Thursday, 10 July 2008

Steve Jobs & the JesusPhone Will Save Us

Clearly Steve Jobs and the JesusPhones is the ultimate name for a band.

We've had mobile phones in our lives for quite awhile now. First they were enormous, and only tradesmen had them. Then they started to get small, really small. So small you couldn't use them. And then they got bigger again: now swelling with countless features. Torches, cameras, pedometers. Some of the features stayed, but not many. Next was email, and that's been pretty popular. The Internet made its way onto our phones as well, but like video calls didn't really go anywhere.

This Friday the iPhone will launch in Australia. And predictably people are going crazy. When was the last time you knew the launch date of a mobile phone ahead of time? Sure, most of the hype is because it's Apple and everyone loves Apple and isn't it so gorgeous and stylish and Oh My God I've just got to have one. Deep breath. But is there something else going on here?

The core function of a mobile phone is making phone calls. Well, yeah. But there have been countless other features rammmed into them. Haven't some of these taken off as well? Yes. There is one that is on every phone in Australia, most of the phones in the world and used by the overwhelming majority of mobile owners; in some demographics more than phone calls: SMS. But SMS is just a very limited single-person to single-person version of online chat. AOL first released Instant Messenger back in 1997 and it's been huge ever since. IM, with presence, blocking, buddy lists, group chat, location mobility is a far richer chat experience than SMS. So why don't you, yes, you reading this post, have an IM client pre-installed on your phone? Why hasn't SMS gone the way of SIM card addressbooks (remember those?) and been completely replaced by IM?

Firstly though, why is that an interesting question? As I said, we've been carrying mobile phones for a long time. And in that time phones have progressively become more and more powerful. Sure, they've lagged in the power stakes behind standard computers, but I think you'd be surprised by how little. The original iPhone was equivalent at release to a four year old Mac laptop. Four years! I was writing interesting software (including a chat system) on 18 year old Macs! So clearly phones are powerful enough. How come then, given that we have these mini-computers with us more than our real computers there aren't interesting applications for them? How come it's still phone calls and SMS? This is expecially frustrating as these powerful devices have permanent connections to the Internet, everywhere! Something I could only dream of when I was first writing software 15 years ago!

People have tried. Shrinkwrapped application developers, vertical integrators, shareware developers have all tried to make a living writing software for phones. And one by one they've given up. And after much thinking the industry as a whole has come up with a batch of reasons why there has been no success. And a lot these reasons boil down to there is no killer app. There isn't one thing that people want to do with their phones other than make calls or send texts. And I bought that line too. Until I thought of SMS and IM.

So why no IM? Well firstly, you are not Nokia's or Ericsson's customer. You are their product. Telstra is their customer and you are being delivered to Telstra so Telstra will buy mobile network gear off Nokia. Interesting. It may not be true any longer, but Nokia used to make more off that gear than their phones. The phones were a loss-leader to drive sales of equipment.

Why the 160 character limit on SMS? Because SMS messages are squeezed into a gap in the control sequences that phones exchange with the towers to remain connected to the network. In other words, SMS messages are sent anyway, all the time, even if you haven't put anything in them. They are just part of the network! So why do the telcos charge 25c per message? Because they can. Oligopolies are cute like that.

Imagine how many text messages are sent every day. Think about how much is charged per-text. All of that income is pure profit for Telstra and the other telcos. That is an enormous, uncontaminated by overheads revenue stream. That kind of revenue is addictive. And here is the crux of the problem with mobile phones: the telcos became addicted to their existing revenue streams and then, with the handset manufacturers as their willing accomplices, set to work on completely controlling and stifling mobile phones as a platform.

Writing applications for phones is incredibly difficult. I don't want to go into the problems here but the two main issues are the half a dozen different platforms with inconsistent implementations of the same platform across devices and end-user distribution and installation are essentially impossible. This situation did not happen by accident though. The telcos strongly encouraged this situation to emerge. Why? Because they are terrified of just becoming a utility that can only charge for data flowing down the pipe. It may be too late, but this was a very short-sighted fear.

Apple and the iPhone are changing this world. Not because Apple are out to save the world, not because they only care about the user experience, not because their phone is pretty. Nope, that's all hype. The iPhone changes things because for the first time, you the phone buyer are actually the customer of the handset manufacturer. Apple is not trying to sell network equipment, Apple is trying to sell phones. And they decided that to sell phones the phone has got to have a great browser. And the ability to install other applications. And somewhere to buy those apps from.

You are buying the iPhone and you're liking it. Or you're not buying it, but those particular features sound pretty good. Why can't my Nokia have those? And pretty soon the telco's worst fear is realised: they are just a pipe through which we ship packets. And I can guarantee when that happens that 160 characters worth of IM conversation will cost a lot less than 25 cents. Try 0.03 cents. That's 833 times less! At today's rate, no demand discount applied!

So, relegated from giants of the economy to the likes of water and sewage for the telcos. But, it didn't have to be this way. As well as providing the network, telcos had something else: a billing relationship with the consumer.

What if when browsing Amazon on your phone when you bought something you didn't have to enter any credit card details? Instead the web site communicated directly with your phone, used a rolling key from there to sign the invoice and then billed it straight to your phone bill? Gee, sounds pretty convenient to me. And a hell of a lot more secure than handing out credit card details. This can only work with phones, and telcos have only a short window remaining to make this happen before something else comes along. They had their chance to replace the credit card companies. But because of their addiction to their immediate (but ultimately doomed) revenues, their willingness to screw their customers and stifle an entire world of technology for almost two decades they appear to have done themselves out of a future.

I, for one, shall not mourn their passing. And do not mourn for Nokia either. Brainless henchman is not a noble calling.

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