VC's vs. Carriers: Wake-Up Call
In their latest newsletter the Wireless Industry Partnership (WIP) reports that they are coming across a very strong message reinforced by personal conversations and developer feedback: Bay area VCs won't invest where carriers are indicated as the major business or revenue model.
Think about this for a moment.
We're talking about an industry that increasingly relies on 3rd party developers to maintain a constant stream of innovative ideas and applications coupled with new and interesting business models. After all, the future of the consumer space, by all accounts, is ubiquitous access to a mesh of user-generated content - on mobile, entertainment devices, and desktop - with and without wires. (Note, by the way, that mobile is just a part of that - carriers in this scenario are no longer at the center of the universe - what does that mean for their ability to dictate terms?)
This 3rd party innovation is, to a big extent, represented by the companies funded by venture capitalists. It is the kind of stuff carriers desperately need to attract to their platforms in order to remain relevant. Yet VC's have obviously found it so painful to come to mutually acceptable business terms with carriers that they have given up and are now looking for ways to work around them. Not that the difficulty in working with carriers is anything new - this is a long-time complaint from small and mid-size developers (in particular, the use of API permissions to enforce particular business terms) - but now it is finally making headlines and the ripple effects are being felt to the very front of the food chain.
I'll chalk it up to this being yet another warning sign to the carriers that they need to come to terms with the fact that sand is shifting out from underneath them - see also my JavaOne presentation on the topic: "Flooring the Accelerator: How Open Source is Reshaping an Industry".
By the way, I'd like to stress that WIP is a great resource for wireless developers and Caroline Lewko, who is a main driver behind WIP, is doing a fantastic job in taking the pulse of the industry and is extremely well connected. I highly recommend you check them out and subscribe to their monthly newsletter (scroll to to bottom of the front page). Caroline is also present at many industry events so that is always a good chance to meet up with her and find out what WIP is all about.