New mobile applications, but how good are the business models?

There are four application vendors on the Applications Innovation panel at Connect 2007 in Boston.  These folks got 3 slides each and 5+ minutes to explain what they are about.

Colm Healy, CEO, Xiam -- mobile content discovery based on the automated discovery of consumer preferences.
Sunil Vemuri, Co-founder and CPO, QTech, Inc. -- Their product reQall helps people remember things (to do lists, names of people you meet, shopping lists, etc.) using a combination of mobile phones, web, WAP, SMS.
Nicolas Arauz, Co-founder and Managing Director, Xipto -- Endorsement-based mobile advertising where consumers choose to run advertising during the ringback tone interval, but only for brands and ads they are willing to endorse.  In exchange they get credits for the mobile service.
Karen Cambray, CFO, Groove Mobile -- Full track download pioneer.  Two million songs in your pocket.

Some immediate comments from the analyst and investor communities:

Seamus McAteer of M:Metrics -- the US is not the mobile backwater people usually say, at least for music services.  Subscription services are the only really viable models today.  Per transaction sales pale in comparison to monthly subscription revenues.  It's not rational (on the consumer's part), but it's what consumers want. 

Stan Reiss, General Partner, Matrix Partners -- it's still very early for mobile Internet.  So far there is not a good model for how to monetize the mobile Internet.  The operator's view that they are going to charge per transaction is very inhibiting (versus "free" on the Internet).  Carriers are making money and content folks are making money, but startups in the middle are being squeezed out.  Investors are looking for business models that can stand up to the carriers.

Strong counter from Nicholas at Xipto that you have to think about attention.  There's real (advertising) money in having a user's attention.  Of course Xipto is still in fairly low profile, but his argument included compelling figures for what advertisers might pay per ringback play (to one caller) compared with the content sale (music purchased a few time per year).

Seamus seems to agree that advertisers will pay substantially to reach people in any venue.  So there is a substantial opportunity in offering brands access to mobile subscribers.

Stan points out the cost of advertising on the web is extremely low.  The challenge with mobile is the carriers view of the cost of transferring content to the phone is still unreasonable.  Example, the US carriers are unwilling to do anything that costs less than a dollar.

Karen points out that Europe is ahead of the US in allowing off-portal or off-deck, i.e. wholesale, content sales.  The key is getting reasonable charges for data usage.  Some discussion of data charging models that are emerging in Europe, including capping the data fee per day.

Dean Bubley again had a good question from the audience:  most users in the world are prepaid, not subscription.  Both Seamus and especially Stan commented that it's easier to make money in markets w/o a lot of prepaid, if only because the consumers are wealthier.

Comments

[1800 phone words]

Hi,

In fact, today's market leaders, from Google, to Apple, to Nintendo, are revolutionary for different reason altogether. Conversely, companies and investors focused on business models are simply applying yesterday's obsolete logic to today's novel problems.

[brough]

1800..., I don't agree. Specific business models become obsolete, but the idea of being in business is not going away and certainly each of your examples is succeeding because they have a viable business model.

Google had significantly better search technology and a better UI, but their success came from their Adwords auctions business model. Similarly, the iPhone represents a significant step forward in mobile UI, but a major part of their success has been in wrenching control from the mobile operators and shifting it to their application store. Indeed, they've made the mobile operators vulnerable and Android, Nokia, Microsoft, etc. are scrambling to participate in the new model. Nintendo has a revolutionary UI which has allowed them to take market share under the an existing game console business model.

All your example companies have business models and 2 of 3 are succeeding due to radically new business models.