Bill Gurley On The Mobile Internet

Bill Gurley's most recent Above The Crowd column discusses the return of the mobile Internet. His belief is that the cell phone and 3G crowd has finally turned the corner from promise to reality. As he writes:

Since the fourth quarter of 2002, U.S.-based carriers have begun to see a measurable increase in the usage of revenue-generating interactive services. In early June, Verizon Wireless announced that its interactive service, Get It Now, had achieved close to 12 million downloads of entertainment content since its launch in September of last year. Its phenomenal growth is accelerating. May downloads averaged 2.3 million, which equates to an annual run rate of more than 27 million applications.

More importantly, in April, Verizon announced that active Get It Now customers showed a $7.50 increase in Average Revenue Per User (ARPU). With ARPU declining steadily across the industry, any product or service that can increase ARPU is the nirvana of the cellular business model. Sprint and AT&T Wireless have announced increased download and ARPU traction as well.

In 2001 as the bubble crashed around us, 3G was seen as the technology that would pull us out. Large numbers of device, platform, application and integration companies sprung up to help the carriers monetize their networks. Generally these companies would have one European or Asian carrier as a reference customer and the next step was to penetrate the U.S. market. However, there were no signs that the domestic market was going to follow the model of overseas and most of those companies didn't get funding.

It will be interesting to see if the current success Bill points to will continue. He attributes the ubiquity of cell phones (there are already twice as many cell phones as PCs) as one of the main drivers and it is true that the capability of cell phones is starting to approach that of a PDA (although most people I know will still claim that there's a long way to go).

The point that Bill concludes with is, to me, the most important. For awhile, it seemed that the race to unwire the world was going to be dominated by 802.11-type technologies. With the recent resurgence of 3G, it is becoming a more balanced fight.