Twitter’s gradual roll-out of non-US mobile network operator “deals” continues with their blog announcement that Vodafone New Zealand has gone live with a short-code SMS service; Australia is allegedly joining soon. This comes on the tail of Vodafone in the UK, and all the Canadian operators joining US operators in enabling Twitter users to send and receive tweets via text messages.
Everyone Tweets. Nobody makes money.
For a company that has no visible, or public revenue model (nor any driving need to soon create one, apparently), Twitter’s engagement with operators to provide access the service across their messaging networks is perplexing. Mobile operators worldwide make a lot, and I mean a lot, of their revenues (and even more of their profit margins) out of text messaging. In most mobile markets, rampant competition and subscriber churn rates lead operators to offer value “bundles” (or packs, caps, whatever) of usage (minutes, texts, megabytes or dollar values). Twitter’s existing operator deals provide for regularly-charged mobile-originating (MO) message, and free (to the subscriber) updates, or mobile-terminating (MT) messages.
Now this isn’t a bad deal per se – the operator gets some network usage in terms of SMS (so no cannibalization of existing revenues) and to be fair, “on-net” (i.e. on a single network, not between subscribers on different networks) SMS traffic is about the cheapest cost an operator has (in real terms it’s fractions of a cent per message, which explains why SMS can be a very, very profitable exercise for the operator). But to be clear, it’s Twitter that gets the subscriber engagement, not the MNO – the operator’s value-add is primarily to do something that (eventually) all of its competitors will do as well.
Other channels for mobile Twitter usage are similarly anonymous and commoditized. Mobile sites like m.twitter.com (and m.tweete.net) are some of the more currently trafficked destinations through WAP gateways, while smartphone clients (I use TwitterBerry, for example) similarly use mobile data, but in small amounts at an increasingly lower cost.
As the mobile consumer price per MB heads towards zero (and with the likes of O2 introducing all-you-can-eat data plans, one could argue that it’s already there), operators are effectively giving away one of the few network assets they can use to engage (and monetise) subscribers; in this case it’s their SMS messaging gateway, which is an “enabler” (other common mobile enablers include mobile location centres, MMS gateways, billing/charging platforms etc). Was the internal business case for Twitter just too hard for the MNO product managers to get their heads around?
Perhaps it was just a case of internal project costs being considered too high to open up the network. Or to bill subscribers in some way. Industry groups like the GSMA (with the OneAPI initiative) are working to bring readily-adoptable standard interfaces to web developers to use and create value with mobile enablers (and I should know, because we’re working on this initiative and will soon launch a pilot service based on our OneAPI implementation). Already, many mobile networks have third-party APIs and interfaces that would have allowed some form of value to be added to a Twitter service.
Or maybe, just maybe, the operators didn’t see Twitter over SMS as an innovation opportunity.
Either way, it is well-documented that the major social networks are suffering from the lack of scalable business models. Mobile operator engagement represents a massive revenue opportunity to engage and add value to mobile use of social networks. And it just seems odd that neither the likes of Vodafone, the North American mobile operators, or Twitter themselves (Kevin Thau, are you reading this?) saw the opportunity worth pursuing.
This posting probably would be more appropriate on the Locatrix blog, but Wireless Developer Network has reported that TCS have acquired the assets of Autodesk’s former Location Services division, which had a brief life as privately-owned Location Logic.
The transaction is of interest in several ways. Firstly, I wondered if the private equity firms that acquired the assets from Autodesk earlier this year did well in their 4 months of ownership. Secondly, the revenues stated for Location Logic of US$18M ($5M EBIT), primarily from Sprint and Verizon, suggest that there’s still room for expansion in the sector.
And thirdly, it’s led me to wonder about the employees – I had quite a few friends at ADSK, and in 2006 was invited to sit on their developer advisory council. They were good folks – I hope they have found the new owners welcoming (but I’m noting that the release explicitly specified the acquisition of the assets of Location Logic, not the business itself).
I think I’ll go send a few e-mails.
I’ve been a bit tardy on the blog of late, will try to make up for it over the next few days. I was in Singapore last week, to attend and speak at the WiMAX Forum’s Asia Congress event. To be fair, I’m a WiMAX newbie. I can spell WiMAX, of course – but I was quite unaware of the commercial progress the technology has made over the past couple of years. A couple of facts to set the scene:
One aspect of the congress I found intriguing is how separate the WiMAX community believe the high-speed Internet opportunity is from the “3G” network providers. In fact, it reminded me a little of being at Linux conferences in the late part of last century, where Microsoft was the non-attending “enemy”. I mean, everyone in the “community” evangilised that Linux could (and should) do everything, in reality the outside world knew that coexistence was the ultimate desitination. The WiMAX “choir” certainly put forward a good argument for their technology, claiming better performance than various HSDPA networks (an assertion I take with a grain of salt, being quite impressed with the 4MBps I regularly achieve on Telstra’s HSDPA network here in Australia, even with a superseded USB dongle). There were a number of technical arguments for why WiMAX is superior, mostly about it not being an “overlay” radio technology like LTE will be, but I wasn’t absolutely convinced.
Anyway, the WiMAX supporters spoke glowingly about their achievements, and as stated earlier I was surprised by the number of networks under deployment. Clearwire, for example, the Sprint/Google/Comcast (with others) venture in the US seems to be pumping a lot of money into their advertising (a number of TV commercials were shown in the opening keynotes). There were a number of sessions talking about network ROI, which I found interesting, and my own session on value-added services (VAS) had a good audience and generated several follow-up discussions.
I’ll be watching the WiMAX space more closely in coming months. I’m not sure that I’d be an immediate candidate consumer (we have no useful WiMAX networks in Brisbane, at the moment) but if Intel do go ahead with the number of OEM WiMAX devices they are suggesting, there will be a lot of interest in using those services. How they will compete against rapidly commoditized HSDPA in mature markets will, of course, remain to be seen.
We held another terrific MobileMonday Brisbane event at i.Lab last night; four good presentations, lots of beer, networking, and mobile-related chatting. It’s great to see MoMoBNE gradually building momentum – I’ve had a great time over the past couple of years attending MoMo events in Singapore, Melbourne, London and Barcelona, and I’m hopeful the Brisbane mobile community will continue to grow.
There’s a link to the event report here. Next month’s event should be the biggest yet, being held in conjunction with AIMIA’s Great Debate event at QPAC. Kudos to my co-founders Chris, Dale and Hannah.