Update: July 10th 2012 – Apple awarded iTravel Patent!

The approaching wave of mobile OS travel buttons (Apple iTravel, Google Travel, Bing!Travel Mobile) need to be viewed within a historical context of travel distribution. At the heart of these efforts is a new customer interface for travel.

During the pre-Web days, traditional travel agents controlled distribution through their mastery of GDS cryptic formats. A travel agents’ worth (especially in a corporate travel setting) was often gauged by their proficiency on the GDS. The customer often viewed the travel agent’s systems as a black box with almost mystical capabilities. In this environment the only consumer interface to travel was the telephone or face-to-face conversations with a travel agent.

The Web created a new era of transparency for the travel process. Supplier sites, Online Travel Agents (OTAs) and meta-search engines suddenly removed the mystery behind travel pricing providing consumers with instant access to travel prices and schedules. This transparency has reshaped all sectors of the industry. Consumers now can compare a variety of sources and book entire vacations online. Even for those remaining traditional travel agents, would quickly admit that their conversations often include “I was looking at prices online and I found…). The Web also has changed the ground rules for distribution. Though the GDS still dominate offline and much of online distribution, direct channels through supplier direct websites and new alternative distribution platforms such as Farelogix (supported by the OpenAxis Group) are causing tensions in the traditional GDS-centric travel distribution ecosystems both economically and through the holding back of ancillary services from traditional distribution channels.

It is my belief we are at the beginning of a radical change in distribution this time triggered by the mobile revolution. With the mass adoption of smartphones and the growing influence of tablets, mobile devices are un-tethering the planning and booking process from the desktop altering consumer behavior and again changing the ground rules for customer interfaces. All the current Web strategies are carrying over to mobile with most major travel companies optimizing their sites for the mobile Web (if not you are in danger of being left behind!) and many travel companies have created native (downloadable) apps for specific devices. The problem with this natural evolution from the Web to mobile is that it has created a fragmented environment where the traveler has to either engage with multiple mobile Web sites or download multiple apps. Shopping multiple Web sites online is not a big issue, but on mobile devices it can be more challenging.  Even the traditional, one-stop-shops, the  OTAs have fragmented their mobile offering reacting to the need for last minute hotel deals. Meta-search may be best positioned for mobile, but these sites lose the ability for continuous engagement, an important mobile opportunity, as the bookings are still spread across multiple sites. Consumers are hungry for a simple integrated mobile travel solution. This is opening the door for the OS travel buttons. Companies such as Apple, Google and Microsoft are masters at user interfaces. There is ample room to simplify the planning and booking process especially with the proper integration of voice, touch and gestures. This could revolutionize mobile travel interfaces. Travel companies need now to innovate with mobile interfaces by adding voice, simplifying steps through storing of preferences, and exploring other new interface methods. Mobile may act as a catalyst for further direct supplier distribution as airlines sell ancillary services on mobile directly to their best customers. Even when the OS buttons arrive they need to hook up to some existing travel e-commerce infrastructure, but the industry can ill afford to let another layer get between themselves and their customers.

It has been nearly 2 years since Apple filed the patent for iTravel, a comprehensive effort to capture the full cycle of travel booking, itinerary management and airport check-in. Last spring, Google completed its acquisition of ITA software and last September Google launched Flight Search while continuing to add features to its Hotel Finder. Also last year, RIM BlackBerry private labeled WorldMate creating BlackBerry Travel. These trends cannot be ignored, but how exactly will native OS travel apps transform the travel process?

The key will be how will these initiatives fit into the current travel ecosystem. Naturally there is some fear that a native OS travel button may lead to the OS provider taking a piece of the distribution pie. With the current airline direct model of the Google Flight Search, the mobile button could lead to more disintermediation. It is essential to recognize that there is an important connection between the emergence of intelligent agents (Siri, Google Assistant) and the OS travel button. My previous post described how I see voice UI impacting every aspect of the travel process. Combining voice assistance and a native OS travel button could transform the mobile travel experience.

It is important to note that all these initiatives are focused on the traveler UI.It is unlikely any OS travel button would provide a complete  m-commerce platform, for travel but rather these buttons would more likely act as a meta-search funnel and hook up into an existing channel (OTA, direct supplier sites). Controlling the front-end funnel for travel does have tremendous  implications for the industry. Apart from the obvious competition this creates for OTAs, Meta-Search, Itinerary aggregators (e.g. TripIt) and even corporate booking platforms (Concur, Rearden Commerce), creating an iTravel button directly challenges the traditional search metaphor promoted by OTAs and Meta-search companies over the last 10 years. There have been numerous articles written over the past few years highlighting the consumer’s unhappiness with the current UI for Web-based travel such as this recent TNOOZ article. A major weakness in the way many travel companies have approached mobile is to simply bring Web functionality to the mobile platform without recognizing that mobile plays a different role in the travel process. Mobile search is about location, relevance and context. Native OS travel buttons will likely take advantage of this triad and deliver a superior experience to the user.

So if OS travel buttons are inevitable, what does the travel industry need to do to prepare for their impact. Rather than spending money on lobbying efforts such as the FairSearch Coalition, the key industry players should be funneling a greater amount of R & D into their mobile platforms.  This includes:

• Focus mobile efforts on location, relevance and context
• Commit R & D dollars to investigate creating your own Siri like functionality for a travel voice UI
• Consolidate functionality so that a single app or mobile Web can do everything the travel needs. For example, including airport navigation, merchandising, itinerary aggregation (for components booked through the site and through other sources), real-time destination information and long tail services.
• Partner with other travel value chain entities on a mash-up of functionality
• Explore new ways to collect personal preferences (opt-in) to deliver more relevant content
• Create a skunk works team to explore next generation mobile capabilities that is separate form your mobile product roadmap group
• Reach out to the big boys – Apple, Google and Microsoft to explore how to support the backend for their travel OS initiatives.

The travel industry cannot afford to have an inward looking view of mobile, but must recognize that the OS trends shape consumer behavior. The sooner your organization starts planning for the OS travel button, the better prepared you will be when it emerges in the market.

Source:  Global Intelligence Alliance

One major debate that persists in the area of mobile development is the question of whether a travel company should create a native (downloadable) app or simply provide a mobile Web application. As part of my upcoming PhoCusWright Webinar Mobile Chaos: Do I Need an App for Every Platform? (next Wednesday September 15th at 12:00 noon), I will discuss this subject.  As a teaser here are some of my thoughts concerning this debate.

An interesting paradox exists in respect to the motivations of travel firms in porting their Website to the mobile Web. Many state that their primary motivation is to make their app available on as many devices as possible at the lowest cost. Though this is an admirable goal, the reality of the mobile Web is that the majority of browsing is happening on smartphones such as the iPhone, Android or the BlackBerry. Therefore if the goal is to reach full feature phones, through these efforts is misdirected. A more important issue is how a normal Web pages appear on today’s smartphones. Even the most sophisticated smartphone browsers still provide a frustrating experience for the user when viewing a normal Web page; therefore, every travel company needs to port their existing Website to the Mobile Web. With more and more browsing happening on the smartphone and with the direct correlation between the frequent traveler and smartphone ownership, the effort to transcode the current Website to be more readable on a mobile Web browser is no longer a luxury, but a mandatory part of every travel company’s mobile strategy. As HTML5 matures, the ability to interact with a phone’s core features such as the GPS, calendar, address book, accelerometer and  compass is emerging.

Source:  Global Intelligence Alliance

As a result, the mobile Web will behave similar to the native app and within the next few years matching native app capabilities. The question then arises, do I need a native app?

The answer is best provided in terms of market segmentation.  To create a native app that simply mirrors the functionality of the current Website, wastes resources and may not yield any significant incremental benefit to the travel company or traveler.  From a market segmentation perspective, the native app should be targeted to your best customers and as a result provide unique functionality that takes advantage of location, personalization and situation.  Recently, Priceline reported that a good majority of its mobile app bookings where coming the same day as the reservation.  Priceline did not disclose whether these bookings had cannibalized their Website bookings or whether they were incremental. The Priceline Negotiator is a good example of a limited function native app that is targeted to specific activity – book last minute hotel or car reservations. Clearly Priceline did their homework to determine the profile of their best customers and the type of function they wanted in a mobile app. Other downloadable apps miss this opportunity and simply mirror Website functionality.  Native apps can provide a travel company with a great opportunity to interact with a company’s best customers, but these applications must be innovative taking advantage of the smartphone’s unique capabilities such as the compass or accelerometer and provide personalized recommendations based on the traveler’s location and situation. It is with this in mind, a travel company can have a successful native app launch. Though most apps seem to first appear on the iPhone the importance of the Android and BlackBerry platforms cannot not be ignored as each has a significant market share. For non-US roll-outs Nokia is an essential platform as well.  We also have the launch of Windows 7  in the fourth quarter of this year and the re-emergence of WebOS under the direction of HP as wild cards to consider as well, not to forget about the explosion of tablets that will hit the market over the next 12 months.  Mobile Chaos will be the norm for some time.

Loyal readers of my blog know that I  have long advocated the need for a more intelligent interface for travel planing and booking.  Early self-booking engines often promoted themselves as replacements for travel agents, while in reality most were (and many still are) simply sending off commands to the GDS  or supplier reservation systems and displaying standard content.  During the TNooz #tcamp5 panel last week at Travdex, Gene Quinn asked me what will it take to have a superior mobile interface. My answer was intelligence. So it was quite interesting to see the announcement on April 28th, 2010 that Apple would be buying Siri. Adam Cheyer, Siri co-founder, has stated that people “need a new way to interact with services on the Internet: a “do engine” rather than a search engine.”  Siri traces its origins to a military-funded artificial intelligence project called CALO, for “cognitive assistant that leans and organizes”. The goal was to create a personal assistant that improves by interacting with its user. If you ask a frequent traveler the characteristics of a good travel agent (yes there are still people who use traditional travel agents), they would likely say that the agent knows their preferences and anticipates their needs during the travel planning process. The promise of AI (a now much maligned term) was to emulate human thought through computing. Siri clearly has its eye on this goal.

It is ironic that Siri is now at Apple. I have often referenced the “Ah Ha” moment I had (as many attendees did) when John Sculley introduced the Knowledge Navigator video at MacWorld in 1989. Unfortunately the Newton which Apple launched about a year later fell way short of this vision.  The Siri acquisition repositions Apple to fulfill this original vision. In conversations with Siri prior to the acquisition, I learned that travel is a key part of their development roadmap.Though it is likely the acquisition of Siri has bigger mobile search implications beyond travel, many have speculated that the combination of Siri with the iTravel could position Apple in a new role to disrupt the industry by providing intelligent local search on the iPhone as part of a comprehensive travel software offering.

Apple has filed a patent for the complete travel process on the iPhone.The patent includes an application called iTravel for planning, searching, reviewing and booking flights, hotels, car rentals, trains and bus trips, as well as technology for identification at airports for baggage handling and boarding passes. The patent relies heavily on Near Field Communications (NFC) to enable the quick exchange of information at all travel check-in points. This patent has triggered a great deal of speculation across the travel industry with many fearing that the iTravel app may indeed compete directly with OTAs, meta-search and itinerary aggregation services such as TripIt and shift the balance of power in the travel industry much as Apple has done for the music industry.

In initial review of the patent, the primary focus seems to be on in-transit services.There is no question that NFC could help the processing at airports as it already does in Japan, but the major US airports and airlines would need to install NFC readers a significant  infrastructure investment. In addition to Japan, NFC is being implemented throughout Europe, so rather than leading this trend, the Apple patent seems to building upon existing NFC  momentum. In addition to the infrastructure needed to support NFC, the majoirty of owners of the iPhone would need to upgrade to the latest NFC enabled  models. All this points to a near horizon reality of at least 5 years, before this capability impacts market. By that time the majority of phones will be NFC enabled.

The most striking aspect of this patent is the itinerary capture and booking capability.  Some have speculated that this could spell trouble for the OTAs, but at this stage it is unclear how these reservations will be booked, fulfilled and managed. The patent also clearly positions the iPhone as the repository of key identification information including your drivers license and passport. Combining this with retina scans and fingerprints could usher in a new level of airport security.

Clearly this patent has some novel ideas and can help the travel process, but the immanent competition with OTAs and other travel value chain players seems unlikely. The pace of technology facilitated business practice changes continues to accelerate in the travel industry. It is therefore difficult for a general tech company such as Apple to recognize all the nuances of these changes.  For example, the current trend toward merchandising is also forcing changes to all points of sale not reflected in the patent. That being said, Apple is a major catalyst using technology to change business practices for music, video and mobile communications and therefore their potential to alter the travel process should not be underestimated.

With Apple approaching 1 billion in downloaded apps, I thought it would be good time to take a look at the top 5 most popular free and paid travel apps on iTunes

PAID.
1. Flight Track - this application from Mobiata is similar to Web based applications such as Flight Stats, but produced by a small mobile app vendor. – Question why doesn’t Flight Track have the top position here?

2. Tipulator – Allows you to calculate the appropriate tip for service. Question: Isn’t that essentially a calculator?

3. Where The Locals Eat – was created by the dining guide company of the same name. The popularity of this paid app reinforces the demand for local dining advise

4. iFare Finder – is a Kayak like meta-search application. The interesting aspect of iFare Finder is that it is only a mobile app. I could not even find a Website for RIV Creations the creator of iFare Finder, only a blog. Having helped a client last year create a mega-search engine, simple screen scraping will not work as a long term solution. Time will tell the quality of the engine behind iFare Finder.

5. Zagat to Go – At last a familiar brand name!

FREE
1. Google Earth – shows how Google is already dominating the mobile space

2. Urbanspoon – a slot machine that allows the user to chose a type of restaurant randomly

3. YELP – the UGC local restaurant and services

4. WiFi Finder – locate free and paid Wi-Fi networks

5. Choice Hotels Locator – At last a familiar travel brand!

So what does this all mean? Though brands such as Kayak, Hotels.com and Disney do appear in the top 20, a vast number of travel brands are missing. Now multiply this by 1000 and you can start to see how the explosion of app stores from Google, RIM Blackberry, T-Mobile and Nokia will further lead to missed branding opportunities unless the travel industry major players recognize that mobile downloads are here to stay and that they need to be part of every travel company’s strategy.

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!).

Yesterday’s announcement concerning the availability of the iPhone SDK (Software Development Kit) is significant for potential travel application developers. The iPhone has shifted the focus from cell phones to mobile Internet devices with the first full function mobile Web browser. Applications written for the iPhone can be downloaded directly from the Internet bypassing the traditional walled garden of the wireless providers. The announcement specifically emphasized application development for the business market to compete with RIM’s Blackberry, the leading corporate smartphone. Venture capitalist firm Kleiner Perkins Caufield & Byers announced it was creating the $100 million iFund to help new developers for the Apple handheld platform. As a result there is a lot money on the table to encourage developers to create corporate oriented apps. Are you listening travel software vendors? That’s the good news.

The bad news goes to the heart of what Apple is about: proprietary software. Though the iPhone design is truly revolutionary, the corporate strategy of a proprietary operating platform environment may constrain development. There is fear among developers that Apple will limit the ability for third-party developers to distribute apps, in the same way they did with the iPod gaming market In addition the ability to write the application once and have it shared across devices is impossible with this proprietary approach. For example many of the current mobile applications are written in Java which can run any device that has a Java Virtual machine (JVM). This week Apple also announced that they will not support a Flash Virtual machine on the iPhone limiting the use of Macromedia’s Flash, a very popular way developers have added animation and desktop functionality to Web apps. In addition, the Telcos are not happy with Apple as the iPhone has eliminated the revenue associated with the control over application distribution that has been a driver for the walled garden approach. A slew of new iPhone like devices is already hitting the market with many more on the near horizon. Apple has again been pivotal in the development of new platforms as it was in the creation of the personal computer, but may fall victim to the same low marketshare fate if open applications environments such as Google’s Android platform take hold allowing a more practical path for cross platform mobile application development. I don’t believe we’ll see the iPhone’s share of the mobile market diminish as it did in the early days of the PC, but limiting third party application development is never a good thing in the age of open source computing.