The river and the dam: CTIA and The Future of Web Apps

I went to two conferences this week: the CTIA telephony conference in Los Angeles and The Future of Web Apps in San Francisco. It's always interesting to travel between the Bay Area and southern California. This is going to irritate Bay Area partisans who like to look down on LA, but I think the cultures are almost identical in the two areas. The main difference is that drivers on the freeway in southern California are more likely to yield the lane when you put on your turn signal (the standard behavior in the Bay Area is to speed up to protect your turf).

There are huge economic differences between north and south, though. Los Angeles and the sprawl around it make up an intensely vibrant, wildly diversified economy. No industry dominates. The place is a huge cultural melting pot, and many fashion and social trends incubate there first before they spread around the world.

By contrast, the Bay Area, and especially Silicon Valley, is more like a hothouse full of orchids. There's less diversity, and the atmosphere is a little more inward-focused, a half-step out of sync with the rest of the world.

The vibrancy of Los Angeles outside the Convention Center made a striking contrast to the sleepy atmosphere inside at CTIA. There were very few new products on display, and I didn't see anything that generated intense excitement (the biggest crowd of the day turned out for a stunt bike exhibit). Even the press coverage from the show focused heavily on business worries -- the failure of mobile video to take off, lack of profitability in mobile games, and speculation about mobile advertising.

Later in the week, a two-day conference on web apps was held in the Palace of Fine Arts in San Francisco. The Palace is Greco-Roman fantasy temple left over from the San Francisco world's fair of a hundred years ago, and it's across the street from the newly-built headquarters of the Lucas film empire (where you can see a life-size bronze statue of Yoda). It's hard to picture a more fairy-tale setting for a conference.

And yet, the presentations inside were sizzling with energy. We heard from companies that are creating important new businesses and making meaningful differences in the lives of millions of users – organizations like Flickr, Digg, and Dogster. Silicon Valley may indeed be a hothouse, but it's turning out some very promising orchids right now.

There's a collision coming between the wireless world and the web, and I think it won't be pretty. The best way to describe it is by analogy. Picture a raging river fed by the meltwater of a hundred glaciers. The jagged river valley is suddenly blocked by a dam. What happens?

The water starts to rise, of course. If the dam is well operated, the water can be harnessed to generate power. But if the spillway stays closed, the water will eventually pour over the top of the dam and rip it apart.

The river is the torrent of innovation happening in web apps right now. The dam is the carriers who won't allow that innovation to run freely on their networks. They haven't figured out how to set up spillways and generators, let along operate them, so the pressure of the water keeps growing as web innovation gets further and further in front of what you can do on the wireless networks.

At some point one of the carriers is going to give in, or a technological change will give the web apps crowd unrestricted access to a mobile wireless platform with broad coverage. When that happens, I think the pent up innovation and new business models in the web will sweep through the wireless world like a flood. The longer the pressure builds up, the faster the change will be when it happens – and the more likely that many of the major carriers will be swept aside in the process.

I know this is a very broad and vague-sounding prediction, and if you're confused or skeptical I don't blame you. Next week I'll write in more detail about both shows, to give you the details on what I mean and why I'm saying it.

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Thanks very much to David Beers at Software Everywhere for naming my post on European and American mobile phone use the post of the week in the latest Carnival of the Mobilists. There's a lot of interesting material in this week's Carnival.

7 comments:

Antoine said...

I agree. There is just too much control on the side of carriers (and you can argue manufacturers) in the mobile space. The time most probably will be here sooner than we think, and with an app/service that will be watershed (something tells me that the first company to tap A-GPS and IM together might do it.

Michael Mace said...

Antoine wrote:

>>something tells me that the first company to tap A-GPS and IM together might do it

I think you may be right. You'd need to tie them into the right sort of community website, something that has a natural relationship with mobility.

Unfortunately, one of the complaints I heard from mobile developers at CTIA was that many of the carriers are preventing third party applications from accessing location data. I need to get more info on what's happening with that.

Douglass Turner said...

Hi Mike,

Doug Turner here. I was at Apple ATG back in the day. We actually bumped into each other at a Palm thing held in Amsterdam a few year ago.

I'm back in the States following eight years in Scandinavia. I've arrived at the view that the Web presents little threat to the mobile industry and I see no river/damn apocolyptic scenerio unfolding.

The mobile industry remains a separate, static, invariant world with little threat presented by anything going on in the Web world.

Yo, an honest to God billing relationship is a beautiful thing baby. Mobile is the only game in town. Always will be.

There is no equivilant business model represented by the Web that could act as a forcing function to toppler the operators/carriers.

Spare me the Skype/WiMax horse pooky. As long as mobile operators patrol the borders of their network like North Korea at the DMZ with the South, they can trivially thrwart anything the Web crowd attempts that encroaches on their biz model.

Lots more to say, but I gotta go.

Cheers,
Doug Turner
skype: dduuggllaa
email: douglass dot turner at gmail dot com

Michael Mace said...

Hi, Doug!

Thanks for dropping by. It's nice to hear from you.

>>The mobile industry remains a separate, static, invariant world

I agree with you about that.


>>with little threat presented by anything going on in the Web world.

Short term I agree with you about that too. But when one part of the tech industry is static and the other is innovating at a furious pace, eventually a serious gap opens up.


>>There is no equivilant business model represented by the Web that could act as a forcing function to toppler the operators/carriers.

I haven't laid out the whole case yet, but to summarize I think it'll be a matter of one of the operators -- maybe an MVNO, maybe a second tier operator -- getting smart and/or desperate enough that they create a more open development environment. It'll happen eventually, just don't know when.


>>Spare me the Skype/WiMax horse pooky.

Who said anything about Skype and WiMax?


>>As long as mobile operators patrol the borders of their network like North Korea

I don't think the government in North Korea is going to last forever either.


>>Lots more to say, but I gotta go.

Drop by sometime and say more.

Animesh said...

I wonder why this 'dam' is there in the first place? If it is missing in the pc/web world, then how did this carrier 'control' sprang up in the mobile world?

If carriers (or service providers) like EarthLink, RoadRunner etc are not able to control the functionality or power of web-apps, then why is a mobile service provider able to restrict an app.

Perhaps its because of the way mobile industry developed in the beginning. A device is a device - pc or handheld - I fail to understand how and why mobile carriers can yeild more muscle than internet service providers?

I think its just a classic case of norms. Walled gardens is the norm, so every carrier is building a walled garden. One day when one of the carriers will open the gates and allow everyone inside, the others will have no choice but to follow.

Michael Mace said...

Animesh wrote

>>If carriers (or service providers) like EarthLink, RoadRunner etc are not able to control the functionality or power of web-apps, then why is a mobile service provider able to restrict an app.

Good question.

In the very early days of computer modems, AT&T (the phone company in the US) was pretty resistant to connecting anything unapproved to its network. I don't know all the details, but I think they were more concerned about hardware than software at that time. They were afraid something might take down the whole system.

Somewhere in deregulation and the breakup of AT&T, the company lost the authorization to say no. And it turned out the network was pretty robust after all.

The mobile operators are also afraid of something bad taking down the network, but they are more focused on software doing that than hardware. They are also afraid of being forced to do tech support for thousands of applications (a legitimate fear, in my opinion, although there are ways to prevent that). And they are afraid of losing control over all those juicy data app revenue streams that they fantasize about (never mind that they have been almost completely unsuccessful at building such things themselves).


>>I think its just a classic case of norms. Walled gardens is the norm, so every carrier is building a walled garden. One day when one of the carriers will open the gates and allow everyone inside, the others will have no choice but to follow.

I agree that's how it will happen. But when? It's a bit like predicting the date when the Soviet Union would collapse In retrospect it was obvious that it would happen, but until it did almost no one predicted it was imminent.

Avi Charkham said...

I once read a beautiful post about Kaiser Maximilian, AKA the last knight.

Maximilian lived in an era when warfare was conducted by knights. Rulers of countries felt comfortable with their nights protecting them and based there whole perception of their reality on those nights.

What made Maximilian special was the fact that he was the first to recognize change. The canon was invented and he quickly realized that the canon made the nights irrelevant.

The rulers surrounding Maximilian failed to recognize the change. They continued to develop ever more sophisticated equipment like better armor and swords. There was nothing wrong with their technology or there perception (in their point of view).

When change did come it came in a storm. Maximilian concurred all his surrounding territories and earned the title of “the last knight”.

Michel I would like to add a few terms into the discussion you are developing here:

a.D2C
b.Household billing
c.Viral marketing / distribution

All the technology is out there. As you say it is a matter of time before someone connect all the pieces and when the change will come it will sweep the operators world like nothing before.