Convergence of mobile phones and MP3 players

Here's an interesting article from Wired on mobile phone and MP3 player convergence.

5 Ways the Cellphone Will Change How You Listen to Music

Why carry two devices when you can carry just one? Just as heterogeneous component hifi stereos in the '70s gave way to same-OEM systems (as OEMs integrated the benefits of competitive manufacturer's expertise into their own systems), ubiquitous electronic devices will converge into one (camera, MP3 player, telephone, datebook, messenger, etc.)

We are moving away from an era where one company's MP3 player was obviously better than a phone company's MP3 player, and a phone company's phone was much better than an MP3 player company's phone. With the introduction of the iPhone and market penetration of other smart phones, the quality of all on-board features is improving to the point where it's redundant to carry separate devices for separate purposes.

Non-DRM music can also be mixed and matched from any music service to any phone, though even that functional separation will be a niche market. Integrated verticals like iTunes Music will continue to dominate the iPhone platform, and would dominate other mobile platforms if Apple were willing to support them. The difficulty here will be building a non-Apple brand with enough penetration that you're likely to have a friend who can show you how her service works. Without friend-to-friend training, any other service will fail.

The Bright Future of Location-Based Mobile Search

The "next big thing"® is location-based mobile search and advertising.

I came to that conclusion not because companies are fighting to win mobile search markets, but after a mental exercise about what people actually buy on a regular basis versus what is typically advertised to them. The food court at the mall is generally busier than the rest of the mall. Same goes for the food at airports or county fairs. Sure you buy books at Amazon once in a while, perhaps a song on iTunes, or book show tickets or travel online, but I'm willing to bet not nearly as often as you buy gas as the corner filling station, or at my age, even dry cleaning services. And what about "that vast array of attorneys, lawyers, dentists, shoe shops, restaurants, and other close-to-home businesses"? The vast number of Yellow Pages-style small advertisers represents a huge location-based market opportunity.

So why don't you see advertising online for products you are actually likely to buy in the next week or month? I think you don't mainly for two reasons: because online advertising relies on large inventories (sold by the thousands to generate a click or two), and because local shop owners or managers lack knowledge of online advertising technologies and the ability to design ads.

Google revolutionized and democratized online advertising with its AdWords text advertising. No longer did you have to know how to run PhotoShop or Illustrator. All you had to have was a web site and a few words. Now a somewhat savvy shop owner could begin advertising without hiring an Ogilvy & Mather.

But your web browser still wasn't very good at knowing where you were. Even IP address to geographical location services aren't accurate enough (one IP location database pegs me 10 driving miles away from my actual location according to Google Maps' directions). Without mobile access, who wants to drive home and log on to the Internet while they're out with friends just to find a good pizza place on the spur of the moment?

Smart phones like the iPhone and Blackberry are solving both the mobile problem, and improving on finding your true location, either with GPS or cell tower location. Combine that with Google Maps local search and you begin to have a solution.

Now add on features that make location based services about more than just advertising (you wouldn't watch TV just for the ads...) Any location-based service must have a reason other than advertising to use it. The application must also blur the line between content and advertising (think of service locators like Yelp or City Search.) Prospects will actually ask for your ads! You won't have to push them on users. One recent feature announcement is Google's Latitude, which lets you stalk your friends by their location (and which makes barely believable claims to have signed up a million users in a week). Get people hooked on location-based services so you build up an audience make the effort worth while for advertisers!

As dumb phones reach market saturation, as more people upgrade to smartphones, as mobile browsing becomes less frustrating, and as Internet access on mobiles is seen as a necessity rather than a luxury, add democratized campaign setup so local shop owners can easily advertise to folks in the neighborhood or traveling through and you have the "next big thing"®!

AT&T iPhone exclusive will eventually end

AT&T has a limited window to be sure they have a compelling reason to stick with them after their iPhone exclusive goes away.

In my opinion, Apple's iPhone App Store has changed the paradigm for telcos who love to lock down their deck. (I will admit to really wanting the silly iBeer app.) Customers will demand the ability to install their own apps at will. Windows Mobile has long supported applications, but the hardware it ran on was never as sexy as the iPhone, and Microsoft or the carriers lacked a centralized app repository. As of this writing, Blackberry still hasn't launched its promised app store. Google has just announced that it will begin selling applications in its Android Market.

AT&T and all the mobile carries also need to reduce the number of manufacturers and models they carry, or at least rationalize how they're presented to non-technical customers. Right now, AT&T's smartphone page alone lists a daunting 33 devices (including colors and memory options) from 8 manufacturers (Apple, Pantech, Blackberry, LG, Motorola, Samsung, Palm, and HTC).

Apple's genius with the iPod was that even though there is a family of iPod models and colors, consumers can still refer to each model as just an iPod. This makes choosing an MP3 player easy, and you are likely to have a friend who has shown you and trained you on his iPod. (Apple is muffing it a bit by splitting hairs between the iPhone and the iPod Touch.)

Finally, just as mobile phones are expected to have cameras, they will also be expected to have music. The mobile music nut must still be cracked! A compelling music service needs to be in AT&T's plans, whether that's iTunes on more than just the iPhone, or some other single branded service, like Rhapsody or Napster. A carrier may try to build its own branded music service, but the investment may not pay back. Users want to share music with friends, even if the friend doesn't use the same mobile carrier. Unless that problem can be solved, it will kill any carrier-based music offering.