Reality Check: What will we learn from CES?

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Many of us, including me, will converge on Las Vegas to ingest the latest trends in telecommunications products and services. There’s a lot to see and hear, from companies both large and small at CES, so I’ll make this simple and give you the cheat sheet. Here are three themes that will emerge from CES that you can bet (pardon the pun) will be influencing the wireless world in 2010 and beyond.
1. Applications finally get a seat at the table. This isn’t about games and girls, two frequent subjects of yesterday’s App Store. No, this is about streaming video, secure access, and information “connection.” There will be folks talking about applications integration (meaning apps that run other apps), applications conversion (so that when you write for Android, you can quickly adapt for Blackberry), applications shelf space (how we find and categorize applications – see my column “When Nordstrom Runs the iTunes App Store” for a full description on the issue), and applications performance (which is tied to the network – see below). Making money will also be a hot topic – many venture capital firms are shutting down their applications investment arms because the first ones simply didn’t bring in advertising revenues. We’ll talk about the carrier’s struggle to be “open” yet monetize some applications revenue to deliver a better network experience. There’s a lot more. “App” has (finally) become the new “e.”
2. Device distribution will get some discussion (thanks, Google). We’re still not there yet with unlocked phones (and “bring your own phone” monthly service plans), but, judging from the spike in on-line sales this holiday season, and the plethora of free smartphones, buying habits for tomorrow’s phones are going to change, rendering today’s carrier-only stores into “Class A rent” service centers. Case in point: the HTC Tilt 2 for free on walmart.com, a $200 difference from att.com. The rate plans are the same, so why not shop around? Free has become the new floor in the subsidized world, and the first carrier to introduce a “bring your own smartphone” plan with either a) free SMS; or b) discounted Internet as consideration will certainly take market share. Thanks to ever-increasing subsidies, the distribution and pricing discussions cannot be separated. Google’s announcement of their new device should help this along.
3. All networks are not created equal. We continue to be bombarded with this message, but the real performance measurement going forward will not be “drops and blocks,” a voice metric, but rather data and applications throughput. Being one of those crazy types who has the same application (Pandora) on multiple wireless carriers (a Palm Pre from Sprint and an Apple iPhone GS from AT&T) as well as on my PC, I can clearly state that applications performance is clearly in the carriers (and/or the operating systems providers’) hands. “Best in class” involves end-to-end optimization of the application, from server (hopefully on the carrier’s Internet backbone or a fiber cross-connect away in a carrier hotel) through the backbone, to the last mile, and over the radio frequency. Given the growth in applications, my guess is that not all of the carriers have thought through the end-to-end picture (clearly AT&T hadn’t, by their own admission at a recent investor conference). The new “bar” will be for improved performance, even as more applications move to streaming video (e.g., a video version of amazon.com or CraigsList). If Sprint could guarantee, for example, that on-network tweet would reach the intended recipient within 10 seconds, would you be more or less inclined to use the “Now Network?” Or, if Pandora were to notify me that the reason why my music quality was deteriorating was solely due to my network provider, would repeated announcements be a consideration when I had to renew my wireless service provider? A “works best over” designation from independent sources could end up driving switching behavior more than a well-placed marketing campaign.
There will definitely be more – machine to machine, e-reading, and the like, but these three are the big ones. If you are attending, send me an email (jim@mobilesymmetry.com) or a tweet (@mobilesymmetry) with your thoughts on the show. Also, thanks for the many comments on the last two series: “All I Want For Christmas”…part one and part two and “Nine for 2009” part one, part two and part three. Very constructive feedback – keep ‘em coming. 2010 will be an inflection year for many companies – new and old, big and small, wired and wireless, cloud-based and client-based. The biggest risk for an emerging year like 2010 is to not take one.
Look for more observations after the show!
Jim Patterson is CEO & co-founder of Mobile Symmetry, a start-up created for carriers to solve the problems of an increasingly mobile-only society. He was most recently President – Wholesale Services for Sprint and has a career that spans over eighteen years in telecom and technology. He welcomes your comments at jim@mobilesymmetry.com.