Why is Everybody Obsessing About Mobile Now? From Starbucks to Tesco, from Visa to Budweiser Beer

The mobile fever is catching on. More and more we hear major global brands suddenly talking of their 'mobile first' strategy. Not just the telcos. Not just the tech companies from Lenovo to HP, not just the media giants from Electronic Arts to the BBC, not just the electronics giants from Sony to Samsung. Bizarre names now saying mobile is their top priority. Like banks, credit cards, travel, retail. Starbucks, yes the world's largest coffee chain said that mobile is their top strategic priority. Not coffee beans? No. Mobile. Because in less than a year, in their home market in the USA, already 10% of Starbucks customers use mobile payments. Wow. That was fast.

 

So lets take a quick look around mobile. Its no surprise telecoms classic players believe in mobile, as if you called any phone number on the planet today, in five cases out of six, the number rings not on a landline phone on some desk, but in the pocket of someone - on a mobile phone.

 

Then some media got the mobile bug early. Music was first, all the big music publishers say the future of music is mobile. The more interesting tidbit came as a confession by Tim Cook Peter Oppenheimer the CFO of Apple two years after the iPhone had launched. He told the reason why Apple rushed its iconic mobile phone handset to the market - it wasn't because of Nokia or Blackberry or Samsung or other smartphone makers, no. It was because Apple noticed that Sony's Walkman branded musicphones were cannibalizing Apple's iPod music player sales. Yes, the iPhone was a 'defensive move' by Apple, to protect is strong music player market in 2007, not an offensive move to try to capture a slice of the smartphone space. The original iPhone wasn't even a smartphone, there was no app store; if you wanted to buy apps to your smartphone, you had to have a Nokia or other Symbian device, or a Blackberry or Palm device at the time. Apple's original iPhone didn't even do high speed 3G data haha, it was a glorified media player phone, that incorporated the iPod and iTunes music player experience and video player etc, onto the phone with the amazing large touch-screen. Only later, did Apple evolve the iPhone into a true smartphone. The music industry was turned upside down by .. mobile.

 

Same for videogaming. Electronic Arts (EA) the worlds' largest game maker says the way game makers make their money now, is through mobile. Rovio has become the owner of the most-played videogame of all time - Angry Birds has had over 1.7 Billion downloads, and Rovio, its owner, earned 200 million dollars last year. There is a whole economy around Angry Birds from t-shirts to fluffy toys to amusement parks to the first full-length animated movie coming out of Hollywood in 2014 featuring our upset birds and those evil pigs.

 

What of the camera? Cameraphones were invented in Japan by Sharp and launched by J-Phone what is now known as Softbank. The camera giants of the time totally ridiculed early cameraphones as toys. Today the camera brand most used on the planet is Nokia. The bestselling camera brand today is Samsung. Both as cameraphones, not stand-alone cameras. Of the four camera maker giants, two have gone out of the camera business totally in this revolution, Minolta and Konica, and Nikon just recently said it plans to launch its own smartphones. Sony has just talked of introducing optical lenses for cameraphones that will work on any iPhone or Android smartphone (but being Sony branded). Kodak, which went bankrupt in the cameraphone revolution, is now planning a comeback providing technology for cameraphones. For 9 out of 10 people on the planet, the only camera they have ever used, was a cameraphone. And we are now learning interesting differences in how people use their cameraphones - its not like old film-based cameras or even stand-alone digital cameras. The cameraphone is more of a magical memory device, to enhance our memory ability. Where did i park my car. What did I have to remember to buy in the store, where is the nearest subway train stop, that kind of things. People scan all kinds of data onto their phones without meaning them as 'pictures' but rather 'memory enhancements'. People increasingly take screen shots of websites onto their cameraphones for example.

 

So then came Social Media. Facebook reported 18 months ago that half of their users now came from mobile phones. Wow that was fast. Twitter reported a few months later, that they had reached the 50/50 user level as well. Every major social network online has said that the future of social networking is mobile. Nice to hear that now. I was the first to write that in a book, as we wrote in the signature book to this blog, Communities Dominate Brands haha...

 

Then lets go big. Money. Did you know that 48% of the total Kenya economy now transits a mobile phone already? Or that one in five Japanese consumers uses mobile payments daily? That the World Bank has already counted 20 countries where at least 10% of the population uses mobile money. You didn't know that? 15 of those 20 countries are in Africa. But this is a global phenomenon, I just mentioned the Starbucks example in the above. Take Finland, mobile money was invented in Finland - by Coca Cola actually, launching the world's first SMS-payment enabled vending machines 15 years ago. So how is m-money in Finland today you ask? The latest stats by BookIT report that 69% of the total Finnish population of any age uses some form of mobile money or mobile payments.

 

Let me give you a perfect example of what happens next. Its not that mobile payments is a digital way to process money (which it is) which saves money (as it does). Its not that every consumer on the planet who is 'economically viable' ie can afford to buy a cup of coffee or tea, already today carries a mobile phones (which is true) and that every single mobile phone can already today process some form of mobile paymets (again true, at least as SMS payments). The bigger part of the mobile payments puzzle is, that every phone instantly becomes also a payment terminal, where mobile totally demolishes the business case for plastic credit and debit cards - which always require the expensive connected reader device. But every single mobile phone can also act as the payments receiving device. Wow. This is massive. Yes it is. And that is all only the beginning. What happens next, we learn from Finnair.

 

Finnair the Finnish national airline invented the mobile check-in twelve years ago. A cool idea, today one in six international travellers already uses mobile phone check in or boarding passes according to an IATA survey. But what happens at Finnair? Finnair reported already in 2010, that half of its passengers now use mobile check in. And so now Finnair can give premium service to its loyal passengers. Finnair today offers dynamic, real-time upgrade offers, as discounted upgrade sales, from economy class to business class. These are only offered after the ticket sales have closed for that specific flight, so in the last 90 minutes before the airplane rolls of the gate, and while the passengers are now being processed through security at the airport, and linger at duty-free shopping etc. The luggage was already checked, the ticket counter is closed, and no more passengers will fly on that given flight. But there are a few seats left in business class...

 

So Finnair targets first its platinum level frequent fliers, with a heavily discounted upgrade offer to business class - pay by registered credit card already on your account, or by your frequent flier miles - also a discounted number of miles required. If a few seats are still left, next the system makes the offer for Gold level Finnair frequent fliers, a discounted offer again, but now the discount isn't as big as it would be for Platinum level customers. And finallly, if a seat or two are left in business class, Finnair sends one more blast to its Silver level members, on a slightly discounted upgrade. The passengers love receiving this offer, whether they buy it or not. Finnair is giving them preferred and discounted VIP treatment. Very nice. And Finnair - gosh its CTO must utterly love this service - it BOOSTS the profits for Finnair. PROFITS. I keep teaching in my workshops, that Mobile is the Magical Money-Making Machine. And once again, we see it here. How well is this innovation working? Finnair now reports 23% of its passengers who have received the upgrade offers, have already taken up the offer. Wow. This means, Finnair has essentially eliminated any unsold tickets in Business Class !!!! Wow. This IS the future of air travel.

 

That is what I mean. The opportunities in mobile come when the companies involved start to explore and experiment and innovate. Like Ikea which started to offer its Augmented Reality based mobile catalog. You can test your Ikea furniture, virtually, in your home. Without carrying and assembling the Ikea furniture. Just point your camera at the wall, see how the Bjorn bookcase or Benny fits next to your Agneta sofa or the Annfrid table.. What a fab idea, isn't it? So good in fact, that the world's largest tool store, Home Depot has also introduced an Augmented Reality furniture tester, for their garden furniture.

 

And talking about Augmented Reality, one of my fave brands, Audi has just introduced AR based user manuals. Point your smartphone at your car and it will recognize what part of the car it is, to suggest for you what you can do. So point the phone at your wheel, and the Audi AR user manual will offer you advice on how to change a flat tyre - including video to see how its done, etc. Brilliant!

 

The excitement and focus on mobile is now everywhere. The Sri Lanka government just announced a few months ago, they will make eGovernment services 'mobile first' and why? Because in Sri Lanka (as in all Emerging World countries) the penetration of mobile phones is far greater than that of personal computers. So it makes sense, that eGovernment services are done as mGovernment.

 

I just read that in Finland there is some legislation suggested to give teachers the authority to confiscate smartphones in class, so students can't use them. What a weird attitude, considering that the digital mobile revolution started in Finland 20 years ago when the first person-to-person SMS text message was sent in 1993. But travel to the opposite side of the planet, in New Zealand, the education ministry is so smart, they have instructed all teachers to incorporate mobile phones into the classroom. All teachers use mobile phones as teaching tools and connectivity with students, teachers - and parents. Thats the right way into an information age, not to forbid phones, gosh!

 

I was just speaking in Singapore at the MMA Forum and we heard stats from the China, that in China its become normal for people to end relationships via SMS text messaging, haha. Two thirds of Chinese had reported this to have happened already. The mobile phone is as I've been telling for years the first thing we see when we wake up, and the last thing we see when we fall asleep. Now there are surveys saying young people would be willing to go weeks without sex, rather than give up on their mobile phones.

 

The addiction level is immense and only growing. We look at our mobile phones 150 times per day, ie once ever 6.5 minutes of every waking hour. Thats not 'smartphone' users or 'young' users or in 'advanced' markets. Its a global stat for all ages and using average ie mostly featurephones. It will get far more intense once we all have smartphones. Q2 of 2013 was the tipping point, where for the first time, more than half of all new phones sold, were indeed, smartphones. The mobile revolution is only starting. You ain't seen nothing yet.

Winston Wang, the digital boss over at AnheuserBusch Inbev the world's largest beer brewery, was speaking in New York at the global MMA Forum where he told us that beer is the physical social medium, and mobile is the digital social medium. The beer brands of AnheuserBusch-Inbev want to live there in the middle, using mobile as the digital bridge to the real world where beer already exists. And they plan to use mobile to bring digital experiences in live events where beer has such a prominent place from sports to rock concerts. Cool. (Winston was also kind enough to mention my '9 Unique Abilities of Mobile' as a key to how you can make successful mobile innovations. Thanks Winston!). The 9 Unique Abilities of Mobile (as a mass media, there are other abilities as a payment mechanism, communication channel, etc) are of course:

1 - Mobile is the first truly personal mass medium
2 - Mobile is permanently connected
3 - Mobile is always carried
4 - Mobile has a built-in payment mechanism
5 - Mobile has the most accurate audience measurement of any mass media
6 - Mobile enables user-generated content (is available at the creative inspiration)
7 - Only mobile captures the social context of our consumption
8 - Mobile is first mass media to enables Augmented Reality
9 - and Mobile offers a digital interface to the real world

If you use those 9 Unique Abilities, you can create magical experiences in mobile. So dont' bother to copy the internet. Don't bother to try to squeeze the TV screen into the pocket screen or fit the newspaper front page to the mobile display. Use the unique abilities to create new, magical and wonderful experiences. A great example of the magic comes from McDonalds in Singapore. Adults will come to a McD's restaurant and think of a table a just a table, a surface on which to eat. A child comes to McD's and a table is a playground. And McDonald's developed a cool way to play with that. They built virtual racetracks, similar to Scalextrix car race track toys. The winding race tracks existed only in the virtual space and were different for each table at the restaurant. What are the racecars? Smartphones! ride your phone - like a car - over the table and stay on the course to race. Cool. Magical. Unique. Fun. Engaging. This is what I urge always in my keynotes and workshops - as all who have seen me will remember - I encourage the industry to pursue magical experiences in mobile. What was not possible before on legacy media.

 

Google the world's largest internet company says the future of the internet is mobile. BBC the world's largest TV and radio broadcaster says that all TV and radio content will be available on mobile. Facebook the world's largest social network says the future of social networking is mobile. Sony the world's largest consumer electronics company says that mobile is front and center of their strategy. Macy's the world's largest department store says that they no longer forbid their customers from using cameraphones inside their stores; they now encourage it. Visa the world's largest credit card provider says the future of payments is mobile. Starbucks the world's largest coffee shop says mobile is their number 1 strategic priority.

 

Twenty years ago Apple Computer was on the brink of bankruptcy. It shifted focus away from the computers and calls itself a mobile company, and is now contesting oil giants for producing the biggest profits on the planet. Samsung says its mobile phone unit drives its profits. The world's richest man used to be Bill Gates of the computer industry; today the world's richest man is Carlos Slim, a mobile industry dude from Mexico who runs the America Movil and Telmex empire. Mobile was the fastest giant industry ever to grow from zero to 1 Trillion dollars in annual revenues, and achieved that massive milestone in only 29 years. For contrast, the PC industry, the TV industry, Hollywood, Music, Gaming, Print publishing, Advertising, the Internet - none of them ever reached a Trillion dollars per year, not even in their peak years. Mobile is the fastest-growing giant industry ever, and increasingly every other major industry is learning to utilize mobile today. Yes, travel, retail, banking, media, automobiles, fashion, cameras, government, healthcare, education, you name it. Mobile is the hottest thing in any industry right now. You need to get onboard and fast.

 

Which brings me conveniently to a plug. The 32 best minds in mobile, who among themselves have published over 60 books already for this young industry, who have more than 475 years of cumulative experience, the ultimate 'dream team' of the mobile industry, are collected onto the same stage for the first time ever, for the Mobilista Rockstars world tour in October 2013. The tour will be in your time zone, wherever you live. We do Hong Kong on Oct 7-8, then fly to London for Oct 9-10 and finish in New York Oct 10-11. If you need to brush up on your mobile strategy - or want to learn the latest about it - or want to send your young hungry digital team to study from the best. This is THE event to do. See here for more including bios and speaking topics for the 32 best gurus of this industry, that I quote in my 12 books:

 

Mobilista Rockstars 2013

Comments

[Ben]

Tomi, as always, thank you for the very insightful blog.

I'm curious to know, what do you think this means for the job market and the economy as a whole?

It seems that already dominate companies will have new and/or bigger departments focused on mobile. Aside from your coders, small developers, and top tier MBA's, will there be jobs for the masses? It seems likely that any new efficiencies created by mobile will go straight to the corporate bottom line and shareholders.

[Tomi T Ahonen]

Great question Ben

Well, mobile as an industry is the most complex giant industry yet. It takes the complexity of the internet businesses and adds the telecoms complexity layer and the mobility (cellular) complexity plus the vastly more diverse scale of handset types vs somewhat standardized PC form factors, screen sizes etc we see on the internet side.

Complexity in the short run means employment opportunity, certainly. Secondly, while many like to repeat the mantra 'the internet changed everything' even though it didn't change everything - ie the illiterate farmers and fishermen and lumberjacks etc in the Emerging World countries didn't see their daily jobs any different before the internet and after it. But mobile IS changing everything, even the lives of those illiterate farmers, fishermen etc are all now being improved via mobile phones and connectivity...

So the range of industries being disrupted is far greater than it was with the internet. So this means, as we've seen for example McDonald's issuing virtual currency - so McD is now competing with banks. Or Google Glass now becoming a rival of eyeglass brands (I don't even know those haha) or Apple rumored to go into the watchmaking business (iWatch) while Nikon just hinted they could release a smartphone. The cannibalization threats are coming from 'every side' in this battle, Google the internet company suddenly offers us Android as an operating system and only four years later Android sells on more computing devices (including smartphones) than Windows, who used to 'own' the computing environment just a few years ago.

These cross-industry opportunities and threats give rise to new disciplines of competence. Who could have guessed in 2003 that Nokia would one day become the world's bestselling camera brand (now replaced by Samsung obviously). Or that Vodafone's mobile money system could take over Kenya's economy so thoroughly that 11% of its current economy is 100% sustained by M-Pesa, so in other words, those perhaps 11% of Kenya jobs, weren't viable before M-Pesa..

I think in the short-to-mid term, till end of this decade at least, the net effect of mobile will be an addition to work force and often good well-paying middle-class jobs. Eventually, its all digital, its all Moore's Law, so eventually those jobs will become mostly automated and will vanish, just how the secretarial pools at major companies disappeared with the introduction of word processing and the PC and internet email could do the work of an army of typists, at a tiny fraction of the costs, and with greater accuracy and faster...

The World Bank calculated that mobile phone penetration rate is the biggest single booster to national GDP growth in the Emerging World countries, so at least at this point in time, this is a significant gain to employment too..

Tomi Ahonen :-)

[vvaz]

OT: Mission accomplished!

[ObjectiveObserver]

It happened. It bloody finally happened!! Tomi, I have been lurking at your site for years and you are truly one of the only people who saw the truth along all this time! Enjoy your victory. Nokia is dead and sold to Microsoft.

[Symbolset]

Microsoft to acquire Nokia Devices and Services. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.

http://www.microsoft.com/en-us/news/press/2013/Sep13/09-02AnnouncementPR.aspx

"Nokia expects that Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber would transfer to Microsoft at the anticipated closing of the transaction. Nokia has outlined these changes in more detail in a separate release issued today."

Elop returns to Redmond with the head of Nokia just in time to be Microsoft CEO. What a strange world we live in, eh Tomi?

[The Recusant]

***

Tomi, you have been proven correct: this moron Elop is a Trojan Horse for M$! He purposely wanted to cheapen Nokia's market value so M$ can buy the company at a lower price! See this latest news today confirming that M$ would buy Nokia:

http://www.bbc.co.uk/news/business-23940171

I hate M$ now more than I hate crApple iFruitcakes! I will never buy a Windows Phone even if it's made by Nokia! Like you Tomi, I also carry a Nokia 808 PV now as my primary phone.

***

[Jan]

I am totally excited about how mobiles can make life easier for us, normal people :) I am writing this in China using my 5.7" phablet. I am able to check my destination or track my walk so I don't get lost or find easier way. Also, have you tried negotiating a fare with Chinese taxi drivers? My mobile is my best tool.i know the distance and they can't rip me off that easily. I am staying connected and answer my work emails in real time. I am able to book things even when moving 300km/h on their high speed trains. I don't have to rely on Wi-Fi either. No longer I need to carry laptop or even tablet. It fits in my pocket, this window in to the world. Also, suggestion for an app. Some of the guides here have limited English. What about an app for sightseeing. It gives you as much info as you want andcould work similar to city lens - camera provides context.

[Tester]

You really buy this nonsense, do you?

It's pure marketing bullshit aimed at stupid investors to hide the ugly truth, nothing more, nothing less.

The 'strategic rationale' is that Nokia was dying and Microsoft couldn't afford losing them.

[Sander van der Wal]

Microsoft is not allowed to lie about that kind of stuff. They are presenting their case in the most flattering way possible, which is allowed. And which is a practice everybody has been practising, including Nokia.

[Erik]

Nice post. However, when discussing this post a question came up.

You write: "He told the reason why Apple rushed its iconic mobile phone handset to the market - it wasn't because of Nokia or Blackberry or Samsung or other smartphone makers, no. It was because Apple noticed that Sony's Walkman branded musicphones were cannibalizing Apple's iPod music player sales. Yes, the iPhone was a 'defensive move' by Apple, to protect is strong music player market in 2007, not an offensive move to try to capture a slice of the smartphone space."

Do you have any source for that statement? It seems a bit bold and some people believe you're very wrong on this. I've heard so many stories that claims the iPhone was targeting traditional smartphone makers so it is hard to believe which is true.

Thanks!

[Tomi T Ahonen]

Hi Erik

Haha, I tried and couldn't find it.. I know I have it on this blog. So I omitted the name and found it.. My bad. Not Tim Cook. Was Apple CFO Peter Oppenheimer who said in Apple July 2009 quarterly results conference call:

"I would like to discuss how we are looking at this market. We have three categories of what we call pocket products. Traditional MP3 players, iPod Touch, and iPhone. For traditional MP3 players, which includes Shuffle, Nano, and Classic, we saw a year-over-year decline which we internally had forecasted to occur. This is one of the original reasons we developed the iPhone and the iPod Touch. We expect our traditional MP3 players to decline over time as we cannibalize ourselves with the iPod Touch and the iPhone."

So yeah, sorry about that, wasn't Tim Cook, I have to go correct that. It was Apple's CFO instead..

Tomi Ahonen :-)

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