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March 11, 2010

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Chris Grayson

Wow Tomi, it is rare that I disagree with you about anything.

MP3 players were largely a failure until the iPod (for that matter, the cassette tape was a flop, until Sony introduced the Walkman). Technologies take time to mature. Longer than entrepreneurs and technologists have patients for, even in our fast moving technological world.

My experience has been -- Ask people why they don't use location based services and the response is pretty universal: "Thought it was awesome until I used it and learned how inaccurate they were. It would be great if it was actually accurate. Wake me up when they solve that accuracy problem."

Now, I do believe there needs to be something more than just location, but a "location based service" is just that: location plus a service. How are Navigon, TomTom, Garmin, et al doing? (personally I think that general purpose devices like the iPhone and the Android are going to eat their lunch, or at least destroy the business model for their proprietary hardware platforms).

The point is, if you have a lame service and/or inaccurate location tracking, then it leads to a poor user experience. Raise the accuracy of the location (assisted GPS, cell-tower triangulation, cross-coordination with Galileo, GLONASS, etc.), and make the "service" part something worthwhile (augmented reality, social networking, gameplay, combination of the three, etc.), and you have a killer app for location based services. These thing will be a success.

Maybe our difference is one of semantics.

cheers,
Chris

James Barnes

You are not crazy.

Very few of the app stores support any app-as-service business models (where the customer pays metered or event charges for a service provisioned by an app). It's all one-time store payment only.

Blinkered like draught horse.

Rick Joubert

Tomi, as you know we speak the same language when it comes to the basic business opportunity - at least on a 3-5 year view - for mobile web/VAS services.
You would not believe it but even in Africa I have to aggressively evangelise the need to focus on WAP, SMS, USSD and Voice as the only channels with real commercial relevance for the foreseeable future.
I spoke at a conference in Nairobi a few weeks ago and led with this message and I must say there were a lot of entrepreneurs in the room who did not like hearing it...the application mindset and the promise of the converged "smartphone" has even got Africans chasing that "fools gold".
I blogged about the Nairobi conference here: http://www.rickjoubert.com/?p=106
Great post Tomi.

Cheers,
Rick

Murat

Your view on the App Store is too narrow, not everything on there needs to raise revenue by being purchased or directly through the app. Lots of apps are to raise brand awareness or promote campaigns, some such as the O2 My Account app save money for the company by reducing the weight on call centres. Another App for Barclaycard which was a game, got millions of downloads. Again, not revenue generating but different objectives.

It's almost like expecting every single brand website to make money. Thousands of apps, hundreds of different objectives. Not every SMS/MMS/Wap site makes brands money, and I can tell you that the costs those are sometimes way more expensive than a app.

Plus, there are many template and 'cookie cutter' iPhone app makers which can publish to the store for less than $300.

The App Store has helped mobile and mobile marketing grow, often you'll find that getting approached to make an iPhone app allows you to do SMS and WAP executions for a brand too.

"or very clever and innovative to the degree of patentable creativity effort"

That should be THE STANDARD for everyone, do you think that people deserve success with anything less? There seems to be a sense of entiltlment. If you make a crap campaign via SMS, MMS, iPhone or whatever, it doesn't make a difference where you put it, it'll still be crap.

Bedroom developers have made millions, is this because they are 'lucky' or that they had a good idea that caught on?

And what else happens once this news breaks out? More developers are attracted to iPhone and you get even more apps. You can't blame them, if you've ever tried to develop for Symbian/J2ME you'll see the difference.

You also haven't factored in the needs of the client, you are touting SMS and MMS, but when a client says they want something visually engaging, in 3D that ties into their ABL and sends status updates to Twitter, and has a Share function and pull dynamic data in and, and... Do you say, ah you don't need an app, you need SMS/WAP. No you don't. You need to go into a few agencies and sit there and look at briefs all day.

Also subcriber data is an issue, not every brand has a beautfiul list of customers that want whatever the campaign has to offer.

"Your ad agency won't like to develop them because these are not candidates to win awards"

SMS, MMS and WAP campaign DO win awards all the time, and will still win awards in the future. I Personally love these the most because of the sheer creativity some agencies have with mechanics (Terminate-a-mate, Nike ID MMS etc)It's just that not everyone is creative enough to think of award winners everytime or the brief doesn't allow for it.

So what you are assuming that if a brand uses SMS, no matter what their objectives, they will make revenue? Dude isn't the case, back to objectives/propositions. Everyone has different ones.

Developing countries, yes the opportunity is the basic services but come on that's not a secret given the type of handsets. So including developing countries in a post about iPhone apps doesn't make sense unless you are marketing to those countries.

My advice is, make sure the proposition is right and fits your audience. Use your demographic information, handset data and whatever else you have to make something that fits the brief and will get those consumer engaging. Whether that means using MMS, SMS, Bluetooth, iPhone, WAP, Webkit, whatever.

You're also talking about Location based services in a weird way, like if an app features location, it becomes its definition. Location is a feature of an app plain and simple, it doesn't become its only purpose for existing. (Unless the service is like Placecast) Like the ATM finder you mention, the purpose of that app isn't to generate revenue for the LBS segment is it? It's a feature. What do you expect apps like that to do?

Tomi T Ahonen

Hi Chris, James and Rick

Thank you for the comments. Will respond to each individually.

Chris - good points and I have heard them for 11 years already. The point you may have missed in the above - was that EZ-Navi was fully GPS-enabled 9 years ago. This in Tokyo - the massively congested city where the buildings are not in numerical order on any street. I am not kidding. In Tokyo on any given street, the numbers are in no logical sequence whatsoever. So taxi drivers get to the right street, and then just cruise from one end to the other, looking for the right number of the building. Or go by landmarks where given (we're opposite the Pizza Hut etc) and obviously now with LBS. But EZ-Navi had GPS from 2001 and still even in Tokyo they have dismally bad market success. The literally world's most amazing navigation service, with pin-point accuracy, yet no market success. This is what I mean. No matter how elegant your argument, Chris, the EVIDENCE suggests that this will never happen. Never. Except for some niche apps like parcel tracking, vehicle tracking and yes, for some drivers (And only some of the time) the navigation aides..

James - thanks, haha.. we agree

Rick - hey, cool, thanks. Yes, I hear you, I have similar experiences all over the world where the given technologist enthusiast manager has read recent tech press and fallen in love with his iPhone (or Android or Symbian or whatever smartphone) and thinks that apps is the way to go. In America it will first be a mass market - because both of high smartphone adoption (while lagging Europe on that) but also because of a large established PC apps market place. And the world's biggest stand-alone PDA market (Arguably the iPhone Touch is a modern PDA). But even there the total smartphone installed base is less than a quarter of all phones today haha, and most of those are Blackberries (business apps, not consumer App store Apps). So yeah, we have a long way to go. ANd in the Emerging World economies, the smartphone market won't be mass market until right near the end of the decade - when we count the installed base to include lots of second-hand (usually Nokia) phones haha..

Great blog about the Nairobi conference. Wish I coulda been with you there Rick. Give my best to all our friends in South Africa!

Thank you all for writing

Tomi Ahonen :-)

Alexander Gödde

I don't really follow the argument about location-based services not ever being successful. On my Nokia mobile I use the navigation feature all the time. Similarly for the search - next restaurant, subway station etc.. If still were a student I would love something like Latitude that lets me see where all my student mates hang out. Or gig finder or similar services that let me discover events close to my location.
All of these, and many other services, are successful and will become ubiquitous in the future. Location is an important part of the context awareness that mobile can provide.
The companies that develop these services and run them will make money. By that I mean the people who do the programming, run the servers, aggregate the data to be used etc. In most cases the money will not come from the end consumer, but from providers who offer these services as part of a bigger business strategy (e.g. Nokia to drive handset sales, google to tie users into the google apps/advertising universe). I agree that this is not at the moment a very big market money-wise, and I do not see it develop into anything that much bigger. But location-based services are not a failure by any means just because they cannot be monetized on their own in the vast majority of cases.

Martin Lawrence

Hi Tomi,

I really enjoyed that post. Very thought provoking. However, I strongly disagree.

The mistake you make is that you contrast cost of development with profit on apps. Not value. And as Murat has stated, a major aspect of location based apps is creating (intangible) value. As in: connecting customers to brands. As in: connecting consumers to (local) businesses.

As you know, all business is local. The majority of household income is spent locally, i.e. withing some 20 miles of our homes. Greg Sterling estimates the local SMB ad spend in the US alone to be at 50 billion US$. I believe that, digitally, this is largely untapped potential. These spendings will shift from traditional marketing to digital in the coming years.

I have been designing digital marketing solutions for local SMBs for the past five years. And I assure you that existing marketing tools - SMS, MMS, WAP - do not start address the marketing needs of local SMBs.

I would argue that a mobile device is the best device to support a digital consumer relationship between local SMB and their customers. And that, today, we do not know what that solution will look like.

Regards, Martin

Sami

Tomi,

Thanks for another lengthy post ;) Just want to touch on a couple of points here:

First, LBS. Agreed. In fact, I don't think there are location-_based_-services as such at all. Nothing beyond a "where am I?"-service anyway. But there are plenty of location-enhanced-services. A crucial test for any "LBS"-service that one is thinking about launching is to ask whether it could be successful without the location information. If it could, then location might bring some genuine added value. But if location is _all_ you have, it's more likely than not to be doomed.

Second, SMS/MMS/WAP etc. You're right in that there's a boatload of money to be made in that space. But for a developer, especially for a small developer that most of them are, there's a major bootstrapping problem or two. First, how to get network access to do the messaging? For SMS there are global providers like Clickatell, but it's far more complicated with MMS, WAP etc. That's when you need to deal with operators and frankly, as I'm sure you know, dealing with operators is rather painful. Then there's the bootstrapping problem of getting customers - how are they going to find out about your service? By sending an unsolicited SMS? Illegal in most places.

On the other hand, if you write an app, you submit it to the app store and you have instant global distribution. Try that with MMS. Sure the potential audience is a fraction of MMS, but so is the pain you have to deal with.

Finally, there's the question that always arises from these "here's-how-you-can-make-lots-of-money"-type of posts; how come you haven't done it? Where is your billion-dollar SMS-business - or is it a secret? ;)

Tomi T Ahonen

Hi Murat, Alexandre, Lawrence and Sami

Thanks for the comments. Will respond to each individually

Murat - first on 'app store view too narrow' that everything need not make money. Fine. We agree on this. But then the point - if any company's or brand's need is to raise awareness or do any type of marketing, then an app is totally stupid if a similar experience can be delivered on SMS, or MMS or WAP or Voice or even basic 'real internet' HTML web page. If the same brand experience can be delivered on any of those 5 methods, to do an app for the 1% or 3% or even 5% of the total audience is idiotic from a brand owner point of view.

Take your examples - 02 My Account to save money that callers don't call the calling center. Good idea. Bad platform. You can do all of it - all of it - via WAP. That is the best platform. Most of it you can do via SMS, a far better platform than an app. Reaches every user, and every user can use it instantly without any apps to download and install. Works on every phone (in UK, WAP would reach 100%). Barclaycard game? I don't know what kind of game it was, some games are indeed optimal for app download not as web service but other games - especially multiplayer games - usually the more appealing ones - work better as community games on the web (or WAP). But if you do a Barclaycard game, and WAP/MMS/SMS is not suitable, I would guess most such games would have worked as Java games - now you reach over two thirds of UK consumers.

But as to truly award-winning popular and innovative games on SMS, MMS and WAP, go take a look at my blog about mobile ads from today. I'm sorry I don't know what the Barclay card game was, I doubt it was as awesome as the NWA game or the Puma game I mention for example.

You make a good point that App Stores have allowed mobile ad visibility to grow, and then clients have also often accepted SMS and WAP executions. I would say that was 80% the iPhone and 20% the 'app' - the sexy part was that the ad executives on Madison Avenue in New York City and the big global brand managers now all have iPhones - that was the big catalyst, and apps the smaller kicker, but makes no difference, yes its been good for excitement. The Concorde was good for air travel excitement but we all travel at half that speed in Boeings and Airbusses, and the Concorde has been withdrawn as commercially unviable. The analogy is strong, most who have developed apps - have also had hopes to recoup their investments - and most will be disappointed. the App environment is not conducive (today) for making money.

Murat then on your expectation - that the 'patentable' innovation is what should be expected. No, that is totally unreasonable. There is no way we get 150,000 patentable unique honestly innovative ideas in one year out of a smartphone platform. Most of those are - as you mention yourself - cookie-cutter concepts. It is certainly commendable for 'expensive' and 'talented' and 'award-winning' top digital agencies to set as a goal, to develop some actually patentable ideas per year - but no way every iPhone app can hope to be that. Totally unreasonable, Murat. Are you aware of the patenting process? Have you ever been granted a patent? Have you ever applied for a patent?

Visually engaging? As if award-winning stunning visually engaging campaigns are not possible on mobile using MMS and WAP? Take my examples of BMW winter tyres (MMS) or the Flirtomatic (WAP) examples. Massively successful, engaging and visually stunning. Plus got of course the metrics and measurements - but far more engagement than typical iPhone app.

You say not every client has a beautiful list of their customers? And therefore? What? We dont' start to collect it now - with SMS and MMS and WAP, we rather forget about it and do an app? Thats just dumb. Every brand, every company, every entity needs to find its fans and supporters and engage with them on mobile and seek their permission - NOW. And thats via SMS, primarily and MMS. Standard marketing work. STANDARD marketing work. Legwork. Needs to be done by every brand. Its not like you look at them and say, oh, in that case the solution is an iPhone app? No, if they are behind, they need to rush now and start. Getting those permissions and that phone number database. Hello?

I never said that if a brand uses SMS it is guaranteed to make money. I said that it is far easier to make money in SMS and MMS than in apps today. Don't put words in my mouth.

You say Murat that it is not relevant to discuss apps in the Emerging Markets. Clearly you do not live or work in those markets (I do consulting work in Emerging Market countries on a monthly and often weekly basis). It is a valid concern, they are very confused about this and ad agencies and brands regularly now talk about apps. My blog is necessary for them as well.

But we do agree that you should use a platform that is appropriate for the need and the client (advertiser, brand etc) and the end-user. And as to location-based services? I make a clear point in the blog that I think location is valid as an element of a service, but for most consumer oriented mass market services, the alternate benefit of a given service outweighs any benefit from the location. like with a game, or a social networking site or augmented reality etc. Maybe you should re-read that part.

Alexander - I am not talking about a functionality that is given for free and we find some usage (like on some smartphones now that have GPS for example and then Nokia offers free guidance, maps etc). I did mean specifically those companies that intend to make money on location-based services. There are tons of them and hundreds more coming from Silicon valley now, each with an ever more outrageous idea to monetize location. I could not have asked for better evidence, today Vodafone announced in UK they terminate their (paid) location-based service they recently bought, as it is clearly never going to make money. This will be the trend, mark my words.

Martin - interesting point and we kind of agree. But consider this - is the value to me, that I am a client of a given hairdresser or shoe store or news stand, or is the value that I am close to one. Why does my regular hair dresser, shoe store and news stand NOT get my permission and market to me directly, and know they talk to their loyal client - rather than bombard those who pass them by. I may live in the other side of town - totally beyond location - but because of my job or school or girl friend or family I happen to shop at that shop. Location is unnecessary exclusion of customers while bombarding un-interested customers. If we go through the trouble of seeking persmission (as we should in all marketing on mobile) then location becomes instantly irrelevant. Do you mean to say, you will NOT want to tell me of your offer today, if I happen to be currently in the other side of town? Your offer today could prompt me to visit your store - where I might otherwise gone an alternate route. Its totally dumb to limit ads to location. There is never a better advantage compared to permission-based/opt-in.

Yes, most business is near us, yes we frequent nearby stores - but mobile allows us so much more in truly personal needs, truly time-relevant needs, truly social content relevant needs (my friends, etc). Any of these can be deployed EXCLUDING the location. So what, if I am suddenly ill and at home. Why NOT send me the scheduled ad, by permission - even though I am not anywhere near your store. I might send my brother to stop by at your store to get it for me. Location based ads is an excluding model, which limits your reach. And very stupidly so, when we have far more powerful abilities on our phone.

You make quite a blanket statement - SMS, MMS and WAP do not address needs of SMB type of companies. I have literally over 4,000 examples from over 70 countries to prove you wrong. I am not about to go one-by-one, your statement is too outrageous. I believe one need SMB's that do service, is to communicate to clients when a limited supply service (like lock repair or hairdresser appointment or dentist appointment or car scheduled maintenance) is available. This is perfectly suited for SMS, why would you deploy it on anything else? I hae thousands of such examples. You better explain yourself before I bother with more. What SMB universal needs are there that SMS, MMS and WAP cannot address (but would be well addressed with Location-based services or smartphone apps).

Sami - hi, welcome back. Yeah, we agree on locaiton-based services.

On the small business point-of-view. Good point. This is where a truly small business can do their CRM stuff on SMS, slightly bigger SME's (of the kind that have professionally maintained web pages) would be fine with WAP and MMS, and only larger SME's should bother with bulk SMS and premium SMS solutions. But lets go back in time - we discuss here at this blog for example how BulkSMS the South African SMS provider got started - it was a couple of surfer dudes, who first just sent automated SMS alerts of wind speeds to friends who were into windsurfing. It can well start from something that small. You know the Lahti dentist office - that was one dentist initially, doing a basic PC-to-mobile 'bulk' SMS mailing to only dozens of their clients per cancelled appointment. You can do this very modestly on mobile. We don't have to build something enormous here, if the business is small. Agustin Calvo's book is perfect in dealing only with small 'mom and pop' size very tiny SME's and how they can do (mostly just basic SMS) based mobile marketing.

But Sami, the last point - that was uncalled for - how do you make money? Sami, honestly, you've been here many times, you've read this blog for years. Have I not been honest, diligent and prolific in catalogueing the successes in mobile, especially around SMS? The first premium content earned on SMS (ringing tone) I was literally the world's first person to talk about it at a conference, to explain how they make money. Then I have returned and charted the growth of that bonanza to a 6.5 Billion dollar industry, and yes, continuously naming names and companies, from Saunalahti to Crazy Frog. Sami thats not fair. One SMS concept after another. SMS-to-TV, I was literally the world's first to discuss that and explain its model, and then catalog over 100 SMS-to-TV services from Finland to Malaysia. including the companies who make the money and the total size of the industry and its relevance from MTV's Videoclash to American Idol. Same for airline check in - I was the world's first person to discuss Finnair's mobile check in at a conference and to write about it and have been charting its adoption and the copycats up to earlier today when I mentioned on Twitter that United has joined the US based airlines now offering this service.

Sami you suggested that I am somehow duping people by talking of something that is not real. You KNOW better. You KNOW there is no other free source, no website, no blog, no wiki, no chat board, with more SMS-oriented business that is explained - and revisited and revisited with numbers as far as they are willing to reveal. That was not fair, Sami. I am totally open on this blog and am just trying to help our readers find the gold in this industry. You know this Sami.

Thank you all for writing. Please come back, lets discuss some more...

Tomi Ahonen :-)

Sami

Tomi, you're right in that the money comment was a bit unfair, but it was also a bit tongue-in-cheek, hope you can appreciate that. And yes, I know all the things you said I know :) Apologies if I offended, I didn't mean to suggest you were duping anyone - I just pointed that it's weird how consultants from all walks of life - yes, yes, I myself am fully guilty of this also - tell you how to make money but still stick to consulting.

Makes me think the best consultants should take some time away from consulting and start a business. You know, just as a proof-of-concept ;) Walk the talk, eat our own dogfood, whatever you want to call it.

What I'm saying has nothing to do with disputing how big a business SMS is. But comparing, say, the entire SMS business to the business of apps or iTunes app store just isn't fair either; the SMS ecosystem is so fragmented it's beyond imagination. The total opportunity for building an app to the Apple App Store might be a thousand times less than "SMS" is - but so is the effort to target it.

Another thing we need is more discussion around this. Because if there is a single developer looking to make a buck or two on mobile services, he or she won't even THINK - not for a second - that SMS or MMS are good for anything. Because all everyone is talking about are app stores.

Bert Van Wassenhove

Hi Tomi,

Interesting view, but I think you miss out on an essential part. Especially the app store is a perfect example of "downstream innovation". The way services (or products for that matter) are brought to market is just as important as the service itself. So location bases as such is nothing, but wrapped in a cool app it might work, especially if you deliver it through an app store that has almost no barrier to entry.

Michael

Hello,

I agree with most of what you write, but you overshot your target somewhat by claiming that EZ-Navi isn't a success at all. Well, you should've researched this particular case a little bit better, before making your bold claims. EZ-Navi is a service made for KDDI by a company called Navitime and it is very successful. The last unofficial numbers I heard are about 1,5 years old and there were about 3 Million paying subscribers for their service (Japan only). It has grown since. If you check on Navitime you'll find out that the service is offered on all Japanese mobile phone networks, it was even the standard navigation for Docomo for a while. In the branded cases the subscriptions are usually paid for by the networks.
Navitime is advertising on all Tokyo trains, on TV, web, everywhere in Japan and it's paying off for them. Almost everyone in cities like Tokyo and Osaka uses their service or that of their relatively new competitor Zenrin (now the standard issues for some if not all Docomo phones).
Now why isn't this service being taken out into the world? I can tell you, it already would've been spread worldwide if it wasn't for the insular mentality that many Japanese companies tend to display.
But what will happen to this navigation market on mobile phones? As you can see Google and also Nokia have already moved into this space, basically starting to recreate what Navitime has developed many years ago. In their case navigation is being used to drive handset sales and not generate revenue through subscriptions, but it is still becoming mass market and is already taking market share away from companies like TomTom as was pointed out before. Who knows, maybe the owners of Navitime finally see some sense and open up their company policies or even sell their company (something they could've done many times by now)?.
If this doesn't happen, then Navitime will most probably loose, but the service of mobile pedestrian navigation will be a huge success in all cities world-wide, probably produced by Google and/or Nokia. And-mark my words-a service similar to Navitime will be on Android handsets very soon and will be a major factor in driving the sales of these handsets...

David Doherty

Thanks for the brilliant post and discussion. Have sent it to a dozen clients who are being brainwashed by the fools gold.

Next time I'm in a meeting and they inevitably start on about the urgent need for an iPhone app I'm going to have to try very hard not to give this lesson. Big shame as it would be so funny to hear someone in a country accent reminding them of the online analogy "my pa, he went and bought some fool's gold..."

Sami - very disappointed in you for that stupid dig, you know what this man is all about.

Martin Lawrence

Hi Tomi,

I think we actually agree on most points. The real gold in mobile - or at least a serious amount of it - lies in digitally connecting people to local business (C2B - consumer to business).

Mind you, though I have done some work with Apps, I am far more interested in approaches like facebook zero - which cleverly leverage SMS and WAP. So I did not mean to make a blanket statement on SMS, MMS and WAP. WAP, SMS and MMS are critical elements that help connect SMB with their customers.

Location sensors are another element, and current location has a catalytic role in establishing the initial connection between consumers and local businesses. I would argue that most mobile subscribers will have their first experience of explicitely establishing a connection to a local business - be it a restaurant, ATM or plumber - by searching it on their phone and saving it to their address book.

Thus, I believe that Local Search will serve as one of the main entrypoints for establishing C2B-connections. And that building digital connections betweeen consumers and businesses is, will and should be driven AND controlled by the consumer.

To illustrate the point about control: I believe we will see the establishment of an C2B-adressbook, containing all my shops and service providers. That includes a simple checkbox for each business, stating if and when that business may send me offers and coupons.

I hope I have made my views clearer.

Tomi T Ahonen

Hi Sami, Bert, Michael, David, Martin

Hey, cool continued discussion. Thank you all for the comments (and many coming back..)

Sami - thats ok, thanks and yes tongue-in-cheek is fine haha. As to me - I serve on boards of some start-ups yes, I did my decade of real mobile/telecoms work in the industry - few other consultants can claim a world record in market share, to deploy the world's largest integrated IT solution across independent companies, to create something genuinely world's first (I deployed world's first fixed-mobile solution) and to have chaired a standardizing committee when they set the world's first version of a standard (again in fixed mobile space obviously). I think I've done my bit to prove I'm not just a consultant haha and have the 'street cred' to preach about what I have once practised.

As to the daily grind of a telco or any other corporation - no thanks. I love my job, I am much rather doing this, occasionally free consulting advice here on the blog, my Twitter commentary, and releasing about one book per year to keep up the more serious contributions to the industry. And then have a james bond lifestyle to visit with my customers to talk about these things.

I'm happy so many of our readers are then able to make money on mobile haha, based on my writings and the blog. But yeah, I know many of those who offer consulting have never actually 'done it' in mobile telecoms. I have had my time in it haha, both on the operator side and the equipment vendor side. Plus before that I did several years on the internet side of the industry. I'm satisfied that my competence stems from doing it, not just talking about it haha.

As to the developer and their interests right now. Yes, we totally agree. It is not necessarily true that for every need, the solution should be or optimally would be SMS, MMS and WAP (or 'real web on mobile' or voice or Java) based but today, the app space is massively over-crowded, the opportunities to do anything successful in it are tiny and the market itself is too immature - the best app store platform Apple's App Store reaching under 1% of the planet's phones - that is a truth which must be heard more. I would hate it, if some clever person puts his or her innovation and idea into a doomed proposition, when a similar technology exists where success would be relatively easy.

Bert - very good point and yes, I have written elsewhere on several times that apps are a good development for the mobile industry and we should optimized per need, customer type, benefit intended, etc. Aops can be great. But today they are far FAR too much overhyped and the market space is sucking all the investment where very valid and FAR more likely to succeed opportunities then get 'crowded out' - like SMS, MMS and WAP vs an app. Like the UK health department or the Consevative and Labour parties all doing an iPhone app when they should have put that effort into reaching their voters or patients through WAP and get into every pocket in the UK. Dumb!

As to location - well, I once believed passionatey like you. And I wrote a whole chapter in my first book about the wonderful future of location. I have grown up a lot since then. Maybe my view should give you reason to pause, to re-consider. Perhaps this old dog has a lesson for you. The money is not in LBS, whether you do it via a service or app. The money is simply not there. Don't kid yourself.

Michael - I am fully aware of EZ-Navi which is why I mentioned it. It is technically supreme but as a commercial proposition has underperformed its own projections and all industyr expectations for a decade. It has only a tiny fraction of Japanese consumers as active users, after a decade. When almost every other Japanese mobile industry innovation has jumped FAR past them in adoption and market success, from 2D Barcodes to 1Seg digital TV to FeliCa. I did not say EZ-Navi or location-based services 'cannot make money' - please read carefully what I wrote - I said LBS is a poorly performming opportunity. It has grown - but has exhibited second worst growth of the past decade, compared to any other of dozens upon dozens of mobile service categories.

David - haha, thanks for stopping by and thanks for enjoying my little comedy there, the kid talking about his pa and losing his short in pursuing fool's gold. I did laugh myself when I wrote that.. And thanks for sticking up for me re Sami, but you know you've seen Sami here before, we're totally cool, don't worry about it.

Martin - yeah, that makes sense. And yes, I am totally open to observing and witnessing how consumers change behavior. Just like cameraphones - we used them first to snap pictures of important 'photograph' like situations, but today many use the cameraphone as a memory aid - like I do regularly snapping a picture of the latest exchange rate tables from the newspaper on the airplane - I don't have time to try to memorize every exchange rate and don't bother 'preparing' for it before I leave home (and don't want to waste my roaming charges or my time in the other country to do that on the mobile web). But on the plane I read the Wall Street Journal or Financial Times or whatever paper, and do an update taking the picture of the exchange rates. And I delete last week's 'picture'. This is never intended to be 'saved' or printed or shown ot anyone. Its just a memory tool for me.

And now I do it for example for all bookings. I take a cameraphone picture of my hotel, my airline, my seating booking, etc. Then if I need it at the airport or hotel, I don't need to dig for my laptop (which in worst case has run out of battery) but just take out my phone and will have my confirmation booking number, etc. Again, using the cameraphone as a memory aid. Others use it to take pictures of where they parked their car, or a picture of the local subway system map, or whatever. This is a 'new way' of behaving with the cameraphone.

Similarly we will eventually learn that our phone has the LBS ability, and we'll adjust to it, and of course there will be services that will be built around it. A perfect example is Layar the Augmented Reality browser. But these are not currently mass market successes, and in most cases the same 'utility' can be done without location.

Take your exmaple - the store. If I want to sign up to say the neighborhood store that sells wines and alcohol, to get the occasional ad and offer and coupon from them - we can do this via a 2D Barcode in the store - no LBS necessary, thus no paymnet to networks, and no need for GPS, and it works inside the store (shopping mall etc). And the 2D Barcode could be on a poster inside the store or at their store window - and thus get an 'opt in' into their customer base, not spam LBS...

See? We can far more easily, less obtrusively, do the same solution at a far more user-friendly way, with technologies that reach a far wider audience. If you don't like 2D Barcodes, we could do it via SMS as well obviously....

Thank you all for writing

Tomi Ahonen :-)

Shawn

First, I don't buy the argument that something is unsuccessful if it has been around for twelve years without generating a lot of money.

Long before Facebook, there was sixdegrees.com, then Friendster. Does that mean Mark Zuckerberg was dabbling in futility? Before Google, there was AltaVista and LookSmart and Excite.com. Before YouTube, there was heavy.com and Atom Films. Sometimes things fail because the right set of factors has not coalesced. Todays phones have orders of magnitude better displays, input mechanisms, processing power and bandwidth than those of twelve years ago. Who cares what location-based services existed twelve years ago?

And I don't know how you can so offhandedly dismiss AdMob's statistic that says the iPhone is responsible for 50% of mobile data traffic. 0.5% market share is obviously not the whole story here. AdMob's stats are "nonsense" based on what exactly?

Apps are folly. I'll give you that. But it's the web that's the future, not SMS. SMS has been a reliable money-maker, but you are the mobile industry's equivalent of a flat-earther if you think SMS based services will continue to have good prospects.

Martin Lawrence

Tomi - brilliant and you're dead-on.

My confusion: LBS and Local Search overlap. So you could see it as 'any Google mobile search with Local intent is LBS'. Example: I search for a doctor who practices in the neighborhood I live in. Now I'm at work. My Google mobile search could be a) current GPS b) my hometown. Is b) not LBS?

Anyway: Lets just say the term 'Local Search' will prevail over 'LBS'.

Really liked the part about the barcode scan being the opt-in. Yeah. It is interesting to watch facebook: first do business fanpages (growing like a weed), then enable businesses to print QR codes. Am I wrong, or are they going into check-ins fullforce? Make it a utility function developers can include.

Business page & checkins & some function for messaging my customers? Could monetize nicely.

Now Facebook is a social utility. Checkins to Social Location are social communications. If they do this right, they will be own a large part of checkins to social locations.

So I think could Nokia. They're getting very focussed. Matter of execution.

Google? Not much luck with innovations lately. Weird QR-code campaign, didn't seem to have caught on. They could drive it on Android - but that's not exactly the world.

Murat

If the same experience can be delivered using SMS, MMS, WAP etc then yeah sure, include those in the campaign.

The O2 example - you missed the point, I wasn't saying that it couldn't work on other channels. My point was that not every app needs to make revenue.

The Barclaycard game - again you missed the point, was talking about revenue again. If you didn't know yhe game was 3D, tied into the ABL campaign and got 10 million downloads. It wouldn't have worked on Java. Why? It used the accerometer to move the player, which is supported by a lot less than two thirds of consumer handsets as Java doesn't have access to it.

You just dismissed the Barclaycard game out of hand without even seeing it, I wasn't even making the point of one being better than the other either it was about not every app needing to make revenue.

"The analogy is strong, most who have developed apps - have also had hopes to recoup their investments - and most will be disappointed. the App environment is not conducive (today) for making money."

Who are you talking about here? Small app developers trying to make some money with their own little startup ideas or actual brands? Again, not everything in the app store is there to make money HOWEVER, those who have the right model and propositon have been very successful. Ebay is one example, Pizza Hut is another. Those who have got it right have done well and those who have got it wrong haven't, but isn't that the same with everything? Just because someone spends time and money making an app doesn't mean the should expect it to be successful for that reason alone.

I wasn't talking about the patenable part, I was talking about being very clever and innovative. I doubt many brands or agencies have the goal of patenting stuff when making apps.

Yes I'm aware of the patenting process, yes I've applied for patents at Nokia.

I didn't say award winning campaigns weren't possible using MMS and WAP (I've worked on campaigns using both that have won awards) but saying that they are more engaging than iPhone Apps is ridiculous.

Visually stunning MMS? At the end of the day you're talking about JPEG slideshows, 256 colour animated GIFs or a 8 sec highly compressed video...on a multitude of screen sizes. Maybe I have a different standard of 'stunning'

I've made hundreds of MMS ad campaigns but I've yet to see one that can compare to the engagement of iPhone/Android applications (and I can do stuff with MMS SMIL that you wouldn't believe). WAP? Yeah it might be engaging for some, but you can't guarentee the same experience for everyone so...then what?

But at the end of the day if all these things could be as engaging as Apps then....we wouldn't be having this conversation would we?

"it is far easier to make money in SMS and MMS than in apps today"
......seriously? Then you would assume I would have created MMS campaigns for hundreds of brands, retailers etc every week from 2006-2009 when in fact, it was just operators sending MMS briefs over. If it was easy then everyone would be doing it. The reason why they aren't is definitely not because their minds are being clouded by the iPhone.

Also I think your comment form has problems with Chrome, I get the message "We're sorry, we cannot accept this data"

klas

if i have a lunch meeting with some business contact and am unfamiliar with the area, it would be great if i could easily from my phone calender open a mapview that would track him/her down (should they allow me to), or if i am in an unfamiliar area looking for something, a charger to my phone for example, if i quickly and easy could see where they are sold i'd see value. If i was in a meeting, suddenly getting an alert from my phone calender that my meeting i had downtown 1 1/2 hours later might be in risk as there is heavy traffic between me and the meeting (this based on data from actual users having gps enabled handsets in cars / car enabled connected gps's) and maybe i even could get an alternative route (where same users data show that traffic flows normally) or just me crawing for a cold beer, see whom i know nearby to join me. Also with Nokia's terminal mode invention the mobile phone (gps enabled) will be connected to the car infotainment system providing a bigger display in car but using mobile phones maps solution and gps.

Augmented reality, me standing somewhere looking at a ruin through my phone camera lens, by GPS and compass and internet access, data could be drawn on my display showing how that ruin looked like when it was inhabitated for example.

i do agree that LBS services in general hasn't historically proven to be cash cows, but i do believe it can add value to consumers in the future.

ishika mahajan

This article is terrific and up to date. I totally agree with the writer regarding all this stuff of Mobile with GPS Technology .The information provided in here is very fruitful and i would like to add on one more technology which i found during searching for last two hours on GPS in india
http://www.satguide.in/
check it and let me know, what you think about it.
Regards:-
Ishika Mahajan
Sales Manager

Tomi T Ahonen

Simon Maddox disagrees with me

(Simon attempted to post his reply but for some reason Typepad was not cooperating. So Simon kindly sent me the email and I promised to cut-and-paste his comment in its entirety)

Wow, I couldn't disagree more.

Firstly, location, however you want to spin it - 'where am i?', local search, or any of the new stuff coming out of Silicon Valley such as Foursquare. You're only looking at this from an engineering perspective. Yes, they could have technically all been done almost a decade ago, but the tech side was never the biggest issue with these services.

The introduction of client side location, whether that's in the Nokias, iPhones, Android, etc, has rendered network-based location almost irrelevant for consumer facing products. Yes, there's still a small market for people that want to pay 15p+ per lookup (couriers, for example) but that has never been, and never will be, acceptable for most consumer facing products and services. Now that we've got super fast, free, and fairly accurate location services baked right into the handset, it's now so much more accessible to anyone not in the mobile carriers back pocket.

As I mentioned above, a service like Foursquare would have *technically* been possible back in the day, but consumers weren't (and perhaps, on the whole, still aren't?) ready for it, but they've been given an amazing distribution channel in the App Stores.

Previously, the only (real) way to get massive distribution was to be on deck on a carrier's portal. That was never possible for most then, and actually still isn't possible now. Believe me, I've tried to get things on carrier portals recently, and they're either asking for silly money, or they're just not accessible to me and my business.

That, to me, is crazy. The App Stores are here, providing a much more efficient method of distribution (hell, I can *link* to the App Store, regardless of what carrier the user is on), and the operators are still a closed channel.

Regardless of how you want to spin it, the key here is relevancy. Want to know why so many brands never went near SMS/WAP etc? Because, in all honesty, SMS sucks. It's great if you want to target EVERYONE, but no brand does. And if they think they do, they're probably deluding themselves.

SMS is an awful user experience, and there's absolutely no way of conveying brand image in 160 characters. SMS is a purely functional medium, and that's irrelevant to brands and companies looking to build a lifestyle business. Even those that aren't lifestyle brands are looking to be interesting and relevant, and SMS still isn't the right channel for them.

From a commercial perspective, SMS is horribly expensive too. I'd actually argue it's more expensive than building an app.
For example, a number of apps I've worked on have had over a million downloads. That's not in the minority, by the way.

Now, let's take the average of 3p per SMS (that's what it cost to buy in bulk last time I checked), and multiply that by 1 million recipients. Oh look, £30,000 - identical to your average cost of an app.
So, using that as the base, I can either deliver amazing experiences to 1 million people with disposable income (they're paying for an iPhone, Android phone, Nokia phone, etc, and the contract that goes with it), or I can deliver 160 characters to 1 million phones phone, regardless of their income.

Add to that the press/buzz/whatever that can be gained by building an awesome app, and I fail to see why anyone would choose SMS over a well done app.

Of course, that's probably also irrelevant for markets in Africa, some of Asia, etc, but absolutely relevant for most markets in Europe, America, etc.

(posted on behaof of Simon Maddox by Tomi T Ahonen)

Tomi T Ahonen

Let me do the other replies first, Simon, hold on

Hi Shawn, Martin, Murat, klas and ishika

I will respond to each individually here by name

Shawn - First on 12 years. Yes, its a valid point, that it may take a long time for a given technology to mature. Nothing at all wrong with that. But - there is nothing new to the current location-based services. Their very IDEA is 12 years old, tried in 50+ markets and failed everywhere. That is what is to me evidence, that there is no giant market bonanza in location-based services - in particular when essentially all other mobile service areas have flourished from news to games to music to advertising to social networking etc.

On Admob, that is free info given generously by one ad network on their ads being served. If you took that as 'realistic' it would give a horribly distorted view of the mobile browser, mobile content and mobile phone smartphone penetration rate, precisely because it is such a limited and specialized view. One of Admob's big rivals is Smaato. Smaato reports that in their network Symbian totally dwarfs iPhone - which is accurate? And Smaato says that featurephones/dumbphones browsing is bigger than any smartphone. Where is the truth? But Admob stats get reported in major press and tech pundits constantly, while most of the other major 30 ad networks get almost no coverage. When was Buzz City ad network stats quoted or D2C or Aircross or Orange network etc. These are all as valid views as Admob - and all offer RADICALLY different views to the market. That is why I am saying Admob has to be taken for what it is, and NOTHING more.

On SMS, good point. SMS is nearing 20 years of age. But you are very badly mistaken if you think the revenues out of total mobile internet browsing and apps will approach SMS revenues in the next few years. Won't happen. The only content/app/service that is anywhere near SMS in scale of revenues is MMS - which is about a quarter of the total size of SMS revenues. There is very long way to go before SMS is no longer the biggest revenue generator to the mobile data industry. In EVERY market SMS is still growing. Just American Idol this past run 2010 in America earned 100 million dollars out of SMS votes. And the Idols format reality TV with SMS voting music show runs in over 30 TV markets. This after what, 5th or 6th American Idol, still breaking its own voting and revenue records. SMS is a HUGE growth industry for years to come.

Martin - First on the 'confusion' of LBS vs Local Search. Imagine if Google today somehow 'lost' all address info. No Google Maps, no addresses of any kind, all just somehow eaten by the 'address monster virus' or something. Would Google lose its value to us? Of course not. Most searches we do have nothing to do with location at all. What is that quotation by Churchill, what is the number of mobile subscribers in China, is there a music video of Prince performing 1999, who will sell me the new Harry Potter book, what is happening with Nokia today, what was the weird name of Tomi Ahonen's blog, etc. Most of our searches have NOTHING to do with search - but yes, just like we are occasinally needing some addresses, yes, the location adds value to some searches. Now, imagine the other way around, if you could have the addresses but nothing else Google search can find. If it was only an 'address engine' with perfect maps. Unless you are a taxi driver, for almost all other people who use Google, the former version is FAR more valuable than the latter.

I do not mean - and never said, that there is no value in location, but only that its the least well performing of our opportunities and for all the silly money thrown at it - Dow Jones just today measured 67 start-ups had received 656 million dollars just for location-based apps (ouch, the worst of all possibilities, combining both of these myths). Those investors well be severely hurt..

So yes, search about addresses can be useful sometimes but those stats that try to pin a number how often search is involved - I totally don't buy those. They have some very severely skewed interpretations, most of the time we google something, we don't get served a google map reference to what we looked at, and don't care. What was the Finnish general who defeated a Soviet army several times his size on Raatteen Tie in the second world war? Even if Google serves me the map picture of where Raatteen Tie (Road) is in Finland, this time I just wanted the name of Siilasvuo, not caring about the map - I happen to know that map as I've studied that battle and know it. The times I 'want' a map is if I'm considering say a Hotel in Singapore and want to make sure its near Orchard Road etc. But even then, if they give me a familiar hotel - and display the address and show the map - if I know it, I won't actually even look at the map..

You get my point? The actual end-user who actually looks at the address or map, is rare in search. Yes, it happens, and probably it happens more when we are on our mobile phone doing search than on our PCs haha, but still, its only a minnor benefit, the BIG benefit is search itself. Thats where the money is, not in location (was my point..)

On QR codes, great points yes. On social, what was your point... oh, yeah, Facebook and social locations. Yes, social networking ie 'Communities Dominate' haha are big. Any social network can grow big by just being a good social network, whether dating, or blogging, or citizen journalism, or job finders, or whatever. Now, what of the location of the users of social networks. There can be an added gain from location yes. BUT its the LEAST PEFRORMING part of a gain. What should social networks rather do? Create games (think Farm World on Facebook) or virtual currencies (think Linden Dollars) or avatars (think Habbo Hotel) or virtual gifts (think Flirtomatic) etc. All of these are INSTANTLY monetizable ! Mark Curtis the CEO of Flirtomatic said they made too much money from virtual gifts and personalization (while making a tiny part of total revenue from ads) that they eliminated their subscription fee as unnecessary.

Now, Flirtomatic has also added location and it does add some utility to its users, but only as a freebie service - its not monetizable. If I owned a social network, I'd first study who makes money - study Mixi and Mobage Town and Cyworld and Gree and Itsmy and Flirtomatic and Frenclub and Habbo Hotel and MyGamma - note these are not just all earning significant revenues - they all make PROFITS - through mobile social networking partially or wholly. And none of them made their profits via location even as many offer location as one of their elements. The money is not there in location, but there is HUGE money in mobile. All three mobile social networks of Japan are so big and successful, they are listed on the Tokyo stock exchange..

Murat - thanks for coming back, and I'm sorry about the problems with Chrome. Obviously I don't control how Typepad technically operates, but I'll let them know there are problems with Chrome.

First we agree, that yes, if the same experience can be delivered via SMS, MMS, WAP or a Java app then yes, it should be and a good campaign combines those where it makes sense. And I'll grant you sometimes a given brand may not want anyone else except smartphone owners ('wealthy' and often 'western' and often 'business user' who may be on an expense account etc).

On O2 and Barclaycard. If they intended to do 'branding' via their app, then I say its a very bad choice from the basic math (unless they for some reason want to target the smartphone owner - say the Barclaycard was the business traveller card for exmaple, then it makes sense to think Blackberry owner = business traveller segment, somewhat, similar to how say Bloomberg news watcher = business person..). Smartphones reach only a tiny part of the total population in any country.

Now, the game with the accelerometers is cool and clever. That is good as a game and the iPhone is the world's best-selling pocketabel gaming platform by now (when we add iPod Touch). But why would a brand bother to do its brand marketing via an app to a smartphone - that is the point here. Yes, it can be done, yes it can be exciting and amazing, but that is wasteful spending by the marketing department. They should have killed the idea, said that 'we want to reach most phones' and offered their branding team only ideas that work on most phones. Now they have a very clever branding concept that is cool to show off, but works on a tiny fraction of all phones. Dumb!

As a game to sell to gamers, yes, the iPhone is a great gaming platform. If you want to market to gamers, thenb into your in-game marketing mix of Playstation and Xbox and Nintendo you should add iPhone gaming. But for Barclay or O2 to do branding via a game? Thats a huge waste of their marketing effort (with the possible exception that they intended this to grab PR headlines in being cool and different, like the one brand what was it, Red Bull or something, that painted the side of the Russian rocket going into space a few years ago - nobody sees the ad in space, but the press attention to the silly event got them big publicity...)

On not making money.. Since I posted this blog in March, there has been a growing flow of expert advice warning that most apps will not make money, that their developers will not recoup their investment and that most will not break even. Its no longer just me saying so. Yes, if you're really lucky, you may win in this lottery but its far worse than the pop music or hollywood business where approx one in ten is a money-maker. There is a growing consensus that the app space is a tech bubble forming. If you don't see that, and refuse to believe it, thats your prerogative. I am here to report the world as I see it and the evidence is overwhelming. Most of apps will not make money, and most apps used for brands to achieve branding will not get anywhere near the downloads to justify that investment.

On engagement. Lets be clear here, it was my book Communities Dominate Brands, the signature book for this blog that coined the term 'engagement marketing'. If you create a branded app - like a game - that is once downloaded onto a phone, and is played on that phone - but never retuns to bring contact between the phone owner and the brand - that is 'interactive' because it did force the user to download it, and it is digital, and it is mobile, but it is not 'engagement marketing'. It fits the dictionary definition of 'engagement' because any game is 'engaging' it is inherently inactive unless the gamer interacts with the game - but that is not 'engagement marketing' ie - downloading the world's best game onto a phone is the same as propaganda interruptive advertising from the brand's point of view - UNLESS there is a feedback channel of some kind. Only with return contact AFTER the download and game-play, can there be engagement from a marketing point of view.

So, you make your ultimate game and app and brand it. Fine. It can be the most cool super-addictive game but its not any sort of engagement with the brand. There has to be a SEPARATE part to the game that causes the contact for fllo0w up dialogue of some kind between phone owner and brand. An advergame may be - if well designed - engagement by the brand. MOST advergames are NOT engagement at all by the brands.

Then MMS - it is inherently interactive. It is messaging. Most recepients of MMS ads react to them instinctively as if they were SMS and responses are natural, the users dont' often even notice it was actually an MMS communication, they just thought the phone message somehow had a picture. So if I design any MMS campaign with feedback from recepients or forwarding or link to the WAP page, it is interactive. If there is a planned series to the messages, they are engagement marketing. Sorry for the lecture but this is so often misunderstood and your comment suggests you don't know the difference. Most branded apps do not have any feedback loop. Even a feedback loop is only interaction. But engagement means dialogue, by definition at least two responses from the target audience. Most MMS and SMS campaigns are by design interactive. Since Blyk taught the world how to do engagement marketing, now increasingly ad agencies plan SMS and MMS campaigns as series (dialogue) which means engagement marketing. You are correct that apps can be used in engagement marketing, but in most cases today the branded apps are not that.

As to those missing MMS campaigns from 2006 to 2009 - hey, Murat, I respect you but come on, I have tons of those examples in my eBook Pearls Vol 1 Mobile Advertising, and there were tons of them winning awards the world over. If you couldn't get a client to trial an MMS campaign in any market except North America in the past few years - when MMS earns dozens of BILLIONS of dollars of mostly media income - then you have been in the wrong business or using obsolete powerpoint slide examples haha. I have plenty of close friends who've been doing a lot of that stuff and I obviously have tons of case studies in 4 books published since 2006. You are almost suggesting you are not competent in MMS if you say that..

klas - you give excellent examples. I totally understand that you feel because you could find great use to those services, they must therefore be also a commercial opportunity. That is EXACTLY why I wrote this blog. It is so easy to fall into the myth that location is useful and therefore it has to make money. I will not go through every example - I will take your first one - your business contact, you'd like to see him pinpointed on the map. We would ALL love to have that ability. But the problem is, that while everybody loves the idea of tracking others, everybody also hates the idea of others tracking them. Take your business contact. You have to ask permission to track him/her. And lets imagine its a very 'open' person who won't mind, and allows you to do so. And obviously does this with others too. How soon does it happen, that the 'wrong' person is now monitoring him and his movements.

What do I mean by wrong person. A legitimate business colleague gets this permission. He is in a business which is not in competition with your company. But he is headhunted to a new employer - and at that company he is put into a new project - which is directly in competition with your company. Now, he could monitor your movements and see when you are visiting your client - and which office of theirs - ie it becomes 'competitor analysis' ie spying.

Thats JUST one example. What of the guy who is often late and gives 'stories' of why he is late. He accidentially gave a colleague permission to monitor him. Then he runs late to a meeting with someone else. He doesn't know that this friend is at that meeting. He calls and says he's stuck in a taxi mid-town, but the friend pulls out his phone, geo-tags his location, and finds the guy is still at his office. These kinds of situations happen DAILY. The husband says he's on his way home, is in a bar with friends. Etc etc etc. You presented a perfect example of one example of why we all want location services but nobody will want them used on themselves. If we don't volunteer the data, it becomes a pointless service. And on the friend-tracker - did you think of paying to find out where he is? Every time when you check? There is no money in location.

ishika - thank you. Will check it out.

Thank you all for writing

Tomi Ahonen :-)

Tomi T Ahonen

Hi Simon

Thank you for the detailed and considered reply.

Lets start with the positioning. So you say now with GPS based positioning we are past the carrier charges. Well, first, GPS-enabled phones are a tiny minority of all phones in use - far less than 10% of all phones on the planet, so your solution is not practical for most phones in use. But secondly, I think we both agree on this, that at least the 'positioning' part is not readily monetizable today - my point exactly. Put your effort in something the customer is willing to pay for (news, games, music, social networks etc, not location)

On App Stores - yes, they are actually a very good development to help break the walled garden thinking that is prevalent in many - not all - markets. But then take an advanced market like Japan where carriers return 90 cents of every dollar to the content owners, and 80% of the nation uses the mobile internet, and there are no limits to getting your site visible on the phones, why would you even think of developing an app - unless the app is the technically right way to bring the solution, typically a game.

When you are talking of carrier deck, I am guessing your background is in the US market and I feel for you. Its a horribly backwater punitive arrgoant and greedy place where carriers totally rule. That is almost the worst it can be haha, even many Developing World countries have more developer-friendly and content-friendly environments than the US carriers offer. Yes, the iPhone App Store was sorely needed, I have many developer friends in America who totally agree with that sentiment.

But that is changing. A great example is UK based Flirtomatic which launched in the USA a few years ago. Its a WAP social networking service and is running just fine in the USA - in Britain its a Top 10 mobile website already on most of the networks. So apps are not the only way (anymore).

Now, on 'SMS sucks'. Haha. Yeah. And consider this. A UK youth population of 200,000 teenagers and young adults were subjected to a daily bombardment of 5 SMS or MMS advertisements EVERY DAY for two years (in exchange for a very modest return of free minutes and messages to their allowance). Yes, that was Blyk. You know what was the single biggest complaint they got - they wanted MORE of the ads !!! Yes, this is well documented by for example former Blyk exec Jonathan MacDonald in his book.

Who on TV says 'give me more ads' or in the movies says 'no, don't show me the movie, show me more ads' or on radio says 'don't interrupt the ads for some music, I want more ads' or on the web says - I wish there were more forced ads ot see before I get to that page I wanted... But well designed 'engagement marketing' based ads on mobile - using SMS or MMS - they can be SO POWERFUL that people want MORE OF THEM. This is not some mysterious UK youth are high on some weird drugs kind of pseudo-reality, it is documented evidence, time and again, market and again. Engagement Marketing was invented in Japan and most Japanese campaigns are like that - and users LOVE their ads. I have tons of Japan examples in my presentations and books and they are amazing. YOU'D want those ads haha.

So yes, there is the old-fashioned view of using SMS as the mobile equivalent of email spam. That is horrible interruptive ad model. And there is the new engagement marketing which registers from 25% to 40% response rates globally wherever its been run and the people love them. Note the response rates are 100x better than on the web. Not the 10x better that you get on basic boring banner ads or yes, spam SMS without any targeting. Oh, obviously - engagement marketing cannot be done without permission.. So by definition a spam SMS blast to everybody is not engagement marketing, it cannot be by definition.

On Brand image and SMS.. haha.. yeah, I get that a lot when I have workshops with ad agencies. THe Branding myth eh? Yes, did you notice my book was entitled Communities Dominate BRANDS. The era of branding for the sake of branding is over, please join the 21st century. I don't mean to be flippant, and that was more intended to other readers than you Simon, obviously, but yes, the need to push 'pure image' of a brand without any 'inherent value' of a communication is coming to an end. Engagement Marketing again is the complete and utter opposite of that. EVERY communication process has to bring value to EVERY intended communication target person, else it is not engagemnt marketing. That may be utility, it may be entertainment, it may be an honest value exchange like freebies or discounts but every communication has to bring value to the ad recepient.

And for that, SMS rules. Coupons, alerts, news, opinion surveys, preferences, activation codes, what have you, SMS can deliver. And even branding yes, but SMS is not the ultimate branding tool. Perhaps a supremely emotional extended multimedia experience is the ultimate branding tool - a major Hollywood blockbuster movie - James Bond and his Aston Martin car, there's your branding vehicle. But for engaging with customers and selling them directly - what is the ultimate purpose of all advertising is to generate sales - mobile is BY FAR the most powerful ad platform to create direct sales. In many cases it can be used to create 'click to buy' experiences that customers love - something not even possible on the internet (where the click next asks for your paypal or credit card number etc, is not anywhere near click to buy)

There is traditionally the AIDA model of consumer behavior (Attention, Interest, Decision, Action) and then there are models of lifestyles of customers. Only mobile phones are physically present at EVERY single moment in our lives, meaning any possible point of thinking about a given brand or purchases related to it - a phone will be present. And only a phone will be present at EVERY point of the life cycle, from considering purchase, to any maintenance and repairs, to later selling that good perhaps after we're done with it, including replacements, recommendations to friends, loaners, what have you. Every time only a phone is present. And only SMS can be used at every point of that experience - they are now for example introducing SMS interactivity DURING movies (was first done in the Philippines) - think American Idol on TV. So if you need to have your BMW serviced, the garage can send you SMS when its ready to be picked up. SMS is the universal tool for any brand's customer lifecycle managment. My flight on British Airways, they could send me an SMS asking if the flight was good and my experience in the lounge was delightful - in Singapore mobile operators do this for example after every customers' visit to their store, every time. Personal SMS asking was the visit ok (followed up by a personal call by a manager in case you were not satisfied).

SMS is BY FAR the best method to engage with customers, with MMS the second best only because not all phones yet support MMS and not all MMS-enabled phones and networks have the settings correct. But if you say SMS sucks and SMS isn't relevant and aweful user experience, I say to you, you are advised by the wrong 'experts'. Meanwhile my clients deploy those award-winning solutions on SMS and MMS and make their customers super-satisfied when their end-users love the attention and special care that is delivered through relevant and personal SMS. Like say here in Hong Kong the government sends alerts when we have Flood warning type of storms. When I was travelling and connected via Bangkok airport, I got a Hong Kong government alert about the Thailand riots, warning travelling Hong Kong residents to be careful of Thailand travel disruptions etc. But that did not go to local Hong Kong people nor to people travelling in Singapore etc.. That is how great SMS can be. A HUGE benefit to our lives.

But again, I think your experience is based on the US market being so hideously behind the times. Imagine China 20 years ago when they had almost no cars. Then for an average Chinese you show a motorcycle with a sidecar (you know like those in the movies that the Germany army used in WW2, where someone can sit in, a kind of 3 wheel motorcycle). They'd think that is glorious, its far better than a a bicycle and you can have a passenger in good comfort - and most of all they are not even told of all the benefits of a low price car, which would have 4 seats and plenty of storage space to carry stuff, and a fully enclosed cabin to keep everyone dry in the rains, etc.

Most American experiences with SMS have only come in the past few years with American Idol and the Obama campaign. Its only three years ago that half of Americans started to send SMS text messages. It was not even thought of as a mass-market communication method (not 'professional enough' for business use, only teenagers would use it, etc). So Americans - and their ad agencies - have not had much time to learn about the power of the most used data app on the planet. I've catalogued and documented literally over a thousand SMS based solutions and services worldwide, absolutely every kind of end user experience from bank balances to airline check in to televoting to breaking news to interactive games to vending machines to lotteries to public transport to consumer surveys to election results to legal notices to digital signatures to mobile payments to mobile banking etc.

Its not the answer to everything, nothing is. But SMS is the most used data app so far more users worldwide are familiar with it than any other data app including Facebook, Google, Twitter, YouTube, email, Amazon, eBay whatever. If you are in marketing, most of the need is to communicate with customers, SMS is the most wide-reaching platform - 2.5 times more active users of SMS than total worldwide population of TV sets - and SMS is inherently interactive and only the mobile phone is truly personal (we don't share our phones even with our spouces). I can promise you, that in 95% of marketing 'needs' in companies or other entities (governments, non-government organizations) SMS can add value and bring better experiences to the end-users than ANY non-phone based method including TV, print, billboards, radio, email, direct mail, etc. Its just that SMS is still not well known in America (but thats changing fast)

So then apps vs SMS - is a false choice. A good campaign in most cases is of course multi platform. But because SMS reaches every economically viable person on the planet and all smartphones combined reach under 10% of the planet, it makes sense to build an SMS element to whatever else you do in your marketing, including the idea of an app haha. SMS should be at the foundation, ad campaigns and marketing campaigns should be designed FIRST to start with SMS, then consider what else do we need, do we need TV for this, do we need print, and how to do the web, in addition to SMS. Apps are mostly useless unless, yes like in your example, if you want to try to reach 'affluent' iPhone users and are happy you're not just limiting your reach to 3% of the total population, you are also excluding all other smartphone owners haha.

I hope I addressed all your points, we obviously agree that in Africa, and other parts of the Emerging World, mobile is not the 7th media, its the first media and SMS and WAP and voice are the primary methods to communicate.

Tomi Ahonen :-)

Simon Maddox

Tomi,

Thanks for your very long reply! I'll try to keep this one brief :)

You're right - I've no experience of the Japanese market (only European and US), but if what you're saying is right (80% of the Japanese population uses the mobile internet) why would you ever want to send them an SMS? SMS is therefore an expensive way of sending something to 20% of the population, when 80% can experience the brand in a much better format (mobile web).

Building an app isn't branding for the sake of branding. Someone mentioned Nike earlier - have you seen the Nike ID iPhone app? Sure, I guess it could technically be replicated using MMS, but it wouldn't be a great user experience - so why would Nike, a brand known for its great design and experience, settle for something less than perfect? Granted, they've used MMS where it makes sense - you can take a photo of something and have a coloured shoe sent back to you, but that's the extent they've gone with that.
What a poor experience - do you think the user (probably a teenage boy, I'd imagine) is really going to show his friends this? Or is he more likely to show their iPod touch, where he can customise every aspect of the shoe, spin them around and even put his name on the back?

As a branding exercise, which one is Nike more likely to go for if they can only have one? The "cool" factor, or the functional one? I don't know for certain, but I'd imagine it'd be the iPhone app.

With regards to MMS, there's also another issue. I often send photos to friends and family by MMS when I know they don't have email on their phone. Want to know what their first question is? It's not "Oh cool, where did you take this?". It's "How much did this just cost me to receive?"

There's still a huge barrier to entry with MMS, which smartphones like the iPhone and Android are totally breaking down. Nobody is scared to use the internet or download apps on their iPhone, but they're scared to *receive* MMS on their "feature phone".

Lot's more I wanted to comment on, but there's far too much so let's leave it at that for now! ;)

Simon

Robert Oschler

If you're looking for the book Tomi mentioned, "Open your eyes and wake up your business" by Agustin Calvo you can find it on Lulu:

http://www.lulu.com/product/paperback/open-your-eyes-and-wake-up-your-business/677529

I looked on Amazon and I could only find it in Kindle format and I don't have a Kindle so maybe this will help someone else too. There's a downloadable file version too. Thanks.

Robert

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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