Smartphones are Dumb

I was asked recently by a reporter to comment on how advances in the smartphone industry were going to affect digital multimedia distributors and aggregators like Myxer.  At first, I was basically looking over each of my shoulders in turn, trying to figure out who he might be talking to. But then I figured that since he’d asked me via email, I could be fairly certain that he couldn’t've seen anyone mingling behind me in my office, so he must’ve been addressing me.

Being addressed as a representative “digital multimedia distributor and aggregator” was kind of like being called “Mr. Willis.” I was like, oh, right! That’s me!

His question was a follow-up to a fractured and ultimately really expensive conversation we’d had the week before. I was in the States and he was in Thailand with a Chinese phone number. Or vice versa. Something like that. Anyhow, I figured that was the perfect situation for Skype, so I charged up my account (with Euros! how quaint!) and dialed him up for an exiting game of “guess what that guy is saying during the 3 out of every 5 seconds you can’t hear him.”

After playing that game for a while (“what do [you think about?] the idea that [bilateral cuspids?] will lead the [periodontal revolution?] against Windows Mobile?”), and answering a great many questions that I’m quite sure I wasn’t actually asked, I decided I’d better try the landline. Boy, did BellSouth love me that day. To their credit, I got through on only the fourth try, and the satellite delay was only moderately annoying after the Skype fiasco. And they agreed to spread the long distance charges out over 3 years, so that’s great.

It is funny that we were talking about how, boy, these cell phone providers better watch out, because people can just use a WiFi-enabled cellphone with VoIP and not have to deal with their stinkin’ GSM and all that. Right. Funny, because (1) I can’t even reliably use VoIP from my desktop PC chained to a fat-pipe internet connection, and (2) it never even occured to me to try out my cell phone for the call.  (I’ve long been saying that VoIP/WiFi is going to bring disruptive change to the mobile industry, but we have several years before this starts to bring the big guys down.)

On to the smartphone topic.

First of all, the word smartphone means different things to different people, and so it’s slippery to talk numbers and trends about them. The traditional smartphone, I think most people agree, is something with a heavy user interface, built to reproduce some subset of the features of a desktop PC. This, based on what I’ve seen to date, is absolutely the least exciting thing since PDAs.  Positively boring. Get Excel spreadsheets on my phone while on vacation! Great. Just what I wanted.

So I think that smartphones have traditionally been marketed at the ‘mobile salesforce’ and other UMMTE  (Upper Middle Management Through Executive) types that prioritize staying in touch with ‘the office’ over things like, say, their kid’s high school graduations.  Fortunately, this is a relatively small market, which is why these devices account for something in the low single-digits as far as the percentage of worldwide phone sales.

So, I said to this reporter, I don’t think smartphones have had any effect at all on mVisible or most other mobile content distributors.

Uncomfortable silence.

It didn’t take me too long to realize I’d broken some cardinal rule of press communications, exactly which one I didn’t know, because I’m not that far into “PR for Dummies” yet.  But I did know that if I was going to continue to be consulted as an expert in digital media and all things mobile by the press, I’d better bring up the iPhone, and do it fast. So I said something along the lines of:

“Although predictions that Apple’s iPhone will disrupt the smartphone market may turn out to be true in the long run, I don’t think it’s for the reasons most people seem to think.”

Brilliant recovery! See how I joined the in-crowd with a reference to the iPhone, tied it right back to the original question by inserting the word ’smartphone’ where ‘mobile’ should’ve been, and then topped it off with the old “most people seem to think” trick?

Honestly, despite the wonderful Steve Jobs reality distortion field, which has led various writers to predict the collapse of existing smartphone makers under the weight of the iPhone, the numbers just don’t support that. Apple’s hoping to sell 10M units in their first year. Nokia, in contrast, sold 70M music-focused phones in 2006. That’s more music devices sold in one year than all of the iPods that have been sold over the five or so years they’ve been on the market. And if you think I’m comparing apples to oranges (ahem) by contrasting Apple’s OSX-based computer with Nokia’s music phones, why don’t we compare the iPhone sales to the traditional smartphone market.  When you look at those numbers, Apple’s looking at about 1% of the smartphone market if they meet their goals.

The biggest effect the iPhone is going to have on the industry is that it’s going to force other companies to take a hard look at the cool factor of their own devices. And it’s about time. Aside from the tired and restrictive business practices of the mobile carriers, the biggest inhibitor to the realization of the true power of the mobile phone has got to be the user interface, and Apple’s made a bold innovation in that department. Traditional smartphone makers have for the most part treated the mobile phone as an inferior PC with a tiny display and crippled keypad for data entry. The lack of imagination is depressing, but it’s inevitable when companies like RIM and Microsoft see the smartphone primarily as a tool for knowledge workers as opposed to recognizing it as a fundamentally different device.

For mVisible and our Myxer platform, it’s critically important for us to provide a good user experience and unparalleled choice of content to mass market devices. The billion or so mass market mobile phones that will be sold next year are more important to us than smartphones, and it’s the capabilities of those mass market devices that are most important to our segment of the industry.

The most important advances in mobile phones from mVisible’s point of view are multimedia capabilities based on open standards and platforms, and unhindered by draconion rights management and feature crippling. We’ve certainly seen a marked increase in the number of devices that are capable of playing high quality music and video. We’re really excited about the opportunities that these new devices’ capabilities present to us, but unfortunately, open platforms are hard to come by in the U.S. mobile industry.

mVisible owes its existence and early success to the way we’ve been able to overcome so many of the technical and bureaucratic difficulties that currently exist to just get content to mobile devices. But we’re looking forward to being able to focus our creative energies on creating new and exiting products that take full advantage of the unique aspects of the mobile phone without having to worry about these artificial barriers that keep getting erected. So we’re interested in seeing DRM disappear, and we’re interested in device manufacturers selling unlocked (and therefore not crippled) phones direct to consumers, and we’re interested in realistic, sustainable business models emerging for mobile content (for example, doing away with today’s ridiculous per-transaction charges for digital content where the carrier takes fully 50% of retail price of an item for doing virtually nothing) .

I might add that this is one area in which Apple is certainly not innovating with the iPhone. Apple’s control freak tendencies line up pretty well with the history of the mobile industry, and delivering a locked operating environment for a device artificially tied to one mobile operator is certainly not a platform begging for others to add value to.

So, I’m not sure I answered the question posed to me, but hopefully I gave a sense of why I see traditional smartphones as fairly unimportant to digitial content distributors. The real trend that is important to us is open multimedia capabilities emerging on mass market phones – when that becomes commonplace, you’ll start to see the mobile content market really mature.