On Product Design...

I read this on Twitter the other day:

-"ha.. my iPaq still lives after 3 years and does most of what the iphone does" 05:46 PM September 27, 2007 from web

-"function without hype" 05:46 PM September 27, 2007 from web

The poster is right in a naive sort of way, the iPaq (and the Treo, and a host of other devices) have had the entire feature set of the iPhone for several years now. In many cases they have even more functionality than the iPhone. Nonetheless, these devices are badly designed. This tweeter(?) shows a fundamental (albeit common) misunderstanding of what's important in designing and building a consumer product.

Product design is not about filling out the feature list on the spec sheet. Product design is about how the features you implement work together as an entire user experience.

Being Defined in Terms of Others

It is human nature to define something new in terms of things one already understands. As more people see what Foneshow is working on (both the public stuff and forthcoming products) they define us in their own ways.

I heard our media publishing platform defined as:

"Mobile Tivo for audio"

Several people who have seen our groups product (now in alpha) have referred to it as:

"Twitter for voice"

Both of those similes are accurate and show a good understanding of what we're working on. Both of them help us think about what we're doing in new ways.

This was predictable

Twitter has announced it is suspending SMS services in Australia, citing high operating costs. This was predictable.

Twitter is Opening Their Messaging API?

Lots of folks are talking about Twitter opening their SMS messaging API.

Let's leave the economic issues alone for a moment.

The Mobile Marketing Association (MMA) has a set of guidelines (pdf) about acceptable uses of Common Short Codes. Does not Twitter risk losing their CSC if some random person using their API promotes drug use, pornography or hate speech (or any of the other things MMA or the carriers find unacceptable)?

What am I not understanding here?

Pondering the Economics of Twitter

The online world is abuzz about Obvious Corp's Twitter product. It's a fun service but I wonder about the business model. Who makes money on Twitter?

Let's follow the money. Suppose I have 50 followers. When I update my status, 50 SMS messages get sent out.

Each of my 50 followers pay between .$10 and $.15 per message to their cellular provider. Even if they've bought an "unlimited" message package ($20/month for 2500 messages) and they max it out (but don't go over), they're paying 0.8 cents/message each. Let's say on average they're paying $.05/message. So for every update I make on Twitter my followers are paying their cellular carriers $2.50.

Obvious is in all likelihood paying about $.02 per message terminated via their short code (this is an assumption). So the carriers earn another $1 from Obvious Inc.

Twitter messages are limited to 140 characters, I'm guessing the eventual business model is advertising and Obvious plans to use the remaining 20 characters (less addressing info) as their ad inventory.

So what do we have...

The cellular carriers are getting filthy rich. For every little update I make to my status on Twitter the cellular carriers get paid $3.50. The carrier costs for this are really low (I'd estimate well under $.05)

Obvious needs to be able to sell their ad inventory for more than the cost of terminating the SMS'es. So Obvious needs to sell out their inventory at a $20 CPM to break even. Obvious has some demographic data, but no real time geographic data on my followers. Do they parse my messages for context and content (a la gmail)? That could greatly increase the CPM they could command.

If the carriers were smart, they would waive the message termination fees they charge Obvious. Sure, it's great for them to get paid on both ends, but it really behooves them to foster the adoption of opt in, push, subscription services that use SMS.

Jason Devitt had a great post a while back on the economics of SMS.