As the smartphone world's hardware becomes more and more commoditised, the money has to be made somewhere else – and the big names are looking at software services to do that. The problem with that approach is you need to double-dip the audience. First you need to get them on your hardware, and then you need to get them hooked into the software.
Unless you are pretty draconian on what can run on the hardware you sell, there's likely to be competition in the form of third party services, be they VC funded start-ups or mega-corporations like Google. So how can you get people to log on to your service rather than others? And once you have them, how do you (a) keep them and (b) make some money from them.
It may seem in the light of Web 2.0 that users are ephemeral, picky and follow the herd, but let's not forget that although the names have been changed, and the tools have more blinking lights than previously, it's still the same game that has played out countless times. Get as many users as you can, for as little as possible, keep them as long as possible and make as much money as you can from them
The hardest way to acquire is starting from zero, and this is where third party services and start-ups have the biggest problem. You need to advertise and get your product out there and hope for the best. Some of the most technologically best solutions never get enough traction by having enough users, while an inferior method that has a better implementation to get the new users, will win through. The classic Betamax v VHS format war is a good example here; by staying closed and not allowing other manufacturers to join in, Sony's Betamax, while still used till 2007 by professionals, lost the home video market to JVC's VHS, which was happy for anyone to build machines to their standard.
So a standing start is tough, and that's why larger companies, such as the aforementioned Google have an inbuilt advantage. Their launch yesterday of Google Latitude, a feature in Google Maps 3.0 that allows you to share your location with your friends, is a good example of leveraging an existing user base to another product. Existing users of Google Maps could register with the Latitude service, and then invite in their friends – and were presented a list of people in their Google Mail address book.
So two good strikes there - existing users were introduced to a new service, and they then proceeded to do the acquisition of new users on behalf of the Mountain View company. Because of the existing structure of users, and their familiarity with “Brand Google”, the use of the service took on an almost exponential growth.
That's something that a start-up very rarely achieves on the day of launch because they don't have the visibility or goodwill in a community. When the large companies go live with products (Google, Nokia, Amazon, Apple and, to a certain extent, Yahoo) they can get tens of thousands of instant users – levels that can take new companies months to achieve. Most online services need to take this long, slow route, so remember that the launching of services with the breadth of Latitude is something that happens comparatively rarely.
No matter how you get your users, the next challenge is keeping them. And if you thought getting them in the door was tough then making sure they don't leave is even harder. Your service needs to do something that the users want and can integrate into their lives. Twitter is a great example here – people outside the service look at it and think what is that for? But those starting and using it soon discover the benefits. That's what your online services need, and they need to show it very quickly.
But that's a discussion for another time. One of the battles to be fought during 2009 is clearly software services running on mobile hardware, and with no offence cast over any smaller companies, the big guns from Nokia, Apple and Google are out to try and get as many users as possible.
There's already a solid battle for your address book and PIM data with Mobile Me (Apple) and Ovi (Nokia) the obvious contenders, and while Google keeps your data in the cloud, their address book and calendaring applications are easily accessible from the mobile. All three provide access via a desktop web browser so you have a holistic approach, and in reality users are going to choose just one service, and it's likely to be very dependent on their phone.
Ovi has a number of strands to go alongside the PIM data (N-Gage and Music Store are the two that should easily catch the eye of consumers). It's obvious that there's a big battle at the moment over mapping and location, and it's not likely to be the last battle chosen. What is clear is that this “hidden” battle for hearts and minds will intensify over the next few months, although I'm not sure this will be evident to us users. But it is going on, and the results are going to have a serious impact on the smartphone world in 2009 and beyond.
-- Ewan Spence, Feb 2009.