Sunday, March 14, 2010

In praise of dumb pipes

Last week, our research-oriented faculty gave 20 minute PPT presentations about how they spent their summer support money. (Mine was about an ongoing research project comparing open, user and cumulative innovation).

On Friday, listening to a talk by colleague Subhankar Dhar about his forthcoming CACM paper on Location Based Services business models reminded me of how far the US has come in just three years both in adopting data services, and also transforming mobile phone carriers into operators of commoditized dumb pipes.

Five years ago, there was an assumption by the carriers that — unlike in the wired Internet — they controlled access to content on their networks. The “deck” (cellphone opening screen) was tightly controlled, and the only applications and content that would make it on-deck were those that made it through their 3-12 month review and paid them a big piece of the action.

This was true not just for applications like games and for streaming content, but particularly for e-commerce. Thinking about the talk on LBS, I realized that If you looked at a paper on m-commerce from the period 2001-2005, they all assumed that such operator control of handsets, pipes and monetization was an inevitable thing.

Of course, such centralized bureaucratic control was hardly a recipe for innovation. But that was where we were stuck until the iPhone came along.

Apple was highly controversial for wresting control away from the carriers of the right to determine applications and content for the mobile Internet. Now it’s clear that it has blazed a path for making the innovation (and adoption) of the mobile Internet as open as it was for the wired Internet 15 years earlier.

This success has, in turn, allowed its onetime ally (now frenemy) Google follow the same path of promoting a platform and proliferating applications for mobile Internet users. I recall that when the iPhone was announced in 2007 (with Google maps), Yahoo was then doing the most interesting stuff on mobile and the idea of Google as a mobile powerhouse was nascent at best.

As Morgan Stanley analyst Mary Meeker put it last December:

It’s notable that, after years in the backwaters of global mobile development, American companies (led by the likes of Apple, Facebook, and Google) are becoming mobile internet innovation pacesetters.
Of course, this wresting of control and transformation of the mobile Internet is entirely in these firms’ self-interest. And this leadership by the WWW pioneers may only be temporary.

Still, I think almost any analyst would agree we’re in a better place than 5 years ago, because these firms have forced the carriers to relinquish their desired role as tollkeepers on the mobile Internet to become operators of dumb pipes.

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