Last night I was reminded of my conviction that any business model build around mobile is doomed and that advertisers should ignore this medium for the time being.

Last night I was at PaidContent’s successful LDN ContentNext Mixer networking event that had over 350 attendants.

I talked to a number of mobile start-ups everybody I talked was in mobile for some reason). All had good ideas, none where getting traction. Many were desperately trying to find a work around the network operators.

Think about the innovation you’ve seen in the Internet since 1995 (the year Amazon launched and Netscape IPOed). Think of how you use the computer today compared to back then; of all the innovative services that have been launched; about the revolution we have experienced in the way we communicate, share content, find information. To name a few there is: Amazon, Hotmail, online news, eBay, Wikipedia, Yahoo, MySpace, YouTube, Google, Expedia, online banking, Napster, BitTorrent, digg, SecondLife, blogs, email, instant messaging, Skype…

Now think of the innovation you’ve seen in mobiles since 1985 (when mobiles began to be widely available) – and note they had over 10 years head start. Think of how you used your mobile phone then and now : uhh… you probably still use it to make and receive calls and text messages. Okay, to be complete there is a 1% or less sliver of mobile users who are Blackberry users; or who send picture messages, make video calls or watch TV. But, to drive the point home, these services were launched in the last two years or so.

So what happened to all the mobile entrepreneurs? Why haven’t we seen innovation on mobile phones as we say on PCs. The entrepreneurs were snuffed (1). Because they control the network the mobile operators figured they ought to make all the profit from any business using their infrastructure and totally control (own) the user experience (2). I know of three mobile-based start-ups, by friends of mine, all with reasonably good ideas, that fatally partnered with mobile network operators. The exception was – there is always an exception the defines the rule: ringtones.

Mobile network operators were (and are) too greedy. The only entrepreneurial mobile environment is iMode in Japan where DoCoMo charges a lowly 9% commission on sales.

And that’s my point. The only way a mobile-based business can succeed is to avoid, at all peril, the mobile network operators.

Prediction: Until there is widespread WiFi and 3G access to the Internet via mobile phones (in other words, mobile-based business can reach consumers by going around network operators portals) there will be limited opportunities to establish profitable mobile-based businesses. Established companies should steer clear until then.


(1) The death of innovation in a closed network environment should serve as a warning to US regulators being lobbied by US operators trying to create a two-tiered Internet.

(2) Another, technical reason, is that mobile phones didn’t have a standard operating platform equivalent to Windows and HTML – until the recent arrival of Java enabled phones. However, for years Nokia represented over 60% of the handset market which is big enough a market. So, though the technical conditions for innovation of services on mobile phones was not ideal, it was not unsurmountable.

tags: mobile