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A value based framework for the smartphone OS war

Now that smartphones are becoming main stream, who will the winners be?  The debate rages around developer support, availability of apps, UI and more.  What is needed, however, is a framework to discuss in terms of which OS will have the most compelling value proposition for the consumer.  In the end, consumers buy devices, and it is their experience that matters.  And then you need to take into account that most consumers (apart from the most die-hard Apple or Google evangelists) could not care less about the OS, but buy phones for entirely different reasons.

First and foremost, we need to establish a common definition of value and what it is.  In this article, value is defined value as the Benefits the buyer receives over the Cost associated with acquiring and using the product.  Benefits and price will further have to be broken down, and especially benefits are hard to define as they can be specific to the individual. However, by focusing on some key benefits of what a smartphone brings to a user, it will be easier to break down the components that make those benefits stand out.

So what are the benefits of owning a smartphone? Well, by introducing another framework, Maslow’s hierarchy of needs, you can begin defining what the basics are: Connectivity (whether it is making or receiving a phone call, checking your email or your social networking sites), increase productivity (through email access, task lists, maps, etc) and entertainment/information certainly seem to be among the basic needs supplied by a smartphone. Going higher up in the chain, killing time seems to fulfill a slightly higher than the basic purpose, and then you move up to the higher principle such as the image of being an owner of a cool phone to be able to show off to your friends, to perhaps the highest of self-fulfillment which is the feeling that you are really ahead by having the latest device. People will naturally put different emphasis on different benefits, and surely there will be other benefits that will matter to people, but these benefits provide the necessary basis for analyzing the premise of what it takes to be a winner in providing these benefits.

The Smartphone Value Equation

The other half of the value equation is the price that you have to pay for the benefits. The most obvious price component is the actual cash outlay for the device itself. However, there are two other important elements in the price component of smartphone ownership: Service Cost entails what it will cost you to use the device, whether in racking up data charges, or spending on applications/services for the device.  Convenience cost has multiple facets, and deserves a further breakdown:

  • Ease of Use is strongly related to the User Interface (UI) of the device, and how well it interacts with 3rd party products (such as your computer), and also how easy it is to upgrade.
  • Discoverability relates to how easy it is for you to find services for the phone
  • Payment Capabilities is simply how easy it is for you to pay for services related to the phone

You could argue that some of these aspects are Benefits, as certainly smartphones are now being marketed as app devices, and the apps themselves are clearly benefits.  However, these components are really about how easy and available all these components are, not what they do for you.

Now that the components have been identified and the framework has been set, which player is best suited to provide the various components?  This is where I am asking you for help.  Two polls will be held to try and get the community’s opinion on the relative ranking of the various factors.  The first poll asks you to rank the Cost side of the equation. For an introduction and further background of the cost aspect, you may want to read this before you vote.

UPDATED:
Read more about the cost side here.
Read more about the benefits here.

Posted in The Business of Mobile.

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Hey, Google: Please don’t destroy Android!

In the spirit of Tomi Ahonen’s open letter to Steve Ballmer and Microsoft on their lack of a proper mobile strategy (albeit a lot more friendly than Tomi’s), I feel the need to write this letter to you Google.  Android has generated more excitement among the developer community than anything besides the iPhone.  You even had people believing strongly that Android would take over and dominate the Smartphone market place.  Motorola bet the farm on you, and HTC and SonyEricsson were pumping out sexy new devices, and even Verizon decided to spend $100m in a couple of months marketing one device. Almost unheard of.  But now you need to see the warning signs: Follow the flow of money and see that it is running away from you!

Granted, Apple enjoys the benefit of running an entire eco-system, even down to their own retail stores.  You have made Android open, which is a major advantage of course, but you are now in the process of making crucial mistakes. Those mistakes I might add have been made by the likes of Microsoft, Nokia, Samsung and others , so you are in good company.  So what are those mistakes?  Well some of the ones you need to fix ASAP are:

1) Mobile AND Online market place. Why is it that SonyEricsson is so far the only one who has figured out the success criteria that made iTunes so successful (and I will give Microsoft credit for adding online purchasing ability on Windows Mobile marketplace a few weeks ago, but where are the apps?)?  It is right there. I am sure you can download it on your computer and try it out – and it should be obvious.  So why do you not have an online AND mobile store?  So you may not want to create a full installable app like iTunes, but why can I not buy apps on http://www.android.com/market/? iPhone users may prefer to use the on device appstore, but I guarantee you most will use both, and will certainly sync their device with a computer frequently (which automatically launches iTunes btw, providing Apple with an opportunity to sell).

2) Upgrading. No iPhone user ever asks how do I upgrade my phone’s software. It is done automatically without the user having to worry about it.  Don’t leave this to manufacturers, as they will screw it up.   OS upgrade should be seamless, and the phone and applications should work seamless after the upgrade.

3) Marketing. This may not be an issue now, as the market place selection is limited, but when you have thousands of apps, you must allow developers and easy way to market their apps and trigger a purchase!  It took a while before the eco system of advertising for iPhone apps developed, but now you have players like LinkShare allowing you to market apps directly, AdMob (which you now own) establishing an ad swap exchange, players like Greystripe selling in-game ads which link to the appstore etc.  This is an area you excel in, and I am sure you will fix. But honestly, you should have had a head start here from day one.

Android has the potential to be THE smartphone platform, and the implementations of the UI that are coming out are stunning, and will surely help to sell phones. But people now have come to expect that with a Smartphone there needs to be a huge selection of apps and services. This will not come if the developers are giving up on you. It’s time to step up to the plate and change this.  Here is an idea you can use (no charge):  Give away free ad word credits for developers wanting to market their apps.  Trust me.  If you build it, they will come.

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CNN, ABC (US and AUS) and others herald new era in user engagement

Following the lead of CNN’s iReport, and the announcement of the Australian Broadcasting Corporation big steps into UGC, a number of news organizations are testing YouTube’s new service, YouTube Direct.

Although looking quite clunky in early implementations (see pictures below), the YouTube Direct program is an open source program which allows any organization to editorially manage video submissions from anyone – effectively creating a platform for “citizen journalism” (at least for video content).  It is quite obvious that having user submissions be a part of the offering is becoming nearly a requirement for news organizations and the like. Users want to engage, and they want to be part of the brand experience. Whether driven by the “15 minutes of fame” or simply feeling they can influence what gets reported on, it creates a stronger bond between traditional consumers by turning them into contributors.



CNN’s iReport has been around for a while and seem to have taken off with their iPhone app being the top paid news app in iTunes.  MySpace’s uReport seem to have disappeared. CBS’s Eye Mobile seem to be off to a stumbling start, with only a handful of submissions per day.  So what are some of the keys to success to getting these services off the ground? Here are a few:

1) Complete mobile integration. This is a key component for users to start contributing. If you took a look at iReport before the iPhone app was launched, you would have seen very little content coming in.  Also, limiting your mobile experience to the iPhone is a mistake. You should cover not only smartphones, but also feature phones through a wap site or J2ME app. Ubiquitous mobile coverage will ensure that no users are shut out and that you get true engagement across demographics.
2) Provide a solid revenue model.  While increased engagement surely increases brand loyalty, the initiative needs to generate increased revenue or is sure to be relegated to the basement of any organizations digital initiative. CNN has put a lot of display advertising into their application, which is a tried and trusted model. However, due to the social nature of these types of services, having a revenue initiative that is built on engagement will provide a new more effective source of revenue for a media organization.

3) Be true cross-platform.  Having mobile device access is not enough. You also need to ensure that any content which gets created gets spread across social networks.  You need to provide a reason for creators to involve their friends to at least read their story, thereby hopefully drawing traffic to your brand. Most services today use simple sharing buttons at the end of the article – however, this is sharing post creation.  Ideally, the creator should be able to share and involve friends at the point of creation – and those friends should be allowed to participate on the platform of their choice.

4) Provide incentives. Everyone (well, nearly everyone) wants to be famous. By putting the CNN logo on content used on iReport, and by having a weekly iReport show on TV, CNN appeals to the wannabe journalist in their viewers.  No doubt other incentives can be used and can perhaps be even more effective, especially if done in conjunction with brands and sponsors.

YouTube Direct provides a cheap and simple way for companies to try out creating these services, but to get the components right requires significant investments.  Using YouTube Direct also has another implication: YouTube is the one who makes the money, gets the data, and essentially owns the content.  Brands have to be confined to YouTube’s strict terms for commercialization – which for a lot of brand will probably not make much sense at least in the long term.

Brands looking to create engagement solutions and involve their readers/viewers/fans to create content and involve their friends in a compelling way – while making money at it, should take a look at Storyz LiVE.  Storyz LiVE contains all the key components for building a successful UGC service today – which ensures your company does not need to make the substantial investments required to build such a service.

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