I attended the Connect 2007 Conference in Boston on 2nd October. It’s organized by NMS, and it’s FREE!
NMS run several developer conferences so have a slick organization on such events, and are now branching out into a broader industry discussion addressable to Director/VP/CxO level in both suppliers and operators.
It kicked off with a CxO Industry Overview, led by Bob Schechter (NMS), Andrew Bud (mBlox), Hassan Ahmed (Sonus), Seamus McAteer (M:Metrics), Jud Bowman (Motricity), Mike Scully (Virgin Mobile USA)
The highlight was a disagreement between Andrew Bud and Seamus McAteer on the role of mobile advertising. Seamus’s position was until mobile adopts the internet model of advertising supported services, the mobile internet will continue its painfully slow growth. While Andrew Bud forcefully disagreed, stating that ISPs made a mistake in not creating value in their networks, and the cost of wireless distribution and the constraints of mobile handsets mandates mobile operators take a more active role. Of course their positions are aligned to their business interests. But let’s look at some of the numbers to see where the balance lies between their positions…
Examining the UK as a half-way house between the US and the RoW with respect to advertising. And using data from Ofcom’s The Communications Market 2006. Internet based advertising was 1.3B GBP in 2005, out of a total advertising pot of 15.3B GBP (8.5%), and growing at about 60% between ’04 and ’05. By comparison the US advertising spend is about 150B GBP, but the US is not a typical case. The total retail telecommunications spend in the UK was just over 50B GBP in ’05. So internet based advertising represented only 2.6%.
But let’s look forward a few years, say internet advertising reaches 33% of total advertising spend, with TV, Newspapers, Magazine, Bill-boards, Radio, etc, making up the rest. Even today, teenager’s still watch TV, movies, read, and exist in the real world. In this scenario Internet advertising would be roughly 5B GBP, that’s still only 10% of the retail communications spend. And that 5B GBP will need to fund not just communication services, but all those other internet services such as news, weather, communities, directions, portals, etc. Let’s assume mobile is able to extract 20% of that revenue for communication services, that’s 1B GBP, just 2% of the retail communication spend.
It looks like Andrew Bud is correct; the internet model can not be applied across the mobile communications market, rather targeted at niches within that market.
Now this paragraph is opinion backed with little data. There will be time-rich people such as teenagers and retirees that will likely be adopters of advertising funded models. For the time-poor, it could receive lower adoption. Those time-rich, cash-rich and tech-savy retirees will be an interesting segment to target, but currently I think the current Web 2.0 hype is reaching a little too far in ignoring the numbers and believing its hype.
But back to Connect 2007. Other sessions covered Mash-ups, Application Innovation, Community, User Experience, Service velocity and had a good mix of start-ups, NEPs (Network Equipment Providers) and some operators. It presented a well informed current snap shot on the status and direction of mobile industry.