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.

Comments

[cooli]

Morjens Tomi!

This made my day, thanks! Quite glad my original comment in 2007 (http://communities-dominate.blogs.com/brands/2007/05/the_seven_deadl.html?cid=69166780#comment-6a00e0097e337c883300e0098392bd8833) made you add a new C :-)

The Amsterdam service, Layar, is also a good 2009 example (from Netherlands!) of something between and/or covering both Context and Cyber. I now need to think what could be the 11th C...

Keep up your incredible work!
Olivier Guyot aka Cooli (and not Coolio like the rapper ;-)

[Tomi Ahonen]

Cool Cooli!

Hey, thanks for coming back Olivier! I was thinking that I have to try to dig through 2007 emails to find the alert about your original comment, to try to find your email, to get back to you, to let you know, your thought has finally gone "through to my brain" ha-ha.. and that I'm crediting you here.

Now you are here. Great! I'll update the posting with your real name of course (and mention you in the slides as well from now on)

Thank you and yes, please look for number 11, it certainly isn't ending now with these ten ha-ha.

Thank you

Tomi Ahonen :-)

[Mike]

I'll tell you why more people aren't doing all that stuff on mobile phones. Because it's a tiny fucking screen, and a teeny little keyboard, that's why. When I read that many people do more web stuff via phone than via laptop or desktop, I wonder, "Are you masochists?"

Phones are damned handy when you're out and about and need some info right now. But as an interface of choice? Please. Pain in the ass. I love my iPhone, but I do what I must on it, not what I can. I have a nice 24" iMac screen. Why would I stare at that teeny little phone screen any longer than necessary?

P.S. I tried to send you email requesting your PDF of 10Cs. It bounced, saying your [email protected] domain wasn't recognized.

[Tomi Ahonen]

Hi Mike

First, my apologies for the email address. You caught the very early version of this blog story when it had that typo. My surname is Ahonen and it should have read tomi at tomiahonen dot com. I am very sorry about that typo, which I corrected about 6 hours ago, but clearly you used it and it was wrong, my fault.

About the tiny screen and small keypad. Very valid concerns. I discuss these at length in the 7th mass media blog posting (pls see link in this story). But a quick summary.

Size is not an absolute detriment, it is a factor yes. We have biggest screen (1st screen) in the cinema. If size was absolute factor, the home TV (second screen) would never have trumped cinema and today PC (3rd screen) not taking over from TV. Size is a factor yes, but not the only matter.

There are many input/output benefits that mobiles have that you can't do on your laptop - witness the new Layar augmented reality browser for example. Can't do that on a laptop.. I don't mean Layar itself will automatically take over from Microsoft Windows Explorer but it is one clear example of early innovation where the screen on the phone can exceed the performance of the screen on the PC. Many more exist and will come.

But yes, masochists, good term. I understand and sympathise. I never said that mobile phones will replace laptops. I have made that point very clear in all of my PC-mobile discussions and have even coined a metaphor for explaining their unique domains, called 30 minute tasks vs 30 second tasks. 30 minute tasks - like now me writing to you on this blog - we prefer to do seated, pre-planned, with a good keyboard, good display. 30 second tasks arrive suddenly and we need often immediate resposes, we do walking/standing, often single-handed using the minimal display and keypad entry - which by the way takes much more intelligence from web/mobile web design than the legacy (dumb) PC internet.

But the last point. You and I have a choice. We both own a high-end smartphone and a nice PC/laptop. We can select which to use. Out of all 1.4 billion internet users, about 600 million are like you and me, with both forms of access. They can choose.

About 300 million have a PC based access method but not a mobile phone (or connection) to access either the "real internet" or the "mobile internet". These users, almost all in the industrialized world, will have no choice, and will access by default using a PC. Many of them will migrate into the mid-camp of having both something like an iPhone and their PC.

Then there are the about 400 million who have no PC but only have a mobile phone for their current internet or mobile internet access. These people have no choice. They have to squint at the small screen and make do with the keypad or perhaps tiny keyboard on their device.

Note Mike, that this group is the one growing. The vast majority of internet access in the Developing World is through phones, usually not smartphones, and they have very modest screens. But their benefit is even greater of now being first-time connected to the information age, than adding broadband speeds to a Westerner who already had dial-up internet.

Out of devices with a browser and access to the branded internet sites like Google, Yahoo, Wikipedia, Facebook, YouTube and eBay, today there are about 1.1 billion personal computers with a browser and internet connection. But in the world, there are over 3.1 billion mobile phones with a browser and network connectivity to do so. Now, most of those people don't bother to, because they don't care, or their prices are too high, or their connection speeds are too slow (or they have already suitable internet access at work, or at home, or via an internet cafe).

As the ability of mainstream phones gets better - similar to an iPhone - and the services keep getting better on the phones - those people will migrate to the mobile internet.

They will no go to a PC based internet. The main growth opportunity for new PC sales now is replacements, and the more some users of Blackberries or iPhones or N97s or Palm Pre's fall in love with their pocket gadget, the more they stop paying for new laptops.

The market for PCs will not disapper, but it will stop growing, while the mobile based internet opportunity will continue to grow very strongly. It was zero users in 1997.

I hope this helped address the main point. Mike, I'm really sorry you didn't get through to my email. I will try to connect with you through this comment you left me and send you the pdf file. Thank you for leaving the comment

Tomi Ahonen :-)

[MM]

Mike - I'm going to add another C here but this is more of a tongue-in-cheek idea than anything else and the idea has been mostly incorporated into the other Cs.

Ahem, the 11th C is Convenience (yeah, groundbreaking, I know). But in all honesty, think about it. I've sometimes wondered about the strange dichotomy of human nature, a trait that we all share where we work so hard so that we can be...lazy? Of course, most people won't describe some of their leisurely activities as being "lazing around" but it's interesting how much of what peoplecreate tends towards those items that reduce the amount of work, physical or mental, that people have to do.

The screen size is a valid argument but, as pointed out by Tomi, it's not a showstopper. There have been days where I come back from work and feel too exhausted to even bother sitting on my work table to and use the PC. Instead, I lie on my bed, pick up my phone, and start surfing the web (I realize that by describing this habit, I've just made myself look just as slobbish as Garfield when he nailed a TV to the ceiling just so he could watch it lying in his bed). Media such as photos and videos are slightly compromised when consumed on a phone but that's not really that big of an issue. Why? Consider that the predominant way for most people to consume information on the Internet is by reading. And phone screens have certainly advanced enough to a stage where reading is usable, even pleasurable because of the convenience.

There are so many other instances of people putting convenience above all else. I had several coworkers that used to drive to the gym from our offices. What's so strange about this? The gym was across the street. The excuse was always "Hey, I don't want to get sweaty walking back to the office after showering at the gym" but I suspect that it was more to do with my colleagues not wanting to deal exert themselves, especially after a hard workout. Another example I remember is that my mother used to give my family a ring on our cell phone for dinner just so she didn't have to bother yelling or walking up to the second floor of our house.

People will always sacrifice a bit of functionality or experience if it means a return in convenience. Combine this with the fact that we are creatures of habit and you'll have situations where people will even do "30 minute tasks" on devices meant for "30 second tasks", just because the phone is so close to us proximity-wise. I'm often surprised when surfing the web on my phone about how much time elapses. Usually my intention is just to scan the headlines and check some blogs. However, I've had days where I'll easily browse for an hour or two without even realizing it, all without feeling the need to be on my PC to take advantage of the "full Internet" and lamenting the tiny screen.

P.S. In defense of the rather lethargic image I must've projected in this post, it should be noted that I was actually active enough to get up on the PC to write this post. :)

[Roman]

sms text messaging is very important feature of cellular communication, Especially when you cand send sms to landline phones with services like text2land.com

[Tomi Ahonen]

Hi MM and Roman

Thank you both for comments.

Good case, MM for Convenience but I'm not quite sold, ha-ha. Yes, we should strive in all services on all platforms to deliver convenience and we also do, to a great degree, deliver better convenience on mobile than on older systems..

Roman - about SMS sent to landline phones, I am afraid that is a very poor opportunity as landlines are dying out and where they exist, they mostly are used only for internet access; and phone owners don't even like to answer the landline phones, knowing their real friends and family would be calling the mobile phones. We've seen SMS services offered to landline phones, and they've all had very poor usage rates and lousy success. Yes, SMS is important, but that service you described, I would not hold my breath that it will be a significant market success. Sorry about that.

Note that I've had a couple of years to think about that, as I worked for the company that first launched commerical SMS text messages, and I was in charge of our first fixed-mobile service project - which delivered the world's first commercially launched fixed-mobile service (now 13 years ago, ha-ha).. So this view comes from a lot of thinking about it, ha-ha.. Of course that does not guarantee that I'm right, but I don't hold much hope for landline SMS services.. Sorry.

Thank you both for writing

Tomi Ahonen :-)

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[angle]

I was reading something else about this on another blog. Interesting. Your position on it is diametrically contradicted to what I read earlier. I am still contemplating over the opposite points of view, but I'm tipped heavily toward yours. And no matter, that's what is so great about modernized democracy and the marketplace of thoughts on-line.

[Smartphone]

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Is it reasonable, that of this group, about one in 15 will be so fanatical, as to make music the primary decision for their smartphone? I think thats reasonable. I don't see it as one third for example out of this group haha.

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The Amsterdam service, Layar, is also a good 2009 example (from Netherlands!) of something between and/or covering both Context and Cyber. I now need to think what could be the 11th C...