Monday, May 08, 2006

Walling off cell phone customers

Competition: Companies praise it publicly, but privately most try to thwart it whenever they can.

Internet search is a case in point. Take this article from today's Wall Street Journal about the rivalry to dominate search via cell phones:

"The push by the world's biggest Internet search firms to dominate what customers see when they turn on their cellphones has accelerated in recent months with Google Inc., Yahoo Inc. and Microsoft Corp. all striking deals with service providers and others in the cellphone industry.

"The tech giants want their search engines and logos to pop up on cellphone screens, enabling people to also use their phones for other services the companies provide, such as downloading maps, or sending email and instant messaging, just as they do on their computers.

"The companies contend that even though only a small number of people currently use their phones to search for information online, there is a huge potential market with twice as many cellphones in use globally as PCs. And, as search engines become better at tailoring results to a user's location, mobile searching will become more attractive, they say. "The leading edge battleground between us and Google in local search really will come on the phone," predicts Microsoft Chief Executive Steve Ballmer."

What Ballmer means is that Microsoft will buy its way into dominating cell phone searches. Microsoft's money hasn't been able to buy that position in PC-based searches because PCs can be so easily customized to bypass the "bloatware" installed by manufacturers (see Sunday's entry). PCs are still largely controlled by their users.

But cell phone software is far more rigidly controlled by the cell phone carriers and manufacturers, limiting consumer freedom. Hence, Microsoft's opportunity to buy dominance on cell phone search.

Where does customer choice fit into all of this? It doesn't. The cell phone carriers are trying to force their customers into a "walled garden" where they can be forced to used services of partners who have paid dearly for the privilege. As part of that, customer initiative in using other services must be curtailed. (T-Mobile appears to be an honorable exception).

That wall is not totally built. Any cell phone that provides true Internet access by definition must allow subscribers to go outside the walled garden. And with GSM phones, the SIM card provides some flexibility for customers. They can simply buy a phone from any compatible vendor and insert the card. This separates the cell phone purchase from the cell phone carrier.

So when you're in the market for a cell phone, it's wise to research whether the carrier and manufacturer will give you freedom of choice, or brick you up.

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