Wak Oentoenk

I saw a great example recently of the problems caused when mobile companies don't understand the structure of the market for mobile data. A report by Research and Markets gave a somber view of the current status of mobile data in Europe:

"Only about 14% of subscribers use MMS/picture messaging, and only 10% of mobile users across Europe who have access to mobile Internet make use of it....In areas such as mobile TV, successful trials have not yet translated into general consumer acceptance."

This led to very skeptical commentary at Muni Wireless, where Esme Voss pointed to horror stories about European mobile users who accidentally compiled monthly bills of up to 10,000 Euros by misunderstanding the billing on their mobile data plans. "A complete failure" was how she described mobile data in Europe.

I think Esme's right about the data charges, which is why Europe's new flat-rate plans are a step forward. But I think the biggest problem isn't the data charges. It's the industry's misuse of the word "only."

If you expect a single mobile data application to conquer the entire mobile market, anything less than overwhelming adoption is going to be viewed as a failure. Getting "only" 14% or "only" 10% of the market is a crushing disappointment.

But as I discussed in a recent post, the mobile data market is heavily segmented. It's very hard for any single solution to appeal to more than about 12% to 15% the population, because that's the maximum size of each market.

The problem isn't necessarily with the services, it's with our expectations. Let's rewrite that Research and Markets report based on the real structure of the mobile data world:

Mobile companies in Europe have successfully pioneered several new mobile data segments. MMS messaging has rapidly saturated virtually everyone who's willing to pay substantial amounts of money to send low-resolution pictures to their friends. Mobile browsing is establishing a solid niche, with as many as ten percent of people who were given an Internet-capable handset using it to access online content. Meanwhile, mobile TV trials have tapped into the segment of mobile users who are willing to pay to watch TV on a screen the size of your belt buckle.

Doesn't that feel a lot better? It's also a lot closer to reality.

There are several lessons to take away from this if you work at a mobile-related company:

Think small. If you're building a new service or product, make sure it'll be cash flow positive even on a small user base. It doesn't necessarily have to pay back all of the sunk cost all at once, but if you need to get 20% penetration of the user base in order to break even on your day-to-day operating costs, you might as well start preparing your resume now, because you are going to fail.

Set realistic expectations. Make sure your management chain understands that there are no killer apps in mobile data. The market's made up of narrow segments, and getting five percent of the users to be passionate about something is actually quite a success. Cable TV programs thrive on that sort of viewer base all the time; that's the type of world you're operating in.

Learn on someone else's nickel. Since 5% of the market is a success, that means you'll need to run a lot of experiments in order to get a portfolio of successful services. Rather than funding all those experiments yourself, it might be a lot better to allow a bunch of software developers to make all the mistakes, and then you participate in the billing for the most successful ones. An open garden is a method for you to minimize your risk.

A reader sent me a note asking if I had seen the thread on Treo Central discussing some patents Palm received on mobile devices with folding screens. Several people have been speculating online that this design might be the new category of device that Palm's developing.

The product designs depicted in the patents are intriguing. They show a device that looks like a mobile phone:



...but opens to reveal something that looks, well, almost exactly like I've always imagined an info pad would look:



There's a flexible screen on the inside, so you get one continuous writing or viewing surface when the device is opened.

Alas, the patents tell us almost nothing about what Palm might be developing today. If you look carefully, they were filed in January 2001, when Palm had a completely different senior management team.



Some of the inventors don't even work at Palm anymore. Frank Canova is mentioned in one of the patents. He was head of advanced technology at the time, but left the company in 2002. Rich Gioscia is on several of the patents. He was driving industrial design at the time, and is still with the company.

The patents can't be early prototypes of Jeff Hawkins' secret project, because he was not working at Palm at the time. It is possible that the ideas filed for by Canova and Gioscia and the others were incorporated into Hawkins' project, but it's just as possible that the patents represent an old idea that the company abandoned years ago.

This sort of thing often happens with patents -- many tech companies pay bonuses to their engineers to file for patents on almost anything they can think of, because patents are used like trading cards in industry negotiations. It's helpful to have a big collection of them. Even if a patents was for a real product that was being developed at one point, by the time the patent's granted the company may have changed its plans completely.

But I will say this: I want that folding device so badly that it makes my teeth hurt.

My kids have a phrase they use whenever their parents share embarrassing personal details: "Too much information!" I think that's what the folks at Astraware must have thought when they recently asked their users to describe where they play Astraware's mobile games. You know where this is going, right? "In the bathroom" was the most common reply.

I don't think the Astraware responses were unusual. If you do a web search for the phrase "mobile phone in toilet," you'll find all sorts of sad stories about mobile phones, iPods, and other devices that took an unscheduled swim. Supposedly utility fees in Helsinki are going up in part because of all the phones that end up in the sewers there.

Which applications the users choose to use depends on which usage segment they're in. The entertainment-focused users play games and listen to music. I was at a focus group once where a communication-centric user admitted that he likes to send e-mails while using the facilities. "My wife hates it," he said.

So don't feel guilty about using that application while you're, uh, otherwise occupied. Just make sure you keep your device away from the water. And if it does take a swim, and you're tasteless enough to want to re-use the device, don't dry it in a microwave oven.