I suspect his thought-provoking blog will do more than set the tone for my book; it will impact the app store debate that will likely dominate 2010. Just look at the recent raft of app announcements: Analyst firm IDC predicts there will be more than 300,000 iPhone apps by the end of next year, compared to 75,000 Android apps; Samsung takes the wraps off its Bada app platform; and (just today) Orange officially opens its app store to users in the U.K. and France, offering more than 5,000 apps for Java, Android, BlackBerry, Symbian and Windows Mobile.

Connect the dots, and the avalanche of apps turns up the pressure on providers and mobile operators to be good retailers and put stuff we’re likely to appreciate where we can find and buy it. Common sense really.

Or is it? Not is we consider the statement from Nenad Marovac, Managing Partner, DN Capital, who was speaking at Heroes of the Mobile Screen earlier this week, In his view, “Operators should be pipes and shut up.” Hmmm… not much room in that model for mobile operators to wield the stockpile of analytics they collect (such as our browsing patterns and past purchases) to present us with a selection of apps we’re likely to appreciate.

In preparation for my own industry report on personalization and recommendation I have spent the last weeks interviewing a who’s who of industry players and their customers (mobile operators/service providers) who are convinced  the company with the most (and best) data wins. It’s a battle between operators (really smart pipes) and aggregators (Google & Co.) – and personalization and recommendation could just be the capabilities that distinguishes the leaders from the also-rans.

With that in mind, we continue MSG’s special podcast series on the top players in personalization, and conclude with Part 2 of my interview with Stephen Oman, Amdocs ChangingWorlds Worldwide Director Sales Engineering. Changing Worlds is an Irish provider of personalization technology that was recently acquired by Amdocs and is now part of Amdocs Interactive.

In Part 1 we dissected the content discovery dilemma, looked at on-portal challenges and examined the results of the company’s recent study that underlined the importance of personalization in determining and delivering mobile advertising.

In part 2 we explore personalization off-portal and across app stores.

ROLE OF THE MOBILE OPERATOR: As Stephen sees it: the operator has a spot at the “center of the Internet.” Their job: “helping the subscriber to go on to the Internet, helping them find the right content, helping them with additional suggestions which they might be interested in, and so on.  In doing that, they’re becoming if you like a partner to the subscriber when they are browsing the internet.” So, there’s an opportunity here for the operator to “set themselves up in essence as the home page for the mobile Internet for their subscribers.”

APP STORES: In many ways, it’s a repeat of the content discovery problems we know from on-portal. But it’s also an issue that independent developers will also face as they try to engage people and compete with similar, rival apps across the store. As Stephen puts it: Making an effort to personalize the content will “help people find more niche types of applications that may exist, and that would never appear in the what’s hot today or what’s in the top 10 for today.”

LONG-TAIL VERTICAL APP SCHEMES: Reports show that many apps downloaded are actually productivity apps. Additionally, apps are being downloaded by professionals in line with their professions. So, will we see a plethora of app stores split across lines such as task (apps to do “x”) or jobs (apps for doctors, for example)? Stephen was intrigued by the idea and agrees that we will likely see the launch of vertical app stores (similar to the vertical content portals that offered only ringtones or wallpapers). “It’s pretty much the same as you see in retail, you do have retail stores that sell pretty much everything, but you also have niche retail stores that cater for particular audiences.”

THE GROWTH OPPORTUNITY: In a word: convergence. “Increasingly the mobile operators’ customers are expecting and demanding that if you like connected lifestyle….Crucially, they’re looking to be able to access services across many different devices: their mobile phone, online, through their TV, through digital TV, and that convergence of access is essentially going to improve and drive growth in the mobile digital economy.”

Editor’s note: This special focus on personalization and recommendation continues in the New Year with a look at a cool new recommendation company coming out of stealth mode and an analysis of Novarra. I had to reschedule this one a few times, but this time it is timed to some important news. Not one to miss!

Disclaimer: ChangingWorlds is not an MSG supporter.  However, MSG has published a by-lined thought leadership column authored by a ChangingWorlds senior executive. MSG has also participated in an invitation-only  thought leadership event organized by Amdocs.

Listen to the podcast here. [15:12]

Related posts:

PODCAST: ChangingWorlds Reveals Real Impact Of Personalization On Mobile Advertising CTRs; Google Shows Mobile Advertising Is Hot (Again), But Will Personalization Make The Market Sizzle?

SPECIAL REPORT: GETTING PERSONAL Openwave Adds Mobile Analytics; Are Gateway Providers The Ones To Watch? PLUS New Report/Project With GigaOM Pro

PODCAST: Bytemobile CMO Adrian Hall: Operators’ Can Win On Personalization; Does A Widget Bar Do One Better Than An App Store?

MSG DEBUT VIDEO: Xiam Talks Targeting & Filtering; Make Way For The Personalized Web!

GUEST COLUMN:Using Personalization To Pump Up The Volume & Increase The Value Of The Mobile Internet

While the iPhone OS was the leading smartphone platform on Millenial’s network, with 33 percent of smartphone share (ahead of BlackBerry’s 31 percent), Samsung was the top device maker, thanks to the predominance of featurephones. The company also said the US mobile web audience grew to 64.8 million users, and that its ad network reached nearly 80 percent of them.

The report also features a section on mobile app analytics, provided by Mobclix, which says that the iPhone App Store is the biggest on the block, with 115,000 apps, and also leads in downloads, with 100 million per month. Android Market is a distant second, with 20 million per month, and BlackBerry App World even further back in third, delivering 300,000 downloads per month.

Millienial adds that traffic to advertisers’ sites represented almost half of the mobile campaign destinations on its network in October, while app downloads accounted for about 30 percent. Source

The bottom line: Mobile web use – and the market for mobile ads – continues to grow. But don’t overlook smartphones, which still account for a huge chunk of the mobile web market.

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THE MOTOROLA DROID SOLD 250,000 UNITS IN ITS FIRST WEEK, according to GigaOM and based on a report from mobile analytics company Flurry. The new Android device, available only on Verizon Wireless in the US, has been well received by commentators, and now, apparently, by the market as well. Flurry says that the sales are more than four times those of T-Mobile’s MyTouch 3G in its first week of sales in August, but of course pale in comparison to the 1.6 million iPhone 3GS devices sold in its first week. Source

The bottom line: Is Motorola clawing its way back from the precipice? Could be – since software has long been its Achilles heel, turning to Android could turn out to be a smart choice, and one that saves the company.

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MORE THAN 3 MILLION PEOPLE IN THE UK HAVE REDEEMED A MOBILE COUPON, says Juniper Research in a new report. The analyst firm says that mobile coupons enjoy a redemption rate six times higher than traditional paper coupons, again highlighting the viability of mobile marketing to deliver results for advertisers and brands. Source

The bottom line: Mobile coupons seem like a no-brainer, if only because people are less likely to forget to bring their phone to a shop than a paper coupon! But combined with opt-in campaigns and any number of targeting techniques, they represent a valuable resource for retailers.

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THE NUMBER OF MOBILE SOCIAL NETWORKING USERS IN LATIN AMERICA AND AFRICA WILL INCREASE TENFOLD BY 2015, says a new report from analyst firm Frost & Sullivan and mobile social networking provider Colibria. F&S says the market will amount to 527 million users and be worth $2.4 billion in six years, reflecting the increased popularity of the services, but also the prevalence of mobile as an Internet channel in emerging markets. Source

The bottom line: It’s easy to predict the growth of mobile social networks, but anybody eyeing the space has to keep in mind how people in emerging markets use their mobiles and access the internet primarily through them.

Imagine a living room where a large flat screen wirelessly attached to a set top box hangs from the wall. You enter a personal code into the set top box that recognizes your profile; the screen welcomes you to a portal where there are no channels only menus with links to personalized content and apps that range from social networking to commerce to premium content and entertainment.  A blinking icon reminds to you to record Wimbledon while an ad from Wilson invites you to view their latest rackets.  As you click the record button, you slide out the keypad on your remote and navigate to the Wilson site where you purchase a new tennis racket.  Payment for the racket is included in your monthly cable invoice.

Sounds like science fiction?  Hardly.  We are on the cusp of next generation iTV (interactive television), services that will elevate our viewing experience. Advertising will also be transformed,  paving the way for two-way communications that enable brands to target households according to key demographics and other information collected by the set top box (STBs). Mobile devices, widely regarded to be the remote control of our digital lives, will surely play an important role in this scenario. (Mobile already has a central spot if we consider how people reach to their phones to cast their vote for talent shows, follow sports and read the gossip during soap operas.)

The promise of being able to access the wide open Internet and everything in between on your TV may be a while away, but the battle for the living room, the one that will decide who monetizes our content consumption and who cashes in on the commercial messages we consume, is being fought now.

Best positioned in my view are the cable companies, who have the trump because they own the signal into the home and have a trusted relationship with subscribers. They also benefit from established business partnerships with broadcast and cable network programmers, that receive billion-dollar fees for entertainment content.

But there are other players lining up to stake their turf. For example, Tier 1 service providers in North America and Europe are rolling out high-speed connections into the home as part of their multi-play strategies to deliver premium content and advertising services via IPTV (TV via the Internet). While the viewing experience for consumers might not be radically different, the opportunities for brands to deliver targeted and relevant advertising could get a boost since multiplay is about creating a holistic view of the customer by monitoring behavior across channels including mobile.

Little wonder that Internet giants are also lining up to own the living room experience. Navic (acquired by Microsoft), gives broadcast and network programmers a unified platform to distribute premium content and advanced advertising services across disparate cable systems.  And let’s not forget Google. Through its relationship with Dish Networks and Visible World, Google is  geared to provide brand advertisers with expanded reach and more precise demographic targeting aimed at satellite and cable subscribers.

These companies have their eye on the prize: knowing the customer first and best. But it’s not an easy goal to reach. Operators concerned about privacy issues are predictably reluctant to release STB data to marketers and industry partners. What’s more, cable’s legacy architecture presents a host of interoperability and scalability problems that must be overcome in order to provide brands national reach across regional cable companies.

So what is cable doing to overcome these challenges?

Although the space is crowding and the privacy/technology obstacles are significant, cable companies are nonetheless next positioned to win the battle for the living room. But how well prepared are they for the struggle ahead?

The cable industry along with CableLabs, the industry’s research and development arm, has developed several key initiatives to usher in the age of iTV. These efforts, already well underway, provide the standards and interfaces that will allow brands and publishers to conduct business via cable and better target their audience demographic.

To get the inside track on work in progress I recently spoke with Paul Delzio, Director of Business Development and Product Management at ARRIS, a provider of infrastructure and advanced advertising solutions to cable. As Paul put it: ARRIS and other solution providers are “helping operators build a superhighway to the home and throughout the home using modern architecture that will ensure an interactive future with robust subscriber services.”  As he sees it, operators will monetize this highway through differentiated data plans, digital TV fees and new revenue streams from t-commerce (tv commerce), advertising and billing.”

CableLabs’ development of tru2way, java-based middleware that will be integrated directly into next-generation TV sets, is a critical step in this process.  With it, subscribers will be able to interact with a wide range of applications such as program guides, commerce, games, Video on Demand (VOD) and web browsing, without the need for a set top box.  Naturally, the world’s largest TV manufacturers are on board to bring us this technology.  Panasonic, Toshiba, Sony, Sharp and Samsung are just a few of the players lining up to cash in on this opportunity. Look for a big push at retail this holiday season.

But not everyone is going to rush out and buy tru2way TVs. So, CableLabs has introduced EBIF (enhanced binary interchange format), a technology which is being integrated into STBs as we speak. In fact, 15 million units are projected to be installed throughout the U.S. by 2010.  EBIF will enable true interactivity through multimedia pages that resemble html, so the consumer experience will have a similar look-and-feel to what we get on the Web. The advantage for brands is lead generation because cable viewers can click on a marketing message, in the form of a static banner, and receive information or goodies in the mail.

According to Paul, this “Cable Advertising 1.0 (which makes use of snail mail to fulfill a consumer request for information) will open the doors for brands eager to justify TV spend.”  Marketers see the opportunity and have stepped up spend on advanced advertising solutions from ARRIS and its partners, which supports them with the same tools they know from online and mobile, such as campaign management, media planning, analytics and response measurement.

These Cable Advertising 1.0 ad products and fulfillment services have been wisely engineered to meet the needs of this emerging ecosystem and to provide user experiences we can appreciate via this medium. Graphic overlays on top of full motion TV commercials will allow viewers to click through to micro sites where they can request information or coupons which will be delivered in the mail, allowing advertisers to target demographic segments by selecting zip codes.

Interactivity will also play a role, but mobile won’t be a shoe-in here. Subscribers can also participate in voting and polling using their TV remote control. Will we really want to use the cable remote control for text messaging? The jury is out is out on this one, but it’s clear there is a laundry-list of usability issues that will have to be solved before the cable remote is our keypad of choice in the living room–particularly when you consider the sophisticated touch and tactile keypads next generation smartphones will provide.

Personalization and relevancy on the big screen

Where are brands in the equation? The good news is significant progress is being made on the new standards and interfaces that will allow brands and marketers to buy interactive and addressable advertising locally or across multiple cable operators. Spearheading this effort is a consortium of ecosystem partners including SCTE (Society of Cable Technical Engineers), systems manufacturers including ARRIS, Biap, BlackArrow and Sigma and Canoe Ventures, a joint venture funded by the cable operators.

For brands seeking national reach, Canoe Ventures is developing a platform for advertising stewardship and fulfillment across the top six cable operators in the U.S.  The platform will aggregate inventory and subscriber intelligence to provide brands with rich data services, localized messages, lead generation and fulfillment on a national basis.

The platform will also no doubt attract the attention of Web giants who want to get in on the action. In fact, Paul tells me it’s “inevitable that major retail portals like Amazon and Expedia will want to collaborate with operators to provide subscribers with a personalized shopping experience.” What will make this experience more enjoyable for consumers and more targeted for advertisers? The key to the equation is unlocking the rich assets — our transactions, interactions, browsing behavior and viewing history all captured in the STB.

And why wouldn’t they be there? After all, it’s much more enjoyable to view a HD large screen to select your next vacation rather than squint and scroll on a 15” laptop. Moreover, cable operators are in great position to expand their billing systems to accommodate billing partnerships with the leading online retailers. Now consumers can buy what they see on TV and add it their monthly bill (Does this sound familiar? Mobile operators are determined to leverage their billing relationship in a similar way.) Shoppers benefit from a consolidated bill from a trusted provider.  Brands will love this — a virtuous cycle of shopping, analysis, advertising and more shopping.

In fact, astute brand managers will see the synergies between cable and mobile. Leads collected from the TV can be fed into mobile advertising systems enabling brands to continue the conversation on an individual basis.  Additionally, mobile SMS will grow as sports and reality TV continue to prompt voting and polling.

What else is cable doing to hedge their bets?

While excitement around Cable Advertising 1.0 continues to grow, some cable operators are exploring their options. In July Time Warner Cable and Comcast joined up to launch “TV Everywhere”, an over the top service (that is, where content is going over the Internet and not through the STB) designed to give cable subscribers access to premium content online.  Content from  cable network programmers such as TBS, TNT and Starz, along with movies from HBO and Cinemax, will be made available to Comcast and Time Warner subscribers.  It is rumored that AT&T will jump on the band wagon, as well.

But, as Paul pointed out, over the top is both “an opportunity and a threat.” On the opportunity side, TV Everywhere will accomplish several important tasks; it will extend audience reach, allowing operators to further monetize ad revenue, while at the same time reinforcing brand loyalty.

As a threat, TV Everywhere will enable subscribers with tru2way TVs to access the Web and enjoy premium content at no cost.  Case in point is premium content provider Hulu. The company’s audience , which has doubled since launch to approximately 1.3 million daily visitors as of July (Quantcast), underlines the validity of the ad-supported business model.   Hulu advertisers include some of the world’s leading brands : Johnson & Johnson, McDonald’s, Visa, American Express, Best Buy, Chili’s, DirectTV, GM, Intel, Nissan, State Farm, Unilever, Wal-Mart, Cisco, and Procter & Gamble.

Plus, it doesn’t take much imagination to envision extending the concept of TV Everywhere to the mobile Internet. Combined with mobile’s portal personalization and recommendation engines (already delivering good user experiences to millions of subscribers in Europe and Asia), premium content streamed over the mobile Internet would provide the broad reach brands have been waiting for. Major Tier 1 service providers planned CAPEX investments in LTE can be subsidized in, no small way, by interactive video advertising dynamically inserted into premium content on the handset.  

Bottom line: who will dominate the living room?

At the end of the day, the battle for the living room will be determined by sophisticated personalization and recommendation engines that understand our preferences and profiles and serve us relevant content and marketing messages.

When operators append third-party retail data to subscriber demographics and STB viewing patterns, then the vision of personalization begins to get interesting.  Comcast Spotlight, in fact, is leading the way by appending third-party data from Experian to improve household targeting.  It’s easy to imagine households that frequently purchase from Toys R Us are a good bet for family products or mini vans.  And personalization technologies will connect the dots for sure.

While the wide spread adoption of tru2way is good news for cable operators it is also good news for telcos and premium publishers.  Sure, subscribers will be free to browse off-portal.  But why bother?  A rich and personalized portal with premium content, entertainment, shopping, social networking, video on demand and other services, will make browsing the Internet irrelevant.

So, who will dominate the living room?  Cable is in the driver’s seat – for now.  In view of somewhat difficult (but not insurmountable) environmental challenges, time will tell if they will be able to deliver the vision of a personalized portal with robust services supported by advertising,  If they don’t, the leading telcos that follow a multiplay strategy and Internet players will be just a few clicks away.

Jim Levey, formerly Director of Product Marketing for Search and Digital Advertising at Amdocs, joins the roster of authors and influencers contributing news, analysis and thought leadership to MSearchGroove. He comments on developments in personalization, recommendation and mobile advertising.

What to do with a people-powered, user-generated index of the world out there? Follow in Google’s footsteps and sell advertising on top of it.

As I wrote in my last post, GyPSii has cleverly harnessed PlaceMe, a primary function of GyPSii that allows you to create a point of interest (POI), add your content (image, video, audio, text), add your current or last geo-location, categorize/tag/describe the POI, and submit to the server in real time to a personal or publicly designated folder in your MyPlaces (your record of points of interest).

To get this to Google scale, GyPSii needs a lot of people out there indexing the world with their mobile phones. It’s an ambitious strategy, but not far-fetched. Dan’s forecast models tell him that a company with 7 million users, each doing 2 PlaceMes a month would produce an index in the first year that would be “significantly larger than the Google file system in its first year.” (Dan expects GyPSii to be on “between 80 and 100 million devices in the coming 12 months.”)

There are no stats on active users as a percentage of that total. But GyPSii members tend to be hyperactive when it comes to PlaceMe, creating and tagging “15-20 PlaceMes per month.” Every time GyPSii members do that, they are adding a new indexed item to what the company calls the Osmotic File System (OFS).

Where does mobile advertising come in? It’s already work in progress in China. In fact, GyPSii has a lot of progress to report in China – period. As Dan sees it: “To have an ad-based model, you have to have an audience.” To reach more members (and encourage them to index the world around them) GyPSii’s has this week launched the Java version of its application, with both Chinese and English language support.

The expectation, according to the press release, is that the new app will “appeal to the 70 percent of the 650 million phone owners in China who own Java-based phones.” By way of background, GyPSii is already locally available in China for the major operators China Mobile and China Unicom, for download on compatible Java phones.   GyPSii is also available globally across a wide range of devices, including Samsung, Nokia, LG, Apple iPhone, and BlackBerry smartphones.

How does GyPSii plan to make the jump from critical mass to relevant advertising? What is the rev share model for partners (handset makers and carriers) who get on board? And what is the experience for members that use the ExploreMe function to search the world around them (and so trigger the delivery of an ad on their mobile device)? These are just a few of the questions I explored with Dan in this final segment of our podcast interview. (It’s a little longer than my usual interviews, but I felt detail was necessary to fully understand the interplay between search and advertising GyPSii-style.

Listen to the podcast here. [20:27]

Excerpts from the interview:

PEOPLE-POWERED SEARCH: Dan is a great believer (as I am) in social search on mobile. As he pus it: “This is the ultimate user generated content business model ever.” With patented technology in place (as part of the PlaceMe function), the next step is scale. “It’s got to be at scale because if our goal is to build that index, we’ve got to get lots of people to use the app.” Downloading is only part of it. Bundling is the business model that drives results.

WATERFALL MODEL: This model sits at the core of how GyPSii does deals and shares the money. “It starts with OEM manufacturers, and then to ODM manufacturers. So we go and get bundle relationships with them to get on-deck.” After GyPSii seals the deals to be on the phones, “the water falls, [and] the next layer is the carrier layer.”  Then, as you begin to get scale, you use something like Open Experience, the API, to further connect all of the social networks.” And what do handset makers get? Future revenue. As Dan puts it: “If you’re a phone manufacturer, for example, once you sell your phone, it’s a done deal. You have to make a new one and sell it.  We’ve got a business model that enables a phone to be an annuity generating device for a manufacturer, and that’s all the downstream advertising that results out of any given phone. So, that way, every device they make is an investment in a future revenue stream.”

MOBILITY AD DELIVERY: “In selecting GyPSii, they’ve not just selected this app to be bundled; they’ve selected the whole GyPSii back- end system, which also is a contextual search and add delivery system.  So, strategically we’ve been selected for mobility based advertising delivery by some of the world’s largest manufacturers and I think that’s kind of a strategic place to be because they believe in this vision….They understand mobility, [and] they don’t appreciate a top-down play from other companies coming in trying to do a land grab on their customer base.”

ADVERTISING EXPERIENCE: It’s a lot like the mobile search we know, except the index is created by people and the ads – well – don’t look like ads. It all starts with a function called ExploreMe. From the website: “ExploreMe allows you to find places by keyword, category, proximity based across the general public, by your friends in your social network, or limited to your own personal points of interest. The resultant places allow you to see full context of photos, video, audio, text and ratings by the owners, contact the owner of the place (dependent on user settings), allow you to map the place, and with navigation allow you to get to the place.” Essentially, ExploreMe is what Dan calls the first step in “planet search or experience search.” You get search results and ads that are sold into that index in the same way that ads are sold into the Google index.  How do the ads look? A lot like content. But you could also get a coupon. No matter what you get, when you make a selection it triggers an advertising-based transaction – and a pay-off to the handset manufacturer.

MORE THAN MOBILES: Who said mobile advertising has to be delivered to mobile phones? GyPSii’s goal is to be on every device out there. “That’s not just phones, it’s also netbooks. We’ve got a relationship with Intel; we’ve been selected as part of their reference platform for all mobile Internet devices and netbooks.  There are other ways to be mobile besides just your phone, so every mobile device that has an ability to be connected to the Internet, we want to be on.”

MOBILE ANALYTICS: Advertising on a social network (as I have pointed out in my recent release white paper Mobile Advertising For the Masses, sponsored by Bango, which you can download here) provides brands access to key data, such as gender, preference, and whatever else members are willing to share. “For privacy reasons, [GyPSii analytics] will never say who a person is or anything else, but it will report things like gender, age, what other social networks that person is in. Think of a 3-D cluster map of the kind of people that are interested in that product, it helps them [advertisers] in real-time know where they should place their ads.” The feedback loop is simple: “We’ll help them know more about who’s interested in their products.”

WHAT’S NEXT?: “We’ve been in hunting mode and now we go into gathering mode.  So, where are we going? We’re going to continue to hunt relentlessly.  We will not yield until we sign every major OEM and ODM and carrier in the world – that’s hunting.” Execution goes hand-in-hand with innovation. We spoke shortly before the iPhone app launch, which Dan explains in the interview. Beyond that, we can look for a “release schedule that enhances that new user experience on all the other devices we’ve got.” Finally, GyPSii will expand what it calls the GyPSiiPlex, “all the data centers around the world adding capacity and fine tuning our algorithms.” (Dan calls the company’s core algorithm PlaceRank, a word play on PageRank.)

My take: My own mobile advertising research for a variety of projects including Mobile Advertising Research U.K., and MSG’s own publication/online resource MobiAD World Focus, brings me in contact with C-Level executives from a mix of mobile operators, agencies, brands, ad networks, and enablers. The questions on the top of the list: What is the value chain and who are the mouths we have to feed? The advance of companies like GyPSii tells us two things: We have to re-think how we define mobile advertising (Is it about brand message? Or is the end-game for advertisers simply the chance to communicate with social networks like GyPSii?), and the value chain we assume is coming together to deliver it.

Clearly, mobile social networks are making the shift from meeting place to market place, and having search and advertising baked in (in addition to all its other features/functionality) has earned GyPSii a prime position in the emerging mobile search and advertising business ecosystem.

Special thanks (again) to GyPSii for hosting my podcast until I can upload my content to the cloud and make it available to MSG readers via iTunes. It’s work in progress and coming soon!

In the next podcast, I look at a new app store approach from Bytemobile. For background I will also feature the video in the video player in the MSG sidebar.

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Disclaimer: Bango is an MSG supporter.

To fully understand the significance of Scanbuy’s decision, it’s important to review the events and announcements that have effectively dealt companies up and down the mobile barcode business ecosystem (Scanbuy included) a new hand of cards.

First came the decision in February by the United States Patent and Trademark Office to re-examine the patent claims filed by NeoMedia Technologies, a provider of barcode scanning solutions. The move prompted NeoMedia to push forward in March on a patent licensing program and tie up with other vendors (3GVision, Mobile Discovery, Mobile Tag, and NeuStar) in a pilot program based on open standards in a bid to show interoperability between the technologies out there and – more importantly – position NeuStar, a short code registry, as a central clearinghouse in the middle. More about this model and Jonathan’s own take in the podcast.

I appreciate that the barcode space is a tough one to navigate, which is why I also recommend this simple primer from Tim Green over at Mobile Entertainment.  Unfortunately, he wrote it before this flurry of activity.

So, what moved Scanbuy to open up the specs to the code that Jonathan stresses has been “labelled” proprietary (thus repeating the discussion around semantics that we began in this earlier interview on MSG)? At one level, it is a giant step toward building a viable ecosystem. But we can also read it as reaction to the pilot program (supported by players 3GVision, Mobile Discovery, Mobile Tag, NeoMedia, and NeuStar).

In response to my comment that NeuStar is clearly positioning itself to play the honest broker in a kind of hybrid model, Jonathan reminds me that Scanbuy can now also play the role of a trusted third party. “We don’t have a proprietary code or reader any more.” (Before Scanbuy’s wise decision to go open, other barcode companies could make a case that it was a closed shop with Scanbuy the only company that could both issue EZcode barcodes and decode them.) The argument from other vendors was that they didn’t have a choice because Scanbuy was the only company that could provide the technology, Jonathan explained. “But that now is off the table.”

NUTS & BOLTS: Scanbuy has committed to publishing the specifications for reading EZcodes, giving companies/developers the ability to create EZcodes. “So, a software company could create software for handsets which enables handsets to read those codes, and they could also create server side software which allows them to create the codes.” Plug-ins? They appear to be work in progress. “We’re looking at that; we made the announcement first. [As to] how we implement it, we’re looking at a lot of different tactics on how to release it and what the best way is.” De-coding? “Anybody who currently creates handset software to de-code barcodes could integrate these specifications into their current decoders.  So, 3GVision, for instance, who have software which de-codes QR and data matrix, could build in the functionality to also de-code EZcodes.

PROCEDURE & SUPPORT: For now, it’s all through Scanbuy. “Over the coming weeks they’ll be able to look at the specifications and create a platform which meets the specifications to create the codes on their own, if they want.” Meanwhile, Scanbuy is thinking through the details of offering support. “Support will probably not be free, however. So we’ll make the specifications free, support is probably going to cost.  What it’s going to cost, I’m not sure.”

OPEN STANDARD: Open is the direction the industry needs to go. While the pilot program, led by NeuStar, may be on the mark, Jonathan wonders whether it might not be too much, too soon. “Too many players, too early, can create too much competition and confusion in the market and it’s not necessarily a good thing.” As he puts it: “To have multiple players, you have to have multiple revenue opportunities for those players to be able to operate and compete, and it’s not clear right now what everybody’s revenue model is in that scenario.”

NEUSTAR: “We’ll see what happens over the next few months.  Obviously we are playing the most active role in the U.S. today as the only authorized code and the only authorized platform provider, so, we’re a major player in the space in the U.S. and we believe we’ll continue to be going forward.” (NeuStar has a strong focus on the U.S. market, thus Jonathan’s comments are limited to that geography.) Not satisfied, I put the question to him straight: What is Scanbuy’s position and will it participate in the pilot? “They [NeuStar] are positioning themselves as the clearing house which everything goes through. It’s not clear to us that they will play that role, so for us participating in the pilot at this point, we don’t know that it’s in our best interest to do that at this point [time].  We believe that if that is the final structure that the carriers decide is the best for the U.S. market, there will be a role for us to play. But it’s not clear. By no means is this the de facto structure for the U.S. market.”

DRIVERS: What is going to move barcode solutions out into mainstream mobile marketing and advertising campaigns? “This market will happen if readers are built into phones by the carriers, not by pushing downloads to consumers.” (By way of background, Scanbuy’s ScanLife handset application has already been pre-loaded on handsets from LG, Nokia, Samsung and Sony Ericsson, and been made compatible for mobile phones running on Google Android as well as BlackBerry, iPhone, Java, Symbian, and Windows Mobile.) “The carriers need to decide, OK, are we bundling readers on our phones or not? Sprint in the U.S. is about to start pre-loading our software on their phones, which is great news for the industry and for us.  But we need the others to get on board, and this has to become standard in every phone just as your Internet browser is that you use on your mobile device.”

EUROPE: Spain and Italy lead the pack – mainly because operators in these countries have chosen to pre-load readers on all their handsets. “What you’re starting to see [in Spain] is widespread code use. Marketers can go to several different campaign managers and get their codes, and they [the codes] will work across multiple operator platforms and handsets in the market.  If that’s the ecosystem that evolves, codes will be everywhere and they will be completely integrated into all marketing materials at all levels for marketers and media.”

DIRECT/INDIRECT MODELS: Which models are popular where? Japan has embraced a direct model (routing the user who scans the barcode directly to a site/destination). The trend in Western Europe, Latin America, and the U.S. is toward an indirect model, where scanning the barcode takes the user to a third-party server (where the site/action linked to a specific advertising campaign can be stored but also changed on the fly to freshen the sales pitch or simply point the user to a different site). “What you’re seeing in countries like Australia …is this hybrid approach where the campaign managers create a direct code that has a URL embedded in it, but that URL goes to their platform and the platform then tells it what URL to link to. So it’s a direct code but it goes through a campaign manager’s platform, not to the person who is putting the code out.” Could the U.S. adopt a similar model to make barcodes work? It could, provided that “code readers are ubiquitous on all phones; they read direct codes but the codes go to authorized campaign manager platforms.”

OUTLOOK: Is huge (!), but not all countries are moving at the same pace. “The markets where carriers and handset manufacturers are embracing it and getting phones into the market with software on them will take off the fastest.” In 2-3 years “codes will be everywhere in Spain and Italy.” In the U.S., the timeframe is “probably 3 to 4 years, and Latin America is probably 3 years.” Are we heading for a shake-in or shake-out? “From a competitive standpoint, I think you’re going to have major players in different geographies and the players in each geography will get stronger; there won’t be a lot of competition in each geography.” There may be a couple of players, but there are not going to be ten, for example. And this goes double for clearinghouses. “There aren’t going to be ten clearing houses in Spain or Italy or the U.S.

HOT TOPICS: In the U.S., it’s about “patent-related questions” and figuring out the right structure and ecosystem to take barcodes to the next level. In Europe it’s about growth – because the market is growing – and identifying the catalysts for even stronger growth. What’s next for Scanbuy? The excitement builds as the company nears the launch of two carriers in Spain, laying the groundwork for the first cross-carrier launch in Europe. “Spain will be the first country to actually launch and be operational with an interoperable system, and therefore our other markets around the globe, Latin America, US, Denmark, will be interoperable with those platforms so we’ll have a multi-country, 5 to 7 country interoperable system up and running in the next six weeks.”

My take: As I wrote earlier, the focus on open standards changes all the rules. The Scanbuy announcement signals a new chapter in the barcode industry (and a long overdue rethink on the part of Scanbuy). It also jumpstarts an equally overdue discussion around openness. But – as we know from similar discussions elsewhere in the telecoms and IT industries – there are different degrees and definitions of openness. How open is open and which open is best? The jury is out on that one.

In the meantime, there’s no overlooking the overlap between Scanbuy’s new push toward open standards and the progress of a pilot program (in which Scanbuy currently has little interest) aimed (likewise) at establishing open standards and a viable ecosystem. From my vantage point, the laundry list of fragmentation and intellectual property issues has yet to be satisfactorily resolved. But that’s not an excuse for not moving the market forward. Scanbuy’s decision marks real progress toward openness – and there is no turning back for anyone. Now all parties will have to walk the talk (and abandon the rhetoric we read across the blogosphere) if they want mobile advertisers to embed barcodes in their marketing strategies and not just dabble with one-off experiments.

Speaking of walk the talk, today Scanbuy’s EZ codes features on the cover BrandDigital: Simple Ways Top Brands Succeed in the Digital World, a business book by branding expert Allen Adamson. The 2D barcode on the back cover connects directly to the title’s page on Amazon’s mobile website, making this the first book to be sold in North America that includes an EZcode to sell the title via the mobile device. As Jonathan put in a statement: “This is a perfect example of how a 2D code placed on any physical media can send an interested shopper directly to a purchase opportunity. The mobile commerce experience has improved substantially over the past twelve to eighteen months, and we expect to see more of these applications in the future being initiated through our technology.”

This scenario also figures prominently in the Netsize Guide 2009, a 250-page mobile industry overview I wrote and offer for free download via a link on the homepage (sidebar).

Barcodes or visual search? Which technology approach will best link our virtual and physical worlds to support commerce? What do YOU think?

(I should mention at this juncture that the MSG global mobile industry research project and publication will feature a section on barcode companies and showcase successful mobile advertising campaigns. If you are a company in this space, or would like MSG to consider a mobile advertising campaign case study for inclusion in this work, then please contact me directly (peggy@msearchgroove.com).