Thursday, July 9, 2009
Forbes: Why Your Smart Phone Is So Stupid
Forbes published an article yesterday titled "Why Your Smart Phone
Is So Stupid". The article is about whether or not
telecommunications companies are abusing their market power and
hurting innovation. Let us know your thoughts!
Why Your Smart Phone Is So Stupid
Brian Caulfield, 07.08.09, 06:00 PM EDT
That shiny new phone? It's been crippled by your carrier. But is
that a bad thing?
BURLINGAME, Calif. -- Whether you own a multimedia-packed Sony
Ericsson or an iPhone, the handset you carry around these days is
pretty smart. It's not as smart as it could be, however.
That's because if you want to exploit a phone's capabilities in the
U.S., you've got to go through the carriers, entrepreneurs say.
It's expensive. It's slow. And you have to do it again and again
for each carrier.
It's a process that could soon receive fresh scrutiny. The U.S.
Department of Justice is investigating whether big U.S. telecom
companies have abused their market power, The Wall Street Journal
reported. The federal government may ask questions about whether
wireless carriers are impeding competition through various
practices, such as locking up popular phones with exclusive deals
that can make it tough for software developers to break through to
a mass market.
It's as if you had to buy a computer tailored to your online
service and could only use the software that that online service
lets you use, says David Grannan, chief executive of Vlingo, which
provides speech recognition software for mobile phones.
The flip side is that carriers can also unlock big opportunities
for entrepreneurs with the resources to build showpiece software.
"That's where the real investment opportunity is. It's just much
harder to get to: a high-value application that the carrier really
cares about," says Salvatore Tirabassi with M/C Venture Partners, a
Boston-area venture capital firm that has backed MetroPCS and
mobile e-mail software developer Seven Networks.
There is a price to be paid for a system that hands carriers so
much clout, however. GadgetTrak founder Ken Westin, for example,
gave up an effort to put his mobile-phone tracking software onto
Sony Ericsson handsets last year.
GadgetTrak's software goes to almost comical lengths to help
customers find their phones. It can help you track it based on GPS
and cellular network signals. It can sound an alarm or send a
message to the device. And if that doesn't work, it can remotely
backup your contacts, before wiping the phone clean.
But while Westin's software worked fine on the phones Sony Ericsson
sent him, it didn't work on the phones most consumers carry. Some
of the software hooks that programmers rely on to make their
applications run had been turned off.
Westin's business case for developing for Sony Ericsson's handsets
evaporated. To make his software work on handsets distributed
through AT&T ( T - news - people ), Westin would have to go
through a long and expensive certification process. Then he would
have to repeat the process with each carrier.
Apple's ( AAPL - news - people ) iPhone, of course, has broken that
pattern, somewhat. While developers building applications for the
iPhone bypass AT&T and submit their software directly to Apple,
the phone's App Store merely substitutes AT&T's walled garden
with Apple's.
And even the iPhone has been dumbed down for the U.S. market. While
the new iPhone allows users to use the phone as a modem for their
other devices, the feature isn't available on AT&T, which has
an exclusive contract to sell subsidized iPhones in the U.S.
Yet the same barriers that make it a challenge for one entrepreneur
to build software for a wide array of phones can provide an express
lane for others. A large carrier can provide some order to a market
fragmented between hundreds of handsets running on a half dozen
major software platforms and a handful of different wireless
protocols.
"If the operators have a monopoly, it's a pretty awful monopoly,
with three giant competitors and a lot of upstarts nipping at your
heels all the time," says Dan Shapiro, chief executive of Ontela, a
start-up that helps users manage the pictures they snap on their
mobile phones.
Moreover, most phones are subsidized by carriers. Without those
subsidies, the feature-packed phones carriers hand out for free
would cost several hundred dollars. "They're subsidizing a
significant portion of the handsets. If they're paying for it, it
doesn't surprise me that they'd want to exert some control over
it," M/C Ventures' Tirabassi says.
In other words, you get what you pay for. Want a really smart
phone? Maybe you should reach into your wallet and pay for it
yourself. The problem: With so few customers in the U.S. willing to
do so, who will build the software that will make that worth your
while?