[+] open platforms for big brothers only

The idea of open platform is about a big website releasing its API and allowing others (individual users, small groups or small or medium-sized websites) to write programs in accordance with its API standards and embed the programs in this big website for its users. For website application developers, this mode can be called "follow the big brother."

Why open platforms? The fundamental reason is to solve the problem of inactive users. Social network services are driven by pressure of interpersonal relationships, so in the beginning users would feel compelled to log on the services. After a while, the pressure wanes and about two thirds of users would quiet down. One way to resolve this problem is continue to offer new applications. Yet it is too slow for a website operator to develop applications solely on its own, so it can only open its platform and let others join.

There are several key points in the definition of open platform mentioned in the first paragraph. Firstly, only the major players of the industry have the power to attract others to join. The open platforms of 51.com and Xiaonei.com, two independent social network websites in China, can only work well when they are turning into major players. Yet, keep in mind that the most powerful open platform would be that of Tencent (qq.com), a major Internet Instant Messenger Service provider in China, which can afford to wait for its best chance.

Why do companies follow the big brother instead of striving to be a big brother? This is because the market conditions three years ago could support a startup to grow into a big player. Now it has become difficult for startups - many of them can't even secure financing. Attaching to a major player for a chance to survive is straightforward thinking. Therefore we see a process of industry consolidation.

[+] Benefits for followers

Secondly, applications, after all, are for users of major websites. It is necessary to figure out what kind of applications major users would need. News for Sina, search for Baidu, C2C trade for Taobao, - major websites have their distinct product positioning. In a word, big websites of different types would have open platforms of different kinds; so small players must have different ways to work with them.

Social network services websites have no specific product positioning, which, however, give unlimited space for imagination. They are most powerful in spreading information. Although this type of websites offers specific functions such as blog, photo album, friend list and communities, their actual core product - relationships and networking - is relatively abstract. For applications to be successful, this core must be taken into close consideration.

Thirdly, followers must have benefits. The odds may be poor for a small developer to grow into a big brother, but at least it must be able to support itself. A big brother cannot make smaller developers keep working with it if it does not take care of them. Unless the big brother is the one and only player in the business, otherwise small developers can always turn to other big brothers.

Contrary to the real life, followers on the Internet enjoy certain freedom. They can join different camps at the same time. Developers certainly would like their applications to be used at many occasions without restrictions and make them good money. It would be a lot of trouble if one has to follow different rules (APIs) when joining different camps. Wouldn't it be a lot more convenient if all big brothers have the same set of rules?

[+] Battle for open standards

So we've seen the emergence of a standard that all big brothers are supposed to follow. This is the Open Social standard advocated by Google - a universal standard for open platform. If all big brothers abide by the standards, life would be a lot easier for small followers. They can join different camps freely, and someday they may even become big by being able to benefit from working with many big players.

This scenario is very much like vertical and horizontal alliances in the era of Warring States in China. Google's performance in social network services is only average. But if you look at the list of Open Social partners, you'll find that Google, with this alliance, looks like ready to contend with Facebook. However, what is Googls's intent to develop a standard for all to use, free of charge? What benefits, after all, will it be able to reap?

Overall, the core of Google is search. Google would wish that its Spider and Adsense could reach where there is traffic on the Internet. Nevertheless, social network services websites are very special - they have heavy traffic, yet they, particularly personal profiles, can only be access by logged-on users. Search engines have trouble indexing web pages of these services.

So Google has to open them up, and Open Social can be seen as a product of such thinking. Actually, baidu.com can take the same approach and come up with an open platform standard that suits Chinese social behaviors. It can encourage other social network services providers to adopt this standard, and independent players such as 51.com and xiaonei.com are very likely to join.

Why? Because for independent social network services providers, it would be too risky to rely on a third party standard and too inefficient to develop its own one. The solution then is to "compatibility with all standards." For them, the point is to attract more developers to come up with more applications to stimulate user activities. It does not matter which standards they choose.

In a standardized and transparent Internet world, what can website operators do to retain their users? ( 2008/11/16 - By Digitalwall.com - Way to China Internet/Telecom )

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[+] The Internet was born to be open.

The Internet was born to be open and free. Since the time when people established the underlying architecture of communications network, the Internet was endowed with the attributes of a decentralized architecture like its genes. Some negative impacts have come along, such as issues of online security and spams. Yet as such things are the consequences of the working of the Internet's genes, they are meant to subsist. For those Internet businesses that go against the Internet's innate characteristics, they would inevitably face tremendous pressure from competition.

Ten years ago, the Internet had posed a severe challenge to the conventional logic of business world – monopoly - , especially of the capital-intensive media industry. The Internet broke the structure and created an opening. An open Internet enabled more content partners to join. Free Internet services quickly drew in a large number of users. People running Internet companies were aware that only through opening up themselves could they continue to grow.

As the Internet follows the pattern of scale economy, inevitably, there is always an innate pressure for Internet businesses "to grow bigger." They need to quickly increase their user base and traffic to achieve a comparatively low marginal cost. One way to grow big fast is to offer free services; to open and embrace more partners is another. During the first decade of the Internet, these two methods seemed to work well.

Now we've seen a third method emerges with Web 2.0 - social network. The way social network works is similar to multi-level marketing. Spreading from one user's social network to another's and then many others', social network services quickly accumulate a huge amount of users. However, the pressure to grow bigger never wanes. Following the innate nature of the Internet - open and free - , renowned social network services providers have come up with solutions: an open platform and opening up users' profiles.

[+] No opening up, no monopoly

Doesn't it sound paradoxical? The only way to achieve a monopolistic position on the Internet is through opening up. In the conventional business world, businesses that survive fierce competition would build bulwarks to enclose its empire within and erect competition barriers. This is why we've seen the first-generation Internet companies, such as Yahoo!, developing into new monopolies. It seems that they have followed the same trajectory of history.

If its monopolistic advantage can last out, why would Yahoo! have Yahoo! Open Strategy? Why would a monopoly need to open itself up? The reason is new players keep coming on the stage, first Google, and later MySpace and Facebook. They have come with a new revolutionary power to rewrite the old business rules, and on the Internet, the revolution can happen at an astonishingly fast speed.

Openness is embedded in the genes of the Internet. It is difficult to monopolize the Internet marked with a decentralized architecture. Internet companies are constantly under pressure for growth, and putting up walls is not good for growing big because no Internet company, however powerful it may be, can monopolize the traffic on the Internet with its own websites - the majority of the traffic is always fall outside its own websites.

Moreover, new comers will exercise the power of openness to challenge the success of existing players. One of the most successful products of Google is the omnipresent Adsense, but Google has been threatened first by Facebook, which took the lead to open its platform, and later by MySpace, which was the first to open up users' profiles. They have unsettled both Yahoo! and Google. More openness leads to greater competition.

[+] Technological innovation is a key catalyst.

The first-generation Internet aggregates and opens up "content;" typical examples are portals like Yahoo!, and issues concerned around copyrights, trading of content and the transformation of patterns of mass communications. The second-generation Internet aggregates and opens up personal relationships; typical examples are social network websites like MySpace, and issues concerned around privacy, property rights of personal data and the transformation of patterns of interpersonal communications.

A key catalyst of all the changes is technological innovation, such as standardization of data exchange and standardization of applications interoperability. The former refers to the prevalence of document (e.g. XML) exchange standards and the later the sophistication of Web Service. The former enables users to insert content of one website to other websites; the latter allows users to embed a function module of one website to other websites.

10 years ago, when a portal wanted to use the content of a certain media company, both parties would need to go through a lengthy process of program development and docking. Now, website operators share their content in standard RSS format freely. When this becomes a common practice, the barriers to content exchange are instantly pulled down, and content may flow more rapidly on the Internet.

The concept of open platform, first raised by Facebook, is to allow applications of other websites to be embedded on Facebook. On the other hand, the idea to open users' profiles, first brought up by MySpace, is to enable users to embed their personal profiles onto other websites. The mode of the former is like "one-stop shopping"; the latter is more like "take out" - portable personal profile.

Furthermore, the idea, initiated long ago, to integrate various login ID's for different websites into a universal one, has been back to the talk again. The Internet world is sure to become more transparent with data flowing faster and content and functions among websites more integrated. It will affect the closer integration of industry chains, the decline of old business giants and the emergence of new ones, disputes over privacy issues and so on.

Openness is a path of no return, but where is it going to take us? ( 2008/11/09 - By Digitalwall.com - Way to China Internet/Telecom )

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[+] Will the advent of 3G lead to a reshuffle of WAP market?

From an iResearch report, Handset-enabled Internet Activities in China in 2008, we can see that Sina, Baidu and Tencent are among the most visited WAP sites in China. There are even a few independent 3G WAP portals. Thanks to their huge PC-based user bases, traditional Internet players seem to have a chance to challenge telecom operators.

Will the advent of 3G lead to a reshuffle of the market? Despite the fierce battle for subscribers, New China Mobile, New China Telecom and New China Unicom have not changed their visions of transforming from "communication service providers" into "information service providers". Key to this effort will be WAP. Will other WAP sites score another goal along with the promotion of 3G?
What we might not have understood correctly is the fact that, with the advent of 3G, the WAP market might have a stable and slow growth, instead of a sweeping revolution. Therefore, it's no use being hasty. It seems that, at the present time, the conditions for a sweeping revolution are not yet in place.

[+] The development of the WAP user base is a long-term process

First, if the 3 new operators do not offer substantially lower WAP rates, there would be no momentum for WAP users to upgrade to 3G, as no major change is expected to the contents offered by WAP sites. There might be more video and mobile TV services, but the key to the acceptance of users is still the fee rate.

The problem is that only telecom operators could decide the fee rates. Other Internet players have no say in it. In view of the current competition picture, the operators are expected to cut 3G WAP fee rates to some extent. But as I said, only substantial cut in voice fee rates could significantly increase the 3G user base, which is essential for a sharp increase in 3G WAP user base.

Secondly, does a substantial increase of 3G user base mean the same for WAP user base? Experience of telecom operators indicates that a large portion of the first 3G mobile phone subscribers would be WAP users of the 2G time. In other words, as a 2G WAP user becomes 3G WAP user, there would be no increase in the total WAP user number in the market.

In the long term, with intensive 3G promotion efforts of operators, all users will eventually give up 2G (whether voluntarily or forced to do so). The process, however, might not be as fast as you and I have thought. Considering the WAP service, which might be offered as an accessory service, the development of the WAP market could be even slower. The key to the speed of growth is the fee rate, not the number of Gs.

[+] The pain in business models

Why have telecom operators not been able to make good WAP sites? Based on my 5 years of experience in an operator, I could see that the root of the problem is their business models. For telecom operators, there's no free service. Every service should generate revenue, which ideally should be collected from end-users with phone bills. One dollar from each user would add up to an amazingly large amount for the hundreds of millions of income.

WAP services are duplicates of those of the Internet, whose basic business model is to offer free service and gain revenue from advertisement. Sharp conflicts are expected for the business model transformation, not to mention the difficulty of changing the mindset of staff in a short time. Telecom operators need to regard themselves as media players before establishing ad departments to gain ad revenue. For them, that's too much.

This business model would have nothing to do with the number of Gs. For WAP, if the business model were transformed to that of media in the 2G time, Monternet could have done it very well even without 3G. Now we are back to the basic question: which is scored "better", higher ARPU or advertisement income? If the former, there will not be any change.

It does not mean that telecom operators have to give up fee-based music or image download services, which are, in fact, the revenue sources of the traditional Internet companies, too. Yet, if operators cannot think of anything else, their business growth would be limited. For example, Nokia is seeking cooperation with telecom operators even as it has its own advertisement network.

Why didn't operators make the proposal first? Because they are still using the old mindsets. Any business you don't do, somebody else in the business chain would do. Nokia advertisement Network is a manifestation of the company's resolution to transit from the manufacturing industry to the service (particularly the Internet service) industry. Do New China Mobile, New China Unicom and New China Telecom have the same resolution? ( 2008/08/10 - By Digitalwall.com - Way to China Internet/Telecom )

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[+] The pricing of video phone service

Generally speaking, the most talked-about 3G services include video phone and streaming media. With video phone, you will be able to see the one you are calling. Of course, you can also dial a number to watch a live broadcasting program. Streaming media, on the other hand, enables users to watch audio/video programs via the Internet, mostly by logging onto portals of operators with handsets.

Voice service, video phone and streaming media, how should the three services be appropriately priced? First, as video phone consumes 4 times of bandwidth than general voice calls do, should it be 4 times as expensive? The answer is no, because 4 times is pretty scaring. Most operators offer rates ranging between 1.2 to 1.5 times.

Due to privacy and courtesy concerns, video phone is rarely used. Some people argue that operators should offer lower rates to increase use of video phone services. The fact is, however, low price is probably not sufficient to eliminate the privacy concern. Operators even believe there are reasons you have to use video phone (e.g., your wife requires you to). Is there any other chance of earning such easy money?

[+] The pricing for streaming media

Streaming media service, which enables mobile TV and movies, has been in a dilemma of whether to charge by traffic volume (e.g., RMB X for watching Y mega bytes per month) or by service time (e.g., RMB X for Y hours per month). Eventually, all operators chose service time-based fee rate models.

As most users are still not accustomed to traffic based models, while charging by service time also seems weird (nobody pays TV bills by minutes), the best solution would be monthly packages without time or traffic volume limit. Fearing that users might turn on their handsets 24 hours a day, which would result in considerable waste of wireless network resources, most operators dare not choose the solution.

If they choose to charge by service time, how much per minute would be appropriate? Streaming media service usually consumes twice bandwidth as much as video call does. Nevertheless, I suggest its fee rate be set similar to, or even lower than that of general voice calls. As streaming media service is delivered through IP-based packet-switched network, it could use network resources more effectively than video phone, allowing larger bandwidth for users.

That billing model encourages the use of streaming media to improve the efficiency of the network resources of operators. A challenge for operators is that they have to collect payments for content providers, which would increase the total cost of users. However, that seems to be a problem without solution, because content providers need to be paid, too.

[+] WAP monthly package and the pricing for mobile Internet access

In my view, WAP, the service that has been available since the 2G time is more profitable than mobile TV, which is wildly betted on because of the Olympic Games. Some operators have already offered WAP monthly packages without traffic volume limit. With the advent of 3G, they now face a problem: whether to raise or lower the package rates?

As the costs of operators are based on traffic volumes and 3G, with higher speed, will generate far larger WAP volumes than 2G, maintaining the monthly packages does not seem to be a good deal. However, in order to encourage 3G subscribers to use WAP services, it makes no sense to raise the price. But operators do not want to cut price. Eventually, the fee rates are usually kept at the same level of the 2G services.

As to the monthly mobile Internet access packages (via computers) for current China Unicom's CDMA network, no substantial change is expected because the speed of 3G service remains low (384k for WCDMA). However, as 3G has just been launched in mainland China, it would be well equivalent to the level of 3.5G (HSDPA) right from the beginning. As a result, the fee charging model would change.

For example, there might be packages of RMB X/month for the speed of 128k and RMB Y/month for 256k. Such a pricing model is similar to that of ADSL. Theoretically, the peak rate of HSDPA could be up to 14.4M (it is reported that 3.6M Internet access services would be available soon in Taiwan). Therefore, it is possible to introduce different fee rates for different speed.

[+] The fee rate of value-added services is not the key to attract subscribers

Why operators are so reluctant to cut fee rates of 3G value-added services? Because in the fight for subscribers, they have already cut prices of general voice calls. How do they compensate the loss? Through the above value-added services, of course. Will the value-added service fee rate level affect their subscriber base? Basically not. Then why not setting the fee rates a little bit higher?

Many consumers would consider switching to operators who offer lower voice rates, not the one who offer lower value-added service fee rates. The pricing of value-added service is not the key for operators to attract subscribers. With this user experience and such a mindset of operators, 3G value-added services will be cheap, but not so cheap as you have expected. ( 2008/07/27 - By Digitalwall.com - Way to China Internet/Telecom )

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New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services - 2008/07/27

New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan - 2008/07/20

From Idea to Business (2) How to Estimate Your Income and Cost? - 2007/07/22

New Era of Online Advertising (2) from Exposure to Deal - 2006/07/23

Ultimate Mobile Device (5) Universal User Experience - 2005/07/24

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[+] The 3G war in Taiwan started 5 years ago.

Taiwan is a place with a GSM penetration rate higher than 100%. In other words, it has more GSM phone numbers than its entire population. Thanks to white hot competitions in the market, the public has been well educated about the "on-net" and "off-net" fee rates. Calls between subscribers of the same operator are entitled to 50% off "on-net fee rates".

Just take a look at the fee rate lists of operators in Taiwan, and you will see this is an inherent logic of their billing practice. As a result, the larger an operator is, the more powerful its ability to attract new and retain existing subscribers. The public knows that, for example, being a subscriber of Chunghwa Telecom, you have better chance of calling somebody who happens to be a subscriber of the same operator and being entitled to preferential (on-net) fee rates.

At the beginning, emerging operators were not able to take a bite from the existing subscriber bases of the "Big 3", i.e., Chunghwa Telecom, Far Eastone Telecom and Taiwan Mobile. The first attack was launched by Taiwan's first 3G operator: Asia Pacific Broadband Wireless Communications Inc. (APBW) In July 2003, APBW launched its value-added brand QMA and two expensive 3G handset models, believing that the first 3G subscribers would arrive soon for its rich portfolio of applications.

[+] Free calls for on-net subscribers

It was not long before APBW found that its 3G vision was a beautiful mistake. Unable to achieve its sales target with expensive handsets and value-added services, the operator soon started its phase-II operation. With free handsets and a stunning offer of "free calls between on-net subscribers", it triggered a price war. Free on-net calls meant that calls between any two 3G subscribers of APBW were free of charge.

The bloody price war did not trap the Big 3, which, as public companies, could not stand the consequent ugly finance statements. In addition, with strong brands, they did not feel the need of an immediate response. Many lovers and students joined the subscriber base of APBW in couple for the free on-net calls. They turned out to be the first subscribers of APBW.

The Big 3 seemed to be so confident that they waited until the end of 2005 to launch their own 3G services. Their strategies were simple: just regarding 3G as a value-added service of 2G. They offered similar fee rates for 3G, except for the mobile Internet service. Up until then, there had not been an all-out 3G price war, as existing operators had been defensive, instead of offensive in the 3G market.

In December 2005, a new 3G operator, VIBO Telecom launched its business operation. Like APBW, VIBO Telecom tried to build its subscribe base from scratch. With lessons learned from APBW, VIBO Telecom did not expect too much from value-added 3G services. Instead, it posed for a price war right from the beginning by offering a package "Everybody On-net".

[+] Same fee rates for on-net and off-net calls

"Everybody On-net" was just the opposite of free on-net calls. The following are a few examples of the differences:

General 3G: NTD X/second for off-net calls and NTD 0.5X/second for on-net calls (like the case of 2G);

APBW: NTD X/second for off-net calls, free of charge for on-net calls

VIBO Telecom: NTD 0.5X/second for off-net calls, NTD 0.5X/second for on-net calls (the same price for on-net and off-net calls, "uniform rates")

As mobile subscribers in Taiwan tended to believe that using services of major operators means better chance of enjoying the 50% discount on-net rates, "Everybody On-net" was actually an attempt to tell consumers that, with VIBO Telecom, they could have 50% discount rates for both on-net and off-net calls. As a matter of fact, VIBO Telecom's price war was to offer 50% discount for off-net fee rates.

"Everybody On-net" led to the counterattack from the Big 3. The first to respond was Taiwan Mobile, which offered a "Local Life" package, dividing Taiwan into 5 regions. Calls within each region were entitled to uniform fee rates similar to those of VIBO Telecom. However, out of the selected region, the cost of communication would rise sharply.

It was really a smart action. It squeezed VIBO Telecom out of the spot light of "uniform rates" without too much compromise in actual fee rates. The region-specific preferential rate package was not as lethal as the 50% discount of VIBO Telecom. However, the strong brand of Taiwan Mobile helped to prevent its subscribers from switching to VIBO Telecom.

[+] Big brands sat tight

For Taiwan Mobile, it was a successful defense. For APBW, however, it was an alert. It followed suit immediately by launching the brand new "Wonder 4" package, ,which, like that of Taiwan Mobile, divided Taiwan into just 4 regions, and offered lower rates than "Local Life". In this package, on-net calls were no longer free. It gave APBW a chance to get rid of the double-edged sword of free on-net calls.

By far the 3G price war really begun, only Far Eastone Telecom and Chunghwa Telecom still sat tight. Instead of introducing new 3G packages, Far Eastone Telecom offered "get one free minute for each minute of on-net calls" promotion for the its existing package. In other words, it was another 50% off based on the existing 50% discount rate.

Far Eastone Telecom promotion: NTD X/second for off-net calls, NTD 0.25X/second (roughly) for on-net calls.

In face of deep cuts in off-net fee rates by rivals, Far Eastone Telecom chose to increase discount for its on-net rates to consolidate its subscriber base. Chunghwa Telecom launched an intensive TV advertisement campaign for its F2 (Friend and Family) package, which offered ultra-low rates for calls between each group of 10 mobile subscribers and 6 local fixed line subscribers. Leveraging its advantages in the local phone market, Chunghwa Telecom consolidated its subscriber base, while responding to the 3G price war in a roundabout way.

It is not until lately that Chunghwa Telecom eventually joins the price war by introducing "uniform fee rates for on-net and off-net calls". Yet it has been 3 years since VIBO Telecom triggered the price war, it is true that market leaders are hurt by the proposition of VIBO Telecom. However, with strong brands, they can afford to be the last ones to join the price war.

[+] Being cheap is just an excuse

Aren't we talking about 3G? How comes that price war takes the place of value-added services as the prime role? As I have said, regarding value-added services as the prime role of 3G is a beautiful mistake. The fact is value-added services are only an excuse for operators to avoid price wars. Whether in Taiwan or in mainland China, 3G price wars are inevitable, so long as price killers exist in the market.

In addition, operators are always seeking ways to avoid direct discounts. For them, the best solution is to make consumers feel an offering is cheap, which is actually not. "Being cheap is just an excuse". This is what I have learned from my experience in designing the "Everybody On-net" package at VIBO Telecom and the consequent price war. Consumers will never know the real planning of the operators behind the fee rates. ( 2008/07/20 - By Digitalwall.com - Way to China Internet/Telecom )

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New Landscape in China's Telecom Market (7) The Pricing of 3G Value-added Services - 2008/07/27

New Landscape in China's Telecom Market (6) Insight into 3G Price War in Taiwan - 2008/07/20

From Idea to Business (2) How to Estimate Your Income and Cost? - 2007/07/22

New Era of Online advertisement (2) from Exposure to Deal - 2006/07/23

Ultimate Mobile Device (5) Universal User Experience - 2005/07/24

Comments

[+] Fee rates reflect the mindsets of operators

Players offering homogeneous products would be trapped into an endless price war, which would eventually erode the profit margin of everybody, if they do not differentiate their brands and fee rates. So far, few researches on the telecom restructuring mention the price competition strategy. Fortunately, I have the experience of working at a 3G mobile operator as the one in charge of service package pricing. Therefore, I do have something to share with my readers.

The first challenge in the post-restructuring 3G market is to attract subscribers of others while ensuring successful migration of the existing customer base. The key is the fee rate. As is shown in the following chart, operators adopting strategy D tend to have strong brands. Therefore, their 3G fee rates would be at the same level of 2G and no discount is expected.

Such operators would choose to gradually migrate their 2G subscribers to the 3G network. With the same voice fee rates for both 3G and 2G services, the migration will not reduce their revenue. However, why should consumers switch to 3G if there's no discount? Do you really believe that the "rich portfolio of value-added 3G services" is the cause?

[+] No price cut v.s. deep price cut

In fact, only a small number of people would switch to 3G for value-added services. For the vast majority, they neither know nor care about what 3G is. But they will consider anything "that's cheaper". "Price cut" is capable of boosting sales without having to explain to the customer what 3G is.

Operators adopting strategy D have enough confidence that their subscribers will not betray them for lower rates. Therefore, they are patient enough to sell 3G as value-added services of 2G. Nevertheless, they will need to give the subscribers something real. So they begin to cut the prices for mobile Internet services deeply to cater for those who have switched to 3G really for value-added services.

It seems that only New China Mobile has the ability to adopt such a strategy. However, New China Unicom and New China Telecom are waiting to launch a price war. For them, strategy B is milder and worth trying. However, the real price killer is strategy A. Low 3G rate packages plus simple, affordable handsets, seem to be ready to sweep across the market.

Anyone who triggers a price war would get hurt, too. At least with its own 2G subscribers flooding into 3G, its revenue would decrease. However, with its CDMA, New China Telecom doesn't have to worry, for its existing PHS service is cheap enough. If New China Telecom's 3G fee rates could be as low as that of PHS, it would be powerful enough to drive all rivals out of the market.

[+] Ways to cut price

Direct discount, e.g., the offering of a 3G rate based on the discount of a 2G rate, is the least desirable way for a price cut. Powerful as it is, there's no tactics to say. Imagine this: how about 50% off for calls between 3G users of New China Unicom? As communication between subscribers of the same operator consumes only internal resources and does not involve settlement with other operators. This would be a useful and low-cost way.

It would enable New China Unicom to maintain 2G fee rates for 3G services, while offering 50% off for communication between its 3G subscribers. In addition, it would attract consumers in couples or in groups. For example, lovers or family members would switch to the service together to benefit from the 50% off discount. It enables operators to build up their customer bases fast.

You might want to ask: "aren't lovers' or family packages very common in today's market?" The fact is most packages available in the market require the payment of an additional fee monthly. What I mean, however, is automatic availability without the need to pay for an additional package. The practice, which offers different fee rates for "on-net" and "off-net" calls and favorable rates for the former, has been popular around the world for years. But it has never appeared in China. For example:

A 2G subscriber of New China Unicom calls a 2G subscriber of New China Mobile (off-net): RMB X/second;

A 2G subscriber of New China Unicom calls a 3G subscriber of New China Mobile (off-net): RMB X/second;

A 3G subscriber of New China Unicom calls a 2G subscriber of New China Mobile (off-net): RMB X/second;

A 3G subscriber of New China Unicom calls a 3G subscriber of New China Mobile (off-net): RMB X/second;

A 3G subscriber of New China Unicom calls another 3G subscriber of New China Unicom (on-net): RMB 0.5X/second;

A 3G subscriber of New China Unicom calls a 2G subscriber of New China Unicom (on-net): RMB 0.5X/second;

The above fee rates would have a number of results. 1) It would attract groups of subscribers of other operators to use the 3G services of New China Unicom to benefit from its favorable rates; 2) existing 2G subscribers of New China Unicom will speed up their migration to 3G for the favorable rates, without causing substantial loss to the revenue of the operator. In fact, if it is New China Mobile that adopts the above practice, the result would be even more stunning, as it has a formidable customer base. The problem is New China Mobile might think it is an unnecessary act.

Maybe you would ask: "why 50% off instead of 20% off?" Mainly because 50% off is more impressive.

What if New China Unicom and New China Telecom both use the same weapon? How would New China Mobile respond? It could simply offer 50% off for calls between its 3G and 2G subscribers, while maintaining the rates for other services. It would enable faster migration of existing 2G subscribers to 3G, and allow the operator to respond calmly to the price war waged by rivals. ( 2008/07/13 - By Digitalwall.com - Way to China Internet/Telecom )

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New Landscape in China's Telecom Market (5) Fee Rates of 3G Services - 2008/07/13

From Idea to Business (1) How to Estimate Your User Number? - 2007/07/15

New Era of Online Advertising (1) from Media to Channels - 2006/07/16

Ultimate Mobile Device (4) Email Service Anywhere Anytime - 2005/07/10

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[+] Are there bystanders in the 3G market?

In April 2007, I analyzed 4 possible market accessing strategies of 3G operators with a chart titled "Market Strategies of 3G Operators". As a matter of fact, each of these 4 strategies has been used by telecom operators around the world. Which is the best depends on the competition situation among local telecom operators, as well as standards they adopt.

Most operators planning to postpone the launch of 3G services would adopt strategy C, i.e., starting by providing internet access service only. With base stations mostly located in cities, these operators primarily sell PC data cards to business people to enable Internet accessing for notebooks.In suburb regions, where 3G signal is not available, services will automatically roam to the original GSM network. So the operators will not provide 3G mobile phone and voice services in the initial stage.

Operators adopting this strategy have a number of common identities: 1) they are market leaders with strong brands, and not afraid of rival operators trying to snap market shares away from them with 3G services. 2) Their 3G infrastructure development tends to be slow, with signals capable of covering only urban areas at the beginning. Business people do have requirements for mobile internet, but they care even more about the quality of voice communication. Therefore, the limit signal coverage for the voice service in the initial stage would offend them.

[+] Maybe everybody is a bystander

The one that's most likely to adopt the above tactics is New China Mobile. In view of the heavy workload of migrating hundreds of millions of subscribers to TD-SCDMA, and the possibility of revenue decline, it pays to be careful. Anyway, nobody has experience in TD-SCDMA. With confidence in the brand, many subscribers would rather wait for New China Mobile's 3G services than switch to other operators.

Therefore, New China Mobile might well be a bystander at the initial stage. Although 3G is a more advanced technology, it is hard for ordinary consumers to tell the difference from 2G (I have a 3G phone myself, but I use it only to make phone calls and send/receive short messages). Therefore, it would be hard to persuade them to switch to 3G in the initial stage.

Should other operators take the advantage of the time window in the 3G voice market left by New China Mobile to introduce their own services? Should they launch attacks with 3G systems and infrastructures that are more mature and easier to deploy, as well as 3G handsets and more affordable fee rates? Or should they join New China Mobile to adopt strategy C and be a bystander in the initial stage too?

There's one factor they must consider when selecting their competition strategies: where will their 3G subscribers come from? In our view, the 3G subscribers will come from: 1) their own 2G customer base; 2) the 2G customer bases of other operators; and 3) people who have never used a handset. The experience of 3G operators in Japan indicates that, for any 3G operator, most of the 3G subscribers would come from its own 2G customer base, with only a small portion from rival operators.

[+] The speed and the fee rates are the key

If operators do intend to migrate their 2G customer bases to 3G, there would be a peaceful market in the initial stage. As each operator is engaged in migrating its own 2G subscribers to 3G, no one would bother to launch an attack before it has had a strong foothold in the market.

As a matter of fact, each of these operators has more than 100 million subscribers to deal with. The one who completes all this first would take the lead in launching an attack. Therefore, the key to success would be speed, nothing else. Despite the strong brand of New China Mobile, which allows it the luxury of more waiting time, subscribers are realistic and impatient. They would switch to any other operator that offers the most favorable terms.

To retain existing subscribes and launch an attack toward other operators, the fee rate packages for voice services would be a powerful weapon. The advent of 3G has led to the emergence of a number of call modes: including 3G-to-3G and 3G-to-2G. As there are 3 different systems for both 3G and 2G, the situation could become more complicated. For example, a 3G subscriber of New China Telecom would call a 2G subscriber of New China Unicom.

With such a complexity, a compelling fee rate package would be helpful to retain and migrate existing subscribers while attracting new subscribers from other operators. As to whether it would reduce the revenue of the operator, there's no guarantee. Anyway, 3G is not something intended to help operators earn more. ( 2008/07/06 - By Digitalwall.com - Way to China Internet/Telecom )

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New Landscape in China's Telecom Market (4) Dealing with Existing Subscribers is Key - 2008/07/06

Ultimate Mobile Device (3) Video, Storage, Copyright Management - 2005/07/03

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In fact, for operators, upgrading either CDMA or GSM to 3G would be easier and more cost-effective than building a TD-SCDMA network from scratch. Particularly, operators of the first two modes around the world have mature experience in business operations, the key is to make oneself focused on one thing. In terms of the extent of easiness for upgrading to 3G, getting rid of either the GSM network or the CDMA network would be an intelligent choice.

According to the latest data, as of June, 2008, China Unicom had 120 million GSM subscribers, and a much smaller CDMA user base: only 40 million. For the post-restructuring New China Unicom, which is posed for the 3G market, getting rid of the CDMA network is not a big loss anyway. If it were the GSM network that's split off, New China Unicom would have big trouble in attracting new subscribers in the future.

New China Unicom could easily upgrade existing GSM to WCDMA. In addition, there are numerous handset models available around the world for the standard. What's more, today, WCDMA has stepped into 3.5G, i.e., HSDPA, which enables download speed several times faster than the original target of 384k.In Taiwan, operators have even launched HSUPA, which offers faster uploading speed to enable the uploading and sharing of images and videos.

[+] The hot potato of New China Telecom

In spite of a much smaller customer base, the above technical infrastructures and the 120 million GSM subscribers make New China Unicom a respectful rival of New China Mobile, so long as it could develop and execute correct strategies in the 3G time. With TD-SCDMA, New China Mobile would carry the burden for a while, which might be an opportunity for other operators.

New China Telecom, the operator based on the existing China Telecom and part of China Unicom, would have two major assets, i.e., the 40 million CDMA customer base and the 50 million PHS customer base. However, it is a well-known fact that the PHS customer base has been shrinking each year. Incapable of upgrading directly to CDMA, PHS is feeling the pressure of market competition.

In addition, with its original market position as mobile local phone service, PHS has been offered at a low fee rate since its introduction. To persuade existing PHS subscribers to switch to CDMA, New China Telecom will have to compromise its fee rates. In addition, there's the problem of changing PHS phones with more expensive CDMA handsets. Therefore, the compromise would involve not only the fee rates, but also the entire handset packages.

The key is to migrate existing PHS subscribers to CDMA. The problem is: will the discount rate package be available to the existing 40 million CDMA subscribers? If not, won't they be hurt? If yes, doesn't that mean a decrease of revenue from the existing CDMA subscribers? That's the dilemma.

[+] Vying to be the price killer

If New China Telecom hasn't made up its mind and continues to depend on landline-bound packages for building its CDMA customer base, the result won't be surprising, in which case, price cut would be inevitable. In addition, any price killer would have only one chance. If it cannot be a hit in the market in the first time, any follow-on price cut would be useless.

If New China Telecom doesn't use the weapon of "price cut", it will be used by New China Unicom. By then, there would be no way out for New China Telecom, for there could be only one price killer in the market. Maybe we want to ask: "why should both operators use price cut in market competition? Why can't they target at high-end business people instead?"

It depends on a few factors. First, how fast could New China Mobile launch its TD-SCDMA services? With the leading-edge brand of New China Mobile in services targeted at business people, it is not easy for the other two operators to compete. The only chance for them would be to build their own networks fast enough to seize the business people market before the launch of TD-SCDMA by New China Mobile.

Second, it is impossible to beat New China Mobile's brand among the business people in a short period of time. Sooner or later, TD-SCDMA would catch up. Therefore, for New China Telecom and New China Unicom, price cut is only a matter of time. Particularly, if New China Telecom falls behind New China Unicom in offering a price cut, it would be difficult to launch follow-on marketing programs. Since a price cut is inevitable, why not taking it up earlier as a weapon? ( 2008/06/29 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

New Landscape in China's Telecom Market (3) Who's Gonna Be the Price Killer? - 2008/06/29

New Landscape in China's Telecom Market (2) Opportunities and Burdens for New China Mobile - 2008/06/22

Web 2.0 Think Again (5) Unearth the Value of "People" - 2007/06/24

Ultimate Mobile Device (2) Competition of Handheld Game Console - 2005/06/26

Comments

[+] New China Mobile as the forerunner

Yesterday, I was surprised to see a 3G ad of China Mobile on a Focus Media LCD in an office building in Shanghai. The ad has two implications: 1) 3G video phone is really cool; and 2) at the end of the ad, it is mentioned that TD-SCDMA is being tested, implying that it will be launched soon. The ad indicates that China Mobile is taking the lead.

The ad gives me a few inspirations. First, telecom operators around the world have a common idea in mind when they launch their 3G services: "video phone is a selling point." It seems that Chinese operators are no difference (but they do not know, as a matter of fact, consumers resist the service). The 3G war once waged among telecom operators in Taiwan seems to be about to start once again in the mainland.

Second, it seems that TD-SCDMA would be the last 3G version worldwide. Other versions, including WCDMA and CDMA2000, have been in commercial operation for years and very mature by now. The 3G ad of China Mobile seems to be a forerunner. However, when they could introduce compelling TD-SCDMA offerings is another thing.

[+] New China Mobile faces the same challenges that Hutchison once did

Hutchison is the 3G forerunner worldwide. When Mr. Li Ka-shing tried to develop Three, the telecom operator in Europe, he encountered a lot of challenges from the very beginning. First, with only 3 cell phone models, Three offered consumers very limited choices. We have to admit that consumers need very simple reasons to buy things. Cell phones with appealing appearances are a big reason for switching to 3G. Limited choices would affect sales.

In addition, its initial market positioning toward business people was another problem. Among the 3 models, one was focused on the video phone function, and another one on the email feature. While capable of satisfying some of the requirements, these phones ignored the most fundamental requirement of the business people "making phone calls successfully". As a new entrant, WCDMA had only limited coverage. That means there were a lot of places where its signals could not reach.

In addition to the coverage of signals, there was also the problem of the compatibility between cell phones and telecom networks. Although both telecom equipment suppliers and cell phone manufacturers complied with standards, it was the first time for the two to collide head on in the business environment. Three's cell phone supplier NEC sent a team to Europe dedicatedly to assist Three to adjust the cell phones in line with the 3G networks.

The clumsy process resulted in customer complaints and damage to the Three brand. As TD-SCDMA has been away from the public sight before, its business operation ability is much doubted. Assuming the mission of promoting the Chinese standard, New China Mobile might become the last operator to launch 3G. Therefore, it is necessary to learn from existing experience and lessons, so as to avoid mistakes of other operators.

[+] Would existing GSM subscribers be its assets or liabilities?

At the new start line, do the 3 operators each carry a burden on its back? The GSM customer base of New China Mobile is both an asset and a liability. It is an asset because New China Mobile could attract those with higher value among the existing customers to become its 3G subscribers. New China Mobile has undoubted edge to promote 3G at its own existing outlets.

On the other hand, it is a liability because discounted rates will have to be offered to attract existing subscribers to use 3G services. Of course, it would be better to attract subscribers of other operators. However, if its 3G subscribers are derived from the existing GSM customer base, the total revenue would decrease. In general, with the launch of 3G, the operator would earn less, instead of more.

In summary, New China Mobile would face 3 challenges: 1) how to attract more cell phone manufacturers to make TD-SCDMA phones, ideally with enough models to cover different price levels; 2) how to maintain the existing GSM rates while attracting more users of 3G; 3) how to ensure the quality of 3G calls, i.e., how to ensure the roaming of the calls to its GSM network in areas beyond the reach of TD-SCDMA signals.

Appealing as they are, other value-added services, such as mobile Internet, won't be available before overcoming the above challenges. The much hated video phone might be only a selling point for advertisement. At the late stage of the 3G war, operators around the world are no longer boasting about their value-added services. Instead, they begin to focus on voice fee rate discounts. ( 2008/06/22 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

New Landscape in China's Telecom Market (3) Who's Gonna Be the Price Killer? - 2008/06/29

New Landscape in China's Telecom Market (2) Opportunities and Burdens for New China Mobile - 2008/06/22

Web 2.0 Think Again (5) Unearth the Value of "People" - 2007/06/24

Ultimate Mobile Device (2) Competition of Handheld Game Console - 2005/06/26

Comments

[+] 3G might have 3 versions.

In China, 3G is no longer a matter of "to have or not to have". Rather, it's about making sure to build it first and seeing how to do it next. The latest round of restructuring highlights the support of the government to the Chinese version of 3G: TD-SCDMA. Prior to that, there were many critics towards 3G and even those arguing for a direct leap to 4G. Now, none of these matters. The operators are posed for a massive merger. Following that would be the issuance of 3G licenses and a new round of infrastructure development. Then, 3G comes.

As a pioneer with 4 years of experience in 3G operation, I have written a lot about the new landscape in the 3G market. As a matter of fact, with the delay of 3G license issuance, Chinese telecom operators have the chance to learn the 3G operation experience from their international peers. As a result, the expectation for 3G, which was once irrationally eager, is getting gradually rational.

The restructuring will turn the operators into 3 powers: 1) China Mobile + China Tietong, let's call it "New China Mobile" for the time being; 2) China Unicom's GSM Network + China Netcom, "New China Unicom"; and 3) China Telecom + China Unicom's CDMA Network + China Satcom, "New China Telecom". Specifically New China Mobile is expected to adopt TD-SCDMA as its 3G version, while New China Unicom will adopt WCDMA and New China Telecom CDMA2000.

[+] Subscribers face bigger barriers for changing network in the 3G time

The restructuring plan seems to have taken care of the interest of each party and each 3G standard fairly. Ideally, a tri-player market structure would facilitate competition and benefit consumers eventually. The fact is, however, to facilitate real market competition, the 3 new operators should use the same version for 3G, for example, TD-SCDMA or WCDMA.

Consumers have to buy a 3G cell phone to be able to use 3G services. Think about this: a consumer who has a New China Unicom's 3G cell phone wishes to switch to the 3G network of New China Mobile. What he needs do is just change his USIM card, instead of buying a new cell phone. If such an easy thing occurs frequently, the operators will have to figure out better ways to cater for their customers, and preventing them from changing network.

Now a subscriber of New China Mobile has a 3G, TD-SCDMA cell phone, and wishes to switch to New China Unicom. The problem is New China Unicom's 3G version is WCDMA. So he has to buy a new cell phone, which is by no means easy. With more functions than 2G devices, 3G phones will not be cheap. The consumer begins to hesitate.

As it is now definite that the 3 new operators will get 3 different 3G licenses, this is sure to happen. To a large extent, it has decided the landscape in the future market: the one who builds its customer base first is expected to retain the customers for a considerably long period of time. No one who has spent so much on a 3G cell phone would so casually switch a network in the immediate future.

[+] Customer base building: winner takes it all

One of the most attractive aspects about 3G is the video phone. Being able to see the person at the other end of the call is a feature that people both love and hate (and that accounts for why it has not been popular anywhere in the world). With the existence of different versions, a person with a WCDMA phone will not be able to call someone with a CDMA 2000 phone. The attractive aspect of 3G, it seems, is not so attractive.

For operators, this is both a challenge and an opportunity. If the new operators could persuade lovers (or mothers and sons) to buy their 3G phones (for video phone communication) at the same time, subscribers would increase by couple. For both parties of a call, no barrier exists for using 3G phones of the same spec to make video phone calls.

The above observation has drastically increased the possibility of "winner takes all" in China's 3G market. The one who builds up its customer base first would establish a leading edge. It was the same situation that once occurred as the result of the competition between China Mobile and China Unicom's CDMA Network. The difference is the new landscape brings everybody back to the start line again. At least it gives us new expectations.

If the 3 new operators end up being equal rivals, it would be the consumers who eventually benefit most. Although under the protection of different versions of 3G, changing network is difficult. There would be a landscape of competition between equally powerful players. However, if the tri-party balance is disturbed, there might be 2 big and 1 small, or 1 big and two small operators. ( 2008/06/08 - By Digitalwall.com - Way to China Internet/Telecom )

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New Landscape in China's Telecom Market (1) Winner Takes All - 2008/06/08

Web 2.0 Think Again (3) A Reason to "accost" Someone Online - 2007/06/03

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[+]The history of SNS

Further back, News Corp acquired MySpace with USD 580 million in 2005; Microsoft paid USD 240 million for merely 1.6% stakes in Facebook. The first deal seems to be too hasty for MySpace and too juicy for News Corp. What, indeed, is the most attractive aspect about SNS to investors?

SNS is really a confusing concept when mentioned together with dating sites, community sites or Blog. Even SNS operators do not view themselves as dating sites, community sites or Blog sites. While those sites have been in place since the Web 1.0 time, or at least the end of that time, SNS focuses on inter-personal relations, and therefore is a mixture of all above.

Finally, it seems that only ambiguous terms such as "personal space" could differentiate SNS from those traditional concepts. In terms of functionality, SNS enables blog, photo album, friends, community (or group) as basic functions. With the intentional guide of the operators, users could visit the blogs and photo albums of others, eventually activating the social networking function.

In terms of social networking behavior, SNS depends on the migration of offline personal relations to online platforms to combine with those of others to build a larger relation network. While using the service primarily to interact with acquaintances, users might meet strangers for deeper communication intentionally or unintentionally, resulting in larger social communities. Hence, interpersonal relations could be maintained by paying attention to the activities of each other.

[+]How to convert page views into revenue

With more than 40 million users around the world, Bebo is worth USD 850 million. In China, the largest social networking sites, e.g., Tecent Q Zone and 51.com, have more than 100 million users, yet none is deemed to be worth that much. What, indeed, is the commercial value of the social networking sites? At the present time, it seems, the value lies primarily in being purchased.

Thanks to the high interactivity among its users, social networking sites have far more page views than conventional portals. What's more, each user would keep an eye on the presence of his/her friends, resulting in a much longer average online time. Many SNS users log onto the site as soon as they get off work/class, and remain connected until they go to sleep. How to convert the addiction into revenue?

There are 3 possible ways: 1) through Internet advertisement; 2) by providing users with fee-based value-added services; 3) by offering e-commerce services in the communities and collecting commissions from transactions. In the foreseeable future, any social networking site is expected to reap revenue through all of these 3 approaches. The only difference lies in the revenue proportion because of different primary users of each SNS site

One of the most distinct features of SNS is its distribution by word-of-mouth. An article by a common person on MySpace or Facebook would get widely spread through his friends, or friends of friends. Such effect is what advertisers have been dreaming for, as distribution by word-of-mouth is the most cost-effective approach.

In the Web 1.0 time, however, this kind of viral marketing was only a result of sheer luck, rather than deliberate planning. Without a platform to operate on, most advertisers had to pay for the views of their ads, allowing their budgets to be washed away by the visit traffic of the portals. While the focus of Internet advertisement in Web 1.0 time was target advertisement, it would be viral advertisement enabled by SNS in the Web 2.0 time.

At the 2008 Annual Conference for the New Economy hosted by iResearch, I gave a speech titled "The Key Word for Marketing in Web 2.0: Viral marketing". You can find and watch the video at: http://v.iresearch.cn/data/20080425/79812.shtml

[+]Impacting the traditional Internet advertisement model

However, the business model has trouble facing advertisers, who generally accept it as a cost-effective approach. For example, one million clicks at a portal or one million users' interaction at a social networking platform, which one do you prefer? For online advertisers, the answer is the latter. The question is, however, how do you charge them for the one million users' interaction?

Currently, SNS is still not able to compete with portals by means of CPM or CPC. With surprisingly good results but no billing method available for SNS, there has appeared a weird phenomenon of "free interaction for ad exposure or clicks purchased". Unable to generate income from its most valuable part, SNS is not yet ready to compete with portals for users by means of CPC.

For advertisers, word-of-mouth-based distribution is the most cost-effective marketing method, as well as one of the reasons for them to move their budgets from portals to SNS. In addition, there's not yet a unified standard in the industry for billing by results. An event might have one million participants, however the extent of involvement varies substantially. There is not a simple and intuitive measurement like CPM or CPC.

Currently, advertisers are still testing SNS marketing, while SNS operators are exploring new billing methods. Therefore, there's a huge potential. Eventually, it becomes a process of negotiation between sales reps and advertisers, and the final result depends on who is going to convince whom. The criteria for advertisement effect in the Web 1.0 time is no longer able to keep up with the market changes, but the Web 2.0 criteria are yet to be developed.

Viral marketing will be the key word for marketing in the Web 2.0 time, as SNS will become a platform enabling word-of-mouth-based distribution among advertisers. Share and recommendation by friends would enable higher market awareness and better marketing effect. What we don't have yet is a set of criteria to measure the marketing result, as CPM and CPC, which derived from traditional media, are obviously out-of-date. ( 2008/05/11 - By Digitalwall.com - Way to China Internet/Telecom )

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Glimpse into Profit Model of SNS-based advertisement - 2008/05/11

3G Time Comes (8) Who Are First Users of 3G? - 2003/05/18

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[+]A new term: Widget

On the sidebars of many blogs, particularly independent blogs, we can often see many fancy things, like a beautiful clock, or a weather forecast column, or news headline updates. These fancy things, which occupy small spaces on the web page and offer a variety of functions, are one kind of Widgets.

Of course, there are Widgets that can be downloaded and installed into your PC or cell phone. You also can download Widgets from many portals, including Microsoft, Google and Yahoo! and install them onto MSN Space, Google Personal or My Yahoo. These, however, are beyond the scope of this article, which only focuses on independent sites to offer Widget service like http://Widgetbox.com.

Why, then, do most of Widgets used by independent Blogs, rather than those empowered by large blog service providers (e.g., MSN Space)? The reason is most blog service providers do not allow bloggers to add Javascript into their blogs, while most Widgets were written by Javascprit code to be embedded into blog web pages.

In addition, it takes considerable expertise to insert Widgets. An ordinary Internet user would have to do a lot of learning before being able to put Widgets on his/her Blog. Most individuals who build their own Blog sites are familiar with such expertise. However, such difficulty is not yet to become an obstacle to the infiltration of Widgets across the Internet in many countries. There have emerged a lot of sites that offer Widget services.

In China, however, Widget is not so popular, mainly for two reasons: 1) given the Internet environment in the country, it is hard for an ordinary Internet user to build his/her own Blog site. In the United States, from applying for the domain name to leasing a host to activating the blog system to making the payment, everything can be done online. 2) Many international Blog service providers begin to allow embedded Javascript, which increases the possibility of Widgets being used.

[+]Operation model of Widget service

Widget service operators provide Widgets with diversified functions. To embed the Widgets onto their own Blogs, Internet users need to copy the corresponding Javascript onto their own Blogs. When the web page of a Blog is viewed, the Javascript code was triggered to retrieve the corresponding Widget from the service provider site and send it back to the web page where embedded.

This is the underlying mechanism of Widgets. A site offering Widget services is like a large warehouse, which sends a shipment whenever it receives a delivery call. Eventually, the goods are displayed in stores around the street. The problem is that nobody is going to visit the warehouse itself. Hence there appears a paradox of business operation: the sites of Widget service providers themselves do not have high traffic.

The traffic have gone to thousands of Blogs. The bandwidth budgets of the Widget service providers are used entirely for the transmission of Widgets to Blogs. According to my own experience in Widget service provision, Blogs that rank top 30% in terms of the total "deliveries" consumes 90% of the delivery calls, which is close to the proportion of the traditional 80:20 rule.

The website I build to offer Widget service is: http://www.rankwidget.com.

The function of this particular Widget is to show the Alexa ranking or the Google Pagerank of the Blog web page where it is put. I have operated the site for half a year now. At its peak, my site provided services to about 50,000 websites, delivering 200,000 times each day. (because advertisement was introduced later, the volume dropped to one third of the original level, with about 60,000 times delivered each day.)

Such niche market-targeted Widget cannot expect to have a lot of users, so 200,000 delivery times per day is a fairly satisfactory figure. The problem is that the site (rankwidget.com) has very low traffic itself - with less than 1,000 page views each day. We cannot expect to have many visitors to the "warehouse". The question is: how do operators of such an emerging application make money? After all, the bandwidth cost is a tangible expenditure every month.

[+]How do Widget operators make money?

You can take a look at a real operation of the Widget on: http://english.digitalwall.com. Open the web page and move to the bottom left corner, where your browser would bring out a pop up ad window behind your browser. When you move your mouse onto the Widget, a "bubble ad" appears. These are the operation models of the Widget I have tried. (Now the site no longer has bubble ads.)

With the 60,000 page views of the Widget site, the pop-under ad window ads would be displayed 2,500 times (most browsers have default pop-up ad blockers, which would significantly reduce the number of display time), resulting in a click rate as low as 0.2%. With the CPM or CPC-based billing approach widely adopted in the United States, I, as the operator of the Widget site, will end up in starvation.

The mindset is simple: each time a Widget site receives a "delivery call", it is expected to generate revenue, as each time there's a bandwidth cost. Hence advertisement becomes a model worth trying. However, as the Widget brings disturbing ads, many Blogger prefer not to use it.

The Internet is really an unreasonable business environment. Users don't care about what operation cost you have. When I used pop-under ad windows, I had to face tides of fury of many Bloggers. Later on, I replaced it with a milder model: bubble ad, which was a big innovation (it seemed that nobody had tried it before), but the income was far away from satisfaction.

I am still exploring profit models for the Widget. In this field, I can be counted as one of the pioneers worldwide. With the thriving of SNS, many sites are following the lead of Facebook along a path toward Open API. In the future, the focus of the Widget is expected to extend from Blog to SNS. How to help this emerging service to find a profit model has become an interesting topic. ( 2008/05/04 - By Digitalwall.com - Way to China Internet/Telecom )

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Initial Experience of Widget's Profit Model - 2008/05/04

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[+]The rises and falls of Apple

Nobody foresaw the company, once in its low, would come back in glory. Back in history, Apple was left alone in the cold due to the introduction of product platforms (open standard) and industrial platforms (labor division within the industry) built by the PC group led by Intel and Microsoft.

Apple's proprietary system throttled the enthusiasm of players in the industry to collaborate in the manufacturing of hardware/software and peripheral products, resulting in few applications usable, which, on the other hand, held consumers back from buying its products. Eventually, Apple was cornered by the PC group into a niche market.

Nobody would deny that Apple's computers had more elegant and appealing shapes. However, it was no rival of the Wintel legion, because they could dig deep into the personal computer market with the power of the entire industry after open standards were formed.

Remarkably, the first surprise Steve Jobs brought the world after coming back to Apple was iPod, which was launched in October 2001. Back at the time, iPod could only be connected with Apple computers through iTunes. Persisting on Apple's tradition for fashionable design, however, it was able to win the favor of its loyal users.

In June 2002, Apple launched iPod Windows version, and then the mid/low-end series, and successfully infiltrated into non-Apple users. Once mocked by its rivals as a "clumsy MP3 player with a mini-hard drive", iPod finally became an icon of imitation.

[+]Beginning to reap the benefits of a "platform"

iPod successfully built two platforms. The first one was a platform of peripheral products, with open interfaces allowing other hardware manufacturers to develop products compatible with iPod, e.g., plug-in FM radios, special voice record pens and digital cameras.

The second platform was iTunes, the one most talked about but none of the rivals could successfully copy. It was first introduced to enable users to synchronize music files with iPod and assist them to manage music files in their computers. Surprisingly, Steve Jobs used it to build his music stores.

The more iPods were sold, the more likely users would buy music. For the traditional music industry, iTunes turned out to be a platform to sell music products in the digital world. With the increase of users who chose to pay for digital music, labels found themselves tied more and more tightly to the platform.

So when Steve Jobs insisted USD 0.99 per song, the labels that originally planned for a price rise had no choice but to agree. Some labels did build their own music distribution websites, but failed to achieve the sales level of Apple.

The support of the admirable iPod sales is the key to the success of Apple, which offers the benefits of a powerful platform of hardware + software + Internet service - benefits which Yahoo! and other Internet players cannot offer. Maybe it is the reason that Google wants to introduce its own cell phones.

The platform can be further expanded. The first approach is to infiltrate into the film distribution market. Now that Steve Jobs has reached his hand into their pockets, film makers, however afraid of following the fate of the music industry, cannot afford to ignore the presence of the platform.

[+]Building a powerful platform with contents

The second approach is that iTunes, while adapting to the Web 2.0 trend, enables ordinary people to make music, broadcasting programs or even films themselves and move them onto Apple music stores. A wide range of PodCast programs are really amazing and of good quality. What's more, the rich contents have increased the confidence of iPod buyers in its value.

However, it is time to use the content platform to introduce new hardware. In June 2007, Apple launched iPhone, an unprecedented achievement through a partnership with AT&T. To use iPhone, users had to register an iTunes ID, and telecom operators share income with Apple.

Such humble operator was never seen before. If not for Apple's bargaining ability backed by the powerful content platform and the user number, the arrogant operators would never have given in.

Interestingly enough, it is said that the same cooperation model proposed by Apple was rejected by China Mobile. Apart from that the latter was the largest mobile operator in the world and hence even more arrogant, it also indicated that the platform was not powerful enough in China to offer a bargaining ability against China Mobile.

Will Apple, which was beaten in the PC market a decade ago, realize the importance of platform and open its iPhone? Currently, iPhone uses Mac OS X operating system. With the increase in sales, there would be more hardware/software and service vendors around the OS, and eventually, new platforms would emerge.

This, however, is not the style of Jobs. iPhone is a proprietary device. In each country, Apple would choose only one operator as its partner. In addition, Mac OS does not have many software service developers. Completely relying on itself, Apple is expected to sell only tens of million cell phones at most.

In terms of building a large cell phone-based platform, wouldn't Nokia, which has much larger sales, present a bigger chance than Apple?

[+]Continue to be proprietary?

Currently, Google is trying to build a series of platforms ranging from cell phone operating system to browser to online service, which it intends to offer free of charge. Apple is doing virtually the same things, but doesn't seem to consider to offer them free to other manufacturers.

The key is Apple does not regard Internet as its core business, at least as of the present time. Both Google and Yahoo! hold Internet as their core business. While the former chooses to develop hardware standards independently and offers them free of charge to the public, the latter chooses to be compatible with all hardware standards.

Other than its own online stores, Apple does not seem to be interested in any other Internet service. Unlike ordinary cell phones, which can only view WAP sites, the iPhone browser enables the viewing of HTML websites. Nor has Apple considered building a wireless portal for all iPhone users to make itself more popular.

As a matter of fact, Apple's understanding of the Internet remains to be around computers. A China Mobile executive once had a negative comment on Apple, saying that downloading music from a computer to a cell phone was not consistent with the experience of cell phone users, who were supposed to download music directly from portals of telecom operators.

Anyhow, Steve Jobs has successfully attracted the eye of the world. Although traffic volume or ad revenue-based profit model is beyond his vision of the Internet market, the success of iPod, iTunes and iPhone is powerful enough to shock traditional cell phone manufacturers. ( 2008/04/06 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Great Changes in Wireless Internet Industry (4) Apple's Strategy - 2008/04/06

The Mist of 3G in China (2) TD-SCDMA is a Hot Potato - 2007/04/08

The Mist of 3G in China (1) 3G Makes No Profit - 2007/04/01

Predictions on China Internet Market (6) Community Services - 2006/04/09

Media, Community, and Blog (5) The Power of Media - 2005/04/03

3G Time Comes (4) Video Phone - the Killer Application - 2003/04/06

Comments

[+] Handset operating systems are getting increasingly unimportant.

If you were the CEO of Nokia, you would think: "can I further do something with these users?" when you see the data. Lucrative as the handset business is, isn't it better to squeeze something more out of the users? Internet becomes a target.

For years, Nokia has been dedicated to the development of its handset operating system Symbian and a series of smart phones to battle with Microsoft - with eye-catching sales. Worldwide, 60% of the smart phones are driven by Symbian. Only 11% use Windows Mobile.

What's clear is, however, amid the tide of wireless Internet, handset operating systems are getting increasingly unimportant. It is not that players on the stage will give up operating systems, but they have found that the ability to provide services is even more important.

If, as described in the previous section, Yahoo! introduces Yahoo! Go to enable service delivery across operating systems on the wireless Internet, and Google's operating system becomes available to handset developers for free. Where is the value of those different operating systems? The users would care nothing else but the services available.

Apple iPhone is an amazing product. But the central topic is not the operating system iPhone uses. In terms of sales, it would have a long way to go before becoming a threat to the market leader Nokia. However, iPhone's ability to drive sales with its music service is something that Nokia cannot afford to ignore.

[+] Nokia moves into the Internet market.

According to data released by Google internally in January 2008, during the 2007 Christmas season, page views of Google through iPhone was next only to that through the Symbian smart phones. iPhone's share of the smart phone market was as low as 2%, while that of Symbian was 63%.

What's the reflection it would give Nokia? Obviously, iPhone offers better Internet experience than Nokia - easier to use, more user-friendly browser functions. Maybe Apple is better able to attract users with high demand for Internet accessing to buy its smart phones.

To Nokia, both the improvements to the interface and the selling model of handsets bound with Internet services are shockingly new. A player that has been traditionally regarded a computer manufacturer is now one step into the telecom industry after a successful transformation into an Internet service provider and a consumer electronic product manufacturer.

What will be the right move for Nokia to infiltrate into the territories of its rivals? The first idea would be to provide proprietary contents, which could be obtained through M&A or through partnerships. Fortunately, many Internet players are interested in getting their services available on Nokia phones.

Therefore, Nokia introduced a series of services, including Nokia Search, Nokia Maps and Nokia Music. Most of the services, however, require download of special software into handsets in prior, and are not compatible with all Nokia handset models. Therefore, pre-installation of the software becomes a necessary means to sell handsets.

Nokia Search is a service offered jointly with search engines such as Google, while Nokia Music is a fee-based online music store through partnerships with leading labels - something similar to the iTunes music store of Apple. To Internet players, Nokia is both a partner and a rival.

Nokia service list: http://europe.nokia.com/A4496273

[+] WidSets: an open platform that pulls together the Internet world

It takes time to build such services. To establish itself in the Internet world as soon as possible, Nokia will have to pull the entire Internet over to its side. Don't forget that the Internet is a huge eco-system that needs a common leader to open the gate to the world of wireless Internet.

Nokia must turn itself into a platform, which must be more open than existing ones, to enable the upload of any service, regardless of the handset operating system - Symbian, or whatever else. If the handset operating system is no longer important, sticking onto Symbian would become Achilles' heel.

To Internet players that Nokia wants to pull over to its side, the prospect of handset-based Internet services available on any handset is a deadly attraction. Perhaps it was based on this idea that Nokia introduced its open platform WidSets.

For handsets, this open platform is a small Java program. Any handset that supports Java can run the software. Theoretically, Internet players would be able to provide services to all Java-enabling handsets, so long as the services are developed on the basis of the small program.

In terms of operation logics, what WidSets offers is similar to that Yahoo! Go does. Internet service providers could ignore the specifications of various handsets and make their services available on the wireless Internet through simple programs, so long as the receiving handsets have WidSets.

Currently, a number of leading Internet players, such as Wikipedia, Blogger and Flickr, as well as news media including Routers and BBC have started to develop applications on the Widsets platform. In addition, many amateur players are developing small games on it for downloading by users. Obviously, application development has become an easy thing.

Download WidSets at: https://www.widsets.com/widgets

[+] Can handsets be free?

Theoretically, Nokia's WidSets can be installed into a GPhone, or an iPhone, so long as it supports Java. In this regard, what operating system a handset uses is really unimportant. Why then is Google still sticking on the development of its own handset operating system?

What's really in the mind of Google, perhaps, is to extend its advantages in online advertisement. By knitting Google services closer with handset functions, it would be able to continue its leadership in the handset-based advertisement market as the wireless Internet population grows, or even use the income to offer cheaper or free handsets.

Of course, Nokia and other handset manufacturers would hate the idea. Instead of selling products, they would have to depend on advertisement to make money. Will this wild dream of Google become true? First of all, handsets will never really be free. They are just paid by somebody else.

Telecom operators were once bill payers that made handsets free through bound service contracts with consumers, who were thereby requested to pay subscriptions, which they had no way to cancel for a given period of time. With the subsidies of telecom operators and Google, it is indeed possible to further drive down the prices of handsets.

If the appearance of GPhone means that telecom operators would pay less subsidy, that's absolutely good news for them. The problem is it will have to be paid, either by telecom operators, or by Google, because handset manufacturers such as Nokia will not sell handsets at prices below costs.

If Google pays the subsidy to make handsets free, it will have to earn the money back from follow-on handset-based ads. To spend the money before there's an income, is this a good deal? Google will have a huge amount of cash to give away as subsidy. It seems exactly what powerful telecom operators did in the previous years.

Compared with those of Yahoo! and Nokia, Google's wireless Internet plan seems more like a big bet. ( 2008/03/23 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Great Changes in Wireless Internet Industry (3) Nokia's Strategy - 2008/03/23

Predictions on China Internet Market (5) Search Engines - 2006/03/26

Media, Community, and Blog (4) Production-Marketing Relations - 2005/03/27

Media, Community, and Blog (3) Deconstruct Blog - 2005/03/20

Stop Internet Marketing (3) All Determination; No Distribution - 2004/03/21

3G Time Comes (3) SMS, Email and MMS - 2003/03/23

Comments

[+] Isolated and multi-standard industrial environment

You don't have to bother about what operating systems your users use, or whether your users access the Internet through ADSL or Cable, or via which telecom operators. However, with a mobile Internet environment, all these are issues you have to think about.

Providing value-added mobile Internet services via handsets is extremely painful. For example, Yahoo! has a searching box on an operator's WAP portal. It wasn't launched until passing telecom network test, value-added platform test, billing platform test and handset compatibility test.

If it wants to cooperate with another telecom operator, it will have to do these tests all over again, as each operator has its own telecom network and platforms. Just consider how many telecom operators there are in the world? Such a service deployment speed makes it almost impossible to duplicate the Internet revolution on handsets.

In the world of mobile communication, each industrial leader wants to develop its own standard. Leaving alone the various platforms of telecom operators, is it possible to have a uniform software development environment in the first place to make it easier for the developers to support a wide range of handsets?

Now we have a crowded market. In addition to Symbian and Windows Mobile, there are the reverend Java and Qualcomm Brew, joined by new comers like Adobe Flash Lite. Even Yahoo! has introduced Yahoo! Mobile Developer Platform.

If you are a handset service developer, what would you feel at the sight of so many standards you have to support?

[+] Handset operating systems are getting increasingly unimportant

These development platforms have everything from operating systems to software deployment environments. Now that none of the handset operating systems could monopolize the market, all will have to seek survival in the long run. What consumers care most about are only services, not operating systems. It would be increasingly unimportant to fight for market shares of handset operating systems.

In my view, therefore, the key to the success of platform development is not the operating system, but the software deployment environment. As a matter of fact, Java, which is best positioned to build a terminal-independent development environment, has not been able to achieve its vision of "write once, run anywhere".

Flash Lite, a product of Flash that holds an admirable share in the computer-based Internet market, is another development environment irrelevant to operating systems. Theoretically, any handset, regardless of its operating system, could use the environment so long as it supports Flash.

If it could really enable "write once, run anywhere", the development platform will be embraced by developers. Yahoo!'s Mobile Developer Platform (MDP) could be regarded as a development platform similar to Flash Lite but more irrelevant with operating systems.

Simply speaking, website operators that write Widget in accordance with the development specifications (simple scripting, instead of binary codes) will be able to deliver existing services of their websites to handsets, so long as these handsets have installed Yahoo!Go.

The goal of Yahoo! is to get Yahoo! Go into every handset, so that more and more websites would support MDP and join Yahoo! This, of course, would include Google's phone - if GPhone has built-in Yahoo! Go.

[+] The Mobile Internet needs a common leader

Any Internet player that plans to provide handset-based service will have to face a variety of handset operating systems, the special functions of different brands, the different browser brands in the handsets and the different telecom operator platforms.

Such a complicated environment would often be a headache for small Internet companies. Investing resources to solve all the problems is, obviously, not in line with their economic interests. Large Internet companies could make such investments and get economic benefits, but then they will have to fight a battle all by themselves.

Computer-based Internet is a large eco-system. Unless there is a platform that enables all Internet companies to deliver their services to handsets, the entire eco-system would not be able to bargain with telecom operators, who control user resources.

So there appears the mainstream requirement for an open platform different from existing software development platforms such as Java or Flash. The former is a development tool customized for small Internet companies to address the compatibility of different handsets.

In addition to compatibility, the platform should be supported by an industrial leader powerful enough to deal with telecom operators or handset manufacturers. In other words, the mobile internet needs a common leader with a sufficiently large user group.

The key is who the leader will be? Yahoo! and Google, both with large user basis, have chosen different approaches. Ignoring other standards, Google chooses to develop its own platform. Yahoo! chooses to co-exist with other standards.

[+] What's the difference between Yahoo! and Google?

What's the difference between Yahoo! MDP and Google Android? Simply speaking, Android is a platform that includes everything - from the operating system to the software deployment environment and even the browser. Leaning more toward handsets and developers, it hopes to build a brand new underlying technical platform in the mobile Internet industry.

Google does not care what operating system is used on a handset, or what impact the browser has on the presentation of web pages, because it has prepared its own. It wishes to persuade handset manufacturers, Internet companies and software developers to use its standards and get rid of all others.

Yahoo!, on the other hand, focuses more on the provision of a front-end environment to enable existing website operators to deliver their services into handsets easily, regardless of underlying technologies. To achieve this goal, however, Yahoo! has to overcome compatibility problems itself.

To be applicable in every handset, Yahoo!Go must be compatible with all handset operating systems (including, of course, the operating system of Google). It has to adapt to handsets or browsers of different manufacturers to ensure normal functionality and display quality.

With all these pains-taking efforts of Yahoo!, medium and small Internet companies will be able to provide handset versions of their services on their websites easily. No more fuss about standards, just follow the leader.

Both players are trying to become the leader, although with different approaches. Who's got the better chance? As of this point of time, we can only say that Google is taking a bigger bet. It will have a big success or a big failure. Both, however, have chosen the approaches best fit themselves. We can hardly imagine Yahoo! to develop a platform like Android.

However, they are not the only ones aiming at the leadership. Nokia has noticed the trend, too. ( 2008/03/09 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : Great Changes in Wireless Internet Industry (1) Google's Strategy

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- Today in History

Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy - 2008/03/09

Great Changes in Wireless Internet Industry (1) Google's Strategy - 2008/03/02

Predictions on China Internet Market (2) Subscriber Number Is King - 2006/03/05

Media, Community, and Blog (1) The Beginning of the Story - 2005/03/06

Stop Internet Marketing (1) All Market; No Marketing - 2004/03/07

3G Time Comes (1) What Is 3G? - 2003/03/09

Comments

[+] The conflict of mindsets of two industries

Mobile operators are in a fortress that Internet players have been unable to conquer so far - largely due to the gap between the basic business modes of the two industries. In the mind of telecom operators, there's nothing to be offered free. Once launched on a telecom platform, any service would entail a cost and should generate an income.

Therefore, when the ringtone download service is released on WAP portal, telecom operators charge the users two types of fees, one for data transmission and the other for use of the content. While the former is most likely to be integrated into monthly packages, the latter is actually collected for content providers.

For a long time, telecom operators have no idea about how to deal with Yahoo! or Google search boxes at WAP portals. Unlike ringtone download, this is a service that you cannot charge users for. If the search boxes are put up by Internet players for marketing purpose, should they pay telecom operators for that?

So when the webpage you get using Google on your cell phone shows an ad, your telecom operator will share a portion from the advertising income. This cooperation model turns Internet companies into a secondary role. What else can they do since the telecom operators control the Internet access?

There are two ways to force telecom operators to recognize their status: either from the upper stream or the lower stream of the industry. One case for the former is Google's bid for wireless spectrum to assume the role of a telecom operator; and that of the latter is Apple's introduction of iPhone - bound music to reach into the pocket of consumers.

[+] Google's overall deployment

Google' s bid for FCC 700MHz wireless spectrum is far more important than its launch of Android mobile platform. Previously, Google had urged FCC to accept a yardstick that "all bidders for the spectrum should offer open access."

The request got the support of FCC. Essentially, it demands that the winner of the bid should have the ability to provide access to any terminal device connecting to networks of the spectrum. Instead of discrimination, the operators should treat all terminal devices equally.

FCC is a neutral party. Its mission is to facilitate the development and effective competition of the communication industry. To open the industry wider to more players is, obviously, in conformity with this mission. As Google stood out with the proposal, telecom operators, who had been accustomed to stand-alone business operation, were at a loss for even not knowing how to rebut it.

However, how could it be possible to allow so many different terminal devices free access to the Internet? So Google, along with the 34 founding members of Open Handset Alliance, introduced Android, a device-independent handset software development platform..

Why were the 34 companies, including heavy-weight players such as Motorola and Qualcomm, and even telecom operator T-Mobile involved from the very beginning? Had Google not announced to bid for the license and urged FCC to accept the Open Access standard, they wouldn't be there so fast!

Google made a smart move. The result of the bidding is yet to be announced, and the open handset platform would have to stand up to existing rivals such as Symbian and Windows Mobile. Nevertheless, it is a good beginning. Nobody could afford to ignore the power of Google.

[+] The license bid is critical

The next step of Google might depend on the result of the license bid. In the first place, if Google wins the bid and becomes a new telecom operator, it would be able to integrate the entire industrial chain, from the upper stream to the lower stream, with the assistance of Open Handset Alliance. The most optimistic prospect would be a performance multiplier.

Google will be able to foster the basic customers for its own handset platform, while its allies would target client groups for their handsets and services, and terminals introduce closer-knitted services with Google. With economies of scale, more investments can be made for R&D to eventually build a healthy cycle.

Of course, it will take Google a lot of money and time to learn about the trade. Telecom is a century-old industry and won't be so easy for Google to understand in a short time. Head hunting might be a good option, but conflict with Google's existing business culture would be possible.

If the learning curve is too long, Google might be mired in the new business. Telecom is a capital-intensive business that takes a lot of initial investments. Google's financial statements would not look so pretty by the time.

More troublesome, in this industry, successful business modes cannot be duplicated. Google might be able to get the wireless spectrum of the United States, but it has no way to get those of all countries in the world. Telecom is a highly localized industry, which means that Google is unlikely to duplicate or export business modes to other parts of the world.

The only viable way is M&A, or financial takeover of local telecom operators just like other transnational telecom giants have been doing. This, however, won't happen before Google's telecom business becomes profitable. How can a money-losing business sell its business mode? Where does it get the money needed?

[+] The Android platform turns out to be a headache of developers

In my view, it would be better for Google not to get the wireless spectrum license. It would be too much to raise cows just for drinking milk. Even if Google doesn't get the license, Open Handset Alliance and its Android platform would still be valuable assets.

As Open Access has been accepted by FCC as a requirement for all players, Google could use the alliance and the platform as its chips to cooperate with the telecom operators that win the license. By abandoning the quest for a telecom operator, Google would be less as a threat to other operators, which would be helpful for cooperation.

By taking the highland to show its determination for the license bid, to create a powerful pressure and facilitate the establishment of Open Handset Alliance, Google has made a really smart move, regardless of the result of the bid.

Of course, there will be challenges. For Google, the biggest is how to attract more telecom operators into the alliance and to boost the enthusiasm of handset manufacturers to develop GPhone. Its rivals will include the formidable Symbian and Windows Mobile.

Handset manufacturers and software/application developers, in the meantime, are frowning at the platform. On the open Internet, Google is undoubtedly the leader. In the field of handset development platform, however, it is just one of the options.

What the developers are concerned about is, if the Google platform is not powerful enough to take the loin's share of the handset market, it would turn out to be one more standard that the developers would have to support. For them, the existing platforms are enough to be painful about. And here comes another. ( 2008/03/02 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Great Changes in Wireless Internet Industry (2) Yahoo!'s Strategy - 2008/03/09

Great Changes in Wireless Internet Industry (1) Google's Strategy - 2008/03/02

Predictions on China Internet Market (2) Subscriber Number Is King - 2006/03/05

Media, Community, and Blog (1) The Beginning of the Story - 2005/03/06

Stop Internet Marketing (1) All Market; No Marketing - 2004/03/07

3G Time Comes (1) What Is 3G? - 2003/03/09

Comments

[+] Web 2.0 is direct marketing

Ten years ago the emergence of the Internet brought some changes for the first time. For Internet start-ups, their products are websites, and their services can reach end users directly. They don't need other channels. This was how the advantage of the capital-intensive newspaper industry, which controlled the distribution channel, gradually dissolved. The Web 1.0 world has taken its place.

This new channel of the Internet has impacted on traditional media, traditional business models and also traditional communications. Generally, in the Web 1.0 era, there are a lot of people with only a small capital starting their businesses. They can do so because they've found a low-cost marketing channel to break the blockade set by traditional capitalists.

Yet after 10 years, some startups, such as Yahoo!, have become new capitalists. They control the distribution channels and suffocate the chances of new Internet startups, which have to buy expensive advertisements from "traditional" channels - Web 1.0 websites - to draw visitors to their websites.

Many years ago in the traditional business world, there was a new channel called direct marketing. It was about bypassing the traditional distribution channel by marketing through social networks. Today with so many tycoons in the Internet, how can we avoid them and do business in a low cost way?

The answer lies in social networks. Web 2.0 startups make ingenious use of social networks or interpersonal relationship to do low-cost marketing. To market through social networks is a very smart strategy. Without this, we won't see significant growth in these new websites' user-base and traffic.

[+] Back to the basics is the key to growth

Many people have the experience of buying products via direct marketing, but they don't have much confidence in it. People who participate in the direct marketing system constantly come and go, making it not very stable. Web 2.0 services attract new users through interpersonal relationship in a similar way. Moreover, a brilliant marketing strategy still cannot solve the inherent problems of products.

The first article of this series talks about two problems of Web 2.0 websites. The first is high user churn rate, and the second is that once users decide to leave, they won't turn to other competitors but will quit all websites/services of similar kind for good.

For a website operator, this has two implications. Firstly, users who leave your competing websites won't go to yours, which means you have to target at first-timers. Think about those users who are still new to the market, and they are the ones your products should be designed for.

Secondly, users will leave sooner or later, so most importantly you should strive to capture heavy users. Only heavy users would migrate among Web 2.0 websites of similar kind or try new websites. An important step for your website to succeed is to seize this group of users.

Once a website can control a certain group of heavy users, it can then start to think about how to either make profits or stay small and survive gracefully, like all successful community websites. However, is there any way to expand the user-base by drawing in less-active users?

My suggestion is, get rid of the strong community atmosphere and cultural ambiance! They are incompatible with things that can meet people's basic needs, such as storage, tools and content.

These things, simply put, are products of Web 1.0.

[+] Next step: storage, tools and content

The founder of Facebook Mark Zuckerbery once said that Facebook is not a social network but a social tool. His words are often interpreted as "Facebook as an operating system or platform," and Facebook's open API implies such possibilities.

His words are impressive because he points out concisely that the key to get big is to serve as a "platform." My understanding of his words is that platforms and tools are things that have little to do with culture. They can be used by anyone and don't require users to change their habits.

You use Gmail to write emails and MSN to send messages very easily. These tools don't have much to do with culture (at least not as much as online community websites.) Operators who have been focused on developing a vibrant online community to retain active users need to think about what are the tools that are not so hot but can be used by all.

Instant messaging (IM), a tool that is highly related to social activities, is one example. For the past ten years, the IM market has been very stable. If a social networking service (SNS) provider with several hundred million users launches a new IM tool, it may have the potential to change the market dynamics.

In addition, people get tired of social activities once in a while. Maybe a user just needs a space to store their photos, documents and bookmarks. S/he doesn't want anyone to know the URL of his/her homepage or to bother her/him with status alerts. Is it possible that a SNS website can provide such functions?

Storage is one of such basic needs. Some active users may be happily busy with various social activities all day long, but there are still more people who need only basic services. What will make a user to keep on visiting a website once s/he gets tired of online social activities? Maybe s/he just needs a space to store pictures.

Active users visit a website because they need the social network there; other users do so simply because this is where they store their stuff.

[+] Web 2.0 evolution is about to complete

The third thing is content. This is easier to understand, and many Web 2.0 websites are doing it. For those who are not keen on social activities, let's give them some content. Using tags to aggregate content is a common method.

So at the end you'll find that Web 2.0 is still about the four pillars of the Internet, which I mentioned years ago: content, community, communication, and commerce.

In Web 1.0, a website operator would start from providing content and then functions of online community, communications and commerce. In Web 2.0, an operator would start from developing communities and then content and communications tools and lastly commerce.

We finally get a clear picture of Web 2.0 in the context of our time. It's about a grand evolution of websites all over the world. The result will not be about replacing old websites with new ones, but a gradual blending of old and new.

Whatever it is in Web x.0, it is all to be used by people. And the humanity of people do not change. ( 2008/01/06 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : Web 2.0 Finale (2) Websites With a Specific Culture Can't Grow Big

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- Today in History

Web 2.0 Finale (3) Finally blended in Web 1.0 - 2008/01/06

The Fourth Generation of Internet Marketing (3) IM Marketing - 2007/01/07

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[+] The social class a website targets at determines its size

The market situation has generally settled. In China, websites with over ten million users can expect to get funding in the third round, but they are also facing the challenge brought by major Web 1.0 websites interested in the Web 2.0 market. For those with only several million users, it's unrealistic to expect fast user growth; operators must strive to make profits.

In Taiwan, the no. 1 portal in the market, Yahoo! Taiwan, is playing a very powerful role, making it difficult to survive and prosper for small Web 2.0 websites in the already cramped market. Yet, at the same time, there are some established online community websites that are successful and making good profits.

Why is it so? I mentioned before that the rationale of Web 2.0 development is based on sociology. As such, the size of a Web 2.0 website's user-base is very much determined by the social (or cultural) class it targets at.

Web 2.0 websites grow along with the expansion of user's social networks. Users bring in other people whom they meet in their daily life, including strangers or acquaintances. As more and more people of the same class gather at the website, it will become more difficult for those who belong to other classes to join.

Once the initial user-base is formed, a website operator would study these users' way thinking and social behaviors more carefully so as to retain and encourage them to bring more new users. This consequently reinforces its focus on a specific cultural ambiance or social class, and the cycle then goes on and on.

[+] The management team's social class determines the size of user-base

To observe the development of a Web 2.0 website, one needs only to look at its initial user-base. Google's social networking service (SNS) website Orkut has got very popular in Brazil unexpectedly and this has made it difficult for users from other countries to join. Look around and you can hardly find anyone using Orkut, even though we are all Google users.

The biggest online community website in Korea, Cyworld, attempts to enter the US market. Its initial target users are white Americans; however, it turns out that the website is more appealing to young Asians. The reason is simple: the design of the website's interface, including functions and the overall feel, is more friendly and attractive to Asian users.

Another example is Friendster, a SNS website, which is very popular among Philippine users. Again, users from countries outside the Philippines would find it not easy to become a part of the community. You can call it cultural barrier. Look closer and you'll find that although transnational Web 2.0 website can reach users all over the world, it is always those who share something in common would flock together.

In China, 51.com, a Web 2.0 website, started from Internet cafes in provincial cities to build its user-base, and now it is struggling to draw in white-collar users in major cities. On the other hand, other Web 2.0 websites also meet difficulties in entering provincial cities. The above cases illustrate the effects of cultural ambiance and social classes in the real world on the user composition of Web 2.0 websites.

Those Web 2.0 websites targeting at the "upper classes" (the white collars) are sure to have limitations 0n user growth. Particularly in China, white collars, mostly living in coastal areas, make up only a fraction of the population. It would be a tough challenge for Web 2.0 websites aimed at this particular group of people to grab more than ten million users.

In Taiwan, two leading social bookmarking websites, HEMiDEMi and funP, have very different user communities in terms of their cultural ambiance. While the former is more attractive to elites, the latter is more proletarian. Yet both websites are focused on the class of white collars, and their performance is not as good as established grassroots online community websites in terms of traffic and profits.

If you move a step forward, you'll find that by looking at the founders of a Web 2.0 website, you can almost tell what the website will be like. Founders will naturally apply their way of thinking, which is surely conditioned to the social class they belong to, to developing online communities.

[+] Cultural products are for niche markets that never grow too big

Instead of aiming at a specific social class, some Web 2.0 websites would target at a group of people who share the same interests. There are online communities devoted to subjects of comics, sports, literature, book reviews, or food and restaurants.

These communities will definitely be conditioned by the size and scope of these social groups. For example, how many comic fans can you find in China? How many people in Taiwan love good food? What about the market prospects? In China, it may be feasible for website operators to cater for a specific niche market, but it may not be sustainable in Taiwan.

Why are there growth limits on Web 2.0 or online community websites? In addition to the conditioning of social classes, cultural products are for niche markets instead of for mass markets. A website that has specific cultural ambiance can never grow too big.

Does it mean that only websites that have "no particular culture" can grow big? By "no particular culture" I mean that there are no specific cultural features that can be attached to the websites. It is not about high culture versus vulgar popular culture. What I am trying to say is, as long as a website can be linked to a specific culture, there will surely be people who don't like it. You cannot please all and, as a result, the website will never be able to grow too big.

This is such a dilemma: an online community is always formed by people who are attracted to its cultural ambiance and who share similar interests. These people gather and stay and naturally develop a certain culture. Consequently, people who don't like its cultural ambiance go away. Many established online community websites remains the way they have always been for years without much change.

Surprisingly, you may find the solution in Web 1.0. ( 2007/12/30 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Web 2.0 Finale (2) Websites With a Specific Culture Can't Grow Big - 2007/12/30

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[+] Users' typical Web 2.0 experience

Recently though he has been getting emails with subjects like "you have been added to somebody's friend list" and the like. Clicking the hyperlink he found that it's by a friend on MSN. How could you decline a friend's invitation? So he signed up that social networking service.

By this way, Mr. X has joined Facebook, MySpace, Friendster, LinkedIn and a bunch of local Chinese language websites. Registering at these websites is a lot of pains. Every website asked him to fill in his profile, upload photos and even contribute his MSN contact list.

At first he was worried that if these friends would visit his personal blog, and it would be impolite if he didn't call at theirs in return. Such relationship pressure was such that he spent two hours after work to reply these messages online for a period of time.

(Interestingly, he didn't know that his friends were tied up on the Internet for the same reason.)

First it was acquaintances, then a bunch of strangers, who added him to their friends list. In the beginning it was fun and nice to socialize with these people online, checking out their newly updated blogs and photos and leaving messages to each other.

After about three months, Mr. X started to get bored socializing with these people online. As the number of friends kept growing, he could not but spend more time on the Internet visiting these websites. At the end two hours a day was not even enough.

He finally decided to quit such Internet services that he had been addicted to when he had almost reached the verge of breakdown. What was the meaning to spend so much time on this stuff? Life should not be like this, and he had to get things back under control.

[+] Typical experience of Web 2.0 website operators

All Web 2.0 websites operators are asking why the user churn rate is so high, and there is seemingly no way to remedy this problem as if it is inherent in Web 2.0 websites. New businesses planning to ride on the force of social networking, which continues to wane, are declining.

These Web 2.0 websites are like a big sieve, trying to capture a large number of users at a time; yet after three months, it always turns out that only half of them remain as effective users, and the rest simply disappear. The size of users may seem big but it is not substantial at all.

For a Web 2.0 website to enjoy growth, its social networking expansion needs to be faster than its user churn, so that, overall, its scale would be increasing. Yet what about when the growth of user numbers slow down?

Social networking websites MySpace and Facebook have shown strong performance and they are yet to hit the growth ceiling with the whole world as their market. (MySpace should reach its growth limit sooner than Facebook as the former has more users.) Therefore, seeking to expand foreign markets seems to be a solution to sustain growth.

Nevertheless, an inherent problem remains unsolved.

Another amazing effect of Web 2.0 websites is that, heavy users are very committed. They are very active and they remain so for a very long period. They visit the websites and stay there everyday.

From registered users to effective users to active users, the number of users continues to get smaller. Is it normal? I would say yes. In terms of online community, it's just the way it is. Just as I mentioned years ago, online communities are where "people of similar attributes gather to warm each other. And these people are the so-called "heavy users," such as active bloggers.

The characteristic of Web 2.0 is high interactivity, which means highly demanding for users. Those who are willing to interact with others and write blog articles are not normal people. They have stronger achievement motive and desire to express themselves, and they find their stage at some community website and feel a sense of belonging.

The question is, while these heavy users are having fun, what are the ordinary netizens doing?

[+] People can get sick of Web 2.0

As to those who quit some Web 2.0 website, do they turn to similar services of competing websites? Some of them (well, the heavy users) do, but for most people who leave, they just won't touch such kind of services and they leave forever.

Only a few people who, after quitting Facebook, would turn to MySpace. Most people would just quit social networking services (SNS) for good. It's the same for blogging. Only a limited number of people would migrate from one blog service provider to another and continue writing. Most would simply stop blogging.

Quitting a website is totally different from quitting a kind of service. For example, we know very clearly the difference between "turning to sohu.com from sina.com because of getting tired of the latter" and "quitting new websites for good."

Woops! It turns out that people can lose interest in Web 2.0 services.

Woops! So what's next when all netizens have become users of my Web 2.0 website?

If market development is like a chess game, then Web 2.0 websites that have been so popular for the past couple of years are entering the endgame phase. These websites operators may appear successful, but in fact they are getting uneasy. How to get away from the doomed path of Web 2.0 websites is an inevitable challenge.

Surprisingly, you may find the solution in Web 1.0. ( 2007/12/23 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Web 2.0 Finale (1) An Inherent Problem Unsolved - 2007/12/23

The Fourth Generation of Internet Marketing (2) RSS Tracking - 2006/12/24

Dream of "Digital Furniture" Store - 2003/12/28

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[+] The past experience of cell phone manufacturers

The world cell phone market started to show signs of saturation in 2000. To maintain their growth, manufacturers had to motivate consumers to replace their phones with newer products. All of the thrilling experiences in the past 7 years seem to be a quest for what really are the selling points. Fortunately, the result so far has been satisfactory.

In summary, there are a few observations:

1)Mobile Internet is a hard-to-handle concept. The key is consumers tend to compare their expectation for mobile Internet with their PC-based Internet experience, which, in most cases, ends up in disappointment, as cell phones are not so easy to handle as PCs. Mobile Internet has been successful in Japan, only because of the low PC penetration rate there.

2)Telecom operators wish that new cell phones be bound with particular services, so that they could benefit from their sales, instead of being un-paid sales reps of the manufacturers. However, it turns out that consumers buy camera phone only because they can use it to take pictures, and anyone seldom uses MMS service.

3) There's no concern for the shortage of content accessing channels. Despite the hot sale of music phones bound with download service offered by telecom operators, most users choose to transmit music from their computers to cell phones, instead of downloading them from the WAP portal provided by telecom operators. Although it is more troublesome, but it is free.

4)3G audio/video services, including IP-based audio/video streaming and video phone, have not brought satisfactory user experience. It is a very simple concept to allow both parties of a phone call to see each other. However, due to privacy concerns, it has not been able to become a killer application.

[+] Telecom operators might be ignored

With the above experience, cell phone manufacturers finally realized that their business is to make and sell handsets. The simpler their products are the better. There's nothing simpler than the concept of mobile TV.

Consumers no longer have to bother whether the TV programs are downloaded from the Internet, nor cell phone manufacturers to care about whether their phones are bound with particular services offered by telecom operators, so long as they free themselves from the troublesome 3G audio/video experience.

In fact, a hi-tech company in mainland China has developed a sort of chip, which can be built in cell phones to receive traditional analog TV signals. In other words, with such a chip, you will be able to watch wireless channel with your cell phone, regardless of its specification or standard.

The only shortcomings are the mobility and fidelity. As analog TV signals are not intended for mobile environments, the fidelity cannot be compared with that of digital programs of mobile TV. However, it would be good for some people, if the programs are played on small-screen cell phones.

In most cases, however, people watch mobile TV on static environments, e.g., bus or subway stations, or in offices. It explains a fact that cell phone manufacturers will be able to sell their products without binding themselves with telecom operators.

The only thing that those manufacturers have to worry about is where programs would be, once new standard-based mobile TV is launched? Will telecom operators become content aggregators as we discussed in the previous section? If not, they'd better establish connections with content providers right away.

[+] Charging or not, it's a matter about the structure of the industry

The high production costs of movie/TV programs turn out to be a big obstacle for traditional value-added service providers to produce contents themselves. Imaginably, a big part of contents for mobile TV will come from traditional TV stations.

An interesting cooperation mode is that after consumers buy a mobile TV-enabling cell phone, they will get a set of passwords from TV program providers. Upon activation, the cell phone will be bound with the passwords to enable watching programs. The fee is charged each month through the phone bill from telecom operators.

That mode is designed for charging fees. If mobile TV programs are offered for free, and program providers depend on ads for their incomes, the passwords and the additional lines in the phone bills of telecom operators would be unnecessary. If so, telecom operators would be shut out of the mobile TV market.

With regard to the mobile TV services, the only way for telecom operators to gain the favor of cell phone manufacturers is to persuade content providers to charge fees, in which case, they would become the largest content aggregators and channels for charging fees. Otherwise, they would be easily abandoned in the game.

In addition to traditional TV stations, will website operators (e.g. Yahoo! and Google), which are gaining influence in the mobile Internet sector be able to get a share in the market? Those players do not have program-producing ability themselves. However, through audio/video content sharing, they will have some opportunities.

Audio/video content sharing sites, such as YouTube, has a lot of interesting programs. In spite of the low fidelity (as most programs are produced by non-professionals, after all), such programs might be good enough for cell phone-sized screens.

Currently, the mobile TV market is still a virgin land for a lot of players, including telecom operators, cell phone manufacturers, traditional TV media and emerging Internet media. The future will be interesting and full of expectations. Eventually the biggest winner will be consumers. The distribution of audio/video contents will be fast and convenient as never seen before. ( 2007/12/02 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Mobile TV Market (3) Terminal Manufacturers & Content Providers - 2007/12/02

Great Future of Wireless Broadband (4) WiMax, 3G and 4G - 2006/12/03

Internet and Books (1) Dilemma of Online Publishing - 2005/12/04

VoIP (2) Who Depends on Whom - 2004/12/05

VoIP Gives out the First Cry - 2003/12/07

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[+] Consumers are spending less time watching TV day by day.

First of all, a trend is crystal clear. Consumers are spending less time watching TV through TV sets. Statistics show that at least in mainland China and Taiwan, the number of people surfing Internet after 8 p.m. at night are increasing steadily, so is the time spent.

Each person has only limited hours in a day. As more and more people choose to spend their off hours in front of computer screens, the TV audience group would diminish. IPTV has not been successful, largely because it is still trying to bring people back in front of TV screens, ignoring the fact that nowadays people hardly watch TV anymore.

The correct way to attract today's TV audience is to move audio or TV programs onto the screen of computers and cell phones. However, the decrease of the time for watching TV and the increase for using computers do not mean that the hours spent on watching cell phone screens would increase.

Here we have two questions to think about: 1) Consumers' hours on the go are fixed (on their way to work/home, or weekend outdoor trips, etc.), so what are their requirements for TV programs during those hours? 2) Is it possible to stimulate the enthusiasm of consumers for mobile TV even in room?

Will consumers buy if we successfully address the user experience challenges for watching video programs on 3G cell phones, and enable press-and-play, fast and effective channel switching and easy, simple billing?

[+] "Killing time" is the core for the development of mobile TV.

Product managers of mobile TV programs might have been racking their brains for clues about consumer requirements. The fact is they don't have to. What consumers want is just to kill time. It would be so boring at bus or subway stations that consumers would like to have something to watch; they may just want to snatch a little rest during busy office hours to steal a look at the cell phone, or they want to take a look at some important news.

Killing time, by all means, is the most critical application of mobile TV. There's no need for complicated interaction programs. Previously, 3G cell phone-base audio/video programs were so troublesome to operate that the "interaction" eventually turned "killing time" into "killed by time".

"Killing time" is also the key to mobile TV billing. One simple question: how much are you willing to pay for killing time? Currently in Taiwan, cable TV bills are about NTD 600 per month. How much, then, is reasonable for mobile TV? 200? Or 100?

DVB-H-based mobile TV offers one-way broadcasted digital programs, which, in theory, don't have to be received only with cell phones. Special terminal devices would be developed in the future for receiving such wireless digital programs. And there might be USB terminals for computers, too.

If digital TV itself is offered for free, there's no need to bother with which terminal device to use (ideally, of course, it's more convenient to be built in cell phones). In view of the current situation, however, monthly billing modes such as those adopted by the cable TV sector will be considered by operators. Therefore, integrating the fee into cell phone bills seems to be a natural choice.

If so, telecom operators would be put into a very subtle position. They might have nothing to do with mobile TV program provider, or become just a billing solution provider for the later, or even play a role similar to cable TV system operators.

[+] The subtle position of telecom operators in the mobile TV industry

In the first case, where telecom operators have nothing to do with digital TV content providers. TV-enabling cell phones bought by consumers (or other terminal devices) will be able to receive TV programs by design. If the programs need charges, consumers can make payment to TV program provider directly to get user IDs.

To get a simpler picture, just imagine binding a cell phone with a digital TV terminal. Each device functions independently without the interference of the other. If TV program providers want to charge the users, they could choose a number of channels, but would have to print and send the bills themselves.

Program providers can also choose to cooperate with telecom operators, if they do not want such troubles. That leads us to the second case: fee collection through cell phone bills. A more deep cooperation model could make interactive programs together with mobile operators and enable real-time program balloting through GPRS.

Trouble, however, is at door. There would be numerous program providers and TV channels. Say, there might be 5, and a consumer could choose to pay one for the program he watches, but he would not be able to afford all 5 if he wants to watch them all.

Generally speaking, that is not good news to the mobile TV sector. The real solution to maximize the interest of program providers is to build a single platform to enable free switching of channels. Yes, there are always competitions. However, if competitions lead to obstacles for consumers, that's no good to anyone.

More over, consumers have been accustomed to the monthly billing mode of one package for watching over 100 channels, which will not change in a short time. Therefore, a player capable of integrating all programs, which is similar to a cable TV system operator, is highly expected. Who will assume this role? It seems to be telecom operators.

That turns out to be the third case. However, everybody wants to dominate. The TV industry does not want their channels to be controlled by others, while the telecom industry will not give up the opportunity of entering the media market. Ironically, the fate of this scenario depends on whether mobile TV is fee-based or not. ( 2007/11/25 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Mobile TV Market (2) the Subtle Role of Telecom Operators - 2007/11/25

Great Future of Wireless Broadband (3) Scarce Resources - 2006/11/26

Google's Choice (2) Lessons for the Software Giant - 2005/11/20

VoIP (1) It's a Fool Not to Make Telecom Money - 2004/11/28

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[+] Press the button and no program comes on your screen

Unfortunately, there have been only a few successes worldwide for those two dreams, which should largely be accredited to their particular geographic or social environments, for example, mobile Internet in Japan, mobile TV in Korea and IPTV in Hong Kong. In other countries or regions? Hardly heard of.

Nevertheless, technological progresses are being made continuously. The development of mobile TV is bringing in a new light of hope into the industry. In fact, "mobile TV" is just a general term, which covers any technology that enables consumers to watch TV on their cell phones.

By that definition, mobile TV has been a reality in CDMA/WCDMA-based 3G cell phones. However, before we go further into the development of the mobile TV sector, we need to take a look at what actually happened to 3G cell phones.

First of all, 3G has 3 major goals: high-speed Internet access, streaming media and video phone. With IP-based Internet access, users cannot get the streaming media movie they want by just pressing a button. Instead, they have to select a set of hierarchical menus.

Throughout the interaction process, users have to send requests and receive responses through the cell phone. A program has to be buffered before being played. This is a sheer difference from our experience with TV, where we get programs by just turning on the TV set. It is this difference that shapes everything.

[+] Billing modes stop consumers

In short, with conventional TV, you get the program as soon as you turn it on, not to mention the fast and effective channel switching through the remote controller. With Internet-based IPTV, you turn it on, but have to wait for a while; you switch a channel, but have to wait for a while; you press the play button, but also have to wait for half a minute. For that reason, IPTV has not been able to replace cable TV, nor has 3G cell phone-based streaming media.

Telecom operators had hoped to graft video phone to movie/TV programs to get better interactive experience (for example, allowing users to watch football games by dialing 123456). However, with the 64K bandwidth and poor transmission quality of video phone (maybe you cannot even see where the ball is), they had to give up.

In addition, there's a billing problem. For decades, telecom operators have been accustomed to billing by minutes or by transmitted data volume, as they say, such billing mode could better reflect their costs (they need to be paid so long as there're data flowing through their telecom equipments). However, consumers are loath to pay. Have you seen anyone who pays his TV bills by minutes?

Monthly billing could be a compromise. However, telecom operators have not been able to introduce total monthly billing packages. For example, they might pack a few programs into one package. However, there are usually many such packages (as each telecom operator would cooperate with a number of content providers). Want to get all the packages? Well, pay for them all!

What's more, the monthly packages only cover the transmission costs of telecom operators. To ensure the reasonable income for content providers, consumers have to pay for contents separately. How could a consumer possibly understand, or withstand so many layers of charges?

Are telecom operators ready to become media companies? It seems not. For example, how about offering completely free mobile TV programs and leaving telecom operators and content providers to earn their bread solely from ads? For telecom operators, that is horrible.

[+] The turmoil of standards

In addition to telecom operators, closely related with the sector are traditional cell phone manufacturers. The global cell phone market has been saturated for years, and the years of fast growth gone. Yet leading cell phone manufacturers are still there and thriving - thanks to continued innovations.

The first innovation might be the camera phone introduced a few years ago, followed by the music phone. New technologies, combined with successful marketing, have triggered tides of changing handsets among consumers. What would be the next innovative application? Obviously, it would be cell phone + TV. And the next? Cell phone + GPS.

Over the years, telecom operators and cell phone manufacturers have learned that consumers favor individual cell phone applications over mobile Internet access. Such applications should be easy and simple, and have nothing to do with Internet accessing.

Now, there are new technologies coming to us. Digital files are transmitted mainly through broadcasting technologies. You will no longer have to wait like you did with 3G or IPTV. Press a button and the programs are popping up on your screen, with high fidelity and no worry for the cost of data transmission.

For the industry, however, the war is just beginning. There are too many standards for using the cell phone as the carrier to play TV programs. While some standards, e.g., DVB-H are derived from the TV industry, others, e.g., MBMS, have their origins in the telecom industry.

TV-derived standards alone have already seen Japanese, Korean, European and Chinese standards, not to mention 3G-based digital TV broadcasting technologies developed by the telecom industry. The turmoil seems to have cast a shadow over the outlook of the sector. ( 2007/11/18 - By Digitalwall.com - Way to China Internet/Telecom )

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- Today in History

Mobile TV Market (1) Cell Phone plus TV, the Dream of Everybody - 2007/11/18

Great Future of Wireless Broadband (2) Public WiFi is Not Enough - 2006/11/19

Great Future of Wireless Broadband (1) Living in the WiFi City - 2006/11/12

Google's Choice (1) Lessons for Portals - 2005/11/13

A Word of Advice for Small Online Stores - 2004/11/14

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[+] Collective spiritual power

If you cannot see what philosophy and religion has anything to do with the future of Web 2.0, or even feel offended, I can only regrettably admit that my attempt is a failure. Every religion has its god(s), and it is difficult to use a single theory to cover everything while avoid offending other people. May I ask for your pardon in advance.

Almost every religion in the world, wherever it comes from, has the ritual of group worship (or chanting and the like). Such ritual implies that we all believe that the collective spiritual power of a group of people can change the way the world runs. We call it divine power. When changes do happen because of the power, we call it a miracle. At bottom, it's the collective will of man. The source of the power to change is blessing, especially collective blessing.

Blessing is a kind of tremendous spiritual energy endowed by god to man. Amazingly, when you give your blessing to other people, you'll receive even greater positive energy than that you give. Similar effect happens to hatred. Therefore we realize that one cannot get happiness by cursing others.

Such spiritual energy exists not only in religion, but in our daily life and in our mind. Just think about it: how many thousands of millions of people in the world that bears hatred towards the U.S. over the past few decades? At the end there was the 911 incident. So who is to blame for the evil summoned? Don't point fingers at others.

[+] The world as one

"Collective will" is the cornerstone on which the world operates. Some thoughts buried deep in your subconsciousness are unknowingly taken as true. In the Bill Clinton era, there had been considerable progress towards world peace; yet later the Americans' collective will summoned a belligerent president onto the stage.

In the area of religion, it is easy to see how collective will works. If you look around, you can also see how people's collective will changes the fate of a country - good leaders always work on forging collective will that is positive and uplifting . Moreover, the fate of humans is summoned by themselves collectively. There is no exception to that.

How can humans uplift themselves collectively? The ultimate truth behind the "collective will" is "the world as one." The hell exists only where this truth is blinded.

The country that inflicts violence on another will receive the evil consequence in the end, because to do harm to others is to do harm to oneself. We all feel sorry for victims of 911 incident, but we cannot ignore what the Americans had done in the Middle East before. That may be one reason for this hostility to American people.

Similarly, the group of people that send blessings to another will receive the positive energy of the blessings as well, because we are as one. You may say that I am talking about Buddhist causality, but more simply, it's just "what you get is what you give."

So smart people are never sparing in giving. The Bible tells us that, "It's better to give than to receive." To give you something does not mean that something will be taken away from me because you and I are as one. On the contrary, the positive energy created by sharing will ultimately benefit you and me.

[+] The desire that lies deep inside our hearts

I hope that what I just mentioned above reminds you of the Internet. Indeed the Internet is a giant network that carries the collective will of all human beings. In the previous Web 1.0 era, "Its" purpose was to carry all kind of information and make our life more convenient. In Web 2.0, "It" starts to carry the shared will of people increasingly.

The original spirit and the essence of the Internet are openness and sharing. Through the connection of networks, people are getting closer to one another. In Web 2.0, with the emergence of various services such as Blog and social networking services (SNS), people are exchanging not only information but also emotions.

I once wrote to my colleagues that, "Think about it: our users shed tears when reading their own Blog articles, behind which is the platform, tens of thousands of lines of program code, constructed by you. There is nothing more significant in your work than this."

If a Web 2.0 website operator does not know how important "emotions" are, or how Web 2.0 can help people communicate and exchange feelings, then s/he doesn't know what else s/he can do, so to speak. Nowadays people are not looking for information tools or operation platforms.

Major Web 2.0 websites like MySpace in the US have every capability to facilitate global exchange. Moreover, through proper guidance, maybe they can allow users to enhance themselves a little bit and positive thoughts to generate during interpersonal interaction. Just imagine how people have shared will flows on the giant network of the Internet….

I do not intend to preach about "website operators' social responsibility." Internet companies are not charities. They are not obliged to do charity. However, everyone wants to bless and be blessed. If website operators do something about it, it's just to 'satisfy consumers' needs." Isn't business opportunities come from fulfilling consumers' demands?
[+] Collective enhancement of all humans

In Web 1.0, we think about how to promote the exchange of information; in Web 2.0, we think about how to establish relationship and to increase interpersonal interaction. In Web 2.0 Next, we need to think about "what can touch our hearts." What we need to connect is people's hearts but not information.

We need to turn the Internet into a medium of emotions, a platform of exchange of souls, so that users will feel more emotions when using it. This echoes to the desire deep inside our hearts. When that desire is fulfilled, we feel close to god.

Some friends wrote to me, saying that online emotions are not real. Some are worried that spending too much time on the Internet may impede the emotional exchange with other people in our daily life. Think about it: in your daily life, the number of people you are familiar and share feelings with may be within five. This is your social network, much more lonesome than you may think.

And these few people constitute the world you recognize. You never think there is any relationship between you and African people, nor do you understand what is "the world as one." The Internet Next brings forth a brand new chance that we've felt 10 years ago. Now it's finally mature with full energy.

Web 2.0 Next will seek to satisfy users' emotional needs (love and blessing), and encouraging sharing (open oneself) and exchange (global integration). It will need an upgrade from information exchange to emotion exchange. Human beings need to enhance themselves collectively, and they should start from getting in touch with each other. The Internet can make all of this possible.

"Dear, we have been apart for too long. So you're here. We are as one from the beginning. Let me hold your hand once again." ( 2007/09/16 - By Digitalwall.com - Way to China Internet/Telecom )

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Prev : The Next Step for Web 2.0 (2) The Fourth Flow: Emotion Flow

Next : Mobile TV Market (1) Cell Phone plus TV, the Dream of Everybody

- Today in History

The Web 2.0 Revolution (4) the Google Paradigm - 2006/09/17

The Web 2.0 Revolution (3) Advertising Revenue is Not Enough - 2006/09/10

Envisioning China's 3G Market (3) Systems & Markets - 2005/09/11

Three Musts of Digital Content Biz (2) Stop Selling "Containers" - 2004/09/19

Three Musts of Digital Content Biz (1) Content is Cheap - 2004/09/12

Comments

[+] Changes in money flow, logistics flow and information flow

Although "logistics flow" is a bridge between the Internet and the physical world, its importance has reduced with the introduction of Web 2.0. On the other hand, "money flow" and "information flow", though remain unchanged in forms, have experienced significant change in essence.

In Web 1.0 era, we spent great efforts to enable the money flow to move smoothly between the Internet and the physical world, so that financial tools in the physical world, such as credit cards or ATM cards, can be applied online, and that there are C2C payment tools such as Paypal.

We think a lot about how information should be transmitted (results are e-mails and real-time massaging tools) and gathered (results are portals and content websites) and how to cope with information asymmetry by inventing new business models (results are online job site and online auction).

The Internet has driven the cost of information transmission down. The revolution in money flow, logistics flow and information flow has made the Internet world as it is today. Yet we have sensed an emerging force of the fourth flow - the emotion flow -, which is about to change the three flows.

[+] Emotion flow will bring forth "the emotion highway" and "the media of emotion"

In the past, when you were done with a piece of online news, you were done with it. Maybe there were some people who would leave a comment below the news, but most people left quietly. Then some website operators made some changes to allow readers to score the importance of the news from one to ten points. Yet few people chose to leave a score.

The scoring system has finally been simplified to two options: "push" and "bury." If you are in favor of an article, you push. That is how the news article popularity website, digg.com, in the US succeeds. Then, we start to see news websites provide a function to allow readers to express their feelings about news articles like " happy," "sad," "confused" and so on.

The dawn of the Internet Next is upon us. Indeed, what really matters is not information per se, but what people think of the information and furthermore, how they "feel" about it. A simple "agree" or "disagree" is not enough.

You must have seen in commercials a network of beaming cables through which information flows freely. The so-called "information superhighway" has embodied people's imagination of the Internet. Now what is ahead of us is "emotion superhighway."

There must be many ways to reflect people's emotions flowing around global networks and represent these emotions on websites. Blog have been seen as grassroots media, and social networking websites a tool for social networking or meeting friends. Web 2.0 Next application will be "emotion media."

[+] Emotion: the next thing Web 2.0 is to deal with

Wanna know the moods flowing on the Internet globally? Check out http: worldmood.info/. This service simplifies moods into smiley face and frowny face. Maybe it can be used to predict stock market performance - isn't it the sum of investors' confidence and moods?
In the time of emotion economics, the ability to control a tremendous amount emotional data will be highly valuable. We do know that emotions affect our consumption behaviors, but we do not have a chance to quantify the relations between emotions and consumption. Web 2.0 may provide a solution.