The U.S. Closes the Mobile Innovation Gap

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Mountain View (Calif.)-based Google is pushing another software project called Android, attracting developers worldwide. This new cell-phone software, which is slated to debut when the first Android-based mobile phone comes out this fall, should offer access to third-party application stores as well. The upcoming Android Marketplace will allow anyone to post a mobile application, to be rated by users YouTube-style. Google, Yahoo (YHOO), and Microsoft are also the heavyweights refining mobile Web browsing, which has recently been enjoying faster uptake in the U.S. than anywhere in the world.

Perhaps just as important, new business models hatched in the U.S. are shifting the balance toward innovation. They put developers front and center, while nudging the telcos to the side. "The U.S. can really lay claim to being innovators for business models," says John Starkweather, international director of product management at Microsoft (MSFT), who is based in Singapore. AT&T's (T) agreement with Apple for the iPhone is one example. The deal, replicated to a greater or lesser extent worldwide, gave a handset maker more control and gave subscribers access to applications and services that the operators don't control. This was important, because many carriers preferred to develop applications for their own networks, or to pick which applications users could use. This threatened to create a balkanized mobile Net.

New Wireless Wonders

American operators are also leading the way in introducing service plans for new wireless devices that are neither cell phones nor laptops. Take Amazon's (AMZN) Kindle e-reader. Released last November, the gadget lets users download digital books right over Sprint Nextel's (S) network. The wireless download charges are all part of the e-book's initial $360 price. And this September, Target (TGT) will begin selling Peek (BusinessWeek.com, 9/3/08), a $100 wireless e-mail-only device that works over the T-Mobile USA network. Both gadgets are expected to eventually become available in Europe.

Even while America catches up to Europe, Asian markets such as Korea and Japan still lead the world by most metrics. Yet for American developers, the Asian strength spells growth opportunities for games and applications. Take PopCap, known for PC and mobile-phone games like Bejeweled puzzles. From a small international presense just two years ago, it's expanding rapidly in Europe and Asia. "In the next few years, Asia and Europe will account for more than 50% [of sales]," says Andrew Stein, director of mobile business development at PopCap. To tap into the overseas market, in 2006 PopCap opened a game design studio in Dublin, Ireland. This July, it opened an office in Shanghai.

Stein believes U.S. developers have a leg up on their European counterparts: Starting out in this country, using a common language, and featuring only four major national carriers is easier than dealing with scores of small European carriers and adapting games to a multitude of local languages. "If you can succeed in getting your games launched in the U.S., it's a much bigger, easier-to-crack base," Stein says. "Success in the U.S. is a better springboard for launching globally."

In the wireless world, that's new.

Business Exchange related topics:
Wireless Communication
Wireless Web
Mobile Industry
Smartphones
Web 3.0

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.