Why Google, Facebook, Apple "Mobile Service Provider" Rumors Never Cease

From time to time there are new rumors that Facebook, Apple or Google "might" become mobile service providers, using a mobile virtual network operator model. Some think it doesn't make sense.

But the rationale for being a mobile service provider is a bit more complicated than it used to be. For starters, "voice" revenue is not the only reason for doing so. These days, Internet access makes almost as much sense.

Also, for application providers with other revenue models, becoming a service provider would allow creation of packages and plans that cold be much more differentiated than currently are available from the leading mobile service providers.

But the lure of revenue might still be important. In the global telecom business, there have been complaints for years from telecom executives that third party app providers build businesses on the back of telco-provided access services, but that the access providers do not share in the revenue created.

In a potentially new development, some application providers might be taking a similar view, sensing that they create huge value for telcos, but do not participate in the access revenue stream, for example.

Strand Consult now speculates on whether Facebook, for example, is willing to look beyond advertising as a source of revenue, and whether Facebook would become a mobile virtual network operator, as a way to create a new revenue stream, as well as recapture some of the value it believes it is creating in the ecosystem.

As some have speculated about the value of Facebook creating its own branded smart phone, Strand Consult now speculates about the value of Facebook becoming a service provider.

Becoming an “MVNO is a logical step for Facebook the world’s largest communication platform,” Strand Consult analysts argue.

One billion users already consider Facebook as their de facto telephone book for friends and family and use the platform for communicating by SMS, text, image and video, the firm argues.

Aside from its huge user base, Facebook has credit card credentials on file already for millions of its users, many of whom purchase premium games, driving one sixth of Facebook’s revenue.  

How much could Facebook earn as an MVNO? Facebook currently earns annual revenue per user of $4.  An MNVO can earn between $10 a month and $50 a month per customer with an operating margin between 20 percent and 25 percent.

Facebook arguably is in no mood to consider such diversions. But Google or Apple, both with key application and gadget businesses, might have more motivation to do so.

Smart Phones and Tablets Converging?

In 2011, the majority of all mobile phone owners consumed mobile media on their smart phones and tablet devices, marking an important milestone in the evolution of mobile from being a communication device to a content consumption tool.

Smart phones also have subsumed the MP3 player, to a great extent. Smart phones likewise have generally replaced cameras, alarm clocks and GPS units.

You might also wonder if the other trend could materialize, namely the tablet becoming a replacement for a smart phone. That seems generally unlikely for the 10-inch version of the tablet.

But with tablets now available in seven-inch screen form factors, with some smart phones pushing up to five inches screen size, there is greater potential for a tablet to become a replacement for a smart phone. After all, the form factor difference is between five inches and seven inches.

More important is the relative importance of “voice” and “content consumption” as computing appliance functions. Virtually all computing appliances now are becoming ways people interact with, and consume, all sorts of media and content, even if the smart phone also does duty as the “voice” appliance.

In fact, smart phone and PC user behavior really is converging. In October 2012 about 55 percent of U.S. mobile subscribers used  downloaded apps, while 53 percent used a browser. About 39 percent used social networking apps, 34 percent played games and 29 percent listened to music, according to comScore. That isn’t so different from what most people do on PCs, to say nothing of tablets.

In December 2011, 8.2 percent of all web page views occurred on devices other than PCs, for example, with mobile devices accounting for 5.2 percent of traffic, tablets driving 2.5 percent, according to the latest Nielsen Cross-Platform Report.

In 2011, the majority of all mobile phone owners consumed mobile media on their smart phones and tablet devices, marking an important milestone in the evolution of mobile from primarily a
communication device to a content consumption tool.

Mobile Content Usage 3 Month Avg. Ending Oct. 2012 vs. 3 Month Avg. Ending Jul. 2012 Total U.S. Mobile Subscribers (Smartphone & Non-Smartphone) Ages 13+
	Share (%) of Mobile Subscribers
	Jul-12	Oct-12	Point Change
Total Mobile Subscribers	100.0%	100.0%	N/A
Sent text message to another phone	75.6%	75.9%	0.3
Used downloaded apps	52.6%	54.5%	1.9
Used browser	51.2%	52.7%	1.5
Accessed social networking site or blog	37.9%	39.4%	1.5
Played Games	33.8%	34.1%	0.3
Listened to music on mobile phone	28.3%	28.7%	0.4

Of course, the application convergence also goes the other way: smart phones increasingly are used as a primary content consumption screen.

A study by Orange shows a  stark contrast in mobile media habits between teenagers and adults in the U.K. market, for example.

For teenagers, the mobile phone is the primary screen, for the first time, not the TV or PC.

Also, adults are using multiple screens more interchangeably than ever before, choosing the most suitable screen for any particular situation, Orange says.

In the United Kingdom, 83 percent of teenagers have a smart phone and 95 percent have one in Spain. In addition, 92 percent of teenagers in the United Kingdom say mobile is a “way to always have a media device at hand” and 55 per cent of teenagers in the UK say that they prefer their mobile over other screens.

Consumers also are increasingly using their mobile or tablet to replicate the same experience on their PC, about  62 percent of consumers in the United Kingdom agree. Consumers also are multitasking. Some 90 percent of consumers access the internet at the same time as watching TV,  in the United Kingdom.

At the same time as interchangeable usage is occurring, larger screens on smart phones are making accessing multimedia easier, and “smaller” sized tablets are increasing their portability. In Spain, 16 percent of tablet owners also own the more portable Samsung Galaxy Tab, for example.

The percentage of people primarily accessing mobile media ‘out and about’ on both their mobile and tablet has significantly increased across all markets.

In the United Kingdom 58 percent of respondents say they use their devices to access content and media while out and about.

Tablet use to access content and media “out and about” has grown from 11 percent of users in 2011 to 21 percent in 2012 in the United Kingdom.


And though some would say tablets are not a substitute for a PC, about 75 percent of tablet media users want to “find the same things on their tablet as on their PC,” the study also found. That doesn’t mean people believe they can “work” on a tablet in the same way as on a PC.

But where it comes to content and information, they do expect they will be able to consume all the same content they would expect to get on a PC.

One of Google’s studies of tablet use over a two-week period, which had users recording every occasion that they used their tablet, shows that tablets really are not PCs, any more than smart phones are used in the same way that PCs are used.

Most consumers use their tablets for fun, entertainment and relaxation while they use their desktop computer or laptop for work, Google User Experience Researchers Jenny Gove and John Webb say. About 91 percent of the time that people spend on their tablet devices is for personal rather than work related activities.

And, as it turns out, when a consumer gets a tablet,  they quickly migrate many of their entertainment activities from laptops and smart phones to this new device.

The most frequent tablet activities are checking email, playing games and social networking. The study also found that people are doing more activities in shorter bursts on weekdays (social networking, email) while engaging in longer usage sessions on weekends (watching videos/TV/movies).

Tablets are multi-tasking devices with at least 42 percent of activities occurring while doing another task or engaging with another entertainment medium. Tablets aren’t PCs

As it turns out, lots of things people can do on PCs don’t “need” to be done on PCs. Content consumption, email and other communications actually represent most of what many business users really “have to do” on a PC.

Also, tablets are more accurately described as “untethered” devices than “mobile” devices, to the extent that tablets primarily are used at home. Unlike smart phones that go everywhere and laptops that travel between work and home, few consumers take their tablets with them when they leave the house.

That shipments of tablets are expected to grow from 72.7 million units in 2011 to 383.3 million units by 2017, according to NPD, would not surprise many observers.

Growth in emerging markets, expected to account for up to 46 percent of worldwide shipments by 2017, an increase from the 36 percent share in 2011, might be more surprising.

The tablet forecast also illustrates an important change in connected appliance trends. In the past, “PCs” have been one category of appliances, while MP-3 players, phones and digital organizers, game devices, cameras and e-reading devices have been distinctly different categories.

These days, many of those devices have overlapping functions. Taken as a whole, the changes suggest the crucial role “content consumption” now plays as a lead application for most devices. Though PCs, cameras and organizers still largely have “work or business” use cases, virtually all the other devices are oriented around content consumption.

It's Really Hard to Stand Out in a Market

A study of the customer experience of mobile apps and websites of 17 major financial services companies shows little differentiation, Foresee Results says. That shouldn't really be too surprising. It is hard, in any market, to truly create exceptional, unusual, unique products and experiences. 

Only credit unions, measured in aggregate, meet the threshold for excellence with a score 80 on the 100-point scale of the ForeSee Mobile Satisfaction Index. Of course, in fairness, it is arguably fairly hard to differentiate a banking app. 


ForeSee’s research shows that apps provide a superior experience to mobile websites and may be the key to competitive differentiation and growth. However, all companies measured have a ways to go to provide a compelling mobile experience: traditional websites (as experienced on personal computers) still provide the best customer experience for financial services companies.

Thus far, there is little differentiation between competitors, since satisfaction with all measured companies’ mobile experiences range between 73 and 79. A full set of scores is below:

Cable's "Mobile" Strategy is Mostly "Untethered"

Time Warner Cable is a partner with Comcast, Cablevision, Cox Communications and Bright House Networks in a public hotspot network of about 50,000 locations, and now is adding WeFi service as well. Time Warner invested in WeFi early in 2012. 

Though cable operators have not been able to really figure out how to create a big mobile communications business, the current effort aims to extend use of fixed connections inside and outside the Time Warner network footprint. 

Untethered communications, inside or outside the network footprint, is part of the strategy. In fact, in many cases a mobile phone uses a Wi-Fi connection more than the mobile network.

Big Data Should be About "People"

Big data can be an important tool for understanding and changing the world. 

How Are People Using Tablets?

"Post-PC" is Only Partly About "Devices"

Most would credit Steve Jobs, former Apple CEO, for popularizing the phrase "post-PC." Precisely what that means will continue to be debated for at least a while. But most would probably agree that the phrase suggests a growing use of computing appliances other than a PC, and reliance on cloud-based apps and services more than locally-resident software. 

On the other hand, post-PC also can mean that many different appliances might converge on a common operating system core and end user look and feel. Consider Windows 8 and Windows Phone 8. 

Microsoft wants to unify Windows Phone devices, Windows 8 tablets and PCs, and its Xbox game console,  PCWorld argues. 

Some of us would argue it is nearly impossible to separate mobility (with the key location awareness) from cloud computing, though. Others might that is part of a growing shift to "ubiquitous" computing as well, where computing is not a "destination" activity tied to a desk.

Part of the post-PC reality is that the cloud increasingly provides storage and processing for a wide range of appliances that can be highly distributed and much cheaper than PC appliances have been in the past. 

It also is true that what people want to do with computers has changed. In October 2012 about 55 percent of U.S. mobile subscribers used  downloaded apps,  while 53 percent used a browser. About 39 percent used social networking apps, 34 percent played games and 29 percent listened to music, according to comScore .

None of that would surprise much of anybody. What might be more unexpected is that consumption profiles of PC and mobile applications is so similar.

In 2011, the majority of all mobile phone owners consumed mobile media on their smart phones and tablet devices, marking an important milestone in the evolution of mobile from primarily a communication device to a content consumption tool.

In December 2011, 8.2 percent of all web page views occurred on devices other than PCs, for example, with mobile devices accounting for 5.2 percent of traffic, tablets driving 2.5 percent, according to the latest Nielsen Cross-Platform Report.

One of Google’s studies of tablet use over a two-week period, which had users recording every occasion that they used their tablet, shows that tablets really are not PCs, any more than smart phones are used in the same way that PCs are used.

Most consumers use their tablets for fun, entertainment and relaxation while they use their desktop computer or laptop for work, Google User Experience Researchers Jenny Gove and John Webb say. About 91 percent of the time that people spend on their tablet devices is for personal rather than work related activities.

And, as it turns out, when a consumer gets a tablet,  they quickly migrate many of their entertainment activities from laptops and smart phones to this new device.

The most frequent tablet activities are checking email, playing games and social networking. The study also found that people are doing more activities in shorter bursts on weekdays (social networking, email) while engaging in longer usage sessions on weekends (watching videos/TV/movies).

Tablets are multi-tasking devices with at least 42 percent of activities occurring while doing another task or engaging with another entertainment medium. Tablets aren’t PCs

As it turns out, lots of things people can do on PCs don’t “need” to be done on PCs. Content consumption, email and other communications actually represent most of what many business users really “have to do” on a PC.

So one reason we are in a "post-PC" era is that content consumption now has become perhaps the most salient activity people want to engage in, on a computing appliance. Diverse screen form factors are important. Cloud platforms are critical. Mobile Internet access is key. 

But what people want to do on a "computer" is the foundation. In an era where content consumption is paramount, a PC is not always the "right" or "preferred" or "only" appliance.