There's an old saying that IBM never enters a market if it doesn't see a billion dollar opportunity. The company's CTO for telecommunications research, Paul Bloom, corrected me during a phone call. It's a billion dollars at the low end. And that's why IBM announced last month that it was putting $100 million over the next five years into "direct research in the mobile space." But don't expect a new mobile device or apps. IBM's strategy is to let partners create the end user software and electronics. It just wants to make money from being in the middle of everything. The company's strategy sits on top of three major market assumptions and a few of its own realities:
- Bloom expects there to be five major handset players: Apple, Google, Palm, RIM, and Nokia. As such, don't expect IBM to cut exclusive deals with any of them, because it doesn't want to cut out its real source of wealth: big corporate clients.
- IBM has its eye not on today's bandwidth, but what transmission speeds will eventually become. "The promise of having 50 or 100 megabits coming to your wireless will change the type of communications that occur," Bloom says.
- Mobile connectivity will move toward an open model, pretty much because it ultimately can't bear the inconvenience and expense of developers having to create multiple ports of their applications for different platforms. Says Bloom: "I don't know if it will be WebKit or not, but I think there will be a core platform that people will be developing off of." Although WebKit does have a good shot at becoming the preferred platform, he's leery of seeing that as cast in stone, as there is at least a possibility of some other approach hitting the market, specifically something from Microsoft.
- For most uses, mobile handsets will become "the device of choice" because it's the most personalized and people will tend to choose it first for their communications and computing. In fact, the potential cannibalization by mobile devices of the PC market is a big reason why IBM got out of making PCs.
- IBM is an infrastructure company, not an applications company. So don't expect a fleet of apps from them. Instead, look for an emphasis on management (Tivoli), collaboration (Lotus), application enabling technology (WebSphere), and analytics and reporting (Cognos).
- Cloud computing will run mobile infrastructure and provide support for the applications.
- IBM sees its partners writing the applications that will run on its infrastructure.
- Emerging World -- Given the potential cost advantages of mobile, IBM sees it as a technology that offers an opening to the last huge new market: the developing world. An important aspect is developing new approaches to application and data interfaces. Voice technology (not just recognition) may become big in this area because populations often will have lower literacy rates. "We call it the spoken web," he says. Not only does the developing world provide a potentially big market, but it's also a test bed to develop new approaches to computing that could be successfully marketed in the industrialized world.
- Inside Enterprise -- Companies will find that they need to stop thinking of mobile devices simply as a convenience for employees and turn them into tools to advance business interests in new ways. As an example, Bloom mentions an insurance company that created applications to give field agents ways to get crucial information when investigating an accident. Here's how he describes it:
The longer they wait [to resolve an accident claim], their [more their] costs go up. People start getting aches and pains, get advice from friends. When someone called in and said I had an accident, they would immediately download information to the agent's cell phone where it occurred, information about the person, and information aout the accident. The agent would take pictures, transmit them back, and in real time be able to get an estimate of what it would take to repair the car, direct the client where to send the car, and cut a check at the location for the insured. It had a very significant impact on the size of the claim and the amount of paperwork needed to file the claim.To put it differently, just as businesses had to think differently to find the real value of using the Internet, they will have to think differently again to get the potential value from mobile.
- End User Experience -- Mobile presents interesting possibilities, and interesting challenges, for interacting with consumers. An approach to mobile retail might involve taking everything known about a customer -- from general purchasing habits to customary locations -- and use it to better market. "The retailer knows you bought golf clubs last week and has a large inventory of golf balls," Bloom offers. And if you can predict what path the person will take from work to home, you can offer a coupon at a convenient branch for those golf balls. Getting past the privacy concerns may be difficult, but should be possible. "If someone is going to give me $100 to use some information and that I won't be spammed, I might say hey, that's great," Bloom says. "I'm willing to accept that value and allow the retailer and telco to use the information but only my benefit." Or in healthcare, an HMO might use sensors built into someone's clothes to monitor for problems in the making, with information sent to a cloud-based healthcare analytic system, another big area for IBM. "It's not unrealistic to expect that one day in the near future, someone in a white coat will come to your door and say you need to come with me because based on your bodily functions information sent by the sensors in your clothes, the chances are good that you will have a heart attack in the next six hours."