In 1995, I founded an ISP in Sydney called Live Internetworking. Myself and my co-founder launched it, got it profitable, signed up a few thousand dial up customers and a couple of hundred corporates before selling it for a small profit. It taught me more than I ever suspected about business, especially the meanings of “undercapitalised” and “sales”. We weren’t strong enough in either attribute to compete against the coming incumbent telco competition. Anyway…. one thing we had to deal with was helping people who had no idea why they would want to be online, get their PC connected to the Internet. This was back in the day of Windows 3.1, 14.4 modems, and no TCP/IP stacks let alone browsers, email clients etc.
In fact, it’s a very similar situation to where the Mobile Industry is today. People buy phones like they used to buy PC’s, based primarily on hardware specs, price and to run a single non-Internet application (Word/Excel on the PC, Voice on the phone). “Multi-media” PC’s with CD-ROM’s were the current “big thing” just like Multi-Media Phones today. Back then, no-one bought a PC in order to get online.
I’ve been helping a Mobile Browser startup figure out their go to market strategy, and they are facing a critical decision re distributing their software. Do they Invest time & effort into the Service Providers, or do they go for a Direct Consumer download approach? We all know that one day, the direct download approach will be the way to go. To get there we all need “Internet phones” which are only just hitting the market today (iPhone etc) and will take 2-3 years to get into the hands and contracts of most people. It took a similar number of years for the PC explosion in Internet growth to hit in 1997-1998.
But what to do in these interim years?
If history is any guide, it will be deals with the Service Providers that get the initial distribution (remember the Netscape & AOL CD’s we were all spammed with in the 90′s) followed very closely by the “Terminal” companies (MSFT pre-loading IE on every PC) before there’s a critical mass of Internet connected devices and educated users to go and download the browser they want (Firefox).
The interesting question is where are we today and which strategy is appropriate for the next 6-12 months? Personally, apart from Safari/Chrome/Webkit/IE which all have rich parents to support them to maturity, I think that the Direct to Consumer approach will be the right one, especially if the user experience is good enough (I think it is). However I think it will take 2-3 years to reach broad distribution, as there are not enough users out there with Internet Phones today, and people only buy new phones when their 2yr contracts expire. In 1995 Netscape relied on the Service Provider CD’s to get installed, their direct to consumer download strategy only gained traction once people already had a usable browser on their PC and they had used the net enough to value downloading an upgrade.
My thinking is that for shorter term results, Service Provider partners are needed. It’s just much harder today as the Mobile operators are bigger, more regulated & more powerful than the scrappy ISP industry was, and they’ve also learnt from history.
Comments?
