Travel and Tourism - Largest Industry - Small Number of Specialists

I have been working in the travel industry since 1982. It never ceases to amaze me how in such a huge industry, the largest in the world, people are so interconnected. This really hit home recently while I was working in Kuwait.

During the reception after this year's PhoCusWright in Hollywood, my friend and colleague Philip Wolf commented that I was the person he had known the longest at the conference with the exception of one individual. A few weeks later I was back in Kuwait assisting my client and interviewing a candidate for the CFO position. It turned out this candidate was on the board of PhoCusWright and was that other individual Philip mentioned. Talk about a small world.

Tomorrow evening I leave Kuwait for Amsterdam to attend the IFITT's ENTER 09. I have not attended ENTER since 2002, but I do see some familiar names. When I first attended the ENTER 2002 back in Finland I felt both a feeling that I was with my peers and that I was somewhat a "fish out of water". The conference is normally attended by academics and government tourism officials. The research from the PHD candidates is always fascinating and the discussions are on topics that are very close to my heart such as mobile travel technology and personalization. This is what makes me feel comfortable. What was a bit unerving back in 2002, was that I just did not know anyone at the conference and I was one of a handful of US attendees. With all the work I have done in Europe, Asia and recently the Middle East, I certainly feel more globally connected. I am looking to learning the latest in travel research and interacting with my peers in Amsterdam this week.

TMC as Consultants - Are We There Yet?

For years a familiar theme heard throughout the business travel industry concerns the evolution of TMCs from order takers to true consultants for their corporate clients. I often classify TMCs into three groups- mega (Amex, CWT, BCD & HRG), 2nd tier and third tier. This is based on size of the company and their regional or global reach.
Late last year I gave a presentation to a group of TMCs who were part of a business travel consortium. The group was comprised mostly of 2nd tier and 3rd tier TMCs. As is my nature I talked about how technology was driving new business practices in the corporate travel market. This included my passion around mobile technology and its approaching impact on the business travel experience. I have given many talks over my 31 year business career and I pride myself on being able to read my audience. There I was prognosticating on how advanced technology would change the role of the TMC, when I looked out at the audience and I suddenly realized they were not getting it! So I paused and asked a simple question, how many of the TMC executives had at least 50% of their reservations being done online. No one raised their hands. Ok I said how about 25% of their volume online? Again only one agency owner raised their hand. Then it hit me. This group represented the famous "laggards" segment of the technology adoption curve.

Let's face it, corporate booking tools have been around for over 10 years. The cost savings of these tools have been well documented, but here I was talking to a group that could not see their value. One of the more progressive agency owners (the one with 25% adoption) whispered in my ear that the current economic downturn might actually thin the herd eliminating those who don't embrace technology. The bottom line is simple. If you don't adopt productivity tools such as CBTs or BI dashboards, you will be left behind. More importantly, if you embrace these tools, the opportunity to move from a transaction processor to truly a consultant that helps corporate clients identify areas to reduce their T & E spend is significant. During 2005-2006, I worked with one of the mega-TMCs on overall technology and service strategy, recommending that they build a comprehensive dashboard for their clients and that they expand their consulting offer beyond the consulting unit within the company to make a part of the account manager's core offering. I was pleased to see this mega embrace my advice, too bad this group of laggards is still clinging to the old way of doing business.

Middle East Travel Market

I am currently back in Middle East. This is my sixth trip since July 08. Rapid growth is still the norm here despite the economic downturn, though the market is showing some signs of a slowing down. Even hot markets such as Dubai are showing signs of a slowdown as many construction projects have been slowed or put on hold.

The following chart describes the maturity of global market based on travel technology adoption:



The Middle East is an emerging market where online travel itself has not yet taken off. Corporate travel agencies are still primarily transaction processors rather travel management consultants.

There are both structural and cultural barriers to adoption of corporate booking tools. Most of the agency staff is actually Indian. Rates for agency staff are still much lower than in Europe or the US. Service is viewed as an essential component of corporate travel.

Despite these obstacles I do believe we are on the cusp of a major change in corporate/agency relationships here in the Middle East. High net worth individuals will continue to demand personal service, but many Middle East residents in my age group (baby boomers) were actually educated in the US or Europe and thus are implementing Western business techniques. With places such as Dubai now facing a drop in occupancy, online travel companies such as Expedia are poised to launch Middle East operations in 2009.


As this chart (developed in conjunction with Market Designs) indicates the evolution of a market first begins with basic infrastructure and online activity. Travel search follows with the adoption of online booking. Corporate booking tools are at the last stage of market development.

I believe the current economic downturn combined with the rapid growth of online travel will dramatically change the lansdcape for corporate travel mangement in the region over the next 12 months.

Mobile Travel apps for 2009

A major New Years resolution for me this year is to blog at minimum once a week! During the last two months of 2008 I did not blog at all and I am determined not to repeat this long absence. My apologies.

A recent post by Tim Hughes of the BOOT (and VP of Orbitz in Australia) predicted that 2009 will NOT be the year where the travel industry embraces mobile.

I could not disagree more! Having now completed the PhoCuWright "The Future of Mobile Travel" special report, I strongly believe mobile travel applications will flourish in 2009 despite the global economic crisis. The two primary drivers of this mobile trend are the adoption of smartphones and the implementation of next generation networks (3G, LTE & WiMAX). The research clearly showed a correlation between frequent business travelers and smartphone adoption. Take a look at these two slides from our Special Report:





The key statistic here is that as of November 3, 2008 18.9% of consumers are now carrying a smartphone.










Compare that with our research results which found that 71% of Frequent Business Travelers own a smartphone. Additional research showed that 90% of frequent business travelers have owned their smartphones for less than 2 years, showing that smartphone adoption is a recent trend. You combine this with the explosive growth of 3rd party apps stores from not only Apple, but RIM Blackberry, Google and T-Mobile and it is clear that 2009 will see tremendous growth in downloadable travel specific applications.

These applications will be location and contextually relevant. The affinity between emerging mobile technology and frequent travelers will change the business and leisure travel experience 2009.

An approaching "Storm" of smartphone competition

Things are heating up even more on the smartphone front as RIM introduced the new BlackBerry Storm which will be available later this month. RIM's BlackBerry owns the enterprise smartphone mobile space. Recent surveys we've completed as part of the PhoCusWright special report "The Future of Mobile Travel" shows the iPhone gaining ground on the BlackBerry with a significant number of frequent business travelers (at least 4 business trips a year) stating that they are considering an iPhone.
The growing smartphone war has positives and negatives for the travel industry. On the positive side, smartphones patterned after the iPhone will have a more practical mobile Web browser experience. The downside comes in application development. Our research is indicating that downloading applications is a more practical strategy than simply repositioning current Website information. In addition to Apple's iPhone App store, Google and Blackberry have announced plans to open app stores as well. The cold reality of this trend is that travel companies who are serious about mobile applications will need to port their app to multiple environments. The iPhone SDK is a good development platform but very closed in nature. In contrast the Google Android platform promises to provide a more open environment for mobile platform development. Even Symbian OS now owned by Nokia is talking about a more open computing approach. Those travel suppliers and intermediaries who believe that simply translating their current Website to work with Web browsers on multiple handsets is a sufficient mobile strategy, will need to rethink that approach as smartphones become the standard device for business and leisure travelers. Yes Web browsing is definitely on the iPhone, but even with the ability to use the two finger pinch to zoom in on Web content, there is a major difference between an iPhone app verses viewing a Web page on the Safari browser.

Here is the screenshot for the Travelocity Web page on the iPhone. Yes you can zoom in but this is still not a practical way to book itineraries.

















Compare that to the screenshot of the Travelocity iPhone App. Sure the Travelocity app does not have booking capabilities but the UI is much easier and more practical to use for a future booking platform, which BTW our research shows frequent business and leisure travelers want (especially for irregular operations!).

The First Android Phone versus the iPhone

T-Mobile introduced the first Google Android phone this week. This long anticipated new platform combines elements of the iPhone (touch screen) and the Blackberry (pull out keyboard). Since I began researching mobile technology for the "Future of Mobile Travel" special report from PhoCusWright, I have been saying that the iPhone is a game changer. This message became more real to me as I purchased an iPhone earlier this month. Like any device it has its pluses and minuses. The same is true with the new Google Android platform. Both of these phones are shifts in the way people view their mobile device. Here's my brief take on the two devices and how they will impact the travel experience:
1) The iPhone - The most exciting part of the iPhone is not the phone itself but the combination of the phone's capability and the large number of inexpensive apps available through the Apple App store. Though downloading apps is nothing new, bypassing the "deck" of the mobile carrier presents a more intuitive, flexible and direct environment to load applications. There are currently 175 apps listed in the travel category and another 121 apps listed in the navigation category. The simple concept of locating yourself though GPS and looking at your immediate surroundings for restaurants, shopping or movie theatres is made simple by apps such as "Nearby" or "Where To". Surprisingly few travel companies with the exception of the online folks such as Travelocity or TripIt have released iPhone specific apps (though a lot more are on the way). Once travel companies start realizing the ease of distribution available to iPhone users I anticipate many more traditional brands populating the travel category. The iPhone is a mediocre email device particularly for those Blackberry thumb users who can type long letters rapidly from the phone. The email application works fine for me as I normally wait to respond (unless it is an urgent message) until I power up my laptop or desktop. I had no trouble connecting the iPhone to my MS Outlook. The Web browser is another strong element, but even with the larger screen and ability to expand using the two finger pinch, browsing on the iPhone is much improved from other devices but NOT a replacement for the Web. Our research has uncovered the fact that many travel companies are simply porting their current Web pages onto mobile devices and even with the iPhone's improved graphics, booking travel on the mobile Web browser can be challenging. The other approach of downloaded apps seems to be a much preferred way to penetrate the iPhone market. A strength that Apple has verses Google is the control of the hardware and software. The hardware control includes the firmware (software that is embedded on the hardware) giving greater consistent performance. The message here is simple, all travel companies should develop applications for the iPhone.
2) The T-Mobile G-Phone wants to be both a Blackberry and an iPhone. Surprisingly, currently the T-Mobile version only connects up with Gmail and in fact you need to have a Gmail account to use the G-phone. No doubt Microsoft Exchange may become a future capability, but until it does the G-Phone cannot replace the Blackberry. I will hold off my full evaluation of the device until I actually see the physical phone. My sense is that the Google Android platform can match the iPhone look and feel and simplicity of Web browsing. How apps are created and distributed will be a key element of the success. According to Strategy Analytics, the Android mobile operating system will account for 4 percent of all fourth quarter smartphone sales in the U.S., a small % but likely to grow. If the Android operating system spreads quickly and if developers gravitate to the application development environment, the same ease of use of downloading apps for the Android powered systems may further cement this process as the preferred delivery of travel specific apps, provided a central store is created. If the carriers remain in control your ability to download apps may be limited by the traditional control the carriers have put on new app distribution. The lack of control over the firmware may be an Achilles heal for the G-phone but it is too early to determine if the need to work with a variety of firmware is truly a market inhibiting problem.

Agent POS International Innovation

My loyal blog readers will recall my frequent posts over the last few years regarding an independent travel agent point of sale (POS) application. An interesting discovery that has been a result of product analysis I am doing for a large Middle Eastern TMC is the fact there is clear trend with many European and Middle Eastern 3rd party software providers to combine various elements of the agent's workflow processes in a multi-facet platform that includes a booking engine, a Web based agent POS, a customer profile database (often referred to as a CRM system), a workflow engine, a mid office and accounting system. I believe that a reason this integrated platform is emerging outside the US has to do the with need for international agents to deal with more complexity at the point of sale and the requirement to generate an invoice from a mid-office accounting program due to the large number of accounts still on credit. The fact that so many travel agencies in different parts of the world still offer credit to corporate accounts and in some cases leisure clients is not a surprise to anyone who understands the global travel market. What is surprising is how 3rd party providers such as Dolphin Dynamics, Tech Tuners and ProCon Solutions have embraced a more holistic approach to the agency needs by providing a solution that supports both corporate and leisure sales.

In his article for PhoCusWright entitled Travel Agency Technology, my colleague Bob Offutt described this platform as the agency of the future:






Now let's compare this with a diagram from a presentation yesterday from TECH TUNERS a Dubai based 3rd party developer and distributor of Sabre's TRAMS accounting system:



















In fact my my diagram from the 2003 PhoCusWright / Travel Tech Consulting report on Dynamic Packaging also describes a similar architecture.

The interesting aspect of this platform evolution is where it is happening and why. In the US the GDS still dominate the agent POS with the exception of mega-TMC initiatives or 3rd party products such as G2 Switchworks POS (now owned by Travelport). There is a clear distinction between corporate POS (e.g. TRX's Agent Desktop) and leisure POS (e.g. Revelex's PowerAgent.) Outside the US due to a need to integrate multiple sources, currencies and accounts on credit, traditional back office functions have shifted to the mid-office. The issues associated with this complex booking process exists for both the corporate and leisure agency. Of course the leisure agency also needs the ability to store net rates a solution that is also offered by many of these non-US third party vendors.

Clearly there is a global trend to provide a more function rich point of sale application for the travel agent. Is there an opportunity to bring this solution to the second and third tier TMCs and leisure agents in the US?

Recent research by my colleague Douglas Quimby of PhoCusWright highlighted the dominance of the GDS platform in the US in his study the "Travel Agency Distribution Landscape" PhoCusWright tracked agency usage of alternative POS technology.
This slide shows that with the exception of the very large TMCs the majority of agencies in the US still use native GDS as their POS.
Clearly an opportunity exists to capitalize on the growing need for a multi-source and integrated application that combines multiple agent processes in a Web based solution.

American Express' Social Networking Initiative

At the NBTA conference American Express announced "plans to launch a business-to-business online networking community for the corporate travel industry." There are a couple of interesting aspects of this announcement. Social networking is finally being embraced (though only a limited short "hug") by the corporate travel community. I moderated two sessions at the conference on social networking and both were well attended. BusinessTravelConnexion.com is being promoted as a way for corporate travel executives, suppliers and other providers to connect with each other in an online community. No one knows how successful this effort will be, but I applaud Amex for launching the initiative. A concern I have was actually part of my presentation during one of the NBTA sessions where I stated that communities naturally exist and cannot be created. Will the Amex Business Travel Connexion tap into existing communities? Will travel managers and suppliers find a forum hosted by the top TMC a proper avenue to connect? Time will tell if the Amex initiative will be successful in tapping existing communities. The other interesting aspect was that I received a call from Amex last week asking whether I would be blogging about the new service. At least Amex is recognizing the power of the Blogisphere.
I also had my first experience moderating a panel at NBTA during an earthquake. I have lived in California for 23 years, but I still have not become accustomed to earthquakes, even though I was at the World Series for the big Loma Prieta earthquake in 1989. Unfortunately we lost about 70% of our audience who fled the session. This is shame as the panelists from Sabre Cubeless and Cisco were excellent. Next year NBTA is in San Diego affording us all another opportunity to experience the earth shake beneath our feet.

AA's battle with Kayak

There has been a lot of media buzz regarding the announcement that AA was pulling their inventory from meta-search engine Kayak. The news was first leaked by Tech Crunch on July 23rd. The article stated that AA was pulling their inventory from Kayak and considering doing the same for Orbitz, which Kayak uses to supplement direct connections with airlines. As originally conceived by SideStep, the meta-search application would satisfy two important market needs: (1) consumers like to compare fares from multiple sources through a single query (2) airlines could benefit from direct bypass of other more costly channels especially OTAs such as Expedia. SideStep was originally launched as a downloaded application that automatically appeared in a sidebar when the user visited sites such as Expedia and entered their flight request information. Recognizing the challenges with downloaded apps, SideStep a few years later moved to a completely Web-based comparative shopping platform. Other sites such as Mobissimo, Farechase and Kayak soon appeared. (note: Farechase was actually the first such meta-search engine and was acquired by Yahoo! back in 2004). At first the OTAs were very negative towards these new meta-search engines. The only exception was Orbitz where Kayak founder Steve Haftner was also one of the original founders of Orbitz and thus had particular pull with his former company. At the PhoCusWright Travdex conference in the spring of 2005 in Dallas, Bill Bliss at that time a senior marketing VP at Expedia, presented a session on why mega-search was a bad idea due to the lack of customer ownership (meta-search engines do not fulfill tickets, but instead send the user to a supplier or OTA site). This negative position soon changed as the OTAs recognized the value of these meta-search engines in generating leads. In fact as the market dynamics shifted and airlines were faced with skyrocketing price of fuel, most of the major airlines stopped compensating meta-search for referrals. At the same time the OTAs continued to provide compensation to these sites. An insider at one of the major meta-search companies told me that as much as 60% of the company's referral revenue was coming from OTAs. AA's decision to pull out of Kayak was based on this reality where more revenue was being shifted to OTAs rather than the AA.com site. The threat to withdraw from Orbitz is more serious and as of this writing has not been implemented. Unfortunately even the best airlines still miss the nature of the Web. Rather than limiting reference sites, AA and other major carriers should be syndicating their booking engine on as many sites as possible. The Web has an unlimited number of specialty sites and syndication has the opportunity to gain incremental revenue from a variety of sources. Comments by AA and other carriers that their dollars are better spend in SEM (Search Engine Marketing), are a bit silly as their brand is so ingrained in the mind of the American consumer that finding AA.com through Google is not a challenge. The idea whereby all consumer traffic could be generated through an airline's site conflicts with the very nature of the Web which is constantly expanding and fragmenting users based on their interest groups. The consumer wants comparative shopping and actions by AA with Kayak demonstrate a lack of sensitivity to the true nature of the Web.

GNEs and GDS bypass

I just returned from a two week business trip to the Middle East working with a client in Kuwait. I've fallen behind again in my blog entries and I will try to rectify that over the next few days.

First up, a discussion of a recent article in Flight Magazine about demise of the so called "GNEs" (GDS New Entrants or "Genies"). This article bemoans the lack of success of these alternative distribution initiatives citing the sale of the G2Swithworks' agent POS to Travelport and the refocus of ITA Software to create a new CRS for Air Canada, as the end of an industry push towards alternative distribution. This article missed a fundamental issue in regards to the GNEs, the source of their difficulties has to due with poor market positioning. To set the record straight, the term GNE was coined by Derek Lewitton while he was Director of Distribution Strategy and Planning at United Airlines. It was 2005 the GDSs and the airlines were in heated discussions regarding new agreements. The prior few years had seen a reduction in segment fee charges by the GDSs related to the airlines willingness to provide total contact (including Web only fares). Derek organized a meeting with large corporate customers and TMCs introducing these new companies (ITA software, G2 Switchworks, Farelogix) labeling them GNEs. Also in attendance were TRX and Cliqbook. The travel and general press latched on to this labeling and throughout the year there were a flood of articles stating how these GNEs would use modern technology to bypass the traditional mainframe based GDSs. The root of the problem was not in these new companies' technology, but rather the positioning of these firms as replacements for the GDS. This was an absurd notion from the start. The power of the GDS lies in the 100,000 of travel agency desktops deployed as well as the engine behind online travel agencies (OTAs) such as Expedia. No single company, no matter how well funded can displace the dominance of the GDSs in the market overnight. In fact, one of the black holes that drained lots of cash and development time at G2 Switchworks was the development of a neutral agent POS. Meeting the complex requirements of the travel agent is not an easy task as many prior attempts (e.g. TRX's SELEX) have yielded limited results. Ironically it was this very application that was desperately needed by Travelport who operate three different mainframes (e.g. Apollo, Galileo and Worldspan). Since 2005 I have been involved with a number of initiatives in both the corporate and leisure space which involved a direct connection into an airline's CRS bypassing the GDS. The reality is that bypass is an evolutionary not revolutionary process. In fact the GDSs themselves are working to migrate their remaining legacy mainframe technologies to more distributed server based computing. The bottom line is that traditional GDS bypass will continue to happen especially as airlines unbundle their services to maximize ancillary revenue. ITA Software's re-engineering of the Air Canada CRS attacks the issue at the source as most airlines operate their CRS as a partition of the GDS with the same limitations that exist with mainframe GDS technology. The most striking limitation is the coupling of the passenger information with the transaction symptomatic of a 1960s IT design created to maximize throughput during an era of very limited bandwidth. With the need for airlines to become more customer centric, this coupling prevents dynamic pricing based on customer value, a basic tenant of CRM. The evolution away from this legacy environment will continue as the GDSs evolve and alternative distribution continues to gain steam on an individual project basis. This is all happening away from the scrutiny of the travel press, until the next round of GDS / airline negotiations. This topic is far from dead just not quite as public as it was in 2005.

SITA Air Transport IT Summit

I am in Brussels today speaking at the SITA Air Transport Summit. My talk is part of session called "Getting ready for your digital traveler". I will be speaking on Mobile based services in travel- where are we today ? Challenges and opportunities".
I was fortunate to share a van ride this morning with Yemmi Agbebi, Director of Portfolio Marketing from SITA based in the UK. Yemmi was directly involved with the Bluetooth test at Manchester Airport. Essentially SITA working with the airport installed Bluetooth stations that enabled various services for travelers. Announcements are made every few minutes instructing travelers to go to a Bluetooth area and and agree to receive messages regarding their flight. Research showed that the average traveler checks the flight board 4-5 before going to the gate. By enabling the Bluetooth communication, travelers received information about their flight lessening the anxiety associated with the boarding process. The most interesting aspect of this test is the impact on airport stores. Once enable and accepted by the user, airport stores send electronic coupons with bar codes that offer discounts to items at the shops. So how did the test go? (note I am quoting these stats by memory so please treat them as estimates). Approximately 7.2 million passengers go through the Manchester airport on an annual basis. 42% of them enabled this Bluetooth connection. The average expenditure per passenger increased from approximately 12 BPS to 16 BPS. The general feedback has been very positive as customers appreciate the information about boarding and the discount offers from the airport merchants.
This is another example of how Europe is way ahead of the US in mobile technology. Considering the current economic pressure on airlines and airports, the Manchester mobile test proves that mobile marketing can have an impact on consumer behavior.

Airline Ancillary Revenue and the Long Tail

This week I am London and I had the pleasure of presenting to and participating in the Datalex User Group meeting. Datalex who has been a Travel Tech client for many years, provides a distribution platform to airlines and travel agencies. The audience consisted of major carriers and travel distributors. One of the hottest topics we discussed is the concept of ancillary revenue. This can be defined in a number of ways. The traditional model was developed by low cost carrier RyanAir who essentially charges for all services (bags, refreshments, etc..) and in addition also sells merchandise on board. Due to the fuel crisis we've seen the legacy carriers follow suit with baggage charges and other fees. The airline term is ancillary revenue, but I believe the real opportunity is the Long Tail. At the conference, I had the pleasure of meeting Chase Cunningham most recently of the now defunct low cost carrier Skybus. Chase was in charge of ancillary revenue for SkyBus. Chase spoke about selling everything from in flight advertising to merchandise (a la RynanAir) . Due to his efforts Skybus even sold Ohio State football tickets on their Website.
I believe the coming wave in mobile and in-flight technology presents an interesting opportunity for airlines to expand the concept of ancillary revenue. By expanding the ancillary revenue definition beyond fees for formerly free services, to more of a Long Tail concept, airlines have a unique opportunity to help promote airport merchants, and destination services. The mobile platform in particular is an excellent way to provide more destination type of services. Rearden Commerce a major corporate booking tool supplier has released a Blackberry version of their product that allows ancillary services such as show tickets and restaurants reservations to be made on the smartphone. There is no reason airlines could not provide a similar service and profit from the referral. When onboard Internet arrives courtesy of suppliers such as AirCell, the airline can use the captive audience to sell a much more expanded version of SkyMall. Now a days when you go to the movies, all sorts of advertising is displayed while you wait for the previews to start. Airlines have an equally captive audience. Of course care needs to be taken to not overload the passenger with promotions as that could anger the traveler and hurt the brand. Providing the right balance of destination oriented content for the on board and mobile experience is in the near future and represents an important ancillary revenue opportunity for airlines.

Is History Repeating Itself with Google Android?

I am old enough to remember the early days of personal computing. In fact the first Mac I worked on did not have its own hard drive and thus required switching out floppies to do any simple computing task. My first non-Mac "personal" computer was a suitcase sized Compaq which ran DOS and Lotus 1-2-3. The advantage of the Mac GUI was obvious. When the first version of Windows was released it contained many Mac like functions and through later releases soon became the dominate GUI for PCs. Despite Apple's initial innovation, Windows based-PCs are the standard.

I am starting to question whether history is repeating itself on mobile devices. There is no dispute that Apple's iPhone represents a game changer in the world of mobile technology. With the first practical mobile Web browser, the iPhone delivers a vastly improved Internet mobile experience, though the telephone aspect of the device is still in need of enhancement. The Google mobile platform is in its infancy, but we should see Android based mobile phones by Q4 of this year. Google has announced an agreement with the Open Handset Alliance, a consortium of 34 handset manufacturers, carriers and chipmakers that have said they plan to support Android products and services. As an open-development platform, third party applications will flourish. Apple's iPhone is clearly the innovator, but the market will likely be flooded with iPhone clones with 18-24 months. Will the Android platform do to the mobile phone what Microsoft Windows did to the PC market? The answer is not completely clear as the mobile industry has many operating systems - Symbian, Palm and of course Windows Mobile. There are also a variety of development environments including Java and Brew. In addition to an innovative design, Apple's iPhone also shifted a significant part of the revenue from AT&T to Apple, something very much on the minds of all mobile carriers. This economic shift plus the power of Google to dominate the mobile market is something to watch as Google Android enabled phones appear later this year.

QuickMobile

I had the opportunity to attend the Dow Jones Wireless Innovation Conference last week in Redwood Shores, CA. The event is primarily designed to connect new mobile start-ups with funding, but the show had some interesting panels where today's hot mobile topics where debated (e.g. open systems, Internet devices, LBS). More on panel discussions coming soon in later blog entries. There were some interesting companies showcased at the event.

I had the pleasure of meeting Patrick Payne CEO of a new Vancouver BC start-up called Quickmobile. The company has developed a mobile marketing platform specifically designed for the global travel and tourism industry. The application enable the delivery of coupon offer to the traveler.

I was very impressed with company's capabilities and approach. Offers that are received are personalized, relevant, timely and valuable to the consumer sent on an opt-in basis only. Quickmobile was able to show how an SMS message can be sent that when accepted sends a bar coded coupon to the user. How can this be used? Here are just a few examples:

• Hoteliers - could use this method to send coupons for hotel services such as a discount at the restaurant, bar or spa to promote on property services
• Travel Management companies or leisure travel agents can promote "long tail" services (restaurant discounts, activity promotions) to increase loyalty and add to traveler convenience.
  

Mobile advertising will explode over the next few years. The key to mobile promotional campaigns is giving the consumer control over what they receive and making sure the offer is relevant. Quickmobile understands this need and is a company to watch.

Microsoft acquires Farecast

Yesterday's disclosure that Microsoft had acquired Farecast was a surprise to many in the travel industry. Is this a new online travel initiative from the original creators of Expedia? Will Farecast be integrated into Microsoft's Live Search?
First a bit of background. I was first introduced to Oren Etzioni through my client Fetch Technologies. This was back in 2002 when the company was called Hamlet. The founders of Fetch are well recognized experts in AI as is Oren Etzioni . I have to admit that I was a bit skeptical during my initial discussion with Oren on whether a predictive fare model would be embraced by the travel consumer. My next interaction with Oren was at a PhoCusWright Travdex conference in Dallas back in 2005. My colleague and friend Philip Wolf commented to me that Oren's presentation at Travdex was the most technical he had seen. This presentation helped reinforce that Farecast was more than a service that tracked historical fares to recommend a buy or no-buy decision. The algorithms created by Mr. Etzioni use advanced AI technology to look at historical fare history creating a recommendation based on complex data mining techniques. It is my belief that this is the core value recognized by Microsoft and thus triggered the acquisition. I doubt if Microsoft is interested in becoming a major travel player, but I do anticipate that the Farecast technology will be expanded to other non-travel segments and incorporated into Microsoft's Live Search. Of course things could change if the Microsoft/Yahoo deal went through as Yahoo! has many travel properties including Farechase which was the first meta-travel search engine.

Travelport and G2Switchworks

On Friday April 4, 2008 Travelport announced that they were acquiring from G2 Switchworks "certain software assets and intellectual property to be used in the development of a future Travelport agent desktop solution." Given all the hype of GDS verses GNE over the last four years, what does this deal mean to alternative distribution?

There are a number of ways to look at this announcement.

• The need for a multi-source desktop- G2Swithworks recognized from the start that to be successful as an alternative distribution platform they would need to provide travel agent call centers with a new multi-source desktop that could mirror the multi-source nature of self-booking applications and sites. Over the last four years G2 has worked hard to develop this platform. Despite this effort, though travel management firms (TMCs) particularly the second and third tier TMCs, have tested the G2 platform, few have actually signed up to run their entire agency using the desktop application. One reality is that despite the drop in financial assistance from the GDS to the TMCs, this type of monetary compensation for larger TMCs still exists. With economics playing a role in keeping the GDS as the platform for the TMC, G2 found that having a better more intuitive application was not enough to develop the necessary beachhead customers to be successful.
  
• A recognition that current solutions do not provide the right platform for TMCs going forward - On the Travelport side, with the acquisition of Worldspan last year, Travelport not only had agents on their Focalpoint/Viewpoint desktop but also inherited the Worldspan's GO! point of sale solution (POS). The announcement to acquire the G2 POS is confirming that neither of these long standing agent desktop applications can truly support the multi-source and workflow needs of today's modern TMC agents. A simple but often overlooked aspect of the G2 platform is the housing a more robust traveler profile outside the GDS. This is a critical requirements for any truly multi-source platform. An GDS-independent profile should allow the airlines to target specific customers with dynamic offers representing their value as a customer, a clear part of the unbundling effort.
  
• Eliminating a potential competitor: By acquiring G2, Travelport may simply be eliminating a potential competitive platform that would put pressure on the GDS/Airline negotiations when they are set to expire in 2010/2011. In addition, the Travelport action may be designed to prevent Sabre from acquiring the G2 platform. A bit of history of the GDS might put this into a different perspective. Back in the early 1980s at that time Apollo (the domestic GDS that is now part of the Galileo brand) licensed a travel agent back office system from an independent firm called ADS. The goal was to expand Apollo's offerings to travel agencies by becoming the chief provider of back office accounting software. After this announcement, Sabre, Apollo's chief competitor, bought the ADS company and incorporated it into their agency solution essentially trumping the licensing deal. This scenario was repeated in the late 1990s after Galileo licensed the GetThere corporate booking solution, Sabre turned around and acquired the company. With both G2 and Sabre now both owned by the Texas Pacific Group perhaps Travelport perhaps was simply heading off another potential competitive effort that would have again allowed Sabre the upper hand in a new platform initiative.

The G2 approach further reinforces the concept of a shift of aggregation to the TMC from the GDS. Today even with content agreements with the major airlines, no GDS has total content as some low cost carrier (LCCs) and Web only content still exists.

So what does this mean for the big picture of alternative distribution? I have repeatedly stated my belief that the GDS are not going away. The role of competition often is to accelerate development outside the constraints large companies. With perhaps the exception of Apple, few companies innovate due to the dysfunctional nature of large corporations. Time and time again, particularly here in the Silicon Valley, small start-up create innovative applications disrupting the market. When the disruptor is acquired, the larger organization can benefit from the start-ups innovation. I see the G2 acquisition by Travelport as an important evolutionary step in travel distribution, providing the market a much needed robust multi-source platform for TMC agents.