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Poll 1: The price of device ownership

Figuring out device cost is not easy, because mobile operators frequently subsidize the devices towards their subscribers in order to lock in long term contracts. Total cost of ownership certainly include the costs you pay for data in addition to other services, and the total length of contract etc. Several attempts have been made to calculate these costs, but plans change all the time and having a relevant up-to-date comparison is difficult.  You could also look at actual production costs of devices with various OS built in from the likes of iSuppli, but even those analysis may not hold over time, as manufacturers come up with different models for the same OS.  Android may have an advantage here because it is not only a free platform, but developers can tailor it towards the lower end of the scale just as well as the high-end, evidence by Motorola’s strategy with Android focusing on the lower end. The amount of subsidies also matters, where for instance the iPhone is heavily subsidized towards the end users. Symbian, Windows Mobile and BlackBerry devices are often sold at high prices (although Symbian has made recent announcements about supporting mid-range devices).

Next comes service cost, which includes cost of data plans and price of applications and services.  Interestingly, high priced applications may actually serve as a lock-in if portability is not included (for instance, if you fork up $150 as I did for TomTom, you will think twice about changing OS and incur those costs again).  A smooth integration of wifi even matters here, as it serves to reduce data charges (Apple has to date done this much better than Windows Mobile, as anyone who has tried both will testify to that).  The trend for data plans, to deal with this portion first, is certainly that they will eventually become standard for all platforms, and prices will come down.  However, it is likely to take years before you see this across the board, thus the devices who are now sold almost exclusively with data plans, such as iPhones and BlackBerry’s may have a lead here. As for service and application costs, with the amazing number of free apps available, Apple certainly has a huge lead.  Given that Android is open source, it may catch up.  Windows Mobile apps may be higher priced and fewer due to the nature of the Windows eco-system, and the same likely applies for BlackBerry. Symbian may try to ride the coat tails of Java here, but really, what matters is native Symbian apps, and they are arguably all playing catch-up to Apple. Palm with their new Web OS may have attractive properties to develop for, but the question remains whether they will achieve enough distribution to attract enough developers.

The next aspect to look at is the Convenience Cost.  The first aspect, Ease of Use, is contentious.  The iPhone arguably made the smartphone a device for everyone, and the G1, Android’s first foray into the market, could surely appeal to nobody but techies.  However, take a look at HTC’s new Hero device you will see that capabilities for custom UI can produce amazing results.  Windows has understood this, and WM6.0 allowed for some nice implementations (again with HTC taking the lead. No surprise they claim to be the leaders in design).

An often overlooked aspect of ease of use is actually how easy it is to upgrade (both apps and OS). With iTunes, Apple has made it dead simple to upgrade. Microsoft leaves it completely up to the manufacturer on how to do this (I am a very frustrated Samsung i780 owner, who have had to learn how to modify the ROM myself in order to get the new Window Mobile updates.

In terms of Discoverability, it is one of the most difficult areas in mobile to get right, especially if you do not control the eco system. Mobile portals have generally been terrible, and most research has shown that unless you are on page 1 of a wap site, your content does not sell. Apple again may have taken the lead here with iTunes and the AppStore, and the question becomes now that the “secret is out”, is it just a matter of copying? Well, early attempts at this seem to indicate it is not.  AppStore’s are difficult to launch, and no doubt many of them will fail.  The Android camp may have made a major mistake by not providing a good web experience for their app store, despite it being evident that iTunes is one of the key success criteria behind the iPhone.  Symbian (mainly through Ovi), BlackBerry, Palm and Microsoft have all launched app stores, but they are way behind the curve.  And it is not just about building and app store, you have to make users come there. In the case of the iTunes AppStore, there is no other viable alternative, whereas with all other app stores, there will likely be a multitude of choices for the user, all implemented in a different way, which most likely will hurt the overall consumer experience because some users will have poor experiences with the app store of their choosing (or the app store forced upon them by the mobile operator or handset manufacturer).

Lastly, in mobile you cannot ignore the convenience of how you actually pay for a service.  SMS billing may be easy for the user, but has struggled for years with poor revenue models, and works less well for higher priced purchases. iTunes had a huge installed base with credit cards already being used, and currently has a clear advantage here.  Other players, who try to build an installed base purely on mobile content sales may struggle, as it will take time to build up volume and convince people to establish yet another digital wallet with your service.  Vodafone may help the Symbian camp with their app store, but it remains to be seen.

Please make sure that you take the poll to voice your opinion on the ranking of the smartphone OS in terms of the Cost equation of the value proposition:

Read Part 2: Defining the Benefits and take the second poll

Posted in The Business of Mobile.

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