Where mobile data went wrong

With 95 percent of mobile data services failing, operators need to wake up and smell the missing revenue, says HP's Steve Dietch.


Network operators - especially mobile operators - are looking in the wrong directions, reckons HP's Steve Dietch. They've focused so much on buying customers, by offering more and more minutes and messages at lower and lower prices, that they've lost sight of their real competitive advantages.

"Our focus is helping telcos avoid becoming dumb pipes and use their networks to their advantage," he says. "The operators are the only ones with a direct touch point and understanding of the customer. But they don't do understanding well - they tend to treat everything as a mass market."

On top of that, he says the comms industry is targeting the wrong audience, which is one reason why it has failed time after time to make mobile data services pay.

"95 percent of what's being offered is failing, and the biggest reason services fail is that you tend to deliver the wrong content," he says.

Fixate on revenue, not youth

"The industry is fixated on 18-25 year-olds, but where's the money? It's with the 30/40/50 year-olds who've got houses and well paid jobs. Other than the professional jetset, with BlackBerrys and so on, are we targeting that audience?"

Dietch is chief marketing officer for HP's OpenCall group, which sells comms software to telcos and represents a third of HP Software's revenue. Not surprisingly, he claims that operators could use software to boost revenues by making use of their unique customer knowledge to target services better.

"I don't believe service providers have the equipment or the knowledge to get into content. What they need to do is monetise the information they have," he explains.

"For example, Yahoo might know a lot about your online habits, but it doesn't know everything your mobile operator knows, such as your location and presence data.

"The golden opportunity for the operator is to gather information and monetise it. We're trying to move from a mass market to the individual."

Could that lead us into a nightmare world, where everything we do and everywhere we go is tracked and used to feed us advertising?

Dietch says he hopes it will be the reverse, as advertisers realise they can do better with ads being fewer and better targeted, instead of blanket bombardment. He acknowledges that could be a bit optimistic though, especially given that US consumers already face more than twice as many ads a day than Europeans do.

Greed has not been good

He adds that operators also need to accept that for a lot of services, they will be 'just a pipe', and do their best to provide an effective channel that will encourage us to use more mobile services - which in turn means more revenue for the operator.

But to do that they need to be less greedy, as well as sorting out what they include on their WAP sites - known as 'decks' in the business. Obviously, content providers benefit from being on-deck, but there's limits to how many can be included.

"On and off-deck is a huge issue right now, along with revenue share," Dietch says. "In the US and Europe, operators have taken a disproportionate share of the revenue compared to Japan and Korea - as high as 70 percent - and then they're surprised that they're not getting good content developed, or that developers are going out of business. I think the operators realise something has to change, and that they've been a bit too greedy."

He notes that while the centre of gravity for business-oriented mobile data services has moved from Europe to North America, in the next generation it's likely to move again, this time to Asia - driven by the greater understanding there, both of what's possible and of what people will actually pay for and use.

"Mobile video downloads seem to be taking off in the US," he says. "I do believe they will solve it to where it's acceptable - some of the Asian phones have now doubled the size of the screen within the same size handset, for example."

He concludes, "If I was making guesses as to the next big thing in handsets, I'd guess Samsung."

"Recommended For You"

Paranoid about Google Android? RIM, Nokia and DoCoMo dodge Google's 'dumb pipe' menace