Hardware seems to have reached a plateau for the next few years and there is no massive technology that still needs to be integrated. My personal feeling is that work on battery life and energy storage is going to be where advances are going to be made, either to increase standby and call time, or allowing faster processors and computation on your device.
With hardware becoming a commodity, software and services is the key to growth, and in this respect the hardware manufacturers may soon find themselves at a disadvantage. Nokia is currently pushing their Ovi platform hard, and the multi-disciplinary approach seems to be working – they must have some revenue coming in from the Nokia Music Store and N-Gage (stop laughing at the back).
But these services need to be not only break-even but also turn a profit. There are a number of options available but the two obvious ones may not be the right way forward. The first is advertising – the great white hope of Web 2.0, and while it's true to say that some sites can turn a profit it's not as easy and simple as many would think.
The lights are on, but is anyone working?
So if advertising is not paying, and at some point the Board will want the company to stop the subsidy of a web service, that means the user will have to pay, and this is why I'm wondering where the revenue will come from. Will users be happy to pay for more? Or is the average monthly bill going to be something that end users would prefer to remain steady?
Services such as Nokia Messaging have been advertised as being an “extra service” that could be added to a monthly bill and the revenue shared by the Finns and the network company; and there's the recent change to Comes with Music to allow monthly billing after the yearly subscription is complete. But that means a lot of extras that will add up on a monthly bill. A bit of data here, some music there, navigation as well... and that's before calls are taken into account.
The consumer has a finite supply of money, and they will be more conscious of how this is spent. It is the nature of people to want new tools, but at the same time they won't want to spend that much more on the mobile every month than they are doing. It's likely that Nokia have done the lion's share of the development on Ovi already, financing it during the boom period, but now there's less free cash floating around in the business system to invest in start-ups, or to buy out fledgling companies to build a super software hub for your platform.
It's notable that in one of the big Silicon Valley start-up shows this month, Tech Crunch 50, that the number of start-ups built around a mobile concept was minimal (although CitySourced was a notable exception). If hardware is stagnant, then software needs to pick up the pace – but right now there seems to be a calm in the industry, with no new practical ideas, a lack of cash both at financial and individual levels, and a general feeling that everything that could be done has been done.
Where does the next big thing come from, or is innovation in the mobile market going to take a break for a year or two?
-- Ewan Spence, Sept 2009.