Tuesday, April 11, 2006

ABI Research: Mobile Platform as Fertile Ground for Proprietary DRM Vendors

According to ABI Research, while "multimedia to the mobile phone is one of the hottest and youngest market segments in the wireless arena, attempts to bring uniformity to it with open digital rights management standards are premature at this stage."

ABI notes that the Open Mobile Alliance (OMA) "developed an open DRM standard for multimedia content distribution to mobile platforms, and chose MPEG LA to administer licensing." However due "the high prices set by MPEG LA precipitated lengthy negotiations with operators, and the resulting delay created an opportunity that was seized by proprietary DRM vendors."

Vamsi Sistla at ABI Research said, "This is a classic example of what not to do when trying to nurture a new market. It is misguided to pursue an open standard solution in a brand-new market. A better time is after a few years, when the market is disjointed, the competition has changed, and companies can collaborate to benefit from economies of scale. Right now, operators couldn't care less about economies of scale: they are focusing on their ability to monetize this trend and get their solutions to the market sooner than their competitors."

Sistla added, "Any emerging technology should find its way into the market by the trial and error of multiple solutions. Early in a market's development, companies whose proprietary solutions don't rely on external integration are often more successful than those that must agree with other players in the sector."

ABI cites "Apple's iPod/iTunes with its tight, exclusive vertical integration and 80% market share is a good example."