Like SMS before it: Mobile Social Networking now the megabillion dollar killer app for 3G mobile

Like SMS before it: Mobile Social Networking now the megabillion dollar killer app for 3G mobile

Almost every user of SMS text messaging has access to internet based e-mail. Yet survey after survey prove that young people don't like e-mail, they prefer SMS. Since first discovered by Orange in the UK and France in 2001, similar findings from Asia to America. Korean youth say they never use e-mail except in contacts with their elders like a boss at work. And the latest survey from the USA this June by ComScore Metrix found the same results, with American youth preferring SMS, and saying "e-mail is, like so yesterday."

And yes, while every e-mail session is free (or seems free), and each SMS text message is separately charged - even if bundled - at a global average of near 10 cents per message, the use of SMS has exploded beyond the wildest dreams of any SMS product managers of any equipment vendors and operators. Today, SMS traffic is worth over 70 Billion dollars. That is over 30 times more than total e-mail revenues worldwide.

SMS text messaging revenues alone, are a larger industry than Hollywood box office, global music sales, and videogaming software revenues - combined. SMS accounts from between 10% and 25% of mobile operator revenues, and it is that profitable, that SMS delivers from 35% to 55% of all mobile operator profits.

An SMS for the 3G world?

So, now with this long prologue out of the way. 3G is looking for a killer application. It is hoping to discover the surprise hit, the kind of totally unpredictable upside surprise, that SMS text messaging was in the 2G world. Even with some of the world's best talent and experts at my disposal, and access to literally the best professional expertise that money could buy, when we built the Nokia 3G business cases, we could not discover one killer app for 3G. I have been on the hunt ever since. Now I finally have it.

Mobile Community Services will be the killer app for 3G. Call it Mobile Social Networks (some like our friend Steven Jones who lectures with me at Oxford's 3G business/services courses abbreviate that as MoSoSo). Call it Digital Communities on 3G. Call it mobile blogging, moblogging. Call it user generated content on mobile. But trust me, Communities Dominate. We now have found our first true killer application for the 3G space. And it is the digital community services.

So we arrive to the numbers. I wrote yesterday in my blog, reporting on the Informa numbers, that digital community services on mobile phones are already worth 3.45 billion dollars! This year, in 2006. That is a massive number. It helps explain the power of mobile - being the world's most prevalent digital platform, nearly 2.6 billion users with mobile phones, and close to 10% of them already using the high speed 3G phones. Anyone in the media industries, or running an internet service - needs to know this is the biggest pond, if you are not on mobile, you won't be relevant soon.

Yet look at these numbers. First the context. On the internet, advertising is the largest revenue source, followed closely by gambling (which is now under threat from the recent USA legislation). Adult entertainment is the third largest revenue source for internet service income. In 2005 internet pornography delivered 2.6 billion dollars to the adult entertainment industry. That has grown from its launch in 1994 so this has been achieved in 11 years. What of videogaming on the web? Since the first sales of videogames via the web in 1993, today online gaming revenues are worth 1.9 billion dollars (in 12 years). How about music? Apple introduced the iPod in 2001. Four years later, iTunes in 2005 delivered about 400 million dollars of music sales worldwide. Television has its biggest innovation and new revenue source in SMS-to-TV internactivity (voting for Big Brother, Pop Idol etc). That was invented in 2001, and last year generated 1.2 billion dollars.

Social networking on mobile was also intrdouced in 2001, and now in five years, it has exploded to 3.45 billion dollars. This is likely to be the fastest-growing launch of a new industry ever. Zero to 3 billion in five years.

Finally: I need to stress again. We see a fantastic opportunity on the biggest digital media platform on the planet - at 37% of all people on the planet carrying one, the mobile phone is the widest spread mass media, and most broadly used payment mechanism, and by far the most widely used communication system on the earth.

Absolutely mind blowing. I know a good bit about online communities from having written this blog for so long, and getting a feel for the way traffic ebbs and flows, getting a feel for the incoming emails based on topics here and on the Yahoo! thread, and being looped into whatever the discussion of the moment might be.

So I think I kind of intuitively get what this is about -- it's not just social networking via mobile phones that's described here, but mobile blogging, mobile online multiplayer gaming, mobile photo sharing, and on and on. It's a safe bet to say that everything on the traditional internet will migrate to the mobile phone -- and obviously there will need to be a revolution in how that data is presented before the 'fixed internet' can really become obsolete.

And, obsolete it will become. It will not be long before people can't even remember the fixed internet with 'desktop' computers. Internet services will be everywhere, and information about everything everywhere will be there too.

This is why I'm excited about what I'm doing. Information is becoming pervasive. And information services are being used to fulfill basic human needs for connection, for understanding, for feedback and for unification.

Mobile devices become mechanisms to discover new people and participate in 'shared hallucinations', via virtual worlds like Second Life or Warcraft or whatever. It's a conduit to access something really powerful, these communities of shared interest and passion.

So, this is where things are headed. Mobile digital communities. This might be the biggest demand driver yet for personal Color Eyewear and embedded cell phone laser projectors.

On another note, I don't know if any of you guys saw the show about Wall St. traders on InHD last night, but it was pretty fascinating. They had these (actually really successful) hedge fund guys and daytraders staring at their racks of screens trying to react to every blip and blop, making decisions every second of the day. It was exhausting just watching it -- I can't imagine actually doing that every day.

It's much easier and makes much more sense for me to identify powerful macro trends in technology and society and then align myself with those trends -- and fortunately now, actually push them forward. In this way, the power of context is always available -- I'm not worried about the price of porkbellies or orange juice or whatever. I'm just focused on, how to people want to express themselves through technology and communications? What does all this technology and connectedness mean? What is it leading to?

I'll hit on some of my answers to those pretty big questions in a post to come soon.