Open Handset Alliance - A Powerful Payment System is what is Required

More thoughts about the Open Handset Alliance…

The problem is not so much who you can bring into the alliance or what kind of gizmos you can create with the Android SDK.

I think the problem lies in the ability to create an economy across the OHA. One that would provide an economic incentive for developers to create applications and monetize them.

The biggest problem with the current mobile industry is the world-wide stranglehold that telcos have on application revenue. They think that every piece of revenue should be squeezed out of everything that runs through their lines.

Probably the only Telco that shares lots of application revenue is NTT DoCoMo. That’s why they’re so successful. They successfully created the model 10 years ago and nobody else has been able to replicate their success.

If you don’t already know, NTT DoCoMo keeps 10% and gives away 90% to developers who create apps for iMode. Apps are super easy to create using a variant of HTML that’s readable by their handsets. They handle payment so they take the 10% which is fair enough for the convenience.

By doing so, NTT created an economy where Japanese sites and developers could profit and hence a virtuous cycle of profitable content creation was put in place. It became a win-win-win for telco, developers and consumers.

Hence I hope Google would find a way to deeply integrate a billing system into OHA so that economic incentives are there for developers. It’s the virtual economy in Second Life or the alluring draw of Facebook Apps. If there is a super flexible and global payment interface that a) all telcos can connect to and earn a part of the revenues and b) sends money into the pockets of developers, the alliance would really take off.

And when I mean deep integration, I’m referring to the depth of Facebook F8 Platform-seque that extends to the ability to bill for premium SMS/MMSes. Only then would mobile be truly open and accessible to all.

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