I think what Mr. Colao is forgetting is a) he is late to the party b) he forgot to bring the wine c) now in haste he is entering the wrong party.
What it means is in the world of digg and widgets, why would somebody pay for content unless it is from WSJ or Economist or FT or some specialized info. And why would not these mentioned sources sell their content directly via a widget?
So, the 'if' you mentioned is actually 'ifffffffffffffffffffffffffffff'
Pradeep Kabra
Re: Face value - Call the carabiniere
May 14th 2009
From The Economist print edition
Vittorio Colao has an ambitious plan to boost Vodafone’s fortunes—and rescue the media industry
STRAIGHT is not always the best way up. Vittorio Colao, now the boss of Vodafone, is a prime example. In 2004 he left the world’s largest mobile operator by revenues to run a company in an entirely different business: RCS MediaGroup, an Italian media conglomerate. He returned to Vodafone only two years later after a row with RCS’s main shareholders, having gained some valuable insights. One is that telecoms and media firms are culturally very different—knocking on the head the idea that Vodafone ought to become a content provider. In addition the newspaper business showed him that rivals can share important infrastructure, such as distribution. “After all, they compete on their editorial quality,” says Mr Colao, “not in driving trucks around.”
That may help explain the thinking behind the ambitious project Vodafone announced on May 12th. It is a bold attempt to rally some of the industry’s biggest operators to build a joint global platform through which software companies and content providers can sell things to mobile subscribers. If it is a success— admittedly, a big if—it will help address two of the criticisms levelled at Vodafone: that it is too big for its own good, and that mobile operators are destined to end up as “dumb pipes”, mere utilities that transport data to and from handsets.
When Mr Colao was appointed as Vodafone’s boss a year ago, he was not expected to come up with grand plans. Vodafone was no longer the global collection of wireless baronies that Sir Christopher Gent, the firm’s swashbuckling boss, had put together in the 1990s through a series of daring acquisitions. But Sir Christopher’s more down-to-earth successor, Arun Sarin, did not quite manage to make the pieces fit together. Vodafone’s subsidiaries have yet to gain much from their parent’s huge size, says Robin Bienenstock, an analyst at Bernstein Research. Mr Colao seemed to be just the man to fix this. In the 1990s while working at McKinsey, a consultancy, this reserve officer in the Italian Carabinieri and graduate of Harvard Business School had helped set up Omnitel Pronto, an Italian mobile operator, and later became its boss. In 2000 it became part of Vodafone and is still one of its most profitable units, thanks in part to his early work.
Just cutting costs and improving efficiency, however, is not enough in today’s mobile-phone industry (though Vodafone’s annual results on May 19th are expected to show that Mr Colao is rather good at it). The market for its main product, mobile telephony, is rapidly maturing in many rich countries. This prompted Mr Sarin to take control of several operators in developing countries that still boast rapid growth. Beyond that, operators have set out in search of new frontiers. One is mobile-data services, a market that is finally taking off after years of hype.
The problem for Vodafone and other operators is that they are trying to catch up. They have long offered such services, but steered users towards “walled gardens” of pre-approved content from which they could take a cut. This stifled the market and left an opening for other firms to create mobile-data platforms of their own. Apple led the way with its elegant iPhone and its “App Store” that gives users easy access to thousands of applications, and lets software developers charge for them. This inspired similar app-store platforms from other technology giants, including Google, Nokia, Microsoft and RIM, the maker of the BlackBerry.
Yet it is this variety that will allow Vodafone back into the game, argues Mr Colao. To make his point he enthusiastically presents visitors to his office at the firm’s headquarters in Newbury, an hour’s drive west of London, with two charts. The first, titled “Today: Complexity”, shows many boxes linked by arrows. A software firm must write several versions of its applications for different platforms, for example, and the owner of a particular handset is usually restricted to a particular platform. Mr Colao’s other chart, titled “Tomorrow: One relationship”, is centred on a big, red box labelled “Vodafone Services”. This is an über-platform that would allow programmers to write an application which could then run on other platforms, and would also provide essential sub-services, such as determining a user’s location and, most importantly, charging for downloads. Mr Colao promises not to be “too greedy”: Vodafone intends to pass on 70% of revenues to developers, the same share as Apple does.
One platform to rule them all
The idea of enabling a single piece of software to run on lots of devices has been tried before, but has never really succeeded. Software firms may feel more at home working with partners in the computer industry: mobile operators are widely seen as lumbering giants, if not greedy predators. And consumers may prefer handset, platform and software to come in a tightly integrated package, as with the iPhone. Most importantly, rival platform-owners are unlikely to co-operate, and might even scupper the project by introducing deliberate incompatibilities.
Still, Vodafone has one thing in its favour: size. It has more than 290m subscribers worldwide, all of whom are potential customers for software firms and content providers. And Mr Colao’s scheme is also backed by China Mobile, the world’s largest operator by subscriber numbers; Softbank, a Japanese conglomerate; and America’s Verizon Wireless, in which Vodafone has a 45% stake. If they realise their plans to launch their own app stores based on the new platform, the potential market will be more than 1 billion subscribers and span the entire globe.
Success is by no means guaranteed, but Mr Colao is not known for giving up easily. Indeed, it was his single-mindedness that got him into trouble at RCS. And if his plan takes off, he says, it could help save media, which he says is still his “second love”. Vodafone’s scheme would give publishers a way to charge small sums, or micropayments, for content—and put right “the big mistake they have made on the internet: giving their content away for free.” Will the industry, and consumers, play along?
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