Gardens of "good and evil"

by Timo Laaksonen, VP Strategy & Business Development

Some ten years ago operators across the world hurried to set up their own content portals, so called walled gardens of content and services. Ecosystems branded, managed, revenue shared and controlled by the operator. Content services - especially ones related to messaging - did quite well and some operators managed to attract lots of popular services onto their portals, recruit a long tail of thousands of content and service providers, and generate good money in the process.

Rich media services never really took off due to several inhibitors, such as slow data networks and somewhat awkward user experience of handsets and applications. Developers were not too keen either to work with complex tools available for creating mobile applications. Operator content portals in some countries did very well, and still do especially in countries with lower fixed internet penetration, but in most markets growth figures turned to single digit figures much faster than expected and hoped for.

Enter the iPhone, enter faster data networks; Boom! To put it mildly, the world hasn't exactly revolved around operator portals anymore after 2008. Another walled garden has emerged: The one controlled by Apple. Apple now does effectively the same as operators were doing ten years earlier and, funnily enough, operators have partially helped them get to that position by promoting the iPhone. As logical as it is to promote a phone which is a killer product in the consumer market, then that is exactly what it may turn out to be for the operator: a product leading to the death of the operator content and service portals. For some time operators were tuning down their content portals and focusing on a shorter tail of best sellers and must haves.

Since the emergence of the iPhone and iTunes AppStore operators started setting up their own app stores to respond to the popular demand. So it's back to the long tail.

Enter Google, Android OS and Android Market. In 2010 Android phones passed Apple iPhones in popularity and the rate of Android application development is impressive. Ok, so now it's not only Apple but also Google who is vying for consumers' eyeballs and wallets. Furthermore, Android Market is just as walled a garden as iTunes AppStore. What is even worse from operator point of view is that they are outside of those blossoming gardens. To finish the trio, Microsoft and Nokia are trying to get their ducks in a row to battle for the same market where Apple and Google already have a two to four years' head start. Maybe Ovi becomes yet another booming garden where operators have little or no interest.

Operators are now working to (re-)establish a strong position in the mobile content, apps and services market. Their assets are a wide customer base and existing billing/charging relationships, trust as a local company, brand awareness, local business networks, local voice and data networks, and more. Which route should the operators now choose? Another try at an operator walled garden independent of Apple and Google? An open garden where all flowers can blossom and operator control on content, revenue share and services is less apparent? Cooperation with Apple and/or Google and focus on boosting the use of voice and data services?

Sorry, I don't know the right answer to those questions. However, I can think of a couple wrong answers: Walled operator gardens with a loooong tail of content, apps and services - operators have hardly enough critical customer mass or pull to make it a success; Leaving the apps and content business to Apple and Google and focusing on communication services - operators will be left with commodity products under ultra-competed pricing terms.

These times should be about open gardens. Fair revenue share with content and apps providers. Operator's own offerings spiced up with local content and apps, complemented by global hit products. Customers having control over their personal data. Supporting local businesses. Predictable service levels. What comes to operator portals and offering I personally believe more in a rich set of local products complemented by shorter tail of popular, global brand products. All wrapped in a neat subscription, delivery and bill by the party I'm accustomed to trusting. What do you believe in?