Let's start by giving Verizon a report card on the anniversary of its announcement.  I give it a solid "B".  They are to be hugely credited for accelerating the discussion, and for separating church and state in having ODI structured as a separate, P&L business unit reporting directly to the CEO.  This way, they are less encumbered by other device and application initiatives at the company.  And importantly, real companies with real ideas have a faster and better-defined route to market than in the traditional model.  That said, though there has been an uptick of activity of late, I thought there would be a little more available in the market via the ODI route than we have today, in terms of both volume and variety.  The past year has largely been spent building the team, defining the methods and procedures, getting the labs on board, and so on.  This is relatively new territory for an operator, and there is still work to be done to make the process as smooth and streamlined as the conference decks promise.  The irony is that the discussion they helped catalyze a year ago has resulted in myriad efforts in other parts of the industry, accelerating pressure on the ODI team to be associated with some exciting, mainstream devices and applications.  

My second observation is that we are still defining what "open" really means.  On the good news front, developers have several clear and relatively quick paths to market.  We are seeing this with the energy, innovation, and market acceptance of iPhone apps, and the prospects for even more options in 2009 with the Android Market and the Blackberry Application Storefront.  Operators such as Sprint and T-Mobile have opened up APIs and put in place processes that are much more developer friendly, as well.  But there is irony here too.  While we look more "Internet-like" in business approach, the sheer number of application environments, platforms, OSs, etc has created a different sort of "complexity".  Developers must, for resource purposes alone, go through the rather painful and undesirable process of choosing a couple of OSs that they will focus on.  

Also, we need to call a spade a spade and admit that in some ways, open is the "new closed".   After all, the Apple world is as close to a closed environment as we have in wireless. Apps in the Blackberry Store will work on...Blackberry devices.  So thousands of apps might be developed that work on 10% of devices, if you add Apple and RIM together.  Google's model with Android is quite different, and looks like the closest we have in wireless to the "Internet model".  They get an "A" grade for making the whole stack available.  Even so, it is the Google apps - maps, YouTube, Gmail - that work so elegantly on the G1  (to be fair, Android Market is still in beta).   As a sidenote, the Internet is not completely "open", either.  Facebook and MySpace are "closed" in their way, and are not interoperable.  Hence the "Open Social" movement that has sprung up. 

The "Internet Model" as applied to wireless is a good segue to the "be careful what you wish for" part of the discussion.  Here's an example:  I downloaded a cool new voice search application from Vlingo onto my Blackberry a few weeks ago.  It didn't come from an operator or an app store, although Vlingo does have a deal with RIM to be able to be on the device.  The app is pretty cool, but lo and behold, it created a bunch of problems, such as inability to access several commonly used Blackberry features.  Plus, the download experience reminded me of some of the bad app installs one has on a PC, with all sorts of weird options, complex questions, and next steps that give you goosebumps (such as "need to reset your device").  This is my long-winded way of saying that as we move toward a more open framework, we are going to have to address the service and support issue.  Operators are not equipped to help with all these applications, nor should they be expected to.  The question is, who is?  

The final issue I'd like to raise is the go-to-market approach for the plentiful devices and applications we hope to see from open development.  We have become comfortably accustomed to billion dollar operator advertising budgets.  They are the ones who spend the money advertising services, devices, applications, and so on.  Very few other participants in the mobile value chain spend serious dollars on marketing.  Here's a factoid for you: in the third quarter, Apple represented 50% of the total device OEM spend in the United States.  To the VCs setting up iPhone and Blackberry application funds, I ask: what's the go-to-market strategy for these apps?  How are we going to create awareness?  I'm sure a partial answer is that a lot of this is will be user-generated and viral, such as Twitter, or what we see with certain Facebook or MySpace apps.  But the analogy that "wireless is going to look more like the Web" might be not apply as neatly, due to the panoply of mobile devices, OSs, development platforms, and so on.  

2008 will be remembered as an "kickoff" year for open development, and in the aggregate we saw remarkable progress.  Expect a shakeout in 2009, with consolidation of development platforms, greater pressure for monetization, and maturation of processes. 

Of all the developments in the wireless industry in this very eventful 2008, none is greater than the way mobile content is being developed, priced, sold and consumed. This has been a net gain for subscribers. But within the mobile value chain, we are seeing a shift in the balance of power and a variety of new business models. Read More