Will Mobile kill free services?

Sorry to be blogging about Mobile again, but at the moment it’s my main focus of work….In this post I want to have a quick look at the problem mobile presents to companies that live, and potentially die based on advertising revenues.

 

The advertising model

The biggest player in building their business solely on advertising revenue is without doubt Google. Almost everything it does is based around gaining more information on us users, so that it can effectively deliver adverts back to us in a better fashion, so we are more likely to click on them, and Google gets paid. The more clicks, the more Google earns and can even charge. It’s this model that allows Google to deliver pretty much all of their services, and software (Android springs to mind) for free, all funded by charging for adverts. Don’t kid yourself that Google delivers services for free because it’s a loving, don’t be evil company. Most of the things Google deliver for free are there to help Google gain more data so they can advertise more effectively. Mobile is a great example, and one of the reasons Google purchased Android, so they had a mobile presence to locate us and advertise based on geographic locations.

Google isn’t the only company that lives by charging for adverts, there are many businesses out there, small and large, especially online, that make their money mainly from delivering adverts. How many times do you go to a website and there are adverts delivered on it? How many times do you read a blog with adverts delivered on it? Quite a few. Even Facebook only makes money because it charges for adverts that are delivered on the website to us users.

So what happens to companies if they cannot effectively deliver adverts any longer?

 

The Mobile Problem

Currently Facebook is becoming rudely aware of this problem, so much so that its newly floated stock is now trading almost $10 down on its launch. Why? Well it’s all to do with the company’s ability to monetize and take advantage of its 900m user base. You see, on Facebook the website (used from a desktop) we have adverts constantly being shown to us. These are tailored ads, based on what I like, what I talk about, my own personal status, and as such Facebook can charge for these. However, if I use Facebook on my mobile phone, these ads simply aren’t there. The concern is then, with so many more of us using our mobile phones as our primary device to access the web that companies won’t want to pay for adverts if no one is able to see them. This basically means Facebook can no longer deliver ads effectively.

This problem isn’t limited to Facebook. Think of those free apps we have all downloaded that have ads being displayed. They are free because the ads are paying for them. But how much space do those ads take up, and typically you can only see one single advert. The problem is that ads jar the mobile user experience, they don’t fit in well and the user finds themselves scrolling to see the actual content they use the app for. I for one have un-installed 5 or 6 apps now where I simply got annoyed with the adverts.

Don’t think though Google is exempt here. Using search on your mobile is fine, and Google still can display its sponsored links there, however, a chunk of Google’s revenue is displaying ads on other peoples websites, blogs etc. As more of us turn to mobile to access the web, these adverts start to disappear, and therefore so does Google’s revenues from these ads. The next mobile problem is that many of us prefer Apps over a browser experience on our mobile phones. This means we start to not even search using websites like Google.com, rather we use an app. I for one use the Bing app, the user experience is far better than visiting the mobile website version, and it integrates with other tools and functions, such as QR code scanning, voice and local scout (which delivers search results local to me and includes such things as local restaurants, points of interest etc.) This means the only adverts I have any chance of seeing are those sponsored links that come back in a handful of searches.

With all this in mind, can the likes of Google even see revenues falling as it too struggles to deliver ads down to mobile devices? Sure, Google has a big enough market share of search to survive, but can it charge enough to then keep subsidising so many of its ongoing projects, and even worse, the number of failed projects that have cost millions which are raking up?

 

End of free services?

We have got used to so many free services online, Search, Social Networks, watching videos etc. All these things cost money, and currently so many of them are funded purely by the ability to deliver adverts to us online. Mobile really does threaten that model, if you can’t successfully deliver a number of ads down to user’s mobile device, then why will a business advertise with you? If revenues start to fall, then how long is it possible for companies to make losses on all these free services? Google subsidises everything it does based on adverts, but if those revenues can no longer support everything Google does, will we start seeing services getting switched off, or having to pay for them? No doubt Google search will survive, but the question is can Google afford to deliver everything else it does for free?

For the likes of Facebook, the mobile threat is even greater; it really does present a problem. Keep in mind that if this is true of Facebook, a company with some 900m active users, then it will be for any business that is built on advertisement revenues. Mobile really could be the death of free services online, unless companies can figure out a new way to deliver adverts back down to our mobile devices. That’s tough, especially since ads ruin the user experience currently. At the moment, mobile could be the grim reaper for so many free services.

…We shall see….

The Android debate

When anyone talks about Android there is a lot to be said, be it “Android is the most popular Smartphone OS”, to comments that it’s “the stolen OS”.  Steve Jobs even stated he would “kill Android”. But there is no getting away from the fact that Android is a feature rich OS, that it has now almost 40% of the Smartphone market share (though Smartphone’s don’t even make up 30% of the overall mobile market) and that Google owns it, and now a mobile phone company…

Competition

There are so many Android devices out there now, and from a range of manufacturers, so much so, that getting your hardware noticed is tough. When you walk into a store and see so many phones all running the same OS, how do you set your hardware out to be different (especially to the average mobile punter). Price…Oh dear…

Poor mans iPhone

So many people who have Andoird have it because they couldn’t justify getting an iPhone. I know many people who have opted for Droids because of price, but they really wanted an iPhone. The same applies to the “kids” that have Androids. Essentially many have them because of price, and once they get a little older move over to the iPhone. That must be a worrying trend. However,
is it a surprise? Probably not since Android feels like a cheap clunky copy of iOS in so many ways…

 It’s free, it’s Google

One of the reason Android has been a success is that is been seen as the free OS, allowing many a manufacturer to ship it on their devices, enabling Android devices to be “cheap” and swamp the market. That is essentially how Android has got it’s market share, and there is nothing wrong with that.

But is it really free? In the past couple of months we have seen a number of patent deals being agreed with Microsoft for Manufacturers being allowed to use Android. In addition to that, we have seen Apple halting many Android devices due to patent infringement. These are problems manufacturers can well do without. Ask yourself, as HTC or Samsung, do you really want to spend a lot of time on R&D only to have your devices stopped from getting to market? Do you want to have to pay a third party company license to use software that essentially belongs to another company? No you don’t…

Throw into the mix that Google now owns Motorola and has effectively secured its own hardware for mobile devices. This must be a worry for HTC, Samsung and all those that sell Android devices. Do you really believe that Google will continue to provide updates to their OS to give away to competitors of their own devices? If they do, then that’s crazy business thinking from Google.

 

Nokia?

I have read many a comment in the past day or so that Nokia should have opted for Android, or they should be making Android devices as well as Windows Phone. But that makes no sense from a business point of view. The Android market is all ready crowded, and how does Nokia regain its Smartphone market share by entering a dog fight with pretty much every other manufacturer
out there? Especially when all they can compete on is price and some nerdy hardware specs (maybe some design too). That’s just too tough. Throw into the mix the hassles you can have with Android and the fact that Google now owns Motorola, and Android looks very risky…

Windows Phone makes perfect sense to me. In many ways it is the overlooked OS, and that’s because no one really knows about it (phone nerds do, but who else). Not many have actually seen it advertised or ever even noticed it in stores. So for Nokia, Windows Phone market is easier to enter, and they know they can sell aggressively against the other Windows Phone competition.

The Windows Phone OS is good, very good. Pretty much everyone I have seen play with it, likes it, they find it intuitive, they like the live tiles and they love it’s simply integration with social media.  It provides something very different to Android and iOS, and as such, that means making a Nokia device stand out on a shelf is made that much easier.

Finally, Microsoft want to get involved in the mobile world, and they know Nokia are the biggest mobile brand out there (still), and that Nokia can get Windows Phones into the hands of millions of people, and ensure Nokia and Windows Phone grab market share.  I wouldn’t be surprised to see Nokia grabbing Smartphone market share quite quickly, which I am sure will make other manufacturers look closely at Windows Phone and start investing more in that OS. It is already happening to some extent with HTC and Samsung…

To finish…

Android has shocked us all with how much market share it has grabbed, but should we have been surprised? In many respects it’s a free, clunky version of the iOS that DOES cost manufacturers in terms of licensing etc etc. Now that Google owns Motorola are companies confident that they will be given the same OS to compete with Motorola? How many other instances of Android devices being banned can we expect?

All in all, Android may have shot to popularity, but there are many question marks above it, and it seems many more are being raised as time moves on. Will these question marks deter manufacturers from using Android? I believe they will over time, and I believe that Windows Phone will be there to grab market share – and that at the front of that pack will be a company from Finland, a company we all used to love…A company called Nokia…

NHS needs to get efficient…It needs ECM and BPM

Let’s face it the NHS is a great example of diseconomies of scale, and a great example of the lack of administration efficiency is shown with the amount of paper that is getting generated and pushed around. In the past 2 years, the boards of NHS trusts, created at least 22 million paper documents over the past two years. If that figure itself isn’t a little worrying, then just think, we are only talking about documents generated for communications to senior managers and to each other! The South West Essex Trust alone generated 333,000 documents, that’s just mad…

The department of health spent close to half a billion pounds in fees to external consultants in the year 2009-2010, so why has no one in the NHS really adopted ECM on a large scale? Just looking at these paper figures alone, it is very clear that each NHS trust should be using some form of ECM solution.

So just what could ECM do to help make savings in the NHS and raise efficiency? Well for starters, it can remove the majority of the paper costs, increase the efficiency of sharing knowledge, rationalise communications through knowledge and content sharing and increase collaboration.

I don’t want this post to turn into a long list of all the benefits of ECM, I have written many other posts on these and there are so many out there, rather it was just to highlight the fact that the NHS should be embracing Enterprise 2.0 concepts, ECM and BPM.

I will leave you with this thought, the health watchdog, the King’s fund, reports that while the number of staff rose 35% from 1999 to 2009 (to 1,117,000), the number of managers rose by 85%! Now please someone find me any example in the public sector where this kind of in-efficiency and top heavy organisation is a success….I bet you can’t, because any organisation in the private sector that was run in this fashion would be long bust…The NHS needs to get efficient just like any private sector organisation, it needs BPM, ECM and hell of a lot of dead wood removing…