THE
SIX IMMUTABLE
LAWS OF
MOBILE BUSINESS
Presented by Marco Koeder
January 19th, 2010

THE
MOBILE
REVOLUTION

The global mobile revolution is here
Over 4 billion mobile subscribers
SMS & Voice: just the beginning

The real power & excitement
lies in
content and new services
built on this foundation.

whether or not you you have
currently embraced the
mobile platform,
you ultimately must and will

More than half the world’s
population owns a mobile
phone

Soon the world’s entire
population will live in
range of a mobile
network.

Mobile phones are the most
ubiquitous and indispensable
digital devices on the planet.

There are four times more
mobile phone subscribers
than Internet subscribers

global revenues from mobile
phone-related services
=
revenues from total worldwide
crude oil production

“We are rapidly getting to the point
where the single most important
medium that people have is their
wireless device.”
Andrew Robertson, CEO of BBDO

The mobile phone will soon
replace television in the minds
(and budgets) of the advertising
industry.

…the same might happen to
newspapers and magazines

The mobile phone now is becoming….
a camera, a house key, a corporate security card, a
credit card, an airplane boarding pass, a game machine,
a music player, an Internet browser, a watch, an alarm
clock, an excuse to leave a meeting early, a scheduling
tool, and a wallet
…and still has the function of plain old telephony.

Mobile phones will change our
personal and professional lives.

NO
other service or technology
has ever reached a similar
diffusion level in such a
short time.

MOBILE
INTERNET

$150 billion
global market size for mobile
content and services by 2011

50%
of mobile subscribers
worldwide will use mobile
browsing by 2011

The West:
a mobile net
“late bloomer”

WEST
device net mobile
applications applications net
Non-Smartphone Smartphone Smartphone
driven driven driven

9%
use their mobile phone to
access online content

Most of them are
iPhone & Blackberry users

91%
A huge untapped market for
mobile content

JAPAN
+ +
mobile device net
net applications applications
Non-Smartphone Non-Smartphone Non-Smartphone
driven driven driven

Why learn from
Japan?

JAPAN
100+ million mobile phone
subscribers
Population 127 million

Worlds 4th largest wireless
population
But globally only 3% of all
users.

90 Million active 3G
subscribers
17% of all global 3G
subscriptions

85%
of Japanese mobile
subscribers use mobile
browsing

40%
of all global revenue
generated from mobile
data is generated in Japan

10+ years
of mobile content success
and working mobile
business models

Immutable Law#1
Value Over Culture

“Well well, isn’t that just
a Japanese thing?”

Japanese culture has had
no significant impact on
the success of the mobile
Internet in Japan

The secret of success
is not about the
culture but about
servicing these four
categories

1.Inform
2.Transact
3.Entertain
4.Express

Instead of focusing on
cultural aspects, focus on
providing true value to
consumers.
Inform, Transact, Entertain,
Express

Immutable Law#2
The Law of the
Ecosystem

The ecosystem
approach

Global revenues generated from
advanced data services
85 billion Euro.
(text messaging &mobile internet content usage)

Japanese mobile subscribers
contributed 16.6 billion Euro.
Approximately
19 %

Removing revenues from sending
SMS, Japanese mobile consumers
contributed approximately
2.5 billion Euro, or 36%
of the world’s 7 billion Euro in
non-text-related mobile data
revenues

The reason behind
the success:
The ecosystem

“An ecosystem consists of
communities of interacting organisms
and the physical environment in
which they live.”
Bill Moyers, 2001

Within an ecosystem, the roles of
the various members remain in
collaborative balance.
If its resources are overextended,
the entire ecosystem can (and
usually will) collapse.

DoCoMo keeps just 9% of
subscription revenues,
passing 91% to content
companies.

The percentage held by
mobile carriers abroad
typically runs from 50% to
60% at the highest.

The mobile internet would
flourish only if the right content
and services were developed and
deployed in a way that
consumers could easily
understand and adopt.

The Japanese way

The takeaway

Create a mutually
beneficial environment for
value, innovation and
growth.

Immutable Law#3
Mobility Empowers

The power of
control

Joining the wireless revolution by
buying a mobile phone turns people
into hubs within these larger
wireless networks, enabling them to
link together with other hubs to
exchange messages.

Empowering
the individual

people can connect with any other
hub and communicate with
information databases providing
content such as current weather
forecasts, news and games.

It is also possible to connect to
other hubs that are animate, such
cats or dogs, and inanimate, such
as the stereo or refrigerator at
home.

1.
Embrace the environment
by becoming more actively involved
2.
Escape the environment,
emotionally withdrawing from what’s going
on.

embrace
data, things, other people.
escape

The takeaway

Two compelling
opportunities
Create a sustainable, long-
term competitive advantage
via the mobile platform by

1.
Further enhancing the consumer’s ability
to escape or embrace his/her
surroundings
2.
Providing consumers with greater
control over their roles as hub within
the wireless ecosystem

Immutable Law#4
The Value of Time
Zones

Mobile =
Media “on the go”?

Not really!

70%
of mobile use
happens at fixed
locations

mobile content use
is not location- or
time-specific

Two approaches to content
irrespective of location
1.
short bursts of varying duration
2.
longer, dedicated attention

Time zones concept

Time Zone #1
In-Between-Time
Content and services must be concise,
easy to access and understand, and
easy to drop and pick up again later

Time Zone #2
Golden Time
Longer-term, dedicated usage. Larger blocks of time
available to focus on content and services. Explore
and engage more, and for longer periods.
In this time zone, content and services can have more
depth and breadth.

The takeaway

People spend far more
time in fixed locations
than roaming.
They mostly use their
mobiles there.

Understanding the concept of
user time zones will allow
to develop and offer more
valuable and effective content
and services in mobile markets
worldwide.

While mobile consumers
appreciate in-between
content and services,
golden time should take
priority.

Immutable Law#5
Mobile-Specific Business
Models Are Essential

The “2.0” paradigm shift:
From passive user to active
contributor
From lean back to lean
forward.

It is interesting to note
that the mobile platform
was the main driver for
Web 2.0 in Japan.

Case studies

Many of these services do not
depend on advertising revenue
as their sole source of income,
which has helped them to
develop more valuable services
for their customers and
stakeholders.

mahoo no island
market share 38%

Mahou no Island translates as Magic Island.
Started as a free homepage service for mobiles
and PCs in 1999
The services allowed users to develop a
personal homepage for mobile phones without
the need of a PC, and at no cost.

The key strategic move Mahou no Island
made was to let users create content in
addition to the usual homepages, profiles,
bulletin boards and other communications.
This was essentially an SNS platform long
before companies like MySpace hit the
scene.

What started as a free
hosting and content
creation platform turned
into SNS, novels, music
and dramas

6 million
mobile users
4.5 billion page views

Create your own
mobile novels
Started in 2006

1.8 million
registered writers

1million
mobile novels
In less than 3 months

Working with two Japanese
publishers, the company
decided to print the novels
that ranked highest.

Books

40 titles
published as novels

17 million
copies sold

Created a new book
category in the industry:
“keitai novels”

In 2007 Maho no Island launched
Island Music Factory.
Amateur and independent
professional artists can upload,
promote and publish their work
on the site and share it with other
users.

5.000
songs uploaded
In less than 2 months

In 2008 Avex, Japans
biggest music label, released
the first CD of an artists
discovered on Mahoo no
Island.

In 2008 the platform added a
service called Mahou no Island TV,
which features video dramas
based on user-generated novels.

To date, seven novels had
been made into special mobile
TV dramas.

Success Stories: KOIZORA

25 million
readers of the mobile version

1.4 million
printed books sold

2 million
manga books sold

3.1 million
viewers of the movie

soundtrack
music composed by users

still growing
keitai creators festival”
2008: 2.956 active
2009: 10.000 active

mobile game town
market share 38%

Mobage-town (short for Mobile Game
Town) was launched in 2006.
The site offers free single and multiplayer
games, SNS functionality, location-based
services and avatars.
MOBILE ONLY

Casual games are the lure at
Mobage-town.
The platform offers over a hundred
different games and adds several
new ones each month. Most are
simple one-button games, and can
be played on most Japanese
handsets.

Registered users can create their own profile
page displaying their interests, hobbies and a
personal avatar, as well as a room for the
avatar to inhabit.
This room is placed on a virtual map of Japan
that defines the virtual neighborhoods of the
users.

15 million
registered users

clever
business model

To personalize their avatars, users need
to purchase clothes or accessories using
a virtual currency called Moba-Gold.

Mobage-town offers a service that
permits users to write and upload
novels or read novels submitted by
other users.
Within less than six months, over
280,000 novels had been
submitted.

There is also a Music Creators
Corner where subscribers can
submit original music. It is also
possible to look “local” artists.
Within six months after the launch,
around 2.500 songs had been
uploaded to the platform

DeNa’s subsidiary Pocket Affiliate
handles advertising and affiliate site
management for Mobage-town.
Mobage-town also introduced
location-based games and
advertising services that further
focus its revenue activities.

Mobage-town became one of most
successful mobile platforms in Japan.
It also became the most active mobile
site in terms of page views,
outperforming Mixi Mobile and Japan’s
number one mobile portal, Yahoo!
Mobile.

The takeaway

Japan has already been beyond the
number-dot-zero buzz for a long
time.
Working, solid mobile business
models are in place.

All this was based on an
early understanding of the
power of the mobile
channel and the
importance of the mobile
phone compared to the PC.

The ad-supported mobile
business model is not the
best and is not sustainable!
We suggest other approaches:

In developing the business
model for a mobile site or
solutions the
following 8 points can be
inspirations…

1.
Social networking as the hub
2.
Two-tier memberships / Freemiums
3.
Affiliate marketing opportunities
4.
User-generated media models

5.
Value virtual currency
6.
Fixed mobile convergence
7.
Stickiness
8.
Value-added tools

Immutable Law#6
The Future is Simplexity

Mobile owners use less
than 20% of the
applications and
capabilities of their
phones

80%
of the money spent on developing new
applications & functions has been wasted

“95% of returned consumer
electronic products who seemed
to be broken are actually
functioning perfectly.”
Accenture study, 2008

The “broken” part
is the user!

It is time to rethink how
people interact with
devices and digital
services.

The age of
Simplexity

A critical shift in thinking
is required to develop
successful and profitable
technology products and
services.

It is time to rethink how
people interact with
devices and digital
services.

Consumers should not serve
technology.
Technology should support
and serve consumers!

case study

video games

Limited audience of only
hardcore gamers

Gamers were still seen as a niche
market within the overall
electronic consumer goods
industry.

The mantra of the hardcore
gamer community is:
bigger is better

Whenever a new console came
out, hardcore gamers upgraded
automatically.

The video game industry and the
console makers warred over this
dedicated but finite audience.

Way too complex

THEN
Nintendo was able to open up
gaming to a total new audience

In 2004, based on that research, they
released a portable gaming console
called the Nintendo DS.

The company put great effort into
reducing the complexity of gaming and
gaming controls

The message was:
If you know how to use a pen, you can
use this device and have fun.

Nintendo even started producing
educational titles to help users increase
their skills and knowledge in many
different fields with the tap of a pen.

Instead of fighting over the
finite market of hardcore
gamers,
Nintendo used Simplexity to
open up a totally new market.

In 2006 Nintendo launched the Wii.
A simple home video game system,
which uses a motion sensor input device
that resembles a remote control.

The controller is intuitive and simple
for the user but filled with high-tech
components that translate
movement into game mechanics.

The games were also innovative
simple, easy to understand, and
offered many options for playing
together with family and friends, a
concept that appealed greatly to the
non-gamer.

The outcome

A global(!) success

Both systems won fans all over
the world, and captivated a new
audience:
non-techies

By 2009 Nintendo had sold
over 106 million DS
consoles and more than
53 million Wii units
worldwide.

The DS and the Wii were
new concepts of
Simplexity

the takeaway

The “post-manual”
society

Simplexity combines technology,
integrated services, intelligent analysis
(preference, behavior based) and an
easy-to-use interface based on and
driven by user needs and capabilities.

1.
Tap into the learning curve
2.
Offer anticipatory services, information
3.
Be user-ecosystem relevant
(based on the user’s current situation, location, needs, etc.)
4.
Add incremental value
(boost the value of the service over time)

While many players
struggle to make larger
screens and wider
keypads, or pump up their
content and services….

…Simplexity will be what
truly empowers individual
users through their mobile
devices.

How will your mobile
Net offerings move from
the complex to the
Simplex?

THANK YOU
Marco Koeder
marco@siximmutablelaws.com