MobileCrunch Responds to Berggi Comments
Posted by Oliver
Thanks for reading, great comments everyone. I knew when I posted this that it was going to cause some controversy. I am pleased that it hasn’t disappointed.
Seeing as how my own diligence processes are under attack I suppose I’d better shed a little light upon my own investigatory methods. Incidentally, for those that may not know and/or those that have forgotten, prior to joining Foldera and also starting MobileCrunch, I was an analyst and associate venture partner with Angel Strategies in Orange County, California. During this time I had the opportunity to look at a substantial number of companies planning on operating in the mobile space. Add this to my work writing MobileCrunch and previous to MobileCrunch the Mobile-Technology Weblog. In short I’ve spent an awful lot of time directly engaged in the mobile sector and most of that time focused on mobile applications.
Anyone will tell you that it is possible given the right analytical tools to build a case for or against just about anything with statistics. It is a truth that there are lies, damn lies and statistics. This is why people secure the services and advice of people that have heavy domain specific experience. They’ve got a sense of the space from engagement with it.
That said, I can tell you honestly that I would never simply come out and bash a company based upon a show of hands - even one from a technology conference like Under the Radar. However, what you don’t know is that I have been posing the same question; “By a show of hands, how many people here have downloaded something to their mobile handset that was neither a ring tone nor a wall paper?” Every time I’ve spoken at an event for the last two years. That is to say that I’ve asked thousands of people this same question across dozens of events over a period of years.
Granted, this isn’t a scientific sample and hasn’t been subject to peer review but then the same could be said for any VC’s decision making process. More importantly, why would I lie about the results I’ve seen?
In any case, across all the conferences I’ve spoken at and all the audiences I’ve queried the MOST I’ve ever had answer in the affirmative was at the Under the Radar Conference recently and even then the total was under five percent of the attendees.
Beyond this, one of the questions that I am asked most frequently by entrepreneurs is “how do I increase adoption of my application?” My answer is always the same; “make it free and get it on the decks of some of the carriers.”
I have never. I repeat, I have NEVER seen an application that was not on a single carrier deck get the kind of massive broad based adoption that would make it a success of the kind necessary for Berggi’s VC’s to feel like the investment was a good one.
I’m not alone in my sentiments either. Ajit Joakar and Tony Fish co-authors of Open Gardens and Mobile Web 2.0 have also opined that without the support of carriers as well as big budget advertising applications that aren’t already on the phone don’t get on the phone. This is also a recurring theme over at Forum Oxford, a discussion group made up of a highly select group of mobile professionals and supported by Oxford University.
The bottom line is that even under what could be considered optimum conditions computer savvy early adopters with data plans, lots of disposable income and multiple email accounts tend not to use the applications already installed on their phones to the fullest extent - most, virtually all in fact, have little interest in learning how to download and install some kind of new application to the phone.
Many of those that fall into the minority and DO try to download an application don’t succeed. Either by virtue of fear of damaging their device (frequently devices give warnings to this effect when trying to install anything that isn’t signed by the manufacturer of the phone) or because they don’t know how to override the protective mechanisms built into their device (such as the certificate signing protection in S60 devices).
So there you have it. My belief that Berggi is facing a very difficult uphill slog is based upon experience, asking thousands of people first hand the same question, the problems that entrepreneurs bring for me to solve, the issues discussed by my contemporaries and the topics of discussion among some of the thought leaders in the space. In addition, Former Chief Competitive Officer at Palm and Principal at Rubicon Consulting, Michael Mace writes recently in his blog a detailed post regarding the current downward sales trend in mobile applications. This is not something you want to hear if you’ve just plunked $3 million down on a downloadable email program designed to appeal to a sector that has also failed to show a willingness to download applications or pay anything for extra mobile data services.
I quote again from Michael Mace’s excellent blog:
At PalmSource we did a lot of research on mobile customers and what they want. The basic outlines of what we found were released to the public, so it’s okay to talk about them. Here goes:
About 60% of mobile phone users in the US and the major European countries are unwilling to pay extra for anything other than basic voice and SMS. In the US they typically take a cheap phone with a low-cost service plan, while in Europe they tend to be on pay as you go plans that let them limit their billing very carefully. They’ll even turn off their phones sometimes to limit the number of calls they take.
If you give them a phone with free features, they’ll accept it, of course. But what makes them distinct is that they won’t pay extra to use those features.
In any case, the fact that time will shake this one out for all to see is certainly true and I’m happy to wait to be vindicated once again.
Thanks for reading MobileCrunch.
Oliver Starr
PS: I can’t help but find some irony in the fact that I get slammed for saying nice stuff about a company and then slammed for saying negative stuff about a company. Isn’t a guy allowed to have an opinion? 
PPS: What’s wrong with Dogster?
