Panel Of Industry Leaders On Smartphones


I caught a webcast of a panel at the AO2005: The Innovation Summit about smartphones, and there were some interesting themes covered which I’ll take bits of and put up here, and some advertising from the Sales VP of Palm, which I’ll leave out.

John Hartnett, SVP, Americas, PalmOneDemographic Differences — There were a few different opinions on which demographic differences are important in regards to using mobile phones. Both Joe Schoendorf (a partner at Accel Partners) and John Hartnett (SVP, Americas, Palm) thought the important difference was generational — the youth use mobile differently to baby boomers, they’re more comfortable using the phone and don’t see the need for a landline. Bill Watkins (President and CEO, Seagate Technology) later commented: “I would never watch a movie on a small screen…but my kids do.”

Stephen Elop, CEO, MacromediaStephen Elop (CEO, Macromedia) has a different view…”The big demographic difference is geography, where you’re growing up right now”. He pointed out that in Japan if you walk around you will see hundreds of young people with mobile phones of all different levels of complexity, because that is the primary mode of communication. And if you look over their shoulder you will see them doing a lot of stuff, because the interface is better. “Largely because of our technology arrogance…we’re used to exporting stuff overseas…it’s all happening over there…we’re far behind here. Eventually the US will catch up…but we’re in the heart of silicon valley and the (infrastructure doesn’t support the kind of tech we’re talking about)”.

Trip Hawkins, Chairman and CEO, Digital ChocolateFinally, Trip Hawkins (Chairman and CEO, Digital Chocolate) stated: “It’s not about technology or demographics, it’s about ubiquitiy”. Once mobile phones went digital they became subject to Moore’s Law…”A feature phone now has about 75$ of components in it. For every higher end smartphone with component cost of $300-500 you have a 10 simpler phones”. When smartphones shrink in component cost and form factor more people will carry them, and — by definition — more content will be used. He also asked the question “Will people be willing to give up fidelity to get better personalization and customization?” Then pointed out that people were willing to pay for a ringtone to personalize their phone, even though it was crappy quality. “You’ll be surprised by the technical unsophistication of that.”

Bill Watkins, President and CEO, Seagate TechnologyStorage — In response to an audience question Watkins indicated he expected mobile phones to have 80-100 GB of memory in five years. “It’s going to be a while before we put terabytes on a phone.” Hartnett piped up with the bit of trivia that the LifeDrive has 8000 times more storage than the first Palm.

Social Interactions as the Killer App — Hawkins answered the question “what do people want from smartphones in order for them to become mainstream?” this way: “It’s not games, it’s not content at all, it’s the way you think of software as being a killer app.” He made comparisons with the media of all forms for the past 100 years and claimed that you get an average revenue per user of $13-15 for most of the services. “There’s another classic media where ARPU ranges from $50-150. Everyone of those is a social network. The reason that RIM can get $60 a month in ARPU is because it’s a social application…When you have access to a social network there is almost no price too high…this is something everyone is very interested in and they’ll sign up for this stuff.” This segued neatly into the next topic…

Standardization — Elop claimed that for social applications to be successful they needed to have commonality and be ubiquitous, but the fragmentation of the market created a barrier to entry. Hawkins cut in with a comment that standardization was never going to occur and it wasn’t that big a problem. “(There are operators, handset manufacturers, everyone) none of whom want there to be standards unless its them, and since it can’t be them we’ll have fragmentation forever. However, the idea that this is a problem has been exaggerated. We routinely take a game and port it to hundreds of Java variants, operators, languages etc and it’s not a problem.” He cited a figure of $100, I think to test the game on all platforms. Elop replied: “You may have conquered porting but a lot of people haven’t, which is why they’re trying to standardize.” He then pointed out that Flash was a very good standardization tool…
Hartnett agreed with both: “Standardization would be a great thing but it’s not going to happen.”

Future Predictions — The panel ended with predictions for 2010.
Hartnett: “The killer app is the custom app. The consumer will decide what that app is.”
Hawkins: “If you go back 25 years, predating internet browser, email, we had the word processor. People at that time might have had a hard time predicting we’d have a lot of Yahoo soccer mums using email…What you’re going to see by 2010 is what this medium is really about…it’s going to be new things you haven’t seen yet and they’re going to have a fundamental social benefit.” The benefit will be to give people opportunities to start new digital conversations. (From my point of view, if you can talk to everybody how do you decide who to talk to?)
Joe Schoendorf, Partner, Accel PartnersSchoendorf: “Connectibility. For the most part I think we’re going to live in a world where WiFi is ubiquitous and free. It’s going to become a utility like water. That thought drives the operators crazy.” If you add IP telephony to free WiFi and multiply it by a billion users, you get “a pretty interesting set of dynamics which we sitting at the top of the smartphone end probably haven’t thought through.”

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