The Fabric of Mobile Services - Software Paradigms and Business Demands

1 AL INTRODUCTION RI TE MA “Technology and society shape and reshape each other ceaselessly like tireless meshing gears in a perpetual motion machine.” —Regis McKenna Real Time: Preparing for the Age of the Never Satisfied Customer. D Harvard Business School Press, 1997 TE Two of the major attributes of freedom are personal communication and personal GH mobility. Mobile communication devices have the potential of offering both. Furthermore, mobile devices that compute and communicate have the potential to enable transformative services, for a wide range of industries, that impact personal, RI professional, communal, cultural, and societal life situations. In order to realize this potential in its fullest extent a large number of new technologies, infrastructure ser- PY vices, business models, social processes, and individual and group behaviors are emer- ging. Therefore, what we see happening in the mobile services space today is just the beginning. Before we look at the question of where this is heading, let us first examine CO the technical, business, and social dynamics of the mobile services ecosystem. 1.1 INTRODUCTION It has long been observed that technology shapes the metaphors we use to describe ourselves, our view of life, our motivation, and our needs and wants. The question The Fabric of Mobile Services: Software Paradigms and Business Demands, by Shoshana Loeb, Benjamin Falchuk, and Euthimios Panagos Copyright # 2009 John Wiley & Sons, Inc. 1 2 INTRODUCTION of whether technology shapes our lives or whether we use technology to more vigor- ously pursue our characteristic ways of life has been of concern to scholars, spiritual leaders, business people, moralists, and many others for as long as technology in its many forms has been part of our lives. If we focus on the last three centuries and the process of societal modernization, we witness the rise of the corporation, the increase of affluence, the breakdown of the extended family, and the growth of indi- vidualism. Regardless of whether these trends shape us or we shape them, they indi- cate a convergence towards self-absorption and personal freedom.1 The mobile revolution can be viewed as the next manifestation of this convergence. The mobile revolution has been enabled by a swirl of new disruptive phenomena, including “experience economy,” “social media,” “network effect,” “long tail,” the “big switch,” “mashup,” “ambient intelligence,” “swarming,” and “always on”. The day-to-day infrastructure of the old order is transforming and giving rise to a new eco- system and value landscape of innovative businesses. Engineers, software developers, network planners, service developers, content creators, media providers, industrial designers, and a host of others provide the building blocks at the foundation. The eco- system is dynamic – some of the new businesses succeed in it and some fail. Where do successful disruptive businesses come from? Some, especially in the venture capital and business communities, believe that you can take any group of smart people and lock them in a room, and they will come up with interesting mobile services ideas. This is only part of what it takes. Even if we assumed for a moment that investors and large ecosystem players had found a way to streamline the creation of new service concepts, the question “What will it take to build a sustain- able business around these services?” still remains unanswered. In other words, and at a very high level: 1. Are people going to use the service even if offered at no cost, given the many hundreds of other new services that are becoming available all the time? 2. How does the service fit in the technology value landscape – what pre-existing enablers can support it or add value to it, and at what cost? Such enablers might include location servers, authentication systems, and information services linked into an information “mashup.” 3. How is the company offering the service going to sustain itself and, furthermore, attain an expected set of financial goals? In today’s “long tail” of the “markets of one” [AND1], how do we assess the value of existing or new technologies? In strict economic terms, the value society puts upon a piece of technology or a service is determined by its functions. As we are finding out, and will discuss in later chapters in this book, mobile services are mostly an exception to the economic value rule, as functional capabilities are not the only thing that users pay attention to (e.g., [AND], [GOL]). With the advent of the “Experience Economy,” where the technology or the services are commoditized and undifferentiated, users find 1 See [STA], [FIS], and [CAR1] for a perspective. 1.1 INTRODUCTION 3 value in the experience of using the technology and getting the service offer. As Pine and Gilmore put in their breakthrough book The Experience Economy: Work Is Theater and Every Business a Stage [PIN]: “Experiences have been always around, but consumers, businesses, and economists lump them into the service sector along with such uneventful activities as dry cleaning, auto repair, wholesale distribution and telephone access. When a person buys a service, he purchases a set of intangible activities carried out on his behalf. But when he buys an experience, he pays to spend time enjoying a series of memorable events that a company stages – as in a theatrical play – to engage him in a personal way” (see also Naisbitt seminal work [NAI]). This emphasis on paying for the intangible experience rather than the tangible goods and services is partly what leads to what economists call irrational behavior [ARI]. This branch of economics is now termed “behavioral economics,” and it seems to be governing much of what is happening in the mobile services space and, hence, makes it hard to predict which technologies will survive and which will die soon after being introduced. There are lots of ways to get it wrong; but certain things we do know. For example, mobile services need to be easy to use, simple to operate, and quick to develop and extend. A delicate balance amongst business models, service features and functionality, and price points is required for achieving a wide user adoption and leading to a sustainable business. But in addition to the dynamics of the individual services, we need to consider the interaction of the service with its ecosystem. In the book Design Rules: The Power of Modularity [BAL], the authors discuss the concept of a “value landscape” as it was first introduced by Alchian in his seminal paper on “Uncertainty, Evolution and Economic Theory” [ALC]. The economic system is viewed as a very large value landscape that rewards the creation of new tech- nologies, products, services, new businesses, and, ultimately, new knowledge. Within this landscape, value is not only “the height” or “latitude” of a specific technology or service but also a force that pulls both technologists and companies “upward” in the landscape. This perception of value is what compels entrepreneurs and investors to create companies that seek to both improve existing technologies and create new ones. If the success of a product or a service were predictable, the “force” of market value would pull the ecosystem players unambiguously in one direction. The process of new product or service creation would then be a straightforward deductive exercise focused on implementation. But as we have witnessed in the high-tech market in gen- eral, and during the dot-com boom in particular, location of the “high peak” in the value landscape is uncertain, and when revealed, even surprising. Therefore, the steps that need taking and the time needed to reach a given peak are unpredictable as well. In some cases, even the “direction” of the nearest peak may be unknown. The fundamental uncertainty, combined with the inherent complexity of mobile tech- nology, products and services (the high dimensionality of the space), makes certain approaches to planning and implementing a new offering in the mobile services space much more effective than others. Specifically, in the presence of uncertainty and complexity, modular design becomes very valuable. Modularity enables design options that can radically change the market value of a given technology. This is why, as we will see later in the book, the approach taken across the board in the mobile services marketplace is to combine enablers, features, and functionality to 4 INTRODUCTION create new offerings that leverage modularity and re-use at all levels. This includes, for example, the “mashup” paradigm in which a new application or service is created through the “gluing together” of existing information and services running on remote servers. The evolution of mobile services and the value landscape they create entail the co-evolution of several industries that did not have much prior opportunity to con- verge. Today, we are witnessing the collision of the mobile device industry, the media and content industry (e.g., Web 2.