GET WITH THE TIMES
"Boeing to End its service for using Internet Aloft", announces the New York Times headline today.
I'm just as bummed as Fred Wilson, although I haven't even had the chance to pony up $27 to use this satellite-driven wireless broadband service (aka Connexion), on any of the airlines that were Boeing's customers for the service.
What's surprising isn't that Boeing made the announcement on it's multi-hundred million, multi-year initiative. It'd been expected by industry observers for a while, since Boeing was reportedly shopping the service, as Om Malik explains.
What's surprising is that Boeing didn't offer any alternative plans to provide, or even just explore on providing wireless broadband on their planes. Unlike their arch-rival Airbus, who currently has an upper hand on this front. Just the cancellation of Connexion.
As the Times article explains:
Boeing announced on Thursday that it planned to scrap its in-flight Internet service, saying there was not enough demand...
The service is much like that in a Web cafe, with passengers gaining access to the Internet through a high-speed wireless network. The system, which is also used by executive jets as well as oil rigs and vessels at sea, bounces the Internet connection off a series of satellites."
The reason given by Boeing is that there didn't seem to be as much demand for the service as they initially projected. But the problem is what the projections were based on. Apparently,
"In announcing the project in 2000, Boeing predicted that the market for in-flight Internet access would be worth $70 billion over 10 years."
I'd love to see the assumptions behind those projections, and the hapless strategists who helped formulate them. And what they were smoking at the time.
And that's the crux of the problem, in my view.
The service was based on a high-cost connection, i.e., satellites, and was expected to pay back the cost with some profit, on ACCESS revenues. And the revenues were to be split between Boeing and the airlines, who apparently expect a gatekeeper's toll...still.
This meant a service that had to cost a customer up to $10 an hour or up to $30 for the whole flight. That meant that only business passengers could justify using it, not the "unwashed masses" in coach.
Also, don't forget that most laptops have an average battery life of 2-3 hours, which means the mainstream customer is going to break down the cost on a per hour basis, even if it's a 5-10 hour flight.
Remember that power for laptops is generally only provided in first and business class (and even that requires proprietary adapters in many cases). And a hassle in many cases for airline staff to help set up the power and broadband connections.
Never mind that Airbus is continuing with it's alternative plans to provide a similar wireless broadband service, based on a different technology provider's offerings, for it's super-jumbo, the A380 when it launches.
Of course technology has marched on, and there are now an increasing number of lower-cost options for providing wireless broadband than half a decade ago.
It's interesting, that the only alternative provider for wireless broadband on US airlines following Boeing's decision is likely to be JetBlue, which doesn't even sport a first or business class, as this CNET article explains.
This from the airline that pioneered putting satellite TV screens on every seat-back, for free, back in 2000. They could have charged $5 a flight, but decided to provide it for free. It became a signature differentiator for the airlines in it's early days.
They realize, that in this increasingly stress-filled world, when even laptops may be banned from aircraft, providing not just inexpensive or free wireless broadband, but potentially screens and seat-back keyboards to access the net may be the way to better serve their customers. And differentiate themselves in an always-commodity business.
Currently, they're in the process of upgrading the TVs to larger screens, and adding XM satellite radio to the service at every seat, again for no extra charge.
The problem is that Boeing and it's partners are looking at wireless broadband strictly through the "Access revenue" filter, and the "let's-milk-the-business-passengers-for-all-their companies-got", filter.
The latter filter might have been OK in the previous decade when high-cost internet could be justified primarily on business ground, but no longer at a time when the majority of our youth rely on it more than traditional forms of communications and media access.
But we're no longer in a world when GTE's Airfones were the state of the art mode of communication on airplanes.
We're in an age when most mainstream travelers will view internet access as an expected commodity provided by most businesses, like air-conditioning, both on the ground and in the air
Boeing's aircraft may be defining the 21st century state-of-the-art, but their thinking on what their airline customer's passengers are going to want in this century needs to be updated...and fast.
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