect services to be free. Hence the model of asking subscribers to pay for using mobile internet services is more palatable.

b. Monetising through ads like the internet is still at least 2 years away and is not a sustainable revenue source. With the slowdown, marketers are not willing to spend on mainstream ad media like hoardings so for mobile advertising to succeed in these times, it will take nothing short of a miracle.

So how do you monetise the mobile internet? Well, let me illustrate with some real world examples...I and my friends recently suddenly made plans to eat out as we were heading home from work and we wanted a location that was not too far away from our residences…What did we do? We fired up our trusty Mobile phones and logged on to burrp.com (a site that specializes in restaurant listings in India) from our phone browsers. A few search queries later, presto, we found a restaurant listing that fit in with our requirement. We were satisfied, the mobile operator was satisfied since we just burnt some data and added to their data charges kitty and Burrp.com was happy since they got some users to use the mobile portal. The question is how will a company like Burrp make money out of our transaction? They replicated the internet model...We used their services completely for Free and our page views were hardly worth monetizing…

On the other hand, my other experience with the mobile internet shows that there is a smarter way of making money. I was on vacation in a village in Karnataka and needed to know if my seats on the train back home was confirmed and out of the waiting list. Well, the fastest way I could check that was that I could log on to the Indian Railways site on my laptop but I just could not connect to the internet due to the remoteness of my location… The only other way to do so was to log on to the mobile portal of the Indian Railways through my operator wap portal. To my relief, it opens up. Every bit of information on the mobile portal is transaction-based, a few Rupees here, a few Rupees there and I gladly pay to get the information that I need. I get the information that I need and am happy even the service is not free; the mobile operator too is really happy since I used up my data plan and also paid a few Rupees to access the Railway service; the Indian railways are really happy too since they have a satisfied consumer who transacted with them.

The Indian Railways provide the same set of services on the internet for free but charges them on the mobile portal. The pricing is extremely low but considering the volume of users using the services, I’m sure it makes healthy revenues. They might not have the flashy web 2.0 bells and whistles on the mobile portal but they got the business model of the mobile internet just right- Pay as you use on the mobile portal. In my opinion, this is the sustainable business model for telecom operators, content providers and mobile internet service companies, at least till mobile advertising becomes a sustainable revenue stream.

Telecom Operators in partnership with Content partner must ensure that this model evolves on the mobile internet. Companies that think otherwise and are replicating the internet business model are doomed. Just like the internet made brick and mortar business models obsolete, the mobile internet business model might make the internet model obsolete.