Monday, February 10, 2014

Do Phones Still Matter?: The Signal Economy Moves From Informing to Action

The mobile smart phone market is booming. About a billion new smart phones were sold in 2013, and total mobile phone sales are likely to approach the 2 billion mark by next year. New models such as +Motorola Mobility's Moto G global phone are bringing performance and features that would have been considered top-of-the-line only a couple of years ago for comfortably under $200 off-contract. There are over a million apps in both Apple's App Store for its iOS phones and tablets and mobile browsers such as +Google Chrome now bring a mobile native Web experience about on par with desktop and laptop PC browsers. And should you be willing to pay for them, a new generation of smart phones is about to introduce 4K video capabilities to phone screens and to their outputs to TVs and high-resolution monitors.

Things could hardly be better for the smart phone industry. But allow me to be one of the first to say that as a leading-edge indicator of performance value, the smart phone is now entering a long era of twilight.

This isn't because smart phones will disappear any time soon, but more because they all do pretty much the same thing about as much as we can expect them to do it in all the places we'd expect to find them doing it. They all have pretty much the same sensors, pretty much the same cameras, pretty much the same apps. have pretty much adequate battery performance for most circumstances (at least on the high end of the market), deliver pretty much the same signal for analysis and can deliver signal-driven services in pretty much the same way. There is lots of economic value in this equation that has yet to be tapped, mind you, so the maturity of smart phones paves the way for an abundance of "catch up" from signal-based services trying to find a broader mobile market.

This can be seen in the down-spiraling of unit prices as well as in component prices. Besides value leaders like the Moto X, component suppliers like Broadcom are beginning to scale up for producing communications chips capable of high-bandwidth LTE mobile signals at prices which should ensure that budget-conscious device buyers should be able to afford a high-bandwidth mobile Web connection pretty much anywhere. Factor in the U.S. Federal Communications' testing the elimination of separate mobile voice networks in favor of voice-over-IP support for Internet voice services, and what you wind up with is a mobile world in which the very idea of a "phone" is disappearing rapidly.

It is a world in which we have our mobile phones surrounded by tablets, +Google Glass, smart watches, smart TVs, in-car displays and whatever, perhaps the notion of a phone is becoming more the notion of a mobile sensor-driven identity with different contact points. What we seem to be winding up with instead of specific general-purpose appliances as the focus of The Signal Economy is an all-purpose capability that can connect signal to services that deliver satisfaction to markets on the best platforms suited for that purpose. Sometimes those devices will continue to be flat-screen experiences, but increasingly they're end points like machines that actually do things - be they controllers like the +Nest in-home climate control and smoke/gas detectors or sophisticated one-or-many manufacturing machines like professional-grade +MakerBot Replicators.

This shift to being able to translate signal into real-world actions with monetary value rather than into just stimulus to take actions is no doubt a major factor in some of Google's most recent shifts in company strategy. Google's planned sale of +Motorola Mobility to China's +Lenovo is a sign that Google is far more interested in accelerating the commoditization of mobile phones to the point that signal acquisition and generation is as universal as possible. This is underscored by Google's acquisition of a string of companies focused on robotics such as Boston Dynamics and advanced artificial intelligence computer capabilities. If you're a master of signal, why stop at just giving people information - why not be a master at helping people to take action with that signal?

There is plenty of money to be made in applying signal to flat-screen appliances, and companies like Google will rely on those appliances for many years to come as a revenue backbone as The Signal Economy begins to unfold. However, I believe that we are already beginning to enter in which cataloging and describing the objects being described by signal are going to be less important than the verbs which apply to those objects that can be inferred from a signal-driven analysis of those objects. Sometimes those verbs will lead us to creating marketing offers for mobile sales prospects just as they're entering or nearing a store. But increasingly it means translating those verbs into the production of actual products and services, sometimes, as seen with the emerging Amazon Yesterday predictive delivery service, even before we've actually asked for them. What happens when that box contains not an item produced for mass markets but an item produced just for us?

What will happen is a shift as dramatic as the Industrial Revolution of the 19th century, but not necessarily in ways that we might expect. We'll have global mass production of certain items indefinitely, but increasingly economic growth and employment will depend on independent thinkers responding to the needs of specific people through understanding their needs via the signals that they produce. Sometimes those needs will be met by major companies, to be sure, but as evidenced by the rise of crowdfunded products like the Pebble watch, it's no longer necessary to have a huge base of capital to get innovative new ideas to market at any scale. So it's at least as likely that The Signal Economy will resemble the artisan-craftsman era of the 18th century in which the peculiar abilities of any number of creative people found profitable niche markets - except now they will be able to harvest those niches on a global basis.

So yes, we'll have mobile phones indefinitely, just as we still have TV sets in our homes more than sixty years after they started to become commonplace around the world. But the economics of what drives content to those screens seems to be shifting towards making them far less of a central point in the Internet-driven information economy. Publishers need to recognize this shift and to see that intellectual property that is not aligned with the Signal Economy may wind up being just secondary cogs in an economy that values real things and actions produced by intellect more than the value of temporary vessels for transforming that information into real-world benefits. Forget about content being "water in a pipe" or even in a bottle. Look at the wheels of economic activity that can be driven by your content by signal, and adjust for those verbs. Soon. Always glad to help, of course.
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