An open assault on the walled garden

Posted December 21, 2009 in strategy  |  No Comments so far

Mobile telcos charge us for the texts, minutes and megabytes we use. They buy our loyalty by heavily subsidising our increasingly expensive phones. And they’re terrified of becoming like the people who supply our electricity or gas. They’re terrified that one day they’ll be nothing but interchangeable providers of a commodity, irrelevant logos printed on tedious, humdrum bills.

This is why their marketing focuses so much on music, culture and lifestyle. It’s why O2 customers get priority tickets to concerts at the arenas bearing their name. It’s why Orange customers get half-price cinema tickets on Wednesdays. And it’s why T-Mobile runs that insufferable campaign about Josh and his ever-growing band.

T-Mobile advert screenshot

Join the b(r)and: T-Mobile want to be associated with music and lifestyle

Customers are being encouraged to associate the brands of mobile operators with a certain type of lifestyle experience instead of just voice and data. This experience extends from the marketing to exclusive content services and even the interfaces and feature sets of the handsets themselves.

In this sense, mobile telcos are offering their customers a walled garden, in which the mobile internet is presented as part of a convenient package branded Orange, AT&T, T-Mobile or O2. If your internet memory goes back as far as the mid-1990s this might sound slightly familiar. But in the next ten years this walled garden is due to come under direct assault.

Charlie Stross has posted an excellent, thought-provoking piece looking at how the next ten years might pan out for the mobile industry – and making it sound in some ways like a technology rehash of the Great Game, with Apple and Google as the chief protagonists.

As Stross sees it, Apple and Google both want to destroy the walled garden built by telcos but for different reasons and in different ways. As a premium marque, Apple wants to work with telcos while preventing their brands from adulterating the Apple experience:

Apple don’t want to destroy the telcos; they just want to use them as a conduit to sell their user experience… [they] want to maintain the high quality Apple-centric user experience and sell stuff to their users through the walled garden of the App Store and the iTunes music/video store

Google, on the other hand, wants people to view more of its ads. To make this happen, Google wants to fundamentally reshape the mobile industry:

I think Google are pursuing a grand strategic vision of destroying the cellco’s entire business model… turning 3G data service into a commodity… getting consumers to buy unlocked SIM-free handsets [like the Nexus One]… and ultimately do the Google thing to all your voice messages [through Google Voice] as well as your email and web access.

These distinct strategies both threaten the mobile telcos, who stand to lose any emotional connection they have with their customers either way. But this doesn’t mean that Apple and Google are going to be bedfellows:

Apple’s iPhone has been good for Google: iPhone users do far more web surfing — and Google ad-eyeballing — than regular phone users. But Apple want to maintain…  the walled garden of the App Store and iTunes… [and] Google can’t slap their ads all over those media. So it’s going to end in handbags at dawn … eventually.

The piece (here’s the link again by the way) has me thinking that the coming decade in mobile networks will be much like the previous decade was in land-line internet service provision.

If Charlie Stross is right, the idea of the telco as provider of an experience will not last the decade, meaning that flash mobsOrange Rock Corps and Josh Ward will become nothing but a dim and distant memory. And customers will hopefully have greater choice over how they use mobile networks, which would be nothing but a good thing in my opinion.

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