Moving from mobile capabilities to mobile compulsion

Marek Pawlowski, PMNThis article by Marek Pawlowski, founder of MEX and Editorial Director at PMN, explores the strategic changes required to expand mass market usage of mobile services, looking at the importance of fully understanding the definition of user experience, the companies best placed to succeed and the reality of the iPhone impact.

Capability is different from compulsion

The mobile telecoms industry has succeeded in innovating tremendous technological capabilities. The range of applications and services which can theoretically be delivered over wireless networks is staggering. However, there has been a collective failing in the mobile business to evolve from delivering capability to delivering compulsion. Quite simply, the vast majority of features go unused by most customers.

This crucial difference springs from an inability to put the customer view at the heart of the industry, resulting in business models which focus first on rewarding the creators of particular technologies rather than meeting the needs of users. It is this attitude which constrains the adoption of new services by a wider audience, promoting an approach whereby companies feel their job is done once they have produced a stable technology. The industry spends many billions each year on R&D to create new products, but has consistently failed to deliver them to the market in a compelling way.

The real impact of Apple’s iPhone

The arrival of Apple in the mobile industry has provided both a provocation and a benchmark. Here is a company which prides itself on an abilility to create irrational desire for its products among customers. It has also proven itself adept at commanding premium pricing and building a business model which allows it to profit from delivering a complete package of hardware, software, services and content. Of course, Apple is in the lucky position of having deep pockets, no legacy mobile telecoms portfolio to constrain its approach and a pre-seeded market of existing Apple users almost guaranteed to buy a few million iPhones.

With the amount of press coverage Apple’s iPhone has received, much of it speculative and inaccurate, it is easy to imagine the significance of the product has been overplayed. Network operator executives and senior management from the handset industry have become practised at repeating their PR department’s standard iPhone quote: “It is an interesting product, but even if they hit their targets for sales it will still only represent a tiny fraction of global handset shipments…” This same spin has been repeated in various languages thousands of times since the iPhone launched and yet, for all their protestations, the old guard of the mobile business is rapidly trying to restructure the industry to replicate Apple’s integrated approach. People are quickly waking up to the reality that 100 users who buy a whole range of additional services are more profitable than 1000 who just want cheap voice.

The iPhone is a great example of how to move from capability and compulsion. There are already tens of millions of users out there equipped with Windows Mobile smartphones and high-end products from Samsung, Sony Ericsson and LG. All of them are capable of accessing a wealth of additional software and services, but we know from various independent studies that iPhone users are much more likely to utilise additional non-voice services. Where other handset manufacturers provide their users with the raw capabilities, Apple offers users a compelling reason to explore new things.

Is the iPhone App Store a revolution?

Much has been made of the iPhone App Store, which provides direct access to a central catalogue of software and services from the handset itself. However, this is neither a new concept (most operators and manufacturers have been offering something similar for many years) or the whole reason why consumption of additional software and services is much higher on the iPhone. Indeed, first generation iPhone users were already compelled to use many more features and spend much more time with their handsets long before the App Store was available.

Apple’s ability to compel customers to do more comes from a complex blend of advertising, user interface innovation, developer relations strategy and, to a lesser extent, new technology. It works because in all of these areas Apple has never lost sight of the customer perspective. New features have sprung for an ability to see the world through the customer’s eyes, to understand the nuance of their experience, rather than a need to introduce new technology.

Understanding the true complexity of customer experience

This is what we mean when we talk about the complexity of customer experience. It is not something which can be radically improved overnight by introducing a great new user interface or changed by hiring an industrial design firm to create a cool new form factor.

You could transplant the iPhone UI and App Store into an equivalent Nokia or Samsung handset and it wouldn’t succeed without the myriad other elements which comprise Apple’s overall experience.

Users are not compelled to do new things by the arrival of new technology alone. Creating or enabling new behaviours needs the complete package of usability, promotion, partnerships and service. An apt metaphor is the chef who spends weeks in the kitchen perfecting a new recipe and then neglects to provide his diners with cutlery or tables, let alone serving staff to deliver it to the plate. The cuisine may be extraordinary, but it is nothing but extraordinary useless without the components which complete the experience.

When a product like the iPhone attracts so much mainstream media attention it is easy to see why it becomes the focus of so many industry editorials.

Which companies are best positioned?

However, many of the moves which may have the most profound impact on the mobile user experience are occuring outside of Apple. Nokia, for instance, is moving with surprising rapidity to transform a sprawling multinational focused on technology R&D and supply chain efficiencies into a modern, customer-focused products and services enterprise.

The fruits of this transformation are only just starting to appear, but they are springing up more and more often as the pace of change accelerates. In the space of about 18 months, Nokia has moved from a strategy built around churning out devices based on its own platforms to a new approach where the platform is essentially commoditised, open and available to all – the new differentiator is Nokia’s ability to identify customer needs and deliver complete packages of hardware, software and services which meet those desires.

Nokia SportsTracker web interface

There are already some great examples. SportsTracker came out of Nokia’s new Beta Labs project and has proved a huge hit, providing users with a way to record their journeys, workouts and tourist trips using GPS. On its own, this piece of software is relatively uninteresting, but Nokia has coupled it with a web-based interface which allows users to upload their routes into a Google Maps mash-up, share them with friends and keep a journal of all their trips. It has also integrated a photo geo-tagging feature, so any photos taken on the journey are overlaid on the route map.

Nokia has succeeded with SportsTracker because, as a handset manufacturer, it has been able to put all of the components in place at the right time: it has specified GPS on many of its handsets to provide the crucial hardware technology, it has invested in developing the web interface and pre-installed the client application on its devices. Crucially, it can still afford to make SportsTracker ‘free’ to the customer, because it has developed the operational efficiences which enable it to derive sufficient profit from the hardware sales to cover its software development costs.

The forthcoming ‘Comes with music’ offering is another example of Nokia applying this new business model to deliver a great customer experience. The proposition is very simple: when you buy a compatible Nokia handset, you get get unlimited access to a catalogue of downloadable music for a year. At the end of the year, you can keep the tracks you’ve downloaded and choose if you want to extend your subscription to continue accessing new music.

New business models favour forward-thinking handset manufacturers

The beauty of this approach is in the way it is marketed to the consumer. From the customer perspective, the idea of paying a premium to purchase a desireable piece of hardware is perfectly acceptable. The logic of the transaction makes sense: money in exchange for goods. Many customers will, in fact, perceive the ‘Comes with music’ service to be a ‘free’ benefit. Of course, the customer is actually paying a reasonable price for it, but that cost is embedded within the hardware sale, so it seems like its free. In doing this, Nokia neatly avoids the big stumbling block which prevents so many users from exploring additional elements of the user experience: if they don’t perceive it to be free, they won’t use it! Ask anyone under the age of 30 when they last actually paid for a piece of music and you’ll see why this is so important.

The old model for delivering capabilities (click for full version)

The old model for delivering capabilities (click for full version).

The old model for delivering capabilities (click for full version)

The new model for delivering compulsion (click for full version).

This is why there is good reason to be bullish about the prospects for Nokia, a hardware manufacturer which has caught this wave early. If Nokia continues to manage its supply chains and manufacturing costs with its customary excellence, the company will be one of the best placed players within the industry to lead the move from capability to compulsion.

As a manufacturer, it is well placed to drive the necessary technology and usability changes and it can make money even when it provides most software and services at a price the consumer perceives to be ‘free’. Operators and content providers simply don’t have the business models to do this. As long as customer perception continues to align with the idea that the greatest value is in the physical device, the handset manufacturers will be best placed to capture the lion’s share of the value.

Share your views on the MEX blog

Do you agree that handset manufacturers are best placed within the mobile value chain to expand into offering free services while still making a profit? Share your views by adding a comment below…


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  1. 1
    Marek Pawlowski

    Do you agree that handset manufacturers are best placed within the mobile value chain to expand into offering free services while still making a profit? Share your views by adding a comment below…

  2. 2
    Andrew J Scott

    I think they’re WELL placed, I’m not convinced they’re BEST placed.

    For starters, they dont have a good track record of making software or UI’s which are pervasive and simple to use. No, not even Nokia.

    The N95 should have been the first of the phone to be a true catalyst toward mobile internet mass adoption; it wasnt. It was the iphone. The N95 has a fantastic spec (i.e. capabilities) but is flawed in its execution. Usability is poor, frankly. It simply does not deliver on its promise.

    I think we’ll see very interesting things from Nokia and others. Certainly the intake of mobile startups (Gate 5, Plazes) will improve their offering, if they are allowed to innovate and not subsumed into the dinosaur of the corporation.

    I believe the real innovation will still come from outside the MNO and manufacturer space and I think that is where the big new consumer brands of the Mobile Internet will come from too.

  3. 3
    Bill Price

    I would agree that Apple unlike any other is delivering on a unified customer experience across many devices with a focus on simplicity and ease of use which most of our industry fails to achieve.

  4. 4
    Marek Pawlowski

    Thanks for your comments Bill and Andrew.

    To address Andrew’s point about innovation outside the manufacturer and mobile network operator space, I would say I am very much in agreement. We are already seeing some creative and profitable start-ups emerging as penetration of mobile web access increases.

    However, what we’re also seeing is an expansion of what many manufacturers consider to be their ‘core’ area. There aren’t going to be many start-ups, for instance, who want to get into mobile mapping now that Nokia has splashed out 8bn+ on buying Gate5 and Navteq. Nokia is also now offering free email, free GPS tracking, a gaming platform and more. Opportunities for start-ups will be confined to niches where there is a more level playing field.

    Other handset manufacturers will follow Nokia’s example. They can see the potential in a business model like RIM’s or Apple’s, where the manufacturer gains an advantage in services by being able to tie-in very closely to the hardware design. RIM’s handsets wouldn’t have succeeded without the software and services and vice versa. Just small things, like being able to specify a scroll wheel to enhance the experience of scanning through emails, can make the difference between a successful product and an unused feature.

    Companies like Nokia aren’t there yet. As Andrew rightly points out, the N95 has some usability failings and is not well integrated with other devices in the consumer electronics universe (I agree with Bill here that the iPhone is a benchmark example of how this can be done). However, as manufacturers with direct control over the hardware specification, companies like Nokia are best placed to deliver the usability improvements, because they can directly influence all the components required for a great user experience – and still make money even if they giving the services away for free. Quite simply, they can afford to commoditise services in the eyes of the consumer and encourage the notion that the value is in the hardware purchase.

  5. 6

    Actually, I would agree that handset manufacturers are ultimately the best placed to drive compelling mobile services, but for a slightly different reason.

    I think getting the software and hardware experience right is important (and in many ways Sony Ericsson is closer to this than Nokia — Nokia’s profusion of slightly flaky services and software is more of an inhibitor than an enabler at the moment). However, this is only a necessary condition, not a sufficient one. There is another necessary condition, and that is user education. This is an area in which Apple has invested as much effort (possibly more) as in software/hardware R&D.

    Unfortunately, the iPhone is an incredibly “shallow” experience (as a measure of this just imagine how shallow the functionality of a device must be for a contacts search field to get prime billing as an enhancement, which is what happened with iPhone 2.0). I’ve said it before, and I’ll say it again, a shallow platform can effortlessly masquerade as easy-to-use, but more to the point here, is that a shallow platform is easy to explain.

    Nokia’s S60 is NOT a shallow platform, and Nokia has a much bigger job of educating users in exploiting this. Perhaps the best example Apple has given is: start shallow (or, in other words, provide a “shallow end of the pool” where people can dip their toes in). S60 (and even S40), as it stands, demands that the user swim immediately they venture off the “ledge” of traditional phone capabilities, or simply sink, and thus many Nokia users dare not venture beyond the confines of contacts, phone, and SMS’ing.

    Eventually, someone has to teach customers how to swim, at least to some extent. This is both the handset manufacturer’s and the operator’s responsibility, and they have been shirking this for far too long. Making a smoother gradient is also critical, but as I said, not sufficient.

  6. 7
    Marek Pawlowski

    Good point Malcolm. User education has a significant role to play here and again Apple is providing a good benchmark example with its iPhone advertising. It really is the first mobile company for decades to centre its marketing around a simple image of the product and a demonstration of what it can do.

    Its adverts clearly explain the product’s features, in a tone which isn’t patronising, and show how easy they are to use. No wonder most people now associate the iPhone with mobile internet access, even though there are countless other products on the market which offer similar features.

    Every other manufacturer tries to come up with an abstract, edgy marketing campaign based around flawed aspirational marketing principles. Apple just lets the product do the talking.

    As a result, it is educating users to understand the real benefits of things like mobile internet access and making them feel like it is something anyone will be able to do, without having to read a 100 page manual.

    It also means customers are more engaged with the features when they actually buy the product. Someone might buy a competing handset because they’ve been finessed by the advertising and never get beyond basic voice functionality. iPhone customers, however, are walking into the transaction with their eyes wide open, knowing and eager to try the features they’ve seen demonstrated in the adverts.

    Nokia launched a marketing campaign for its high-end Series 60 devices about 12 months ago based around the concept of ‘Open to new features’. I think this is a step in the right direction for user education, but the execution was poor. They kept it all at the conceptual level, rather than providing real life examples of how users could make the most of that openess.

    How about a Nokia campaign centred around the benefits of SportsTracker, or the free push email service they’ve recently launched? What about a Samsung advert which shows users why their new 8 megapixel camera phone is worth the extra money to upgrade from an existing 3 megapixel device?

  7. 8
    A provocation and a benchmark

    […] by Marek Pawlowski of MEX are always interesting, and the latest one is no different. In “Moving from mobile capabilities to mobile compulsion“, he looks at what the impact of the iPhone and the App Store really is, and who’s best […]

  8. 10
    Dan G.

    Thanks for the very insightful article.

    @Malcolm: Great point about shallowness vs. ease-of-use.

    I agree with @Andrew, that real innovation will come from the “consumer brands” external to the manufacturers and the operators.

    The move towards open platforms,
    such as Android, S60 Foundation, and the iPhone OS (OK, depends on your definition of ‘open’ 🙂 means that OEMs will have a lot less control over what users can do on their devices.

    Other than making phone calls over a cellular network, I have a hard time thinking of a compelling service for which the only touchpoint is a mobile app. As you point out, most mobile apps are just windows into a much larger ecosystem of services.

    If mobile platforms become a commodity, as desktop platforms have, and anyone can use readily available tools develop a beautifully shallow iPhone app or a clunky yet powerful S60 app, I think that this moves the potential for profit up the value chain from the device manufacturers to the social networking, media sharing, and location-based services which are the real reason mobile devices are so compelling to use in the first place.

  9. 11

    Thanks a lot for sharing this information with us. I also agree with Andrew.N95 is flawed in its execution. Usability is poor, frankly. It simply does not deliver on its promise.

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