Monday, March 10, 2008

The End of Mobile As We Know It

Half the universe will be building applications for the iPhone, now that the software development kit has been released.
Businesses will be more likely to dole out iPhones to employees because, in addition to e-mail compatibility and synching ability, Apple is now offering a way for employees to access business servers that are behind firewalls. Moreover, the phones can be cleared of all data remotely, if they are lost or stolen. And, a business services company, has already built applications using the iPhone development kit. "I think what you're going to see is, just the release of the enterprise integration alone is going to drive substantial business sales [of the iPhone]," says Raven Zachary, a software developer who started iPhoneDevCamp, a series of workshops to spur development of Web-based iPhone applications. "You'll see people leaving their BlackBerrys at the office."
Add in the $100 million Kleiner Perkins investment in iPhone software and you have the beginnings of critical mass.

Then there are the Google-backed Open Handset Alliance and the OpenMoko folks, who are promoting open reference designs for mobile phones that can host open applications.

What does this mean for the mobile carriers? It means they're in big trouble. Faced with this onslaught of open platforms, the first piece of revenue to dry up will be their highest-margin service revenue. They simply won't be able to restrict their handsets to accessing only their services. Following that, the application bandwidth demand will force them to provide cheaper (aka lower margin) data services. Finally, after they've invested in tons more data bandwidth for their networks, VoIP services will spring up that eat into their voice carriage. They'll be simple commodity data carriers.

Good news for us. Bad news for them. We should start thinking about how to keep a mobile data commodity market healthy. It's not going to be the sexiest business in the world and the coming crash in the mobile carriers' equity will leave a very narrow field, I suspect.

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