The NYT published an article about barcodes for cellphones in yesterday’s Sunday Times. The article does a good job summarizing many of the benefits of using your cell phone as a barcode scanner that can translate specialized two-dimensional barcodes from print or other offline media into some piece of digital information – a URL, a coupon, a ticket, etc. We think the concept is long overdue – barcodes and cellphones can bridge the offline world with the online world in many compelling ways. But frankly, we were surprised to even see an article in reference to barcode use in the US, as we believe the structural nature of the wireless industry here will keep us from enjoying the benefits of cellphone barcodes for a long time to come.
It will be difficult, as the article points out, for barcodes to enjoy widespread use if a client download is required to make things work. This is where the carriers can significantly accelerate adoption, by getting their handset vendors to pre-load the software onto phones so that barcode functionality comes by default. But alas, what’s in it for the carriers? More data traffic? A cut of advertising revenue?
Surely there are multiple business models that could make sense for carriers to offer barcode services, but that’s where the coordination issue comes in. Today, there are multiple standards for barcode technologies and multiple ways to implement those solutions on handsets. Would Canon want to run a magazine ad for its latest camcorder featuring a “for more information” barcode that could only be read by Sprint subscribers? Maybe, but that’s not nearly as compelling as if they could use a single barcode that would be accessible to any mobile subscriber, regardless of carrier. Think of it like a URL. Imagine if each website had to have a different URL depending on which ISP its users were coming through. At this point in the US, there is no equivalent of ICANN for barcodes, so there is no standardization and no coordination around this concept, which means, in our opinion, that US mobile subscribers will be cheated out of a very compelling and convenient user experience for quite awhile.
It’s a shame, really, but contrast this to China, where we think barcodes have a much better shot of making it to prime time. Lightspeed invested in a cellphone barcode company based in Beijing called Gmedia. We think the China market has a few key ingredients for the success of barcodes. First, China Mobile accounts for roughly 80% of the 400M+ wireless subscribers in the country. If you can strike a relationship with China Mobile, as Gmedia has for the “DM Code” flavor of barcodes, much of the coordination issue gets solved – China Mobile’s choice becomes the de facto standard. Advertisers can rest assured that if they go to the trouble of putting barcodes in their ads, most cellphone users will be able to use them. Second, China has almost 3x as many cellphone subscribers as broadband users, and the handset is the communications and internet device of choice for most people. Gmedia’s solution makes surfing the mobile web a heck of a lot more convenient than keying in URLs on a number pad. See an ad with a barcode, scan it, and your phone’s browser automatically takes you to the right destination on the web – no keying required. Finally, if China Mobile gets behind barcodes, it can exert alot of pressure on handset makers to pre-load the barcode software on handsets, which will be a pre-requisite for getting advertisers excited about incorporating barcodes into their ad campaigns. Nothing like the potential to reach 400M new customers with a new hook to motivate some experimentation. China Mobile is poised to start exerting that pressure this year, so hopefully the barcode flywheel will start spinning in China very soon.