Just came back from CTIA in San Francisco. The show was rather uneventful and got me down with real Finnish melancholy. Why is the US mobile market so much behind the rest of the world in the freedom of innovation? Why are the carriers still holding onto their monopolistic grip of the market? One thing is for sure: they are offering a wonderful breeding ground for future mobile challengers such as Apple and Google to grow in their home market. There is such a huge pent-up demand to improve your mobile user experience in the US that 3 million iPhones will be sold this year. That is a huge number for a product which still is too crippled in many ways to compete on the market in its own right. But people are longing for a change and they buy into a story that promises that change. Well done, Steve Jobs! (Although I don’t think you are a god after all, we will still see you make some even silly mistakes.)
But on the US mobile content market we are living a transitional phase: the first hype cycle is over. Some companies got sold for a lot of money and then failed in execution (pretty much anything the Japanese investors touched). Some others are on their way to oblivion – disappearing after having for too long banked on the carrier market dominance holding, something which will eventually come crumbling down. Then you have those mainly European originated D2C mobile content companies like Thumbplay which had the right timing are were skilled enough to execute well. The only downside there is that they come to the market in a phase where the traditional mobile content market (ring tones and other personalization media) will start to loose both market interest and monetization capability.
The US mobile market is in a ‘post-soviet trauma stage’. There are too many ineffiencies and too much fragmentation for the market to grow as rapidly as it should with the scale economies this huge country offers. We will need to wait for the infrastructure layer to get more harmonized and the Internet companies get more market momentum and only then – probably in 4-5 years – will we see some hockey-stick growth.
