Mobile is growing in leaps and bounds, driving significant growth for some companies even as others are struggling. While the ongoing poor economy may be partially to blame, it is also apparent that failing to grasp and adequately respond to mobile is also to blame.
Facebook, Nokia, Research in Motion and Yahoo are just a few of the companies that are struggling financially at least in part because of an inadequate mobile strategy. As mobile continues grow and impacts even more areas of a consumer’s life, it is likely that other may also find themselves in hot water unless they come up with a strong mobile strategy.
“Successful companies in the mobile space understand what customers want — not just today but tomorrow,” said New York City-based Chia Chen, senior vice president of mobile practice at Digitas. “And they are willing to find a way to make it.
“In the case of mobile, companies need to understand that it’s more than just a technology shift, it is also a significant change in how people connect with each other and consumer content,” he said. “Mobile changes people.
“Companies who invest in really understanding this change and are committed to changing themselves to adapt will win. And the costs of getting it wrong are high.”
While mobile has been around for a while it was not until the iPhone was introduced in 2007 that the technology began to have a big impact on consumers’ lives. However, some companies did not grasp the significance of smartphones at first.
For example, RIM, which was a darling of professionals during the early days of mobile, was slow to introduce more consumer-friendly phones and lost mindshare and market share as a result. The company recently announced its latest round of cutbacks as it struggles to return to profitability.
Nokia is another handset maker who has lost ground because it did not respond quickly enough to the transition from feature phones to smartphones.
“From 2003 to 2007, when the iPhone was introduced, mobile was mostly about being able to communicate via voice, text and email,” said Noah Elkin, principal analyst at eMarketer, New York. “One of the many things that the iPhone changed was that the phone can be much more than that, it can be a more effective portable computing device.
“With the subsequent introduction of apps and the integration of different content stores, what changed is that smartphones became about marriage of software, hardware, content and services.
“Some of the companies such as RIM and Nokia, were slower in being able to put those different assets together in a compelling and easy way for the end user.”
A matter of timing
The problem that many digital companies are having in the mobile space is that their heritage is in desktop computing and they have yet to figure out how to make money in mobile even as their customers increasingly interact with them via mobile.
To some degree it is a matter of timing. For example, Facebook – which came about when desktop was still the primary way consumers went online – is facing significant revenue generating issues while Twitter, which came around several years later when mobile use had begun taking off, is reporting strong results.
“Facebook is struggling to play catch-up to accommodate the shift in its audience’s access of its site and services,” Mr. Elkin said.
“It is a question of timing,” he said. “Facebook was born in 2004 and Twitter in 2007 – it is a subtle difference but it can make a big difference.
“There are companies that were born earlier that doing well. Timing is not the sole determinant but it can be a factor.”
Another reason some are suffering in the mobile era while others are not is that next generation advances are coming at a faster and faster pace and some companies are having a harder time than others reacting quickly to the marketplace.
Even when companies do realize the potential in a transformative technology such as mobile, they try to avoid taking aggressive steps that might cannibalize their existing businesses. For example, this is what happened in the music industry when digital content first began making an impact.
“In the mobile era, we are seeing a greater acceleration of impact in the market when there is something new,” Mr. Elkin said. “The iPad accelerated even faster than the iPhone or iPod – the timelines are compressing.
“For major corporations it can take a while to change direction – they don’t just turn on dime,” he said. “Part of the problem that RIM has had is that they didn’t realize or acknowledge soon enough the challenge that an iPhone represented.
For those companies that do understand the potential that mobile holds, they are moving aggressively to shore up as big a piece of the landscape for themselves as possible, sometimes stepping on others along the way.
This suggests that any companies that are currently showing weakness in their mobile strategy will continue to struggle until they get it right.
“It is hard to say what the ultimate fate of a company like RIM or Nokia will be at this point,” Mr. Elkin said. “We have certainly seen that the situation that they are in is in part a result of the very aggressive moves on the part of Apple and Google and its partners, which have been the beneficiary of the degree to which Nokia and RIM have faltered.
“The companies that are waiting in the wings, trying to redefine their place, like Microsoft, have made efforts but haven’t made significant inroads,” he said.
Chantal Tode is associate editor on Mobile Marketer, New York