ith the present possibility of downloading new J2ME applications over the air, the transformation of the mobile phone into something extraordinary is well underway. Today's applications are primarily local applications: they are downloaded onto the device and then run without requiring network connections. They range from numerous personal productivity tools to games. More sophisticated applications are on their way; things like location-based applications or audio and video streaming, which require connection to the internet and content sources.
The mobile phone's complete transformation into a versatile smartphone depends crucially on one thing: the business model. The business model affects both customer uptake and the distribution of payment among the various players (particularly, developers and content providers) that bring the product to the customer.
The Significance of Billling Models
At the moment, the most common billing models for J2ME applications are based on payment per download or by subscription. This model is rapidly becoming a hindrance to mobile development.
Upon hearing of a new product, interested customers want to do one thing: try it out. They don't want to sign forms, commit to memberships, or jump through hoops. For instance, the success of the short message service (SMS) is, in part, due to its billing model. Rather than charge users according to a network data packet rate, users were charged 10 cents per outbound message. Its simplicity is admirable: 10 cents each time, day or night.
This notion of pay-per-use for J2ME applications demonstrates the advantages of value-based billing models over per download or subscription models for each segment of the value chain.
For consumers, it eliminates high upfront costs, such as subscriptions, with an unknown value. The consumer has no reason not to try the application.
For the mobile operator, value-based billing is easy to administer and offers greater billing flexibilityoperators are not tied to a single billing system. Stock quotes, for example, could be billed in any of the following ways: (i) per use of the service, (ii) per quote, (iii) or service subscription + per use. Because of the flexibility, new services involving much more sophisticated applications can be quickly implemented. Operators also benefit from personalized data on customer habits.
Content providers and developers get immediate feedback on usage statistics and can react quickly to market demands to deliver premium services, applications, and even application upgrades. In the case of games, popular games that are pay-per-play will have the opportunity to earn several times their "per download'' value, providing incentive for developers to create other, diverse applications.