Barbells and Dumbbells
Richard Morgan of The Deal Magazine interviews Bernstein senior analyst Craig Moffett (LinkedIn Profile) in an article titled: “The End of Mass Media?”
“As for the telecom sector, Moffett recognizes the future will rise or fall on smartphone adoption. Yet this market is already experiencing what he calls a barbell -- "where affluent customers rapidly adopt iPhones, 4G services and richer and richer data plans, while those at the bottom end of the market are furiously trading down, to the benefit of the pre-paid segment." What's more, it's a barbell with a disturbing tilt: "In fact, at this moment in the smartphone adoption curve, annual revenue per subscriber is declining." … “For a media industry that has never before encountered the limits imposed by poverty, the way out is not at all clear. What is clear is that the country's top quintile has carved out so much for itself that the bottom two can no longer pay their way. And what we've come to know as mass media may soon be no more.”
The Trend is Your Friend - Until it Ends
Cheaper, faster, more functional phones and personal computing devices, are clearly a trend. Cheaper data plans, cheaper internet access (whether Cable, DSL, or Wi-Fi) are not the trend. Craig Moffett describes how the power user is driving up prices for the typical user.But the LA Times Opinion piece “Technology: the end of all-you-can-eat wireless data plans” puts the bottom line in place: “I don't blame wireless carriers for seeking to make the heaviest users pay the most for data plans. All of their customers in a given coverage area share bandwidth with one another, and those who stream video take up more of this shared resource than those who are just sending tweets. And network operators say a small percentage of their customers are responsible for a hugely disproportionate share of the traffic.”
So, are we working with a normal supply/demand curve?
Or, has “data inflation” created a bi-modal (barbell) distribution?
Moffett may want to extend his prediction to include the various flavors of Cloud computing.- How will cloud based services like SkyDrive, iMatch, DropBox, Google Docs, iTunes, Netflix, Amazon Prime Video, etc. survive when distribution costs explode?
- How about the quasi-social sites with large data transfers (think photo uploads to Facebook, flicker, Snapfish)?
- Will Joe Consumer end up a dumbbell - paying higher rates for the convenience of the cloud?
Maybe the Music CD and DVD movies will make a comeback.
Que sais-je?- Yinka Adegoke, Reuters “Time Warner to test Internet billing based on usage.” [P.S. Comcast is testing as well.] Kurt Peters, internetRetailer.com ”Who’s a heavy Internet user? Now, it’s half of the online population” Cecilia Kang, The Washington Post ”Heavy Internet Users Targeted”
