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Godzilla vs Reptilicus? Clash of titans: Netbooks vs Smartphones, the preview

Pick your gigarivals of choice. Godzilla vs Reptilicus? Alien vs Predator? Spiderman vs Batman? Kirk vs Picard? Venus vs Serena? Coke vs Pepsi? We will be witnessing a classic clash of true titans over the next few years, between the shrinking personal computer and the ever-smarter mobile phone. Lets handicap that contest.

IN THIS CORNER HEAVYWEIGHT CHAMP

The undefeated heavy-weight champion, the Personal ''PC" Computer. At 33 years of age, the PC comes in after decades of a steady diet and weight-loss regimen and features superfast processors, enough of a hard drive to fit the text from all the books in the Library of Congress, and so much memory to run even Windows Vista. With a full QWERTY keyboard and a mouse, and big 10 inch TFT display the PC is fast at its inputs and outputs. Taking lessons from the mobile phone, the netbook has wireless and mobile connectivity from WiFi and WiMax to 3G and 3.5G for broadband speeds. The heavyweight champion has been dieting and enters the fight weighing only 2.6 pounds (1.4 kg)

The PC has an undefeated record and in its illustrious career the heavy-weight champion has crushed the stand-alone typewriter, the desktop calculator, the filing cabinet, the encyclopedia, the desktop calendar, the yellow pages, the atlas; and in a tag-team doubles match, with the scanner and printer, has also crushed the stand-alone photocopier and fax machine. In its latest bouts it met up with the television and newspaper, and at the time of this edition going to print, the two were out for the count, no doubt the PC will emerge victorious against also the TV and newspaper.

IN THIS CORNER FEATHERWEIGHT CHAMP

The undefeated featherweight champion, the Cellular "Mobile Phone" Phone. At 30 years of age the mobile phone steps into the ring slightly younger but also weathered veteran of bruising battles in the digital space. The mobile phone has been bulking up with abilities and capabilities to exceed the wildest dreams of superspies and joins the clash in full smartphone form, with not just one inbuilt camera but two, for that special someone, one person in a million, who actually makes 3G video calls. The mobile phone has studied the laptop and bulked up from a puny keypad to full QWERTY keyboard and then adding a touch-screen. To compensate for no mouse, the smartphone has learned to take inputs via 2D barcodes. The smartphone has picked up abilities recently to gather contextual data from the networks, in location-based data. While never having a huge display for its featherweight size, the mobile has grown its screen and new measures a full 3 inches. To add versatility, the phone offers real time screen orientation and augmented reality overlays as well as live camera feeds for megapixel microscopy (what in layman's terms could be called a magnifying glass). Also dieting a lot over the past three decades, the mobile phone now enters the the match at 4.5 ounces (130 grams).

The mobile phone brings an undefeated record against the stand-alone PDA, the digital camera, the wristwatch, the pocket calculator, the landline phone, the alarm clock, the pocket calendar, the MP3 player, the address book and the white pages and portable maps. Its latest bout was with the compass, which according to all early reports was also decided by knock-out.

PREVIOUS MATCHUP

The amazing thing is that in their full professional fighting careers, the two world champions have never met up face-to-face before in a championship bout. In some junior series they have met, briefly, when a Blackberry took on emailing use of tethered laptops early in this decade, and more recently when an iPhone took on web surfing on WiFi enabled notebooks but neither contest was decisive. This no-holds barred death-match between undefeated world champions PC and mobile phone has been anticipated with great excitement for many years already.

MATCH

The battle between the netbook and the smartphone is about to commence and will last the full 12 rounds in other words up to the end of 2020, unless ended by knock-out by either contender prior to that.

ODDSMAKERS

Vegas oddsmakers in America feel the PC is the front-runner and give the netbook the odds to win. Meanwhile Monaco betting in Europe is firmly on the side of the smartphone, and European betting is heavily in favor of the mobile phone. Macau betting in Asia is almost even. The match will be an epic battle and could go either way.

TOMI AHONEN HANDICAPPING

We have received exclusive handicapping of the upcoming bout by famed author in digital convergence, Tomi T Ahonen, who has previously followed closely the careers of both champions and written extensively about them. Mr Ahonen gives us his inside scoop on the upcoming bout.

The PC has to come out swinging. It will take the fight directly to the smartphone, and attempt to approach the compactness of the smartphone, and achieve the same level of mobility in a small portable and dare I say it, sexy casing of the most desirable smartphones, while adding the richness of the PC applications and web surfing experiences. With a 3G dongle in addition to WiFi, the netbook will become a formidable opponent in its broadband connectivity. By adding Skype, the netbook has neutralized much of the mobile phone's inherent advantage of voice communications. And with a comfortable large keyboard and mouse, the netbook can deliver volleys of Twitter updates in an attempt to overwhelm the smartphone.

The mobile phone will rely on its mobility and pocketability to go where the netbook cannot go, from the bathroom to the disco, cinema and even climb right into the bed, to deliver that last SMS text message of the night. The mobile will use innovation and creativity and compact features to match the sheer power of the netbook, such as the camera also used as 2D barcode reader, to bypass some keyboard entry in web surfing, and adding real-time context based information in augmented reality. Its recent addition of money-payment skills will come in handy to conjure up new virtual money plans to use revenue streams to pick up points from the judging.

These are top top-notch, disciplined, highly trained and prepared contestants, with an illustrious legacy of defeating long-standing champions. The office typewriter and desktop calculator (PC) and the landline phone and the wristwatch (mobile phone) have been iconic champions ruling their domains for more than a hundred years each, yet defeated easily by these two champions. Do not under-estimate either one of them. They are formidable.

HOW IS YOUR REACH?

But I do think it does come down to one decisive item in the smartphone's arsenal that the netbook simply cannot match, and it is something we've coined the term "Reachability" (from the Finnish "tavoitettavuus"). The most powerful need for humans is not to be entertained, nor to be informed. It is not either to compute, The most powerful need for us humans is to communicate. That is why we carry the phone with us every day, 24 hours a day, literally taking it to the bathroom with us, and we do sleep with the phone in bed with us, but not with the laptop. To communicate.

With netbooks there are ever more powerful means to initiate communications. We can skype, we can email, we can Twitter, and depending on the 3G contract on the netbook, we can also send SMS text messages straight from the netbook. In the netbook format, the PC is catching up to the abilities of the mobile phone and may well be as good or perhaps in some cases even better at initiating communciations. Initiating communications.

But the PC falls completely in the ability to receive communcations by others in real time. Even in a netbook format, the PC will need to be on, connected, and physically open, to receive Skype calls or Facebook updates or to view a picture sent by a friend. It cannot deliver our calls and messages while we walk on the sidewalk, stand in line at the Starbucks, rush on the platform from one train to the other to make our connection. The phone can always deliver in real time, because it features reachability.

That is why the original Blackberry email was so addictive in America they called the device the "Crackberry". And then for exactly the same reasons, reachability, the rest of the world did not fall for email on the Blackberry, because by then the rest of the world had discovered SMS text messaging, something even more rapid and addictive, the "hard drug" if you will, as SMS is even more dependent on the element of reachability. Once Blackberry adjusted to become the texting-phone of choice, it found even bigger success among SMS users. Reachability is why mobile phones replace the fixed landline. We don't answer the family landline phone, because we know the call is not for me. My friends know to call me on my mobile phone. Reachability.

SERIOUSLY

Ok, enough with the supermatch. I'll take Godzilla. The netbook market is a vitally important market for the existing PC industry. It is the big frontier where the next generation of PC winners and losers will be made. There will be a long-lasting major market for the personal computer and it will have many uses where it totally trumps the best of smartphones. The PC is not going away. I have created a metaphor of 30 minutes/30 secondsto explain the different market needs, the PC serves a "30 minute" need while the mobile phone serves a "30 second" need. These two have very little overlap.

Understand what I wrote about in Reachability. While a netbook can do much the same as a smartphone, the netbook cannot replicate reachability. That means, that the netbook is a 'nice to have' device while a mobile phone is clearly today a 'must have' device. The more the smartphone can cram abilities into it, the more it will also own those activities.

All economically viable people on the planet have a mobile phone (4.2 billion subscriptions today). Many of them, but not all, will want some kind of "computing ability", which more today than ever, means some form of "internet access" which can be very basic WAP access. Some may use a netbook, laptop or other PC to do their web surfing, but increasingly as smartphones get better, many will be happy with their smartphones to do the web surfing ("computing") they want.

POCKET TEST

Remember McGuire's Law, the utility of any activity increases with its mobility. A laptop PC is more portable (more "mobile") than a desktop. A notebook fits a smaller briefcase and weighs less, is more portable than a laptop. Now ultra-tiny netbooks are even more portable. But a phone is more portable still. All modern mobile phones, even the "near-brick sized" E90 Communciator from Nokia, fit the pocket. The netbooks do not.

So if you have the ultimate greatest perfect does-absolutely-everything you ever wanted, in a netbook, but it does not fit the pocket, it won't replace the mobile phone. When you go clubbing or to the restaurant or to the sporting event or wherever, the phone must fit the pocket. If it is too big to fit into your pocket, it won't replace the phone. It is an additional gadget, inherently, not a replacement gadget.

Now bring back reachability. If we are limited to only one device that we'll take along, it will be the phone, and any additional functionality that happens to be built-into the phone. Because of reachability, if its only one thing we pocket, it will be the phone.

RINGING IN POCKET TEST

So what if it truly merges into the exact same device? A laptop-notebook-netbook-ultra-ultra-compact tiny keys pocketbook? ie the next generation "pocket PC" or any such "palmtop" form factor full-functioning PC first explored successfully by Hewlett-Packard about 20 years ago with their classic LX-100 series? This is of course quite possible.

Then I'd say the ultimate test of "is it really a phone or is it only a tiny PC" is "does it ring in the pocket". So when it is in its closed state (perhaps in sleep mode), will it still be able to receive calls (and incoming SMS messages) and ring the alarm. If  the tiny PC in your pocket really rings when someone calls you, and you then are able to take it from your pocket and take that call (or not); then yes, its a phone. Else it is a pocket-sized PC, and we've had those for more than 20 years now to tiny market success. They are now called stand-alone PDAs and their annual sales linger in the 4 million units per year when.

What is then the impact? I say the smartphone "wins". In the longer run, during the next decade, the pocketable super-smart convergence device will succeed in mass markets if it is based on a phone metaphor (ringing in pocket test) and not succeed in anywhere near that scale if it is merely a tiny PC (non-phone) netbook. It has to pass the ringing in the pocket test. If it does that, it is a phone. It not, it is a tiny PC. Lets examine these two.

REGARDLESS, NETBOOKS WILL DO WELL

The Tiny PC type of netbook is an attractive option for many reasons. It is more portable (remember McGuire's Law) so we can take it with us more often than larger PCs. The netbook is lighter, fits better, because its screen is smaller, it needs far less battery power (biggest power hog of the laptop is the screen) and with scale, it can be mass-produced to large numbers, helping push down the price. Many of the installed base of 1.2 Billion PCs in the world need to be replaced.

Don't think it will be total shift to netbooks. The laptop PC was introduced by Toshiba in 1985. It took the laptop and all portable PC types (netbooks and notebooks too) a turtle-crawling speed of 23 years, to reach just slightly greater sales annually than desktop PCs. Yes, 2008 was the first year when more laptop format PCs were sold than desktop PCs, and it took all portable PCs to achieve that for laptops, counting laptops, notebooks and netbooks to just edge out the desktop PC format. 23 years of chasing the desktop PC.

Some existing desktop PCs will never go mobile. Imagine a corporate user, with a calling center with 500 agents at a cubicle farm, with desktop PCs with flat screen monitors, reading their customer-service scripts on their PCs, and speaking on Skype-enabled headsets serving customers. That calling center operator will want absolute max optimized costs, and has zero added value from mobility of the computer. The calling center operator would not want to let workers roam around the town supposedly working, from smartphones with tiny screens. The desktop metaphor is perfectly suited for the calling center operator, and no matter how wonderful the next E-Series or Samsung or LG or Blackberry of iPhone 4G might be, they will not replace their desktops, not even with laptops or ultra-super-cheap netbooks.

In rough numbers the world sells about 150 million desktop PCs annually and the installed base is in very rough terms about 750 million desktop PCs in use today. Maybe half of them might migrate to portable computers? and perhaps a majority of those portable computers will go to netbooks eventually?

Not all. Many laptops need to be big. The netbook evolved partly from the ideas of an ultra-cheap laptop for the developing world. But many who have laptops for work needs, for example travelling salesmen who make customer presentations daily to small audiences in conference rooms using the 14" screen of their laptop, will not want a 10" or smaller screen of a subnotebook sized netbook. Others want the laptop as a multi-purpose multimedia device, to edit photographs and videos, to watch DVDs and play videogames. For them too, a larger screen is desirable. So not all will go to netbooks.

Very roughly speaking, about 150 million laptop PCs will be sold and this year about 20 million of them will be netbooks. The installed base of laptop PCs globally is about 450 million (netbooks under 25 million end of last year).

SHIFTS TO AND FROM SMARTPHONE

There is a growing shift of existing PC users shifting to smarphones. We first saw it with the Blackberry and early Nokia Communciator models at the start of the decade with a trickle of email users abandoning laptops; and its now been a more pronounced stream of converts with the iPhone recently. Obviously nowhere near even a majority of their users, there nonetheless is an undeniable trend of some existing laptop users shifting to high-end smartphones for all their "computing needs" (usually that means internet access needs) This trend will accelerate as the distinctions between a "real PC" ie netbook and "very smart" smartphone (think next year's iPhone or Blackberry, or Nokia's follower to N97 and E90). As the devices become ever more similar, the shift-over becomes ever more appealing.

Mostly those who would consider this choice - you reading this blog for example - are the wealthy part of the industrialized world, where we are lucky enough to be one of the 1.2 billion people who have a PC. For PC users in the industrialized world this is a question of choice, and also needs to consider the old PC, is it "good enough" for web surfing for another year. Would I need to re-install (perhaps re-purchase) the various software apps we've installed onto the existing PC, from Windows to the office suite to the anti-virus software etc. The phone is replaced about every year and gets ever more powerful. Maybe I'll make do with the existing PC if the new smartphone is "just good enough" to do my Twitter updates and check on CNN news and watch YouTube..

We are in the minority of the digital divide. There are 3 billion more people out there who do have a mobile phone subscription, but who do not own a PC of any kind. Most in the developing world do not even have this choice.

But please understand, it is not the only shift. There is an opposing shift too from phones to PCs. These users will not stop using their phones (for browsing etc) but may want to expand their web or computing use to a "real" PC. There are current mobile phone owners, of feature-phones or smartphones, who don't own any kind of PC, who wish to have a real PC (notebook or netbook). They currently are doing their surfing on their phone, and they perhaps also use a PC at an internet cafe or at school or with friends, and they aspire to own a netbook sometime soon. And among the middle-class in the developing world, this is a significant new market niche. So there is a reverse trend as well. Very roughly speaking, these two will cancel each other out, but my gut says the PC-to-smartphone trend will become bigger. However, considering the math involved, in the big picture, it really won't matter which off-setting trend is marginally bigger than the other. These two roughly cancel each other out.

NETBOOK MARKET SIZE

The total market for PCs may grow somewhat from the 1.2 billion in use today, to maybe 1.5 billion by the middle of the next decade. It won't reach 2 billion. And the replacement cycles for PCs have been relatively stable at 3.5 years on average so we can expect a top end annual market size of at best 400-450 million PCs sold annually, at the end of the decade.

Still, of those personal computers under perfect conditions by 2020. perhaps 300 million netbooks can be sold annually, towards the end of the new decade. That is the rosy scenario, remembering they sell about 20 million netbooks this year says Gartner. Netbooks may well never sell more than 100 million units per year. The 300 million is very very optimistic, but it is plausible. (for those more econometrically inclined, note that this means sustained annual growth rates of 28% per annum, for 11 years in a row. Reality is most likely only half this rate, sustained over more than a decade, for an industry as mature as the PC industry)

But again, I want to be clear, I do believe in a strong robust market growth opportunity for netbooks to reach into quite possibly hundreds of millions of netbooks sold per year, towards the end of the upcoming decade.

SMARTPHONE MARKET

Meanwhile, the smartphone market last year was also very roughly speaking about 150 million units sold. This year smartphone sales are growing strongly inspite of the economic downturn, will be near 200 million (but very unlikely to pass 200 M this year.). The mobile phone industry has a long history of migration patterns as the phones have picked up new abilities. These  show a perfect S-Curve, just like the shift from 1G (analog early cellphones) to 2G (GSM/CDMA etc) digital mobile phones did in the 1980s (a shift that has reached  100%).

Then we saw the S-curve pattern for SMS capable phones (up to 100% already), then in this decade several early innovations: WAP capable phones (already past 90%), then color screen capable phones (past 80%), then MMS capable phones (past 70%) then cameraphones (past 70%). All follow the same adoption pattern. Smartphones are on a similar pattern and will eventually form the majority of all phones sold in the world, the pattern is obvious and undeniable. We cannot say for certainty, if all phones will become smartphones; but certainly more than half will be, that much is clear from the numbers so far. So, roughly speaking, we'll pass 250 million smartphones sold annually in 2010, 300 million in 2011 and pass 400 million sold annually no later than 2013.

Last year, 2008, was the first year that more smartphones were sold than laptop PCs. In less than four years from now, more smartphones will be sold than all PCs sold, including all desktops, laptops, notebooks and netbooks.

Understand the scale. Netbooks are far smaller in size, their total addressable market is smaller, their adoption ceiling is far lower and they will never ever ever catch up with smartphones. Smartphones are bigger already, growing faster and with a far far far greater accessable market size.

WHO NEEDS WHOM

Lets think a bit. The PC industry has to go where their customers want them to go, to ever more mobile devices. The netbook is a natural evolution for the computer, ever smaller, ever lighter, ever more portable, ever more compact, ever more stuffed with abilities, and ever cheaper.

The phone makers have many options. Go the smartphone route is one option, which is currently very popular, or the featurephone route (SonyEricsson has been taking a beating at that option recently, with Walkman musicphones and Cybershot cameraphones) or the low-cost phones option (you need scale, so this is only for the big 5) or up the value chain to services and apps (think Apps Store). The phone makers don't need to bother with netbooks, their smartphones are close enough and have that key competitive advantage, Reachability, guaranteeing them the victory in the long run vs (non-phone) netbooks.

ONE DOLLAR PC

Ok, a couple of other thoughts. Some will say, but Tomi, the PC makers now offer deals with mobile operators/carriers to sell one dollar netbooks (with 2 year annual contracts). No difference. It is the same price for the netbook, hidden in the price of a 2 year contract. The subsidised netbook is not a one dollar PC, any more than the iPhone 3GS in America is not a 200 dollar smartphone (its real unsubsidised cost is about 700 dollars which every AT&T customer ends up paying, over the life of the contract. There is no free lunch. In other countries like Italy they pay the full unsubsidied price for the iPhone).

There is absolutely no difference in the concept, to buying a gadget from an electronics store with a monthly payments plan, or to putting the full price on a credit card and paying that off in two years.

But please do not think that pattern can hold globally. It can't. The global trend is away from subsidised phones, they are illegal in many countries (like Italy and Belgium), over half of the industrialized world don't offer any subsidies and they are even more rare in the developing world. Many countries have recently studied the phenomenon of subsidied phones, found it to be very bad practise, and moved away from them, such as South Korea and Israel recently. The countries where the subsidised netbooks will mostly be offered will tend to be the wealthiest countries like the US and UK, and even then to only the wealthier segments of the customer base, those with monthly contract "post-paid" accounts, rather than prepaid (voucher) customers who often are the poorest. The one dollar subsidised netbook will not suddenly eliminate normal rules of economics, and this is not a magical way to get poor people to afford PCs. Sorry.

SOFTWARE COSTS

A point that is often missed in the netbooks discussion is that the netbook buyer will need software to the PC, which typically is pre-installed on (most) smartphones. The netbooks tend to come out of the box relatively "dumb" that can be then customized by the new owner, by installing lots of software. The smartphone, on the other hand, tends to come out of the box fully operational, and by far the vast majority of smartphone owners never install an actual application onto their new phone.

It takes a far greater level of sophistication to install apps to PCs ("computer literacy"); even more so, to do it with free software downloaded from the net, often needing to be unzipped, which can require several steps to installation. Most mobile phone apps, can be done with over-the-air download and one or two accepting verifications on the phone screen to complete the installation.

LITERACY, COMPUTER LITERACY

I want to mention literacy. An illiterate user can easily learn basic use of a mobile phone, even to the point of sending and receiving money as millions do in Kenya for example;  but illiterate people will be bewildered by a netbook (the world has 800 million illiterate people and vast more who are marginally literate, all can happily use a mobile phone). The PC is far more demanding on its users. Remember what the World Bank just said a few days ago, that it is the mobile phone which is the most powerful platform to deliver services in the developing world. Don't kid yourself, its not the PC or broadband. Mobile is.

PHONE PLUS X EQUALS PHONE

Lets end on some fun with math. I stole this idea from Glyph Lefkovitz of Divmod, when he was discussing the computer. Glyph said anything the PC wants, it gets, and gave a cool formula:

Computer + X = Computer

Thsi is very good. Think of the PC's past. Computer + modem = computer. Computer + mouse = computer. Computer + stereo speakers = computer. I liked that theory, but saw immediately that in my mind the formula is even more compeling for the mobile, that it is

Mobile Phone + X = Mobile Phone

Now think of the history of phones. Mobile phone + camera = mobile phone. Mobile phone + MP3 player = mobile phone. Mobile phone + alarm clock = mobile phone. Mobile phone + web browser = mobile phone. Now with the the crash of the netbook and smartphone, we will see what happens when:

Mobile Phone + Computer = ?

I say it is mobile phone. Mobile phone plus computer.. will equal mobile phone. Even if both devices are identical in form factor (pocketable), it comes down to Reachability. If you can receive calls while the device is in your pocket, then its a phone and will "take over" from the PC. Both will have their own markets, the smartphone "own" market far bigger than the netbook market, but when they clash, I do think the phone "wins". So thank you Glyph, but I think I will be using that revised formula in upcoming discussions.

This is obvously my view today. I have been thinking about it a lot and many hold other views, which are equally valid. Regardless, I think this question, "which form factor, netbook or smartphone, will be predominant in the next decade" has tremendous implications for not only handset makers and PC makers, but for operating systems (Chrome vs Android for example), how that OS is structured (around a PC use metaphor, lets install apps; or a smartphone metaphor, it has to work out of the box); and of course, for applications developers. I say smartphones several times larger total market in the next decade than netbooks, similar in scale to mobile phones vs PCs today (4 times bigger).

That is what I think of now, as we brace for the clash of the titans, when the netbook enters from one corner and the smartphone from the other corner. We will see this battle rage for long into the decade, but it will not take to 2020 to see the winner. I believe we'll have a winner by round 6 or 7 in this battle, near the middle of the decade. I think I can hear the rumble and roar of Godzilla approaching..

Let me know what you think...

From Adsense to Flirt-Words; Virtual ice cubes that melt on arrival: Flirtomatic!

We love Flirtomatic here at this blog and have chronicled its rise and rise and rise since its launch in 2006. Flirtomatic's CEO Mark Curtis is a close friend of ours and has been remarkably generous in sharing detailed information about the service. I discussed the melting ice cubes two weeks ago at my mobile-specific blog www.7thmassmedia.com but they have again innovated and also picked up some recognition. So its time to do a bigger review of perhaps the most innovative social networking service of them all, Flirtomatic.

FLIRTOMATIC IS NOT

Lets start by what it is not. You might think its a dating service. It is not. There is an 18 year age limit and some of the often-mentioned (and seen) graphics from Flirtomatic included the girl swirling the bra, and the "virtual boob job", so its easy to think Flirtomatic is sleazy sexy nudity. It is not. The content guidelines for Flirtomatic say that the user-generated content must be of the kind, that the BBC would be willing to broadcast the content over the air. All messages and pictures are monitored by real live people and when members approach or cross the line, they are gently advised of the guidelines. The members greatly appreciate it. Flirtomatic is not a place for sick, perverted "dirty-old-men" (like me, ha-ha).

So its not dating and its not porn, what is it then? Its a fun flirting service for adults. Mostly young adults. A social networking service for that age who hang around in the clubs, pubs and discos. Who are perhaps a bit tipsy and drunk, wanting to flirt a bit, not really looking for anything serious. Twitter but with the fun added. In fact, Mark Curtis said that Flirtomatic members "buy extra fun from us" that is what they do.

BIG GROWTH

Ok, weird experiment in social networking? Lets look at the numbers. Today Flirtomatic has over a million users and has spread from the UK to Germany and USA. It is available on the PC and on mobile, but far more than half of users are currently on mobile. What does it cost? Nothing. Even on mobile, Flirtomatic abandoned its subscription fee as "unnecessary" in 2007 as we reported here at Communities Dominate.

To sign up its that simple that you only need a minimum of two details and you can be up and flirting. Yes, there are profiles you can fill out (later) if you want, but Flirtomatic understands that users especially on mobile are in a hurry and don't want to go through many clicks and pages of forms to sign up to something. Its as near-instant as possible.

So how do they make their money, it has to be advertising then, eh? Banner ads? Well, yes, Flirtomatic does have advertising also, but their ad revenues are a small minority of total revenues. So small that they really would not suffer if ads disappeared. (What? no subscriptions and negligable advertiser revenues? What kind of voodoo magic financing is this based upon?). Flirtomatic is the most creative developer of real money-making opportunities from their user base, that are possible in a virtual world.

MOBILE, THE MAGICAL MONEY-MAKING MACHINE

Personalizing for premium cost. You can have your basic character and customize it, post your picture etc. But if you want to customize your character and be a bit special - and who doesn't want to be a bit special - then yes, customization. Flirtomatic created their virtual money system, flirt points. And they started off by accepting premium SMS based payments to buy flirt points. Today they accept a wide range of payments including credit cards, paypal, direct debit, and yes, mobile premium SMS payment. Obviously this was not invented by Flirtomatic, it is a direct adaptation of the idea first launched by Habbo Hotel. But its one way to make money. Latest ideas of this concept include yes, boob jobs and tummy tucks at one UK pound each. They sold 10,000 virtual boob jobs for last summer (and bear in mind, its only visible in bikini, there is no nudity..)

Then they decided to add gifting. Virtual gifts. Again, this is not an invention of Flirtomatic, it is an adaptation of the stunningly popular virtual gifts first invented by South Korea's Cyworld. The first famous Flirtomatic virtual gift was the virtual red rose, which back in 2007 (when they only had 400,000 users) sold 3.5 million units at about 23 UK pence a piece and generated 800,000 UK pounds (1.4 million dollars) in revenues. That is what I mean. Flirtomatic was proving that mobile was indeed a magical money-making machine. Not everyone of their members needed to buy these premium gifts, but as some did, the others saw them, and more bought them, and rapidly Flirtomatic made tons of money. Since then they've done wonderful stuff in the virtual gifts space, such as the sprinkled red rose and then the innovation of real world gifts sent to virtual friends (a true invention) when they launched  a set of real world gifts for Valentines's day this year. Now they carry a big inventory of real gifts you can send to your flirting partner(s). Latest in this space is the gift of the virtual ice cube, that melts upon arrival.

MELTING ON ARRIVAL?

What? What good is a virtual ice cube? You see it in the phone screen, you can't drop it into your drink. And then it melts on arrival? Who in their right mind pays to send such a gift? Not in their right mind, remember, the Flirtomatic users buy more fun from Flirtomatic. They may be a bit drunk when flirting. Ice cubes can mean many things from cooling a drink to sensual sexual fun. An ice cube is fun. You are flirting, you may be in a pub or bar. Your friend may be stuck in a meeting that is running late and is getting upset at the boss who wont' let them leave (send an ice cube! Show you care). Then your friend is in the train that is crowded and hot (send another ice cube). Your friend finally arives, orders a drink - you see her, you wink, she orders her drink, drowns it fast, and with the phone hidden behind your back, you send another ice cube.. its fun. Did it sell? They sold 5,000 melting ice cubes in the first week.

Its not just selling such gifts to the Flirtomatic members, they also can turn these into sponsored content, so its a form of advertising. Not a boring banner ad, but a sponsored "big wet kiss" for example by L'Oreal or a sponsored virtual drink like a glass of champagne or a beer. Again, Flirtomatic is blending the line between reality and virtuality, they had for example a gift of a sponsored real glass of Guinness beer, redeemable at authorized Guinness pubs. Not virtual beer but real beer from your virtual friend. Who would NOT want to give this gift to a friend? See how Flirtomatic delivers more fun to its users?

EGO SERVICES

But the really funky part of where Flirtomatic has truly shown the way for the 10 billion dollar social networking industry worldwide (over 2/3 of the revenues is generated on the mobile side, obviously, most of the Facebooks and YouTubes and Twitters are very poor at generating revenues while mobile social networking is usually very lucrative), is with what Mark Curtis labeled as "ego services". Paid premium services that deal with the users' ego. For example your ratings. All Flirtomatic members can rate each other so you get 5 stars or 3 stars or perhaps you get 1 star. Nobody wants bad scores, and it is typical of human relationships that sometimes there is unfair play, perhaps "revenge" etc. So you have mostly great scores and the one 1 star review spoiling your record. Wouldn't you want to be able to just eliminate that bad score? With Flirtomatic you can. They call it "delete your freak". But obviously you need to pay (I wish I could delete one freaky review of one of my books on Amazon ha-ha).

This also is a class of services, there are many. Another is to pay to reveal who gave you that score, whether particularly good score (really loves me) or particlarly bad score. But pay to reveal. Yes. Ego-services, a true innovation by Flirtomatic.

AUCTIONED USER ADS

And they keep on and on. So while yes, there are banner ads on Flirtomatic and yes, traditional brands as advertisers; and Flirtomatic has also pioneered virtual branded gifting; the most amazing part is how they've brought auctioned ads to the service. They started with the First Face. If you want to be the first picture all Flirtomatic users see when they log into the service, that is easy to do. Bid on it. outbid the others, and you are the First Face for the next 6 hours. You'll definitely gain new friends in the next 6 hours, fastest fingers first...

Now they've just today announced Flirt-Words, a variant on adsense type of auctioned words, rented for the next 24 hours to the member who bids the most. Want to own "cool" or "sexy" or "fun" for the next day, when Flirtomatic members search the service? If you win the bid, you get it and be prepared for incoming messages from new friends.

GRAND PRIX OF NEW MEDIA AWARDS

We love Flirtomatic. It is the most fun side of our thesis that communities dominate, and we really do appreciate it, that Flirtomatic keeps validating that you can make money on social networking (primarily on the mobile side, obviously). Last week the New Media Age, a UK publication focusing on digital media but with a strong history and focus on the internet side, had its annual awards. Flirtomatic was not only the mobile winner, but given the Grand Prix top prize of the gala event. I wish I could have been there but we joined very warmly celebrating with Flirtomatic via Twitter and Forum Oxford and now here at the CDB blog. Congratulations to all at Flirtomatic.

Now, several really important additional comments. First, Mark Curtis is of course also an author, his book Distraction: being Human in a Digital Age is very VERY warmly recommended. Its in paperback, if you want something great to read this summer, pick it up. If you like our blog, you will love the book.

Then Fjord. Mark Curtis is a founder and board member of Fjord, the digital design agency specializing in digital convergence, between mobile, web and media. Truly a world-class talent, Fjord is used by the BBC, Nokia, Yahoo, T-Mobile, etc. And yes, Fjord designed Flirtomatic originally. Certainly its own staff have evolved Flirtomatic very far, but please, in your mind, go back to 2005-2006. Four years ago, who was promising new ways to make money on social networking? on a converged service? Who was even offering mobile social networking back then, apart from some unfamiliar names from Japan and South Korea.

Yet back then, long before Twitter, when Facebook and YouTube were not known, some UK digital agency named Fjord, conceived of Flirtomatic. If you today need help with gaining success in this difficult digital convergence space that includes mobile, then please consider Fjord. They have expanded past the UK with offices in Germany, Finland and USA. They are truly world-class.

And lastly, if you want to read more about Flirtomatic and also those other services I mentioned like Habbo Hotel and Cyworld, then I am most proud that Mark Curtis wrote the foreword to my latest, my 9th book, Tomi Ahonen Pearls Vol 2: Mobile Social Networking. You can read many sample pages of the 171 page eBook, that has 50 case studies of success in mobile social networking, at this page: Tomi's Pearls Vol 2.

Moto-Morons! What now? Enterprise smartphones for Asia? Madness

Motorola is truly clueless. I blogged about what they should be doing to reverse the death-spiral that they are in (Moto lost half of its market share in just one year and made massive losses while industry grew). And I blogged about what to do about it, where the real growth opportunity is (SMS for consumers). Now we can see how smart the Moto strategists have been. Transport & Logistics News out of Australia reports that Motorola has been developing entepprise-oriented mobile computers (smartphones) for Asia-Pacific.

MORONS !

The enterprise smartphone market (Palm, RIM Blackberry, Nokia E-Series, many of Microsoft Windows for Mobile smartphoes etc) is heavily contested. it is growing far less rapidly than the far larger consumer market. It has recognized brands and Moto is not in that game. WHY go fight in an area of diminishing relevance, which is already the far smaller segment, where it is very costly to enter and to support, and where margins are small.

Look at the companies that already are there. RIM. It shifted from enterprise oriented Blackberries to the consumer market and DOUBLED sales in just one year (RIM will become bigger than Motorola, possibly as soon as this year). RIM also increased its average sales prices, while the economy was in trouble ! Meanwhile, Nokia had its E-Series enterprise smartphones. They released their N-Series four years ago to serve the consumer market. Guess which outsells which. N-Series outsells E-Series by an enormous margin today. Apple iPhone is not an enterprise smarthone, it is a consumer smartphone.

So I told Moto in April that SMS was the only killer app for current mass-market consumers and is fuelling RIM's growth, Nokia's loyalty (and for example Samsung's solid growth and profitablity). What do Moto do? They go to the worst-performing sector of smartphones, with strong established players, and try to enter it with high-cost devices, and worse, they don't do this globally, only in APAC, so they even dont' get scale out of this idiotic move. Total incompetents ! These are your investor dollars in use. Are you satisfied? Go read the strategy roadmap to save Moto and compare. Idiots!

Lets Examine Facts of Mobile Advertising? Why Wildly Varying Stats?

Our dear friend Jouko Ahvenainen of Xtract was on U Talk Marketing discussing a couple of studies in mobile advertising, and attempting to explain the discrepancies. (Jouko is co-author with our Alan Moore with their book Social Media Marketing, a must-read book for 2009)

HOW MANY BILLIONS?

Deloitte in its Media Predictions / TMT Trends report 2009 said that mobile advertising was worth 1.0 billion dollars in 2008 (and predicted growth to 2.0 B in 2009)

Strategy Analytics reported also that 2008 mobile ad spending (by brands) was 1.0 billion in 2008 and Strategy Analytics felt that it would grow to 2.4 billion dollars this year.

eMarketer reported in February 2009 in the Netsize Guide that mobile advertising spending globally was 4.2 billion dollars in 2008.

Juniper measured mobile advertising at about 2 billion dollars in 2009 in June 2009

Gartner in 2008 measured mobile advertising to be worth 2.7 B dollars

Meanwhile Japanese mobile advertising alone is worth about 1 billion dollars in 2008 (Seed Planning 2008). Dentsu alone reported 620 M dollars of mobile advertising just in Japan in 2007. South Korea trends most mobile internet data at about 45% of the levels of Japan and has a very similar mobile ad market and eco-system and history as Japan, so Japan and South Korea alone are about 50% bigger than the total global numbers found by Deloitte and Strategy Analytics. And then we get countries like India where 80% of mobile phone users receive advertising and Spain where 75% do. Even in the UK 51% receive ads on their phones.

Yes the real number is certainly far more than 1 billion dollars for 2008. My company TomiAhonen Consulting measured the global advertising market for mobile at 3.2 billion dollars for last year, as reported in the Tomi Ahonen Almanac.

But this is pretty meaningless squabbling on the size. The worldwide total advertising market is worth over a quarter of a Trillion dollars and whether mobile advertising is 1 billion (Deloitte) or 4.2 billion (eMarketer), it is still of the magnitude of far less than 2 percent, and possibly under one percent of the total worldwide ad spending. It really doesn't matter at this level, is it "actually" one or two or three or four billions (and yes, makes me a bit humble to write that billions don't matter..)

The relative scale is significant. Fixed internet based advertising is ten times larger than mobile advertising. Radio advertising is of that size as well. Print and TV ads are far larger still. So please do not bother to focus on how many billions it is or is not. What we need to look at are certain trends, and certain comparative findings.

TRENDS, ALL OTHERS ARE DOWN

The first important observation is what is the prevailing trend in the economy, how it impacts. We know the global ecnomy is in trouble. We've heard the dire reports of broadcast and print advertising facing severe declines. Did you notice, that also internet advertising fell in the first quarter of 2009? Yes, all other advertising is declining, even that previously "hottest" ad category, internet advertising.

Now, if mobile also fell, it would be typical of all other ad media platforms. But what is happening? Every major analyst who has reported in 2009 about the status of mobile advertising, has said that mobile advertising is growing this year (like Deloitte and Stategy Analytics here mentioned in the above). Bucking the trend. This is very significant. The overall trend is down, yet mobile advertising is growing. Wow, that has to be very powerful indeed to counter the global trend.

HOW MANY

So one way to measure the advertising platform is by how much money is spent on it. Another way to measure it, is by its reach. How many people does your advertising on the mass media reach? 480 million is the daily ciculation of newspapers inlcuding paid and free dailies. 1.1 billion is the installed base of all PCs, laptops and netbooks. 1.4 billion is the total number of internet users. 1.5 billion is the total number of TV sets in use around the world, but not all of those have advertising.

How about mobile? 4 billion mobile phone subscribers worldwide, have 3.4 billion actual mobile phones in use, by 3.1 billion unique owners of at least one mobile phone and subscription. Clearly not all of those will receive ads, but 1.55 billion people had received ads on their phones last year. Yes, more people received advertising on a phone last year, than the total number of TV sets or PCs; and more than read a newspaper or wnt onto the internet.

We do need to remember that on mobile phones we do not receive dozens of ads per advertising break like on TV or hundreds of banner ads on an hour or two of web surfing, not to mention the thousands more in newpapers, magazines, billboards etc that we see daily. Mobile is the 7th mass media channel, the newest and youngest mass media, as different from the internet as TV is different from radio. Mobile is considered very personal and we are not willing to put up with heavy bombardment of ads. But ads can be very effective in this environment. In particular if mobile ad campaigns are built using engagemnt marketing methods. Lets look more at the numbers.

RESPONSE RATES

So lets consider why. On the internet the past 16 years we ahve seen the growth and evolution of interactive advertising. The measure they use is CTR (Click Through Rates). Wikipedia tells us that an average CTR is under one percent and if you achieve 2 percent on an internet ad campaign, it is "very successful". So you have to send 50 ads, to get one to click on it, and you have success. And most ad campaigns need over 100 ads served, to achieve one to click through.

On mobile we have a better measure, "response rates". This is a better statistic, as it measures an active interest by the advertising audience to engage with the advertisement or brand. Not just to click to the site and consider possibly to be interested. And we have some very interesting response rates from several countries across thousands of completed ad campaigns. In Japan goo Research reported that response rates were at 44%. In the UK, Blyk reported after 2,000 ad campaigns that it sustained average response rates of 25%, while Croatian Tomato Plus reported response rates of 30%. Separate other recent mobile ad campaigns range from response rates of 39% in the USA by car-customizing company West Coast Customs, to 44% in South Korea with a Gillette Campaign.

An even more powerful endorsement comes from Germany, where BMW achieved not a response rate, but a "conversion rate" ie direct actual money paid by that customer who received the ad, on an MMS picture messaging campaign, that achieved yes, a 30% conversion rate. For every ten picture messaging ads sent by MBW, 3 recepients walked into an authorized BMW dealership and made a purchase. This is POWER.

So as the first mobile ad was launched in Finland 9 years ago, and today mobile advertising is no longer a "novelty" gimmick, if we achieve response rates between 25% - 44% across six countries on three continents, we are starting to have quite meaningful "rule of thumb" that about 3 out of 10 who receive mobile ads, will also respond to them. Almost one in three. That is average for mobile. Remember that a "very successful" internet campaign has to shotgun out 50 ads to grab one "click-through" which is not even yet automatically an engaged prospect.

Understand what this means first, in terms of the volume of ads. We can SHRINK the total of ads sent out, by a factor of at least 10, compared to the internet or TV or any other legacy ad media channel. And then, bear in mind the statistics, that bucking the trend, mobile advertising is growing revenues this year, possibly doubling in total value. This while mobile ad campaigns will be far less in total volume of ads.

Secondly that diminished volume means less clutter. Less noise. We can, and indeed we must, provide targeted ads that are permission-based and very strongly personalized. That means that even "generic" campaigns can seem far more relevant than mass-market ad campaigns on TV or the web.

And most importantly, on mobile when using engagement marketing methods and with a little bit of better design, the resulting campaigns are dramatically more powerful than any seen before, on any media. Like the BMW campaign (it created a virtual image of "your" car using your colour and model and the tyres and wheel rims you had bought. Even though a standardized mass-niche campaign, it seemed totally personal - that is MY car) - you can achieve enormous success. BMW was reported to sell 45 million dollars of new winter tyres and new wheel rims on a campaign with a total cost of 120,000 dollars. After such a return, who goes back to TV ad campaigns?

SECOND CLICK

Now, the above is ample reason enough for any astute CMO to shift advertising budgets to mobile. If literally thousands of achieved mobile ad campaigns only do the "worst" of those stats, at 25% response rates, then it is still more than ten times better than a "very successful" campaign online, and achieves in the process far greater level of true engagement than click-throughs. So lets get the kicker.

We have the first study of second click rates on mobile ads. This is amazing stuff. Amethon studied mobile ad campaigns and was reported somewhat "negatively" that "only" one in three mobile ad campaign achieved a second click rate. What does that mean. It means that overall for all mobile ad campaigns, the average response rate is 3 out of 10. And now, the second, truly and fully "engaged" level of involvement by the audience is one third, ie 1 out of 10. Wow. On mobile, we achieve on average, two engaged clicks, which is still five times better than any "very successful" internet campaign!

This is night-and-day, isn't it? You have to bombard 50 people to get one click for an excellent campaign on the web and more likely you have to devastate the audience with over 100 ads sent to find one willing to click on your banner.

On mobile, an average campaign you only need to send less than 4 ads to get one response, and with every 10 ads sent, you get a customer willing to make two clicks by the average campaign !

BUT IT GETS BETTER

This is measuring only the early "basic" types of mobile ad methods, like SMS ads, MMS picture messaging ads and WAP banner ads. This is barely the beginning. We have far more exciting and promising formats now being introduced to the market, on mobile. Such as advergaming, 2D barcodes,  augmented reality and idle screen advertising. As I reported on my parallel blog 7thMassmedia - I heard from my friend C Enrique Ortiz who said Telefonica is finding 82% response rates on advertising on their idle screen.

Update July 4: Since I originally posted this blog story, we discussed it with my friend Johannes Heinze on Twitter and Johannes pointed out that regular banner ads on mobile (and SMS spam) don't get these levels of response rates. So let me be clear, "generic" banner ads and spam SMS is as poor as any other interruptive ad concepts form the last century, whether on TV, radio, internet or mobile. Yes, they may achieve some response levels and click-through rates, but that is really just copying bad formats for the newest mass medium. Advertisers do need to learn, that mobile allows a far more powerful advertising method, "engagement marketing" and only by using that method, do you achieve resonse rates of 30%. Generic interruptive ads, even on mobile, will not perform at that level. I hope that was clear. (Thanks Johanes!)

The important point is that this is now the golden age of mobile advertising, when great innovations are being made and magnificent new ad concepts are being invented. We are facing a change to mobile advertising like the internet world saw with Google adwords. This is the big opportunity for advertising now in 2009. If you're in advertising, get into the mobile side of the business, here is where all the real creativity is happening.

And yes, if anyone wants to take a quick read of 50 case studies of excellence in moble advertising, then please read my eBook Tomi Ahonen Pearls Vol 1: Mobile Advertising. See the book website, there are free pags for you including many free case studies to see.

40% of iPhone Users access web more from phone than PC

Yeah, this is no surprise. comScore has surveyed 7,300 users of iPhones (and iPod Touches) and found that 40% of them now use their iPhones to access the internet more than they use personal computers. This is similar to findings earlier reported for Blackberry users with email and consistent with the ealry anecdotal evidence about the iPhone. iPhone users are also quite wealthy and relatively old (76% are over the age of 25) and seven out of ten iPhone owners are men (boys' toys, eh?).

Note this finding does not suggest an end of the PC, it only suggests an accelerating shift from PCs to smartphones. Note that even with such a powerful internet-optimized handset as the iPhone (best internet smartphone clearly out of the current lot) they do not even pass the half-point of all users shifting to mobile. But regardless, it does confirm that increasingly, as the mobile handsets get better, more and more casual mainstream PC users will find no particular utility out of the PC. Like the Japanese say, if you ask them, would they like to read emails on a PC, they will be surprised and say, they were not aware that email also was available on a PC (as almost all Japanese email users access email on a phone) - and then usually add, but why would you want to..  (Yeah, the Japanese have had the full mobile phone based access to the internet for ten years now, and very advanced phones for most of this decade).

Now factor in the replacement cycles of phones - we replace our phones more than twice as often as we replace our PCs - and we tend to get phones in many markets at severe price subsidies so they seem much cheaper than a full-price PC; the trend is strictly one-way for any existing PC owners: from PC/laptop use to smartphone use. The iPhone itself keeps improving dramatically each year, and the rest of the field is clearly taking lessons from the iPhone. So if you're currently into the second year of your laptop and start to look for a new laptop late in next year, by then there will be significantly better new smartphones in the market, than the iPhone 3GS, the Palm Pre, the Nokia N97, etc. This trend will acclerate, not slow down.

Evolution of mobile phone continues: from 8 C's now 10 C's

I blogged about the evolution of the mobile phone and how its capabilities had expanded in what was originally the 7 C's of Cellphones two years ago, and the it had expanded to 8 C's by 2008. Now we add two more, and explain how the gadget in our pocket has the power of 10 C's of Cellphones. I will keep this reasonably short, summarizing major parts that tend to be not disputed.

1st C - COMMUNICATION - JAPAN 1979

The telephone, both the fixed landline and the mobile phone, is first and foremost a communication device. It is why we take our mobile phones to bed and to the bathroom but we don't carry our iPods or PSPs or laptops within arm's reach 24 hours, 7 days a week, as 91% of us do keep the mobile phone (Morgan Stanley 2007). So yes, nine out of ten will also have the phone in the bedroom, often in bed, as 71% of the British report that they think the stand-alone bedroom alarm clock is now obsolete, as they use the mobile phone alarm (Birmingham Post 2008). The mobile is literally the last thing we see when we go to sleep and the first thing we see (or hear) when we wake up.

From that it is easy to jump to the conclusion that therefore the primary use of a mobile phone is naturally: voice calls. After all the telephone is a "distance voice" machine (from the Greek words tele and fon). That sounds very reassuring for most telecoms experts, yes of course, the cellphone is and will always be a telephone, a voice calling device. No, this part has changed and that change is very recent. Some advanced markets saw it earlier (first witnessed in the Philippines) but the UK regulator reported back in 2006, that for UK mobile phone users, the primary use of a phone had shifted from voice calls to SMS text messaging. It is still communication, but after over 100 years of voice calls, the system that first was called the "voice telegraph" had reverted to something more like the telegraph in communication - text based person-to-person communication ie SMS.

Before any readers can say "but but but" - this is indeed a universal trend, with reports from as far as Ireland and New Zealand (literally on opposite sides of the planet). We hear form Equador and Malaysia and South Korea and Indonesia, that SMS is preferred over voice calls. Even Americans, for the first time in 2008, the CTIA the US industry association reported that Americans did use the cellphones for the first time to send more SMS text messages than to place voice calls. A universal trend, definitely. In India the trend is already so far, that while 90% of mobile phone users send SMS text messages, only 66% of users place voice calls. The cannibalization of voice calls is considerable in some of the more advanced markets. But the point is, that Communciation is the first C and mobile phones have had it since the first commercial cellphone service in Japan in 1979, and SMS text messages since first launched commercially in Finland in 1993. It is still the first and most powerful ability, the phone is not morphing into an internet device (like a laptop) or media consumption device (like an iPod or PSP). It is primarily a communciation device, that is adding now new capabilities.

2nd C - CONSUMPTION - 1998 FINLAND

Now we get to the "mobile internet" part. The first downloaded content over the cellular network was the ringing tone launched by Saunalahti (now Elisa) in Finland in 1998. Soon thereafter we got i-Mode, the first "mobile internet:" service in Japan in 1999 and today's vast expanse of mobile content from games to news to jokes to screen savers and logos to adult entertainment, gambling, etc. Paid content is worth over 70 Billion dollars on mobile, ie about twice the value of paid content on the older fixed and PC based (legacy) internet. It is why now we call the mobile the newest, the 7th mass media channel and the fourth screen. Content of some type is availbable on essentially all mobile networks, but for varying prices.

3rd C - CHARGING - 1999 PHILIPPINES

The next innovation came from the Philippines where Globe's G-Cash and Smart's Smart Money were launched, and we got our firstmobile  payment services for hte mass market, in 1999. The payments industries (finance, banking, credit cards etc) have a patchy record with mobile. In some countries you can do just about anything with mobile payments such as Japan, Finland, South Africa, Austria, Croatia, Slovenia. In Estonia the only way to pay for parking is by mobile and in India you get a discount if you pay your utillity bills by mobile. In South Korea the default assumtion for new Visa cards is that you only want it onto your phone, the "old fashioned" plastic Visa credit card is a free option, mailed to your home. In other markets mobile payments are only starting. But m-banking, m-payments, m-wallet etc are real, and to show just how potent this is, today, just two years after M-Pesa launched in Kenya, 47% of all banking accounts in that country are mobile phone based m-banking accounts. To underestand the scale of the two industries now evaluating each others as possible rivals or partners, there are about 1.7 billion unique credit card holders, about 2.2 billion unique owners of bank accounts but 4 billion mobile phone subscriptions.

4th C - COMMERCIALS - 2000 FINLAND

In 2000 we get another radical innovation, advertising, or commercials on our phones. This comes from Finland via the commercial TV broadcaster MainosTV 3. Advertising on mobile has had a slow start and still today accounts for only 10% of all interactive digital advertising (ie internet advertising is 10 times bigger) and only 1% of the total global advertising spending. But mobile advertising is now in a strong growth stage, as the industry has learned about "engagement marketing" and we have sustained response rates reported of 25%-30% for mobile ad campaigns using this techinque, run across thousands of ad campaigns reaching hundreds of thousands of consumers, such as reported by Blyk. Better yet, the second click rate of mobile ad campaigns is still four times greater than the first click-through rates on the internet. Four times more people had been so satisfied with their first exposure to an ad brand on the mobile than advertising on the legacy internet, that they clicked to the second stage! And yes, last year 1.5 billion people saw ads on a phone worldwide, that is 50% more than the total installed base of personal computers, or about the size of all TV sets on the planet (and all of those TVs do not carry advertising)

5th C - CREATION - 2001 JAPAN

Japan brings us the next expansion of the abilities of the mobile phone in 2001 when J-Phone (now Softbank) introduces the mass market cameraphone. This spawns all that citizen journalism and amateur paparazzi we have covered here at this blog, from Ohmy News to CNN i-Report. Film festivals already exist for mobile phone based films. And to think, that whole concept of the cameraphone is only 8 years old and initially all camera industry experts said this fad of the puny little"toy cameras" on the phones would never catch on. Ha-ha, think again. MMS picture messaging has now grown past internet based email to be the second most widely used data application on the planet, with 1.4 billion active users, behind only SMS text messaging which has 3.0 billion active users.

6th C - COMMUNITY - 2003 SOUTH KOREA

Then in 2003 we see the start of the migration of social networking to the mobile phone, when South Korea's Cyworld releases its mobile version. Mobile Social Networking today is far bigger by revenues than its older internet-based siblings and all major internet social networking brands, from Facebook to YouTube to Flicrk to Friendster to Wikipedia have strategies to expand into the mobile space. After Habbo Hotel of Finland showed that fixed internet online social networks can make money (and profits!) out of mobile, today many fixed-mobile services exist including of course Cyworld but for example Flirtomatic out of the UK and Mixi out of Japan. Others focus only on mobile such as Itmy from Germany, Frenclub from Malaysia and Mobage Town out of Japan. Mobile Social Networking became the fastest-growing billion dollar industry ever and is the fastest growing industry sector today where major players are not only reporting healthy revenues, but many are also reporting profits - try to find that on internet based social networks.

7th C - COOL - 2005 JAPAN

This was added based on discussions at Forum Oxford in 2007 and Cool refers to Fashion. We can see the cool factor in the Apple iPhone but real fashion brands have also invaded the mobile phone space ranging from Prada with LG, Armani with Samsung and Dolce & Gabbana with Motorola. Premium luxury phone brands like the Vertu brand by Nokia, more of an ultra-rich jewelry brand than mass market phone brand, have launched. But the first to doa fashion-branded mass-market mobile phone handset was Benetton in Japan on NTT DoCoMo, and it was back in 2005, which is where I peg the addition of Cool to our list of the 10 C's.

8th C - CONTROL - 2007 SOUTH KOREA

When Jim O'Reilly and I were researching our book Digital Korea, I was stunned to find that South Korea had already started to sell household robots by 2007 and when we were in Seoul for the book launching tour, I visited one of the big shopping malls that had a robots store. Made me really feel like I had stepped into a science fiction movie. A shop selling only household robots. And yes, the robots could be controlled by moblie phone - in fact, some of the robots had features that the robot could call you on your phone and show what the robot saw via video link etc, even let you speak to others near the vicinity of the robot via a speaker on the robot - so if your relatives came on a surprise visit, your robot could open the door and greet your relatives, call you, and show you who is there, and then let you talk to them via the robot..  Anyway, 2007 is when South Korea added remote control to the abilities of phones. We do have all sorts of apps in this space, mostly weird niches like the SMS controlled tea-kettle in England and the remote control of your saunabath in Finland but for mass markets, we now also have homes built in Japan and South Korea where the locks are operated by phone.

9th C - CONTEXT - 2008 USA

This is a category I initially was not sure about. Back in 2007 a reader named Cooli - Olivier Guyot - suggested on our blog that Context should be one of the C's and argued it included the GPS ability and mapping and compass and cell-id, plus our status updates and shared calendars etc. I felt back then that context was not a human need we had (like to communicate or to consume), rather it was an enabling technology underneath, like IP the Internet Protocol. We humans have no need for "IP" (sorry, honey, I gotta go get me some IP now) but IP can be used to build all forms of services for the internet (or mobile) from YouTube to Google to Skype. But I reserved judgement for Context, that it might become something in the future, but that I did not see (back then) any mass market uses of context based services. Yes, GPS chips were coming onto phones such as on the Nokia N95 but even then, I did not believe in LBS or location-based services (for mass markets), which have, after all, existed commercially since 2001 and have been colossal market failures in every market.

This all changed in the past 12 months now with Twitter. I am now totally convinced that there is a human need to let people know our status (what are you doing), and we can build lots of services around this, from yes Facebook and Twitter updates to "mood music" as launched by Dada in Italy. So now when my friend Chris Bannink from the Netherlands suggested that Context should be a C, I do agree. And I have to admit, Cooli back two years ago saw this first.. Yes, its the 9th C and I time it for 2008, around the time Twitter broke into the mainstream and Apple added GPS to the iPhone, so this is also an ablity that was commercially launhced in the USA even though we've had various LBS services for most of this decade from Japan to Germany to just about the whole world. Twitter really changed my mind on this. Yes, Context is the 9th, but its commercial mass-market opportunity emerged in 2008, led by the USA.

10th C - CYBER - 2009 JAPAN

I had the 8 C's in my latest hardcover book Mobile as 7th of the Mass Media and I've been showing the story to my audiences in seminars and speakerships around the world. Often my audiences ask, what is the next C. And I have honestly been looking for it. A few days ago it occurred to me, that Cyber has to be it. My epiphany moment was with the news that a Japanese company, AgriHouse, has introduced a gadget that monitors the houseplants that you have and sends a text message when your plants need to be watered.

Again this area of cybernetics and the communciation between humans and other living things is not really new in mobile. We have been connecting pets (LBS hunting dogs in Finland) and farmyard animals (Cows in Canada and Iceland) and even such immobile objects as trees (Forestry management in Sweden and Finland via GPS/GSM chips). South Korea even had that commercial launch of Bowlingual, letting your dog barks be translated to human speak via SMS. But I still counted those as niche markets. Now we have a true mass market, household plants - which start "to communicate" with us humans in our language, so to speak.

So Cyber is a valid category for mass markets now in 2009. But it won't stop with pets and plants. We are also witnessing a host of new truly "magical" services that allow us to enhance reality and alter it, using augmented reality, and of course the magic of the mobile phone. I have been talking of the Kamera Jiten cameraphone dictionary from Japan or the Ford Ka augmented reality ad campaign from the UK and Germany, or now the first case of an inherently superior browser for the phone, something that is not viable on a PC, the Layar augmented reality browser that overlays browser info to the real time view seen on the cameraphone and its view screen. Augmented reality? Enhanced abilities for humans (translations for example) and communciating with non-human onbjects like houseplants, trees and pets. Yes, Cyber is the 10th C, and it became a mass market C in Japan in 2009.

MOSTLY 3 COUNTRIES

The story of how the mobile phone has evolved does run very strongly around three countries - Finland, Japan and South Korea. These are also home to Nokia (biggest handset maker, from Finland), Samsung (second biggest maker, from South Korea) and LG (third biggest handset maker also from from South Korea) and half of SonyEricsson (fifth biggest handset maker, Sony from Japan and Ericsson from Sweden). I know I am a Finn and yes, very proud of my little country of only 5.2 million people. But South Korea and Japan have now taken the lead and they do drive this industry. The USA is in there, recently more active thanks to the awakening that happened in 2007 with the launch of the iPhone. But look at this story and where are perennial technology and science innovators, France, Germany, the UK, Italy? Spain, Switzerland, Russia? or here in Asia, how about China, Australia, Taiwan, Singapore, Hong Kong, Malaysia, Thailand? or other often innovative countries like Israel? The mobile phone industry leadership is very strongly centered in these 3 (or arguably with Sweden, 4) countries: South Korea, Japan, Finland (and Sweden). It also means that the related mobile industry innovations tend to come from these regions, so if you are interested in the future of mobile, keep following the developments in these 3 or 4 countries, odds are, they are experiencing a future today, which is very similar to the future for the rest of the world (around mobile phones) in the near future.

IS A BABY, LEARNING TO WALK

Many also are frustrated by this industry. The "potential" is so huge, the real world results seem so tiny. Why is it that everybody is not surfing the web on the phone, why aren't we all making payments on the phone, why isn't advertising on the phone bigger, etc. Give it time. Please note those dates of each of the 10 C's. The expansion of the abilities of the phone started only in 1998, eleven years ago. It is not a mature industy yet. We will see a lot of innovation and growth for this industry. We will also see clashes between different cultures and technologies and industries and business models. Every one of the C's in the above is both a threat for someone and an opportunity for someone else. The next decade will offer greater total changes to our lives, based on the phone, than we've seen in this decade, so the opportunities are indeed huge. But don't panic. Give this industry some time to learn to walk before it can run.

So this is the story of how the mobile phone has evolved and expanded. Like Christian Lindholm the ex Nokia ex Yahoo mobile design guru and author, now Director at Fjord, likes to say about the mobile phone: "Anything that can be mobile, will be mobile." Why? it comes down to McGuire's Law of course - the utility of any activity increases with its mobility. (Russ McGuire is Sprint exec and author). Or the way I like to say, mobile has 7 unique abilities we cannot replicate on any other digital platform.

If you'd like to have a short 2 page summary of this story as a PDF file, that you can share with friends and use for your own reference, I have just written my latest "Thought Piece" about the 10 C's. I figure any executive has time to read two pages ha-ha.. If you'd like the free Thought Piece on 10 C's just please send me an email to tomi (at) tomiahonen (dot) com and I'll send it to you via return email.

Beyond demographics, how marketing will use mobile to collect better insights

I wrote a blog about the futility of using demographics in marketing. It struck a chord and many referenced the posting. I explained that demographics were a useful method to collect customer insights, and then to build segmentation and targeting propositions for marketing ...in the last century. And that more advanced digital interactive methods were now available to get far better insights about customers, not on assumptions made on our demgraphics data (age, address, marital status, gender etc) but rather based on real behavior.

In my blog I mentioned Google Adwords as the validation of the concept. Obviously you cannot do Google Adwords through the cinema screen or on the radio or in a newpaper ad. This is honest real innovation in advertising. Then in my blog I mentioned that Google Adwords are a a new ad model for "the 6th mass media channel" ie the internet, but that a newer, seventh mass medium has emerged (mobile) and that it is far superior, compared to the internet, with unique abilities that even the internet cannot replicate.

For many in the advertising and marketing industry (or mass media for that matter), that may seem an astonishing statement, perhaps even seem illogical ("but surely the tiny screen and poor keypad..") So let me explain how all of marketing will move beyond demographics, and will increasingly collect the best customer data from our phone, not based on demographics, or any other surrogate data like what newspapers and magazines we buy (and TV channels we watch), or any surveys of our stated preferences; and yes, most importantly also, better data than what we can possibly get on the web.

SEVENTH MASS MEDIUM IS NEWEST

There are seven mass media channels (see Wikipedia, Seven Mass Media). In chronological order, they are: 1st mass medium Print (magazines, newspapers, books, billboards etc); 2nd mass medium Recordings (records, tapes, video cassettes, CDs, DVDs, etc); 3rd mass medium Cinema; 4th mass medium Radio; 5th mass medium TV; 6th mass medium the Internet; and 7th mass medium Mobile.

Each of the 7 media is different. Each mass media channel has particular benefits so certain content types fit it particularly well.

INTERNET THREE UNIQUE BENEFITS

The internet introduced three unique benefits that you could not do with any of the legacy mass media at the time, by the early 1990s. The internet was interactive, it introduced search, and it allowed social networking. You can't do any of those in print, radio, cinema etc.

Note that these three unique benefits, when used with legacy mass media concepts like newspaper websites or YouTube videos or the iTunes music store etc, will add to the utility, making the internet media experience better than the same experience on legacy media channels. We can search the NY Times archive! We can leave a comment to the journalist, and we can blog about it (or Twitter) and get the viral effects. Using the unique benefits of the newest mass media, we can build more compelling media concepts.

NOT PERFECT DIGITAL FOOTPRINTS

But the internet arrived with a false promise to media and to marketing. The internet promised us a "segment of one" and that we could gather perfect customer insights. A marketing professional's dream. To know not what people claimed in surveys, or some statistical averages of mass audiences, but real individual actual factual usage of services and thus real info on the consumers. What marketing professionals pursued like a eldorado, turned out to be fool's gold.

On the web, the consumers regularly give wrong or incomplete data to profiles and surveys. Many PCs are behind firewalls and IP addresses are often allocated dynamically. The standard spy to track individual users and their data, the cookies, are often deleted by users. Users can access our service from numerous PCs like one at home, another at work or school, yet another at an internet cafe, etc.

Pleasee understand, the internet is FAR better than nothing, but it is very imprecise and unreliable. If you have a major branded must-go site, like Amazon or Facebook, then yes, within that given service, you are able to probably capture incredibly powerful and actionable data - witness Amazon book recommendations - but still, the internet on the whole, across 1.4 billion users, is mostly a marketing wasteland. What seemed like useful, turned out mostly useless.

MOBILE SEVENTH MASS MEDIUM

So we have the newest of the media channels, mobile. The seventh mass medium only became a media channel in 1998 when the first media content (music, ie downloadable ringing tones) were introduced. Mobile is by far the newest and thus also the least well understood mass media channel.

Almost all experts from legacy media, including print, TV, internet etc, who first consider a mobile phone as a media option, will obsess with the small screen and tiny keypad and think this is an "inferior": mass media channel. they think of mobile as the dumb cousin of the internet, the inferior sibling of the PC, the lesser screen, etc.

Those are fatal misunderstandings. Mobile is not the inferior medium. Mobile is the newest mass media channel, and it is incredibly powerful. But more than that, it is as different from the internet, as TV was from radio.

Mobile is as different from the internet as TV was from radio. What does that mean? All content, every single content type that had ever been created for radio, when TV appeared in the late 1940s and the 1950s, was immediately and successfully replicated to TV. All of it. But TV then went and created countless formats that you cannot do on radio - the music video, the game show, reality TV like American Idol, Strictly Come Dancing etc.

Mobile, just like TV copied all from radio, will copy all from the internet. ALL of it. And then, just like TV generated content and formats you CANNOT do on radio, so too mobile will develop (and has already commercially launched) media content formats and types, you cannot do on the internet. Consider that first media content for mobile - ringing tones. Yeah ringing tones, a 5 billion dollar global industry - three times bigger than all digital music sold by Apple iTunes to iPods worldwide. We sell those short snippets of music to mobile phones, but we don't sell ringing tones to our laptops. There are literally hundreds of services on mobile that you cannot commercially deploy on the internet.

MOBILE DOES WEB - WEB CAN'T DO MOBILE

Of the three unique benefits of the internet, they all are obviously available on mobile. We have interactivitiy on mobile (SMS text messaging is the most widely used data application on the planet, with more than twice the number of total users than all users of any type on the internet). Search exists on mobile. And social networking is on mobile (think Twitter).

Just like the internet a decade ago, when it started to cannibalize the five legacy mass media, today mobile is discovering its abilities. And mobile is equally capable to cannibalize all six legacy media including the internet, but very importantly the opposite is not true. The legacy media including the internet, cannot cannibalize mobile. Why, because mobile has seven unique beneifts. Not three like the internet, seven.

SEVEN UNIQUE BENEFITS

We've discussed the 7 unique benefits at this blog and my parallel blog www.7thmassmedia.com to considerable degree with lots of examples. Obviously my current hardcover book, Mobile as 7th of the Mass Media explains in deep detail not only the 7 unique benefits, but also at length why the small screen size and tiny keypad are not obstacles for mobile as a medium. In this blog I will focus only on the marketing insights, beyond demographic and other such archaic data about customers.

The seven unique benefits of mobile are obviously

1 - mobile is the first personal mass medium.
2 - mobile is permanently carried.
3 - mobile is always on.
4 - only mobile has a built-in payment channel.
5 - mobile available at creative impulse.
6 - mobile most accurate audience data, and
7 - only mobile captures our social context of consumption.

Lets see how these can improve customer insights.

DIGITAL FOOTPRINT IS NOT DIGITAL IDENTITY

We as marketers should not obsess with digital identity factors. Remember, demographics are worthless, and actually counter-productive. Get rid of them. Do not TRY to capture the digital identity of your customer. It does not matter to your business at all, what is my name, whether it is Tomi Ahonen or Tommy Ahonen or Tom Ahonen or Tim Ahonen or Tiny Tim Ahonen or Tina Ahonen. You can't sell me your service in any way differently based on my name, with the exception of name-related services (a coffee mug with my name? then yes, I don't want to have a mug that says "Tom" when my name is Tomi)

What we do want, is perfect unique identifier. that is why so many websites require us to register, so they know that if this PC connects to the service, it is actually me, and not for example my wife or kids or parents etc who might be also using this PC.

On mobile, and only on mobile, we have a (near) perfect unique identfier, our mobile phone number. That is unique. The home fixed landline phone number is not unique. With families, it is used by the father, the mother, the son and the daughter. But each will guard jealously their mobile phones - we do not share our phones even withour spouces, it is that personal, as Wired reported in 2006.

Please understand this, and internalize this. It does not matter one iota, what is my name, my age, my marital status, my address etc. The digital identity and demographic data is not actionable; certainly so poorly actionable when compared with our digital footprint, that the identity is irrelevant. Don't annoy your customers by repeatedly attempting to capture useless data. If you can communicate with your customer electronically (and don't deliver goods to the home), don't even bother to ask for a home address. Why do you need it. Who cares? Its USELESS (except for deliveries if you actually sell real good delivered to the home like a book or DVD)

DIGITAL FOOTPRINT IS ACTIONABLE

What do I mean by digital footprint? I mean, that we know - and the mobile (cellular) network automatically tracks perfectly - what I do. Who cares what my parents named me? Or where I (claim to) live? But if my mobile phone number is 123 456 7890, and that number visited a WAP site about Fomula One racing, and that same phone number downloaded the movie trailer for 007 Quantum of Solace and that same phone number paid for the London congestion charge 27 times in the past two months - you can be sure the owner of 123 456 7890 is a James Bond fan, watches Formula One racing and works in London (and drives a car to work, as the person pays the congestion charge).

It doesn't matter at all, if I am a man or woman, if I'm 21 years old or 81 years old, married or single. I am an F1 fan, love 007, work in London and drive a car. We get (near) perfect digital footprints that are (almost) always unique to that same person, and not their spouce or brother or sister or parent or child. Now, if this same phone number accesses the Playboy site one weekend and downloads some screen savers, you can be sure, that it is still the same person. No matter what the person would say in a survey ("Oh, I don't download porn") or even if the person is of a religious faith which does not approve of adult entertainment etc. The digital footprint on our phone is the real activity we do, and is personal.

PERSONAL

So yes, the first unique beneifit of mobile as a mass media channel is that moblie is the only personal medium. Even the internet is only semi-personal. While you may own your own laptop and not share it, many families share PCs, students share PCs, many business enterprises share PCs and many IT support people can access and monitor and even control (block, delete) uses and data on company-owned PCs etc. The internet is semi-personal. Only mobile is truly personal.

What can we do with it? Tons. Note that the phone is a device many users personalize. We don't personalize our TV sets or our FM radio on the bedside table or in the kitchen. But we do our phone. Ringing tones, screen savers and logos. Interchangeable covers and faceplates. Here in Asia they hang little trinkets and toys and decorations to phones, like tiny teddybears for example. And of course the stickers..

Now, what do we get out of this? The personalization can reveal many of our passions. We tend to decorate our phones with themes and brands related to what our passions are. In my case, the Ferrari F1 engine ringing tone. You can be pretty sure that if this phone number downloaded a Formula One engine ringing tone to the phone, that person has a high level of interest in F1 racing. I mentioned in the previous blog that I am a fan of rap music. Now, if I wanted to appear very sophisticated and smart (being 49 years old), I might say in some surveys that my music tastes are classical music, Beethoven, Mozart, Sibelius etc, which is kind of true, I do like it. But if you track my phone behavior, even though yes, I do like classical music, I never buy it. I have never downloaded any classical music but I do love my rap music from Chamillionaire to Public Enemy. The digital footprint does not lie.

If you think "but that is not me" - fine, you don't care for 007 and not F1 racing and not rap music. This works with everyone and for anything, it only takes time for the apps to be there. Take golf. What if you had a free, mobile phone app, which shows the present weather at your fave golf greens? Allows instant bookings and gives alerts when there are cancelled times at the green. Includes some expert advice from your fave golf pro with a weekly free video clip of advice, offers some occasional special offers to your fave pro shop, and is all free, sponsored by one of the major golf club manufacturers? Wouldn't this appeal to just about any golfer? Download it to your Blackberry or iPhone or N95. Carry your golf assistant in your pocket every day.

Every passion will find these adver-apps. We had for example a formula one related multiplayer free racing advergame at the Shanghai F1 race last year, sponsored by the Puma running shoe brand. They used the game to drive F1 fans to visit the official Puma stores in China. Whatever your passion, NBA basketball or American Idol or fishing or the soon-to-be-born baby as your first child, whatever the passion, there can be, and there soon will be services for it, around mobile. And we will be able to then collect real interests and accurate info about our consumers using it. I Poland they used a famous TV celebrity chef to provide cooking tips as free video clips, sponsored by the soup makers Knorr. I personally couldn't care less about cooking but if thats your passion, you'll love this free service and the dozens of free cooking tips and clips.

PERMANENTLY CARRIED

Lets move on. The phone is the first thing we see when we wake up and the last thing we see when we go to sleep (as most people now use the alarm on the phone). We carry it everywhere, including the bathroom (where we indulge in our fix of more messaging, either SMS or Blackberry email, as we are embarrassed how we again need to send more messages and don't want to let others know)

The network tracks every moment where your phone is. It need not have GPS technology enabled, it will be accurate enough to know if you stayed home today (called in sick) or actually left home and went to the neighborhood pub for a few drinks. What can we do with this? I don't want the snooping services and I certainly don't believe there is a valid sustainable business case for "location based spam ads:" ie you  walking down the street and getting ads from nearby merchants.

But what we can do, is to use the location info, and capture passion-based audiences. Imagine Madonna playing Wembley Stadium in London. Every mobile phone in Wembley Stadium is a Madonna fan (almost, some may be janitors etc). If Madonna sends a welcoming message to every audience member phone to Wembley Stadium a few minutes before her concert, and offers fans the chance to join her mobile phone based fan club for free - she captures the phone numbers of 20,000 of her most passionate fans in London. These will not be offended to receive a message from Madonna - they will love to receive it. And Madonna? From now on, she needs no other marketing except send SMS and MMS messages to these die-hard fans (with viral marketing links, obviously, so these die-hard fans can then do the marketing on Madonna's behalf). So Madonna releases a new album, send the announcement adn pre-order coupon to these fans. Next year's world tour? Pre-sell Wembley Stadium with one set of SMS text messages to these fans. Better yet, give each fan the chance to buy 2 tickets - every fan knows one other fan who "should have been there" and now you sell out the biggest stadiums twice.. The first pop music artist to build its fan club around the phone was Hong Kong based duo Twins (think Spice Girls), six years ago.

ALWAYS ON

No other media was intended to be always on. Our TV with 24 hour CNN news may be left on over night as we sleep, but it is not meant to be consumed 24 hours in a row. Our laptop may be with us, but we put the laptop to sleep mode so it is not actively connected all the time. But the mobile is always on. It can deliver Blackberry email messages or SMS text messages to bed as we sleep (20% of Belgian teenagers wake up regularly - regularly - to incoming SMS text messages at night)

Now the mobile allows us to do alerts. Real time alert. So for example last summer the Virgin rock concert in Australia. They had the full concert guide as a phone app. One of the features WAS THE announcements of who was going to be playing next. Anything in our lives that has urgency to it, the phone is by far the best method to deliver the news. Your stock market info. Have allergies? There are apps that tell you the real time personal weather including pollen counts and prevailing winds. When do you need to take your medication. In South Africa the banks offer alerts when your credit card has been charged. Go to a cash machine/ATM and withdraw money - the SMS alert arrives to your phone that your card was charged, before the cash has been dispensed from the bank teller machine, etc.

BUILT-IN PAYMENT

Only mobile has a built-in payment channel. Note the internet does not. On the web you have to either set up a Paypal or equivalent eCash account (less than 10% of internet users have such an account including Paypal) or else give credit card info or other payment method. The vast majority of the world's internet users do not have a payment vehicle to use. Most kids can't have credit cards etc.

But every single mobile phone account on every network in every country can handle payments natively. You can purchase a ringing tone, and download it to your phone, and that will either be charged to your monthly phone bill, or in the case of a prepaid (pay-as-you-go) account the cost of the ringing tone is deducted from your available balance. Same for paying to vote on American Idol etc. All mobile networks can do payments.

Currently most networks do not offer true mobile money and full mobile banking services, but they will come. Most payments today on most netorks tend to be small amounts like coca cola vending machines, the lottery, parking, public transport etc. And where they started early, the stats are becoming quite compelling. more than half of all single ticket payments in Helsinki public transportation is now paid by mobile. But don't think "micropayments" are the limit. In Kenya you can move up to one million dollars in one money transaction from one phone account to another. Pay for your house by mobile? Can be done. Is being done..

This is only the beginning. Banking will go mobile. Credit cards will go mobile. Cash will go mobile. Quick examples. 20% of all banking accounts in Kenya are already mobile. Half of all new Visa cards in South Korea are now mobile. And cash? Estonia became the first country, where a specific cash-only purchase option has eliminated cash and only accepts mobile payment. Yes, a specific activity already today, which once only accepted cash (coins) now refuses them and only accepts mobile payments. It is parking. if you park your car in Estonia, bring your mobile, the parking meters no longer accept cash at all.

In countries as advanced as Japan and South Korea, and in the Developing World such as the Philippines and South Africa, you can today spend a week, with no cash and no credit cards, and do all money transactions on a phone. All of it, from air travel to trains to rental car to hotel to petrol to restaurants to movies to groceries. And yes, in those countries its not uncommon to receive your whole paycheck directly to your mobile phone account. Kenya became the first country where you can do worldwide money transfers to and from the local mobile phone accounts.

"But I'll never do that.." Yeah, sure. But what if it is automatically enabled, costs you nothing more, and is easier. Paying for parking, no need to dig for coins, to go walk to the parking meter, decide on how long to park (!), and then worry about if your parking payment has run out. All of these are solved with mobile parking. You always have the "correct change". You don't have to walk to the meter - it might be raining or be miserably cold etc - and the meter may be broken. You don't have to guess how long you might park, and inevitably sometimes overpay - and worse, underpay and receive a parking ticket. All of these are eliminated with modern mobile parking payment solutions. It is inherently better than using coins.

So you don't own a car? What if you get a financial incentive to use the mobile payment option? In India your utilities (gas, electricity) will give a 5% discount if you pay directly by mobile rather than cash at their dealer. In England Orange will sell you two movie tickets for the price of one any Wednesday if you pay by (Orange network) mobile phone. Do not kid yourself, money is already migrating to a phone near you. Soon you too will receive your salary - and pay your taxes - and pay your mortgage etc - on your phone. Mobile payments will become as common as credit cards and banking (debit) cards are today.

Image the power this brings. Think if MasterCard or Amex could offer an intelligent credit card, with an active screen, an interactive keypad, an active network connection AND a memory chip. What kind of superior services can be deployed. Show available balances in real time. When you travel and see prices in another currency, on your phone show the price in your own currency. Give alternate links to do price shopping. Offer real time couponing. "Rather than the 1 litre of Coca Cola, would you like a 20% discount coupon for Pepsi" etc. And mobile is becoming the virtual currency platform for many online services such as Habbo Hotel (children's Second Life, has over 100 million registered users in 30 countries) and Flirtomatic and Cyworld.

Eventually everything we buy will be paid for by mobile. No country is there yet, but in advanced countries about a quarter of the nation is at this level. So give this trend at least 10-20 years. But it is an irreversible trend. And far more powerful than credit cards or Paypal, we can build integrated and converged services on mobile utilizing money.

Evere major expert in mobile agrees that in the long run mobile money solutions (often called mobile wallets) will be the norm. Now, back to marketing insights about our customers. If ever you felt that airline or retail loyalty card schemes have a wealth of data, that is truly peanuts, copared to how powerful mobile money related data will become. its like comparing a children's storybook to the Encyclopedia Britannica.. This industry will own all commercial transcation data. Wow...

POINT OF INSPIRATION

This means user-generated content. The cameraphone in particular. If you're into blogs, Twittering etc, the phone is increasingly your main method of updates. So for those customers who are true advocates (our "army of fanatics" as UK marketing guru Jonathan MacDonald says) will be using their smartphones to promote their causes. And we will capture that customer insight, and we can join in the conversation if we learn to do engagement marketing, obviously rather than just old-fashioned interactive marketing. Mobile is becoming the focal point of all social networking. YouTube is headed to mobile, Facebook is headed to mobile, etc.

MOST ACCURATE AUDIENCE

This is a bit of a redundant benefit for data collection in this blog story, as I have already proven this point, but this also applies to cross-media uses. Mobile is a way to measure other media audiences, and being the most accurate at that too. TV for example. In New Zealand on local TV 2 channel, they used an interactive SMS points game to measure actual active viewers far more accurately than "Nielsen boxes" in a campaign that awarded various prizes to viewers. If you ask a TV viewer to send an SMS to the TV station when a given logo is visible on the TV screen, you get exact audience data. Not that the TV set was on. Not that someone was reading a magazine with the TV on the background. Not that someone started to watch but didn't finish watching for whatever reason (phone call, ha-ha). Most importantly, the SAME person could be tracked. Because we don't share our phones.  POWERFUL info to help measure audiences of other media.

CAPTURES SOCIAL CONTEXT

The newest unique benefit of mobile as a mass medium is "captures social context" and this was only discovered last year, so we don't have actual examples for it yet. But let me explain and give a theoretical example. Take American Idol. If our phone number voted in American Idol, we know our phone owner is a fan of American Idol and was actively watching the show.

It is very likely that our Idols fan was also communicating about Idol - using the phone and mostly SMS text messaging - with other American Idol fans. And some of that SMS texting traffic would be during the broadcast of American Idol. Not everybody does this, but especially among younger viewers it is very common to send SMS text messages while watching TV.

If our Idols fan was sending text messages regularly during the Idols broadcasts to four other people and one other of those people also voted a couple times during the TV shows, we can be 100% sure, that this group of 5 people are all fans of the American Idols show and they watch it simultaneously.

Even if I did not ever once vote in the show, but I was texting with friends during the broadcasts, and some of my friends voted - then the social context of my consumption reveals the pattern. We find out what you do, not by what you consume, but who you consume it with. This is the ultimate technique into customer behavior !  Why? because our social context is more important to consumption patterns. We are inlfluenced most by what our friends recommend.

There is radical new social networking analysis already available about who influences whom. Note that any such claimed abilities based on internet info is inherently flawed due to the inherent shortcomings of the 6th mass media, obviously. If we don't know with reasonable accuracy who you are, then the accuracy of influencers is truly questionable.

But on mobile we know exactly who is who. we don't share our phones, not even with our spouces. So systems that measure influence in social networks and "communities" that use mobile for identifying individual members of such communities, those can be incredibly powerful. The term "alpha user" was coined by Xtract (not to be confused with Alpha male type aggressive personality) and we explain this concept of course in our book Communities Dominate Brands, the signature book for this blog.

This is the future of marketing. Extremely precisely targeted marketing, aiming to engage with the true influencers (alpha users) in any given community. Note these are not always the ones with most "friends" or contacts. You have to monitor the actual behavior of members within the community to identify those who  influence the others. And an alpha user of one community is not necessarily an alpha user in another community, etc. But this ability, the inherent ability to capture our "social context" of consumption and communciation, is the last, the seventh and probably the most powerful unique ability of mobile as a mass media channel. Expect enormous innovation in this space. New tools - like Google Adwords - will be developed to capitalize on this opportunity. If you are interested in inventing something truly life-altering (for the marketing industry) then explore this seventh unique benefit..

MOVE BEYOND DEMOGRAPHICS

So yes, in the last century marketing professionals were using demographics because it was far better than nothing. Today we recognize that demographics are incomplete, inefficient and even counter-productive. As far better methods have appeared, we can safely abandon demographcis as obsolete and learn to use the far more powerful methods from interactive media.

The internet is powerful. It has discovered many ways to try to capture consumer data and insights from cookies to search terms in Google Adwords. Please do not misunderstand me, the internet does provide today, and will provide much more in the future, methods to understand customers. Tools such as Amazon search insights will be developed and get ever better. Do not ignore the internet.

But the internet is the 6th medium, mobile is the 7th of the mass media. Mobile is newer, bigger, better. It has 7 unique benefits that even the internet cannot replicate. Each of the 7 unique benefits of mobile can help develop far more actionable customer insights than anything we could hope for in demographics.

ONLY PERMISSION BASED

One final comment. Mobile is our most personal media. We will feel very personally offended if our gadget and its service provider is abusive to us. All marketing activities on the phone have to be permission based. Please do not misunderstand me, I am not in any way advocating being abusive to your customers. Use engagemnt marketing methods, which by definition invite customers to participate. Not interruption but engagement. Like Blyk for example and its clones like Tomato Plus. They are achieving incredible satisfaction levels even though they bombard customers with 6 mobile ads every day. And yet, their honest engagement marketing based campaigns achieve response rates across all campaigns and users, in the levels of 25% to 30%. Not one pilot campaign. Thousands of campaigns with hundreds of major brands serving hundreds of thousands of registered users. Satisfaction so big, they get 30% not click-through rates, but honest response rates. That is what I want. Not spam. Not intrusive, interruptive, impersonal banner ads. Real engagement marketing campaigns !

THIS CHANGES EVERYTHING

If you work in advertising, marketing or media, please do study mobile, the newest and least-understood mass media channel. It will be far more relevant to your career than print, radio, TV or even the internet. Obviously if you want to read a book about this, I coined the term 7th mass medium and I am the father of most theories to this industry and am referenced in 50 books by my peers. My latest (sixth) hardcover book is Mobile as 7th of the Mass Media.

Now, if you work in advertising, then I have a real treat for you. 50 case studies of excellence in mobile advertising and marketing from 19 countries around the world, including several successful engagement marketing campaigns from Blyk to the Virgin rock festival. Russell Buckley, the Chairman of the Mobile Marketing Association (and VP at Admob) wrote the foreword. The 171 page eBook will load onto your iPhone or Blackberry so you can have 50 cases of excellence in advertising on mobile, in your pocket every day. The eBook costs only 9.99 Euros and is available for immediate download. Best of all, there are sample pages including sample case studies at the book pages. See Tomi Ahonen Pearls Vol 1: Mobile Advertising.

When I was Young, There Used to be Tiny Houses for Telephones..

A story from your future. You will sit your grandchild onto your knee and tell the child a totally unbelievable story.

"You know, when I was your age, they used to have these houses, all over the city, that were built just to be a home for a telephone. The houses were so tiny, that only one person could fit inside, and even then,they could not sit in those  houses. They were so small that you could only fit in by standing. The houses were proper houses with walls, windows, one door, and a roof. And the only thing that would live inside that house was a telephone."

Your grandchild will look at you with that child's expression of very deep thought. Pondering. Maybe this is one of those famous jokes that grandparents are known for. But it was said with the honest voice, not the joking voice. Your grandchild will then decide and say: You are kidding. If they built a house for a phone, someone would just take the phone away.

Now you laugh, and you add, "Well, actually those phones were tied to the house by a cable." "Why so people would not steal them?" "No, that was how all phones worked when I was your age. all phones were connected by a cable."

Your grandchild will not believe you. So you go and show the picture of yourself in a phone booth..

Moral of this story. The payphone is on its way into history. Finland was the first country to start to decommission payphones.Use this opportunity while we have it - and take a picture of yourself in a phone booth. Some day it will no longer be standing there.

The coin-operated Twitter kiosk? Check out actual device from 1930s

This is exactly why we love MobHappy. Russell Buckley and Carlo Longino are to me my must-read blog, always informative, and so often either funny (mob-HAPPY) or entertaining. Check out Russell's blog about a 1930s machine. There used to be a set of machines (in London I guess) where you could deposit a message to a friend for a couple of hours. You paid a coin. The messages were displayed for all to see. It was like modern Twitter or night-time TV chat boards etc., but done in a kiosk (and as a "location-based service too, ha-ha) Same idea, but way way ahead of its time. Gosh, over 70 years ahead of its time. Check out the picture too at MobHappy.

Itsmy free mobile tagging game gets 1.5 M uses in 8 weeks out of 2.5 M users

Mobile is the 7th mass media channel and when media owners learn this, they can build radical new services and get enormous levels of activity and satisfied users. And of all mobile services and applications, social networking on mobile is the hottest growth area. Itsmy is one of our fave stories, offering mobile social networking in several countries including Germany, the UK and the USA. They have 2.5 million users today.

In March Itsmy launched a free mobile tagging game to allow users to post graffiti onto their friends' mobile websites. Look at the numbers. In just 8 weeks, they have reached 1.5 million tags of graffiti created, out of a total user base of 2.5 million. How satisfied? 95% of users loved the way they could use tags to stay in touch with friends, and 61% of Itsmy members connected with new friends using this game. Talk about the power of viral! Excellent case of Communities Dominate. Itsmy CEO and our good friend Vince Staybl said that moble social games are a new revenue-generar for their company. They plan to launch 50 games this year. How can a free game be a revenue generator? Ha, the basic level of the game is free. Premium content, gifts, personalization, ego-services etc --that is how you make money with mobile social networking. It is why mobile social networking finds many ways to make money, while the internet based social networks struggle with only subscriptions and advertising models.