• by Diane Mermigas , February 13, 2008

The opening day of this week's global Mobile World Congress in Barcelona, Spain was ironic. It was marked by a massive service blackout among North American BlackBerry users--another reminder of the gaping void between where the most advanced mainstream mobile technology is and where empowered consumers want it to be.

Many of this conference's glitzy show-and-tell products take their cue from the Apple's renegade iPhone. They feature touch-screen commands, more integrated functionality and greater storage capacity to host Web surfing, music, email, entertainment and photos, on a single interactive device. Even Research in Motion unveiled a touch-screen version of its BlackBerry the morning after the blackout.

With 3G technology still new to American shores and global mobile players struggling to set standards for advertising and content, mainstream mobile convergence could be years away. Couple that with the operating snafus of BlackBerry and other service providers, and it suggests that the delivery of a reliable all-purpose mobile device is due to technical problems beyond our control.

That is not sitting well with younger consumers, who are impatient industry pacesetters. They already appear to be rejecting early efforts to integrate too much targeted advertising into their social networks. They are dividing their time and attention among multiple digital media pastimes, favoring the most flexible devices and platforms. Overseas, there are more advanced electronics in a heavily bootlegged market, which has left Apple wondering about the 1 million or so of its iPhones that reportedly have been reconfigured to operate on non-company systems.

With Apple cutting the price on its products and gearing up for the next-generation models at a time when Google is entering the mobile fray, there is no telling just how far Internet players will take an industry that no longer belongs to telephone manufacturers and carriers.

Google elbowed its way into the Mobile Congress with prototypes of its long-awaited Android software on a variety of mobile handsets. It has also loaded some of its software into Nokia phones, which also host Yahoo and Microsoft software. The Internet wars have clearly gone mobile. Microsoft announced the acquisition of Danger for the user-experience technology it provides on smart mobile devices, like T-Mobile's Sidekick. Yahoo announced that it will be the exclusive mobile search provider for T-Mobile's European customers. Both were subtle reminders that search and functionality have become the main focus for multipurpose interactive devices. That represents a huge market potential for Microsoft, Yahoo and Google.

Mobile phones far outnumber any other electronic device on the market. Once they include Web browsers, expanded storage, larger and clearer screens and multimedia functions, they can compete with other consumer electronic devices (and likely win). Never was there a more eclectic bunch of rivals and allies. Not surprisingly, the efforts to standardize applications across advanced interactive mobile devices are in high gear, led by Google's Open Handset Alliance of 34 handset manufacturers and the LiMo Foundation supported by Matsushita, DoCoMo, Motorola, Vodafone and Samsung.

The marketplace is fraught with conflicting and unsettled standards that will hinder the advancement of new devices. After years of struggle, for instance, Blu-Ray is emerging the winner of the CD format wars as major players from Netflix and Blockbuster to Best Buy and major film studios side with Sony's Blu-Ray. Sony-Ericsson's mobile phones have been a leading interactive music box for years.

But new problems are accompanying mobile's evolution, such as the need for longer battery life to accommodate more high-powered activities, interoperability, palatable mobile advertising and new business models. Pertti Kasanen, manager of End User Solutions for Nokia Siemans Networks, points out that bringing more media to mobile devices generally results in moving money SPEND on traditional media platforms to new platforms. It's just as well, since telecom companies are wrestling with a steady slide in their core homebound businesses.

A greater focus on catering to users' interests and needs could generate new revenue streams, she said. While advertising on mobile devices is only around $1 billion, it could top $13 billion by 2011, according to the Gartner Group. The growing role of search providers such as Google, Microsoft and Yahoo will help. Madison Avenue firms like Publicis Groupe SA, Aegis Group and WPP Group have invested in mobile advertising enterprises that experiment with mobile Internet access and on-location site-buying. Refining the science of mobile interactive marketing will take years; it will also be an uphill battle against personal privacy without consumer support.

Vodafone CEO Arun Sarin in a conference speech Tuesday warned against mobile operators losing their relevance in a fast-moving market and failing to create critical Internet services--the kind that Google, Microsoft and Yahoo already are loading into palm-size interactivity. "We can't just sit back and become bit pipes," he said.