How Data Determines the Battle Between Tech and Media for Mobile Superiority

Sure, mobile is the dominant platform. Point conceded; the consumer has spoken, or rather, texted. Ease of use and convenience trump power, at least for now. But the question, as the following article explains, is what they are going to do with those devices - and of greater interest to everyone who is not a consumer: who profits?

Which brings us back - as usual - to data.

Oh, is that all? Well, yeah, everyone wishes it were that simple. But first of all what data are we talking about? There's content, which some people claim used to be king, but that was so long ago few can remember when that was or why anyone thought so. Sure it helps to have content people want, just like it helps to have hardware people want. But that simply gets you the attention that monetizes the real prize:  it's the second kind of data that provides sustainable advantage. And that, of course, is not data about other stuff, it's data about the customer and what he or she want, need, hope for and, very much more to the point, will be willing to buy.

So the battle is going to be about generating the best data, how it gets shared. And then banked. JL

Richard Waters reports in the Financial Times:

“On one level, Apple and Google have won the smartphone wars. At the same time, what you’re going to do on these devices — and who’s going to control them and how they’re going to work are still completely unsettled."
Tracking the technology world’s upheavals is like studying the shifting of tectonic plates: the direction of movement may be obvious, but it takes periodic earthquakes to reveal the magnitude of the forces at work.Two sharp tremors brought home how far the tech, media and communications industries are realigning around mobile.
The first came when US telecoms company Verizon announced a $4.4bn acquisition of AOL. The online services pioneer is a mixed bag these days, which includes the original internet connectivity business as well as web properties such as Huffington Post. But Verizon’s sights were firmly set on something else: a digital advertising platform that AOL has been building with an eye to planting commercial messages into video streams.

There has been a spate of similar acquisitions of “adtech” companies as digital advertising has boomed. What set the AOL deal apart, however, was the fact that the buyer was a communications company whose business is predominantly mobile. With its purchase of AOL, and a nascent digital video service acquired last year from Intel, Verizon is on track for a confrontation with internet advertising giants Google and Facebook in the battle for mobile video.

Facebook followed through on a long-anticipated plan to add a mobile news-stand to its list of attractions. Nine media companies — among them the New York Times and NBC News in the US, the Guardian and the BBC in the UK, and Bild and Spiegel Online in Germany — agreed to give the social networking company some of their content to host on its own site.

Even some of the companies involved in the Facebook arrangement seemed in two minds about the idea, given the potential risk of surrendering control of their users to the social network.
If Facebook quickly succeeds in turning itself into a platform for mobile news, there is a danger that users will stop having to use the media companies’ own apps and news sites.
“There’s no doubt we debated the pros and cons,” says Declan Moore, chief media officer at National Geographic. “This is an interesting new line across the frontier.”

Facebook could eventually play a role in deciding which news services are given top billing, and make sweeping decisions about the overall exposure that news is given on its network. It has already done much the same with games, to the distress of games software companies that have seen their exposure suddenly shrink. Zynga, the maker of the FarmVille game that initially thrived on Facebook, blamed changes made by the social network for a rapid decline in its fortunes.

“We’ve tried to build these systems that can try to figure out who is into games and who isn’t,” Mark Zuckerberg, Facebook’s chief executive, said this week. That approach was used to determine whether Facebook users see information about games in their feeds or not — and it could soon play a similar role in determining the visibility of news services.
But media companies seem to have decided they have little choice but to follow their audience, which is spending more time on social networks, particularly on mobile devices: “It’s important to have a presence or you become irrelevant,” says Mr Moore at National Geographic.
What has yet to play out, though, is the realignment among the businesses that ride on top of the mobile platform.
How smartphone technology will evolve, and which new business ecosystems will develop on mobile, are still unclear, according to Benedict Evans, an analyst at Andreessen Horowitz, the venture capital firm.

“On one level, Apple and Google have won the smartphone wars and they’re now taking laps of honour,” he said at the Financial Times Digital Media conference in London last month. “At the same time, what you’re going to do on these devices — and who’s going to control them and how they’re going to work and what the acquisition channels and the interaction models look like — are still completely unsettled.”

Central to this is the battle to attract and direct the attention of mobile internet users. For the winners, success will bring valuable data about this new audience, which in turn is likely to support new advertising empires or fuel mobile commerce.
The mobile app stores of Apple and Google, which together generated revenues of some $17bn for app developers last year, have become the first winners in the mobile platform wars. But mobile operators such as Verizon and powerful apps such as Facebook are starting to flex their own muscles as they look to build central positions in the mobile world.
Verizon’s venture into video marks a new departure in mobile operators’ attempts to tap into a revenue stream that internet companies have successfully built up.
In the pre-iPhone dawn of the smartphone era, Verizon and its peers had hoped to build “walled gardens” in which they could steer captive mobile customers to their own set of services. They lost out to Apple, whose revolutionary smartphone both shattered the walled gardens and proved a powerful enough wedge to force mobile operators to agree generous subsidisation deals.
Verizon is now bidding to join the ranks of the large-scale video aggregators for mobile. That puts it squarely in the main growth market for mobile media. Video already accounts for 55 per cent of mobile data traffic and is expected to grow to 72 per cent by 2019, according to networking company Cisco Systems.
But if Verizon is to become a video hub for its own massive base of mobile subscribers, it will have to go up against large-scale aggregators of audience attention, such as Google and Facebook. These are “enormously large players who are able to operate on a global basis,” says Philipp Nattermann, UK head of technology, media and telecoms for professional services firm McKinsey — making it hard for other video producers to stand apart from them.
One sign that the telecoms operators may have more success this time is a willingness to use acquisitions to bring in the expertise they lacked, says Derek Aberle, president of Qualcomm, the US mobile chip company.

For media companies, the decision to hand over content for Facebook’s Instant Articles service is similar to the one they made when joining Apple’s mobile App Store, argues Mr Moore of National Geographic. “People were saying, you’re doing a deal with the devil.”
This time, though, media companies can console themselves with the thought that Facebook — unlike Apple — has said it will pass on all the data it collects about users who read the stories it hosts. It has also allowed them to keep any revenue they make from placing adverts in the stories that appear on its site.
Media companies claim they have a deeper level of trust in internet companies than was once the case. “I think many of the West Coast companies have a new appreciation of the value of quality content for their users,” says Mr Moore.
Given the power shift under way in mobile, they may have little choice but to believe it.