Mobile Operators / OEMs & Social Networking: Release the Hounds!

November 28, 2006 by Lisa Oshima | Mobile, Social Media

Companies are currently using social media and social networking sites as a platform for evangelizing their own products and/or improving their image.  Even more interesting, is the way that companies (particularly mobile operators and OEMs) are thinking about how social media/social networking can:

  • Make their products/services more attractive and usable to customers
  • Increase customer numbers/ service subscriptions
  • Connect customers to each other – driving data usage (which may be attractive to European Mobile Operators, most of whom do not offer “all you can eat” data plans, like many US-based Mobile Operators)
  • and more.

I’ve been independently investigating social media (specifically social networking) for a while now because I believe it will revolutionize computing and human interaction.  In particular, I believe that social networking has the potential to transform the current mobile telecommunications landscape.

I have a passion for mobile, and have worked extensively with mobile OEMs (Nokia, Inc. and Palm, Inc.), mobile operators, and independent software vendors (ISVs).  While none of my jobs in telecommunications have involved investigating social media, my experience working in mobile has given me an understanding of OEMs’ and operators’ priorities.  In my experience, operators are most concerned with driving revenue by increasing:

  1. New subscriptions and renewed subscriptions
  2. Sales of “sticky” paid-for services that provide recurring revenue and drive consumers reliance on the network, without overburdoning the mobile network.

Mobile OEMs seem most concerned with driving revenue by:

  1. Keeping mobile operators happy and increasing sales and carrier subsidies (Note: Mobile operators subsidize mobile phones in an attempt to lure their customers into signing new service contracts.  Operators choose how much they want to subsidise each phone in their catalog, based on a number of factors.  If two phones have similar features but one has a lower price point, the phone with the lower price point is likely to attract more attention from consumers, so OEMs are eager to get the highest possible operator subsidies for their own brand of phones, in an effort to squeeze the competition on price.)
  2. Increasing brand recognition of devices by offering “sticky” features/services that appeal to consumers as well as mobile operators
  3. Selling software, accessories, and services.

A growing number of players in the mobile space are betting that social networking will satisfy the above objectives, generating revenue and increasing ways that consumers use their mobile phones.  Vodafone and others mobile companies are just starting to talk about their plans to push mobile social networking.  According to a recent Business Week article, Vodafone is in “talks with a number of social-networking sites, and expects deals to be completed during the first quarter of 2007.” Vodafone CEO, Arun Sarin did not say what sort of social networking services Vodafone will offer, but he’s got high hopes for their ability to generate revenue.  The article reports:

Sarin says social networking, mobile advertising, mobile video, and other advanced applications are on the rise. “We expect these services to generate 10% of our revenue within three or four years,” he says. Vodafone generated $29.4 billion in revenue and $6.6 billion in profit during the first half of the year, beating analyst forecasts.

A recent report by Telephia, a leading independent researcher of mobile trends, reports that while most of the mobile social networking applications/sites don’t have a large enough user-base to track, consumers want to access social networking services on their phone.  According to Telephia’s report, almost 1.4 million mobile customers logged onto MySpace using the wireless Web in September 2006 (Note: I couldn’t find this report on Telephia’s site, but several reliable sources mentioned it – Mercury News, Government Technology.). I assume this means that users logged in to using their mobile browsers – as opposed to using the MySpace Mobile software application, which is distributed exclusively by Helio, a relatively small (and new) OEM.  Cingular and BellSouth both offer a service which sends customers a text message when they get posts on their MySpace pages, but the Mobile MySpace application/service is only available on Helio, which demonstrates carriers’ interest in paid-for services associated with social networking.
MySpace access is not the only example of the mobile industry’s interest in social networking.  Location-based (LBS) social networking services are growing.  Helio, who is big on services, now offers a social networking service called Buddy Beacon, which, using GPS, allows a customer to let up to 25 of his/her “buddies” track his/her whereabouts by using another Helio mobile… Seems a bit of a scary proposition to me, but I’m sure it’s got appeal in the teen and college market.  ISVs like Google and Boost Mobile offer other location-based social networking services. Google’s Dodgeball, now available in 22 US cities in the US, allows you to:

  • Let your friends know where you are
  • Discover friends of friends within a 10 block radius
  • Meet potential love matches and be notified when they’re nearby
  • Find venue locations and broadcast them to friends

Boost Mobile offers Loopt, which allows you to put yourself on maps accessible to friends via their mobile phone, allowing them to see where you are and what you’re up to and vice versa.

Besides LBS, there’s potential for mobile video social networking.  Another of Telephia reports says that: “three percent of U.S. mobile subscribers, representing nearly eight million consumers, use their cell phones to take personal videos. This adoption rate for mobile video capture doubles to six percent among mobile subscribers who recently purchased a new handset, revealing a rapid upward trend.” Clearly, this has implications for the mobility of all of those video sites I’ve discussed in previous blogs. 

The aforementioned Business Week article on Vodafone’s entry into social networking points out that some analysts are sceptical of social networking’s potential to generate revenue:

Cell phones are still primarily used for personal or one-to-one communication,” writes David Schatsky, president of researcher JupiterKagan, in a report. “Services relying on unique features of the cell phone offer better, though modest, revenue prospects.”

Wireless phone companies have been reluctant to open their networks to third parties. In the past, they have offered proprietary, high-margin services such as text messaging. The Internet offers cheaper, open platforms such as instant messaging and social networking. As the cell phone becomes equipped with increasingly powerful Internet browsers and faster Internet connections, the migration of open Internet standards to the wireless world is all but inevitable (see, 11/3/06, “Cingular: Giving Away the Music Store”).

With companies like Google, proposing that web-based mobile applications like Dodgeball and mobile Gmail should be free to users (using an ad-based model), it may be tough for mobile operators to generate revenue on competitive “charged-for” services.  That said, if a mobile operator, ISV, or OEM is able to offer a new and unique enough social networking service, which enough users adopt:

  • It will be possible to make that applicaiton free, given ad-based revenue, and/or
  • Users will be willing to pay for it, to avoid ad exposure (which is sure to increase on mobile phones in time).

Either way- there is a future for mobile social networking, but this future may not be led by mobile carriers.  The “walled garden approach” that carriers have embraced for so long, flies in the face of the usefullness of social networking and will be challenged by the likes of Google and other web-based social networking mobile ISVs.  I don’t think that users will accept being inhibited by who they can interact with based upon what mobile network or phone they’re on.

Regardless of what happens, I am exicted to see how the mobile social networking market unfolds- especially:

  • Who will lead the mobile social networking game?  Will it be ISVs, OEMs, mobile operators, or a combination of all three?
  • Will users want to access social networking services on their mobile phones via stand-alone applications, or will web-based stub apps prove more popular? (This may impact the way that social networking information is delivered to customers via mobile – think about the differences between the use-cases with free web-based email vs. paid-for push email.)
  • What is the revenue model?  Will it be ad-supported or subscription based?
  • How will the convergence of mobile phones, land-line phones, cable/satellite, DSL/Cable internet influence who wins the social networking game?

Stay tuned to hear my thoughts on these questions in future blogs.  And, if you’re interested in mobile blogging, check out SixApart’s new Vox Mobile application.

Be Sociable, Share!

Post to Twitter

  • Nice post! And great links! I recently read an article in the Financial Times about a woman who wrote a PhD thesis on social networking. Don't have the link as I just get the paper but you could probably find it online.



Recent Comments

    • کنگان نیوز: کنگان...
    • Jeffrey Matthew Cohen: Such a beautiful blog post. I never met Jeff in person, but over ten years ago, I was looking to make a huge career/lif...
    • Right Travel: Great post....
    • Right Travel: Great job!! Thanks for the blog! :)...
    • Cheryl McNinch: all that is true and makes people look more creepy and tracking people with glasses is plane out weird....