I'm currently looking at a number of mobile application domains, such as messaging, social networking, VoIP and application downloads.
One thing that strikes me is that we frequently see powerful incumbents being challenged by alliances. Apple faces attack from operator-run appstores. Facebook is viewed enviously by others that would like to control social networks. MSN has been pursued by various own-brand IM proponents. Visa and Amex are regularly targeted by new payment mechanisms.
But one regular characteristic of this type of competition in the mobile domain is the "coalition of the losers" approach, usually based on the notion of interoperability as a competitive differentiator. Industry bodies like the GSMA are frequently the drivers of such initiatives, although often they take over a pre-existing coalition.
We've seen failed attempts to build an IM interoperability community. My current view is that the RCS Initiative is also on its last legs (I'm currently writing an "epitaph" paper if anyone would like to try to change my mind). Now we have the Wholesale Application Community. There have been assorted others around payments, identity and mobile broadband (sorry, WiMAX Forum).
But I am struggling to think of a single case in which a losers' coalition has ended up being successful. For that matter, I'm not sure I can think of an example outside the telecoms industry either, where a single powerful Samson has been brought down by a coordinated horde of Davids.
Having 53 previously-ineffectual companies attacking a strong individual player usually just proves that 53 x Zero = Zero
Where change does occur, it's usually another proprietary or standalone player. BlackBerry's Messenger is taking bigger lumps out of MSN's user base than operators' messaging services ever have. It's Facebook that has given MySpace a kicking, not a consortium. Vodafone's M-Pesa has had more of an impact on mobile banking than any number of joint initiatives. Paypal has made the biggest impact on online payments.
In the airline industry, it has been the impact of individual low-cost carriers like Ryanair and Easyjet that have caused the greatest shake-ups, not Star Alliance or OneWorld.
One possible exception might be the Open Handset Alliance, aka Android. And more generally, the open-source model tends to fare a lot better than the "industry collaboration" approach at unseating incumbents.
I'm genuinely curious about this - if anyone has an example where a "coalition of the losers" has been triumphant in mobile, I'd love to know.
Dean Bubley's Disruptive Wireless: Thought-leading wireless industry analysis
15 comments:
Well said.
My impression is that "coalition of 53 companies" is the key point here, not so much whether they are losers.
My proposed formula for effectiveness of a coalition would be x1*x2*x3*.., which is zero when one of the xi is zero.
This also applies to many mergers, I think. In best case, x1 and x2 are both close to 1, and x1*x2 is also still close to 1.
Android may be an exception.
But how much of Android's success can be attributed to the alliance rather than Google's direct actions?
I'm sure that ICQ took off long before MSN became popular...
I love journalists that don't know what they're writing about
Anonymous - makes two of us not liking people who don't know what they're talking about, given that I'm:
(a) not a journalist, and
(b) didn't say that MSN was the first to do anything
Your post brought to my mind another example for your list: the old "Liberty Alliance" coalition promoted by Sun (against MS Passport/Live ID).
It has been a long time without hearing any news about them.
Visa and Amex on payment? Have you ever tried to pay something with an Amex outside an airport in a european latin country? Besides in France payment card are regulated by a "consortium of loosers" called GIE Cartes Bancaires.
Among the things a cooperation of loosers did well, I would point out SMS for which regulation and interoperability was a key element fostering adoption. And in my mind openness, trust and interoperability will be key in future location based services to avoid "big brother" effect.
Oh, and on the MS / libery alliance one, how many sites use passport/LiveID outside MS ones ? How many use OpenID ?
Hi tott,
OpenID has nothing to do with Liberty Alliance, actually Live ID acts also as an OpenID identity provider ;-)
I am just saying that L.A. coalition was born with an anti-X vocation and it has been a complete failure.
apples and oranges. Star alliance/One world and Ryan air were formed for different purposes. It is strange to call "one world" a coalition of losers. Is your point that one company with a good business idea achieve a lot? Yeah, well may be. GSM itself was a coalition of companies - losers? I don't think so. But good press coverage .....
GSM was not developed by a "coalition of losers", but by CEPT, the association of European telecom PTTs - the monopolists at the time, and therefore by definition "winners". They were also not fighting against anything with an entrenched competitive position.
I'm not an airline industry analyst, but my understanding is that few airlines have been able to run profitably on their own, without partnerships in recent years. Added to the number of bankruptcies and consolidation in that industry, it certainly seems that there's no shortage of "losers" in the airline business.
On areas like IM and social networking, mobile operators are very much "losers" at the moment, with a handful of exceptions. It is examples such as that where I have doubts that a coalition approach has any value or chance of success.
CEPT - Fair points Dean. I agree with your IM and Social Network comment. But I don't imagine for one moment that most IM/SN players are really "open". And whereas I agree with the fact that several airlines are "losers" i don't think that "star alliance" or "one world" is a "coalition of losers" in the sense you mean here ( the analogy is being stretched). If companies work better through partnership then I would hardly call that a coalition of losers either - anymore than saying in general that an acquistion strategy is flawed. I think that by sweeping up the argument in terms of a "coalition of losers" a stereotype is being developed and there is a serious danger that the analyis lose a sense of the real issues. Sure telcos have not helped themselves. But at the same time regulation works against them as well in their favour.
I am not going to deny that RCS is flawed. In more ways than one: but look closely and you will see that the real drivers are not the operators but some vendors. RCS is a dream - it is a way for operators to cling on to a past. I only dream when I am asleep. So I guess Operators pushing along in that direction are not showing themselves in a good light - but hey "who ever got fired for buying IBM".
Hello Mr Bubley,
Curious why you lump WiMaX Forum with the other initiatives. Didn't the existence of the WiMaX forum moderate some LTE claims and indeed shape some aspects of the technology choices?
Thank you
On WiMAX:
I think one of the mobile WiMAX community's largest mistakes has been pretending that LTE is its most important rival, rather than HSPA.
Can the WiMAX Forum be classified in the same category as some of the other examples?
I'd say for fixed WiMAX the answer is no - in fact, it's been a coalition of the winners, driving standards & interop through the fixed-wireless access world.
For mobile WiMAX, it's a different story - one of competition against a strong incumbent (3GPP family, GSM / UMTS / HSPA) and a medium-strong one (CDMA).
Not only that, but it's attempted to compete with a deck stacked against it, in terms of things like frequency allocations.
I actually think it might have had a fighting chance, if it had developed profiles for <2GHz bands, and pushed much faster on FDD variants.
Dean
"For that matter, I'm not sure I can think of an example outside the telecoms industry either, where a single powerful Samson has been brought down by a coordinated horde of Davids."
I can't think of any example at all where Samson was brought down by David - including the original story ;)
"I can't think of any example at all where Samson was brought down by David - including the original story ;) "
*smacks forehead*
I'll be making certain not to sell my services as biblical / ecclesiastical analyst in future.
Am at Mobile 2.0 in Barcelona. Where a person told me about this blog where WAC had been mentioned in the company of some other less illustrious cousins like RCS. The context was that we had a presentation on WAC by a Vodafone's Vidhya Gholkar. The gist was that a bunch of companies were gettng together to create a wholesale platform and make developers life easier. He stressed a number of times how this was not a retail story. And that operators needed to make sure that things were right on their own portals as well. The general reaction was (a) This WAC idea is really good (b) The other presntors need to learn from Vodafone on how to present and make things interesting!
(c) There was a very difficult question from a biz dev game company guy which amounted to "this will never work because nothing that a group of large companies do together works (and gave some example from Microsoft). The Voda person smiled and said something along the lines of do you think that the aim is bad?
And I guess this is where your blog comes in: is it necessarily bad that a bunch of companies are trying to do good? Should all gatherings of companies be bad? Does labelling them a "coalition of losers" work? In this case, I think that they haven't lost and are not losers. To use Gholkar's comment, they are trying to create a much bigger and open market place. You may say de ja vu, but he was believable.
Anonymous
I agree that WAC has more chance of succeeding than RCS.
One of the main differences is that it is not dependent on every operator in a given market adopting it.
The Vodafone rep is right in his comments about the strengths of wholesale vs. retail propositions here: single operators can use it, if it makes sense given their particular circumstances and strategy.
That said, WAC does still have a glaring Apple-sized hole in it. And I personally have my own doubts whether the size of the aftermarket apps market is going to be large enough to sustain the 3+ different appstores that may well be accessible per handset
So, for WAC maybe the term "coalition of the late-comers" is more appropriate.
Dean
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