V Feldmann 3 COMPETITIVE STRATEGY IN THE MOBILE INTERNET The digitization of content distribution has lead to structural changes in media and entertainment markets 25. Online content has become an established component of raditional media companies'offers. It has also led to the emergence of new media companies. The next diversification in the multiple digital distribution strategies of media companies can relate to the provision of personalized mobile wireless media content. However, before analyzing emerging strategic options for media companies, we must observe changes in industry structure, and changes in activi- ties of media companies by using the tool of the value chain in order to seek potentials for building sustainable competitive advantage A lesson that media companies have learned from the Internet is that they do not vant to follow the Internet rule"follow the free"26. The media companies want to charge for mobile Internet services, although it is still unclear if customers are will- ing and ready to pay for such services after having been used to getting content for free on the Internet. The telecoms have learned from past experience with mobile communications that they must avoid distorted revenues, costs, and share prices. For example, strong subsidies of handsets, in Europe have led to a distor- tion of telecommunication companies' customer base and the determination of the industries' leading revenue measure, the average revenue per user (ARPU). Subsi- dizing prepaid phone handsets contributed to this trend. Consumers bought hand- sets,used the prepaid card and simply bought a new handset instead of buying a new prepaid card. Thus, the telecommunication companies' customer base has grown on paper, but not in revenue. The subsequent distortion of ARPU not only leads to mistakes in internal processes bought forecasting demand and sales, but also misleads shareholder The impact of strategy in mobile Internet markets is extremely high, because gain ing sustainable competitive advantage lies in differentiation awareness of cus- mer demand, and good estimation of technological development to overcome the high level of uncertainty of the mobile Internet. These are the elements that will determine if the mobile Internet can create economic value for the players involved in the mobile value chain. Ultimately, this uncertainty will be resolved by the uses and gratifications the mobile Internet will offer to businesses and con sumers. When we analyze the industry structure of mobile Internet markets related to the media and telecommunications industries, we see that there is the potential for profitability. However, we have yet to see who is going to capture the eco- nomic benefits. This uncertainty is due to potential power shifts in the industry and how much value can be reaped by the customers 26 See3 COMPETITIVE STRATEGY IN THE MOBILE INTERNET The digitization of content distribution has lead to structural changes in media and entertainment markets25. Online content has become an established component of traditional media companies’ offers. It has also led to the emergence of new media companies. The next diversification in the multiple digital distribution strategies of media companies can relate to the provision of personalized mobile wireless media content. However, before analyzing emerging strategic options for media companies, we must observe changes in industry structure, and changes in activi￾ties of media companies by using the tool of the value chain in order to seek potentials for building sustainable competitive advantage. A lesson that media companies have learned from the Internet is that they do not want to follow the Internet rule “follow the free” 26. The media companies want to charge for mobile Internet services, although it is still unclear if customers are will￾ing and ready to pay for such services after having been used to getting content for free on the Internet. The telecoms have learned from past experience with mobile communications that they must avoid distorted revenues, costs, and share prices. For example, strong subsidies of handsets, in Europe have led to a distor￾tion of telecommunication companies’ customer base and the determination of the industries’ leading revenue measure, the average revenue per user (ARPU). Subsi￾dizing prepaid phone handsets contributed to this trend. Consumers bought hand￾sets, used the prepaid card and simply bought a new handset instead of buying a new prepaid card. Thus, the telecommunication companies’ customer base has grown on paper, but not in revenue. The subsequent distortion of ARPU not only leads to mistakes in internal processes bought forecasting demand and sales, but also misleads shareholders. The impact of strategy in mobile Internet markets is extremely high, because gain￾ing sustainable competitive advantage lies in differentiation27, awareness of cus￾tomer demand, and good estimation of technological development to overcome the high level of uncertainty of the mobile Internet. These are the elements that will determine if the mobile Internet can create economic value for the players involved in the mobile value chain. Ultimately, this uncertainty will be resolved by the uses and gratifications the mobile Internet will offer to businesses and con￾sumers. When we analyze the industry structure of mobile Internet markets related to the media and telecommunications industries, we see that there is the potential for profitability. However, we have yet to see who is going to capture the eco￾nomic benefits. This uncertainty is due to potential power shifts in the industry and how much value can be reaped by the customers. V. Feldmann 358 sbr 54 (4/2002) 25 See ECC (2002); ECC (2000). 26 See Jupiter MMXI (2002). 27 See Geng/Whinston (2001); Porter (2001)