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On the Hunt for the Next Killer App
On the Hunt for the Next Killer App

The development of electronic commerce has led to an ongoing search for so-called killer applications. In today's environment of electronic commerce there have been some clear winners, such as electronic auctions, but the killer application for mobile networks (especially 3G) has yet to be found.

If we're to believe certain mobile commerce experts, designing a killer app is as easy as cooking a pot of chili con carne. Blend some mass appeal, high-frequency usage, and accessibility with affordability. Wait a few moments and put it into the self-reinforcement cycle (see Georg Tacke, et. al, in "Mastering the Mobile Internet"). Another expert suggests the following steps: first reshape the landscape, then build up new connections and, finally, redefine the interior (according to Larry Downes and Chunka Mui in Unleashing the Killer App). Is it really so easy to create the next killer app and, if so, why hasn't anyone done it yet?

Some companies have designed products that they believe could be the next killer application. These include video telephony (late '80s), VoIP (late '90s) and, today in the mobile arena, applications such as SMS Garage (storing SMS on a central server in case your cell-phone memory is full) or mobile tickets. Some others are quite successful - such as dating services, ringtones, and horoscopes - but still far from being killer apps.

It's time to acknowledge that there won't be one particular killer app waiting around the corner - either in the Internet or in the mobile arena. The challenge will be to offer the right set of applications and services. The ultimate killer application will be a portal that combines the strengths of each application and satisfies all consumer demands with one click.

The reason for the hype around the next killer application is obvious. In contrast it's a bit unclear who the driving force should be: the network provider, the content provider, or a third party. I'm sure the potential revenue is big enough for all players, and the only threat could be some players that are too greedy. A promising strategy for all participants, therefore, would be to focus on their own business. Network providers should provide access to networks, content providers should distribute content, and application providers should develop and run applications.

Network providers who have the greatest interest in increasing traffic and customer loyalty should create a friendly environment for content and service providers to offer their services on the network provider's platform. Part of such a service platform has to be a network access module and a payment module. The network provider should try more and more to take over the whole value chain, to keep in control of the business. However, network operators are not the best parties to handle the content and service business.

The last few months have shown that you can observe a trend so as to reconstruct the value chain. So far network operators have also been the parties billing the consumer, but in times of increased value-added services, a new player is emerging - the payment service provider (PSP). The core competence of the PSP is to handle the financial transaction between the consumer and the content provider.

Emerging business models that offer services and content by mobile phone require new payment methods to charge the consumer for using the services. Systems have been developed to try and meet new market demands (i.e., eMoney, eCash, Digital Cash, or ePurse approaches), but so far the success of these systems has not lived up to the requirements they set out to meet.

Bertelsmann Distribution Financial Service Ltd. (BDFS), the financial service provider of the Bertelsmann group, has worked with their partners to develop a low-cost system for content providers to also charge the consumer. It's based on a fairly simple idea of having a virtual account that the user can access by any available devices (Internet, cellular phone, interactive TV, etc.). Furthermore, it's secured for making virtual payments as the technology allows. This system makes it easy for the content provider to offer premium content and services for a low cost. This revenue stream is a crucial prerequisite for the success of emerging business models.

Taking into account that the U.S. is lagging a bit behind in mobile commerce development, it's now time to create the necessary requirements for the uptake. The business models and applications exist. The only barrier is the missing earning logic for the provider - there's still no monetary incentive for offering mobile services. After this gap has been closed, you'll rarely hear the term killer application, because there won't be a need for one particular application.

About Robert Martignoni
Robert Martignoni is a business consultant for Bertelsmann Distribution Financial Services Ltd.,
one of Europe's largest payment service providers.

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