Could our proclivity to text message be a proxy for our budding interest in mobile video?
Cyriac Roeding thinks so. The former head of CBS Mobile and now the entrepreneur in residence at Kleiner Perkins Caulfield & Byers, one of the most prestigious venture-capital firms in the world, believes the exponential growth in the number of text messages Americans sent in the last four years isn’t just about our desire to schedule booty calls or chit-chat with friends. Our short-message fever suggests we also want to watch video on our phones, he said.
What’s the connection? Well, our love affair with text messages says we’ll use the mobile phone to do more than talk; we’ll use it to text, ergo, we’ll use it to watch video, Mr. Roeding said.
Let’s look at the text-message growth first to understand the underlying usage patterns.
According to the CTIA Wireless Association, about 263 million Americans owned cell phones in 2008, representing an 87% penetration rate into the total population. That’s an increase from 182 million in 2004, then 61% of the population. During that four-year period we’ve gone from sending 4.7 billion texts per month, or about 26 per cell phone user, to 75 billion per month, or about 285 per user.
What does that mean?
“This is a tracking point,” Mr. Roeding said. “It says people are doing more on their phones than just talking on them. The next question is, are they ready to do more than texting and talking?”
Look to the iPhone for the answer.
Apple released its cell phone in 2007 and the “app store” for the phone in 2008. The app store on the phone and in iTunes lets iPhone users buy features for the iPhone, such as a weather tracker, stock tracker or news updates. Some of the applications are free, some come with a fee.
Within the first 150 days or so of its release, the iPhone app store registered 300 million downloads of applications. “That is 100 times the number of downloads for applications per handset compared to the average cell phone,” Mr. Roeding said.
And 100 times is the kind of factor that makes venture capitalists, analysts and others take notice—because it says the iPhone is meeting a previously unmet desire.
“This is not a small increase. It’s a revolution. The iPhone is a game-changer,” Mr. Roeding said.
The interest in iPhone applications also answers the question of whether mobile users will do more than text and talk. They will because they are playing with fun, functional and affordable programs and services on their phones.
Here’s even more evidence: About 37% of iPhone users watch video on their phones, making them 10 times more likely to watch video than the average mobile consumer, Nielsen Mobile reported in 2008.
“This industry has been active for 20 years, and now you have a new entrant and only one and a half years later people are still running into stores to buy it,” Mr. Roeding said. “It tells you there are huge opportunities because consumers are longing for a better experience.”
Sure, the mobile video business faces other hurdles—it needs faster networks, better interactivity with TVs and the ability to easily shoot video from a cell phone.
But the appetite is indeed there.