Mobile social business future

Facebook, Twitter, Skype and similar services are popular. They report tens or even hundreds of millions of users. The companies running the services are funded by the investors expecting to get their money back some time, when these companies find out how to monetize the huge number of users engaged into their services. But you need to be careful, those services are certainly being watched.


The competition

Every mobile handset company has added social applications into their handset application store, or in most cases, preloaded the applications so those can be used out of the box. Mobile handset company works more or less with the mobile operator. Sometimes the operator says what software the phone has to have. And every company wants services that are popular and make people buy from them. This is very clear.

But who pays to bill here? Running the social service requires resources, ie. computer servers, software and maintenance engineers, managers, marketing staff and so on. This personnel and hardware is paid by the company which gets the money from investors. Running the service costs money. The little application in the phone is relatively simple piece of software that is not too difficult to make, ie. it is cheap. Handset makers may or may not pay for the right to use the name and logo of the social service in their marketing. But for the handset maker and mobile operators, the social services are almost free marketing. They get the money by selling hardware and data plans for the consumers.

And the winner is?

Now the tricky point. Do you think you would like to invest money into these cool and popular social services? What happens when your company finds the gold and gets profitable? There will be competition, of course. Everyone wants his or her share of the gold just found. And who has a pole position in that competition? I would say it is the handset maker and operator who puts operating system and preloaded software into your phone.

Why is that? Because those companies already control the market space. The biggest companies in the business, say Google, Vodafone, Nokia, Telefonica, RIM, just to name a few, have truckloads of money. They have thousands of software engineers that will copy the social service framework in a reasonable time to their benefit. Just look at the mobile devices right now. They have IM clients, Skype clients, Facebook clients etc. But the makers have also their own services in parallel. The own clients are probably not as finished, not so good, not so polished as the most popular services. It is because those social services are not profitable enough right now.

As long as your company is not profitable, you are probably "interesting" or "nice". When your last line in the financial statement turns black, you will be a competitor. Be careful, you have been warned. Competition will be fierce.