Mobile devices outsold PCs last year for the first time, and top smart-phone apps need little more than a year to win the kind of audience it used to take technologies decades to reach. What are the limits of mobile computing?
When Facebook agreed last month to spend $1 billion to buy Instagram, a 12-person company with no revenues, technology watchers had to recalibrate their speedometers.
Facebook, the social network created for personal computers in February 2004, is now planning an IPO that could value it at $100 billion. Instagram, which began giving away its photo-sharing app for the iPhone only in October 2010, represents something new: a shift away from the Web and the PC to a kind of consumer experience built expressly for mobile devices, particularly smart phones.
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Mobile computing is advancing much faster than other technologies did in their early years. To reach an audience of 50 million people, radio took 38 years, television 13 years, the Internet four years, Facebook three and a half years. Instagram took 1.3 years. That helps explain why Facebook founder and CEO Mark Zuckerberg reportedly negotiated the deal privately over the course of a weekend. The message was that these are do-or-die times, and only visionary founders with total control—and millions to spend—will be swift enough to keep up.
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How fast is the change? Smart phones and tablets outsold personal computers for the first time last year. Forty-two percent of U.S. residents now own a smart phone; in the U.K., it’s more than half, comScore estimates. Last week, while reporting record iPad sales, Apple CEO Tim Cook continued to predict that tablets by themselves would soon overtake the PC market. Even Afghanistan is licensing its 3G spectrum; there, many people’s first computer will be a mobile one. Forrester Research tells us that globally, more users will access the Internet from mobile devices than from PCs within four years. The market research firm recommends that companies begin hiring for a new position: chief mobility officer.
Navigating this change is a challenge for all kinds of companies, whether or not their main business is tied to mobile technology. For many, pocket computers will offer huge, obvious benefits to customers, clients, or employees. But there are also big uncertainties. Will union employees sue for overtime if they use a smart phone to work during off hours? Will the stream of consumer data from mobile devices be as useful as it seems? For all the clarity the Instagram deal seemed to offer, things are not so clear. Some observers even predict that native apps—those that exist only on your phone, like Instagram—could be a short-lived phenomenon.
This month’s issue of Business Impact looks at major questions now facing mobile computing and the factors that could limit or shape its direction. These range from device issues like screen sizes, battery life, and rapidly growing bandwidth consumption to the trade-offs between native apps and the open Web.
Facebook offers a good example of the uncertainty businesses face. Today, 488 million users reach its pages from mobile devices each month. Yet these visits yield “no meaningful revenue,” according the company’s IPO prospectus. The ads and games Facebook can sell to PC users don’t yet translate to phones. Nearly any company on the Web, small or large, will find itself following users into a domain of similarly doubtful revenue.
Mobile barbarians are already at the gates of vulnerable industries. During last year’s Christmas shopping season, Amazon offered an app that let shoppers scan bar codes in stores and then buy for less online; retailers were outraged. (No one, not even Amazon, stood to make much money amidst the hostilities.) On the other hand, tablets and e-readers offer a lifeline to publishers trying to stanch the bleeding of their print businesses.
Technology businesses are also reëvaluating their strategies as the PC-era market order topples. Onetime leaders like Microsoft and Intel are far behind on mobile platforms and striving to catch up. Apple and Google vie for domination. Samsung, a manufacturer that invested heavily in smart phones, just ended Nokia’s 14-year reign as the top mobile-device seller.
These technology races also pose philosophical questions pitting open-source against proprietary software and proprietary mobile platforms against the open Web. Apple tightly controls the operating system tied to its profitable gadgets and app store. Google aims to increase revenue from search advertising with open-source Android code available to any device maker.
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Today, many companies offer downloadable native apps that are walled off from the searchable Web. But mobile-optimized HTML5 is another emerging option. It’s not as functional as mobile software, but developers can avoid the 30 percent revenue cut they must pay to Apple and Google to sell apps. Playboy, banned from Apple’s store for nudity, became an early adopter of HTML5 for the iPad; so did the Financial Times, which did not want to pay the fees.
For consumers, mobile computers are still used primarily to consume media or do basic tasks like send e-mail, take photos, or look up map directions. But the mobile-computing experience will increasingly involve more day-to-day interactions with the world around us: what we create and what we buy, how we work, and how we connect with people, places, and things.
This raises questions about how we will interact with our devices. What’s the optimal screen size? How good will voice and gesture recognition get? And how will we continue to determine the optimal trade-offs between data speed, data costs, and battery life?
One day, we will not need to ask these questions. Computing will occur on a continuum of devices, including PCs, ultra-books, large-screen smart phones, and phones that act like fully functional computers when docked. Hardware distinctions will become fuzzier as we store more documents and photos on remote cloud servers accessible from anywhere, instead of on local memory drives.
The mobile-computer market whose emergence dominates technology headlines today will also be a “boring” reality for most businesses, says Craig Mathias, a longtime wireless consultant who is president of Farpoint Group. “In five years, the differences will all be more subtle than they are today,” he says. “We won’t need wireless analysts any more than we need computer analysts today. I’ll find something else to do.”
