I had a fun chat with my cousin a few nights ago in Brussels. Not that any of you is interested in reading rubbish my cousin and I talk about when we have a couple of beers, but for once I think we were talking about something worth mentioning. I am not pretending to be an expert of any kind, I just read
www.wired.com,
www.theregister.co.uk and a few more publications that give hints about what's going on. Below are some thoughts about that chat we had even though the end of the evening is a bit blurry in my memory, so let's say it's just what I think. Leave my cousin out of it.
He started with a question like this: Innovation. Where is it going and what will it deliver to the end consumer? (again that's what I remember being the starting point)
First of all we have to recognise that innovation today is marketing driven and not technology driven. There is a big difference. It means that a new product will be launched only when it's clear who to sell it to and how to make money out of it. I know that it sort of makes sense but it would make a lot more sense to deliver the technology to the end users and empower them to make choices on how to use it.
When a new technology comes out (eg UMTS, WiFi, VoIP...) people think about how it's going to be used and how you'll be able to bill customers. Unfortunately if you leave it to companies to define the services to provide users with they'll have something very clear in mind: how can I bill my customers and where am I going to make more profit.
Here are a couple of examples that explain a little better what I mean.
SMS - for a while SMS were widely ignored by mobile phone users. When mobiles became popular enough for teenagers to start using them the whole SMS thing took off. The functionality was there, but probably the first mobile users were business users who didn't need a cheap way to communicate simple text-based messages ("who cares, my company is paying for it" sort of thing). The user base changed and so did their needs. SMS today are stupidly expensive if you compare the amount of information you send out with the price you pay. Mobile operators understod that SMS became a valuable service for mobile users and started charging a lot more for it.
From Wikipedia "Despite the low cost to the consumer, the service is enormously profitable to the service providers. At a typical length of only 190 bytes (incl. protocol overhead), more than 350 of these messages per minute can be transmitted at the same datarate as a usual voice call (9 kbit/s)."
Wifi at Starbucks (
Full story). that's a very good example and I'll have to give all credits to wired (again) for that. Most of the cost for Starbucks to set-up wifi access in their cafes (can we call them that?) is around billing customers. You need, of course, a billing system and a helpdesk in case things don't work, things that you'll pay for when purchasing your right to access the wifi connection. My point is that if the objective is to provide (bad) coffee drinkers with internet access, wouldn't it be easier and cheaper to just give wifi access for free? If it's not working, well, tough shit, you'll have to come back later instead of paying for it and knowing that the biggest chunk of it will go into paying for the billing system. By the way, to set-up and run a wifi hotspot costs 20 euros a month... To me this is a clear example of technology misuse.
To take this one step further, shouldn't we consider internet access as one basic utility (as water, gas, health system) a government should provide its citizens with? Why don't we leave entrepreneurs create new businesses without making stupid money on our back for what should be considered a basic service. In the US some cities are starting to roll-out city-wide wifi coverage creating a new trend supporting the idea of having cheap/free internet access available city-wide.
I'll go even further to say that there should be economic areas that should be free from market economy. Why is water distribution supposed to deliver a profit? Access to clean water should be a human right (isn't it already?) instead we give all the infrastructure we've build over decades to a private company for a short-term profit. The only reason for a company to exist is to generate profit (sooner or later). How can an organisation based on such principle be in charge of what should be a human right? I'd rather be sure and have someone who only has the well-being of consumers at heart in charge of it. Even if this means a less efficient company (which is not always true). I could use similar arguments for motorways, the health system, trains, electricity, gas, etc. Why an electricity company has to make a profit? Can't it just deliver electricity? Hospitals should just take good care of sick people, shouldn't they?
WiMax - great technology, but will probably put out of reach by having UMTS-style auctions for a few licences. WiMax is the next generation WiFi, with a much higher bandwidth over Kilometers not tens of meters like WiFi. This sort of mobile bandwidth will definitely enable users to have a really fast and mobile internet access. This is the theory. What seems likely to happen is that licences to operate with WiMax will be auctioned for tens/hundreds of millions. Only well established (or well backed) operators will be able to afford such licences, and guess who will be paying the bill? You, the end user. Some may claim that UMTS-like auctions will bring a lot of much needed cash to governments but that's in the short term. On the long term the consumers will pay for it. So is the government (understand the people they represent) going to be richer or poorer auctioning wimax licences? A lot poorer. Think that companies will have to obey to the universal law of ROI and you will end-up paying for it.
Look at UMTS now. It was supposed to deliver fast-ish mobile internet access. Operators spent billions in licences as it was supposed to be the future and now we're heading towards WiMax while UMTS penetration is still very low*. I think that operators were presented with a whole new market and instead of trying to understand what people wanted to do they concentrated on how they could bill them. Completely different approach. End result: many people will tell you that UMTS services are very expensive and very little used.
*When I say penetration for UMTS is low I mean that I haven't seen that many non-business users firing up their laptops in a bar and get their fast internet access or PDAs, no grannies doing video-conferences in the streets.
As you see my cousin and I had quite a chat and definitely more than a beer...At the end, the conclusion was that I'm not expecting to see something thought, designed and tested by consumers. I know companies have to generate a profit but there is only one clever ways of doing this. Put the user first. Let them decide. Let them have a go at what you think they need. Get the consumers onboard. Companies just don't understand that hundreds of their top customers would be flattered to be invited to give their opinion about a new product or service. Ferrari has done it and has even achieved to get customers to pay (a lot) to do it (
read here), but they're Ferrari, it's a different story. Just in case someone working for Nutella is reading this, I am free to run any sort of quality control tests on Nutella.
Enough for today. I have to go play with my bike now.
ciao
