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State of Mobile Computing

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  • 1. iPhone computing paradigm is as significant as Windows 3.0 and the WinTel monopoly was for desktop computing in 1990 and Mosaic/Netscape was for internet adoption in 1995All created new platformsConsumer have in their pockets.Immediate boot time, battery lifeiPhone 4960x640 pixels or 320 dpi is greater than anything on the marketGyroscope$199 price point3. Many new products have followed the same paradigm including Nexus One, Motorola Droid, HTC Incredible, Sprint EVOiPhone 3GS,600 MHz processor,256 MB RAM, 16GB – 32GB storage,480 x 320 pixels,3.0 Megapixel camera
  • Growth drivers include declining costs and feature set improvementsDays to reach 1m units iPhone and iPad are faster than blackberry (300), iPod (360), Netbooks (180)iPad took 60 days to hit 2m unitsiPhone has sold 50m units
  • First true mobile computing device
  • WSJ app is free to WSJ.com subscribers. WSJ has 64,000 of those.WSJ app is free and Apple only gets their vig if sold through App Store so no rev share with Apple for nowWSJ gets $400k for 4-month advertising deals
  • iPhone success has led to the rise of new platforms that are disrupting the mobile value chain 1.) Platforms are not coming from carriers but rather Apple, GoogleHow will this new paradigm affect the existing value chain?2 key points 2.) Value is clearly shifting to platforms. Carriers are generally on the losing end, but leading carriers may benefit from price elasticity effects as prices fall but volumes increase (kindle, iPad, other data devices) 3.)Open vs. closed. If/when platform become more open value will accrue to consumers
  • Apple generating $18bn in revenue from iPhone last year and $6.1bn in revenue from iPhone/iTunes/content in Q1. Total $50bn in revenue.Growth drivers include declining costs and feature set improvements40% of Apple’s revenue is now iPhone or iPhone related#2 product after Mac
  • Also worth noting that Google and RIM have performed reasonably wellApple has created $150bn of value, market cap of Google
  • Growth drivers include declining costs and feature set improvements
  • Explain #siPhone success has given Apple a lead but has also paved the way for competition and Apple’s “closed” model may be an Achilles heel. Apple has grown from 5% to 15% market share by sales volume.Android is experiencing rapid adoption and is now #2 platform after RIM. Android seeing 100k activations per day less than 18 months since launch.As competition increases among platform vendors the industry will move towards an open mobile web. Importance of HTML5.
  • Consumer usage patterns also imply further share gains for iPhone/Android
  • These are very different platformsBattle for developer mind share and most devs want to program for iPhone or Android or HTML5Itunes link provides benefits to iPhone, Android lacks a similar forcing functionAndroid is highly fragmented - 60 hardware platforms - More than 60% of Android users have v1.6 or earlierApple’s iTunes integration results in a smoother OS upgrade path - Only 5% of users have not upgraded to OS version 3.0 - 85% of iPhone users have one of the two latest OS
  • Admob was founded in 2007Quattro founded in 2006, series A in 2007Siri was founded in 2007Only 31 VC backed deals acquired in Q1, 2010 for $5.5bn, $900m via IPO (Venturesource)Boku has raised $38m in the past yearIt is a provider of infrastructure products that enable mobile operators to deliver multimedia services such as video, Internet access, voice-over-IP, e-mail, mobile TV, photo sharing, and gaming to their subscriber
  • Transcript

    • 1. Alex Ferrara, June 23rd, 2010
      Mobile Computing Roadmap
      Confidential
    • 2. 1
      Agenda
      State of Mobile Computing
      Potential Investment Opportunities
    • 3. U.S. Wireless Industry is Large and Mature
      Almost everyone in the U.S. has a cell phone
      • U.S. wireless penetration at 91% exceeds U.S. PC penetration (~80%)
      Soon, everyone in the U.S. will have a Smartphone
      • Smartphone adoption forecast of 20%+ CAGR
      Source: ctia.org, Forrester
    • 4. Three self-reinforcing trends are driving global adoption of mass mobile computing:
      Moore’s Law continues to drive performance/price improvements in smart phones, netbook PCs, and tablet PCs making them increasingly affordable
      3G telecom network roll-outs have enabled mobile broadband applications
      The massive success of the iPhone has broken the carrier walled garden and created competitionamong platforms
      Smart phone adoption has reached a tipping point; network effects now maintain momentum
      Why now? Mobile Computing in a Post iPhone World
    • 5. With iPhone, Apple introduced a new mobile computing paradigm that consumers and competitors have embraced
      4
      User Interface Evolution Over Past 30 Years
      Text
      Touch
      Graphical
      User Interface
      Keyboard
      Fingers
      Mouse
      Input Device
      Consumers now have in their pockets:
      Fast processor Larger memory High-res screen Broadband Internet Camera GPS
      Multi-touch UI Magnetometer Accelerometer Wifi & Bluetooth Good battery life
      Source: Morgan Stanley, T-Mobile
    • 6. 12minutes
      33minutes
      28minutes
      27minutes
      This is paradigm is more about data, apps, and content than voice and SMS
      Daily Usage Breakdown
      % of Mobile Users Who Consume Digital Content
      65%
      Average iPhone user spends50% more time per day, 20 minutes, using device
      All that extra time is spent on data features and apps
      48%
      21%
      Smart phone consumer value is more about data than voice
      Source: Morgan Stanley, iSuppli, CTIA, comScoreMobiLens
    • 7. Mobile Internet
      NTT docomoi-mode
      Launched 6/99
      … and it has been a tremendous success
      iPhone + iTouch vs. NTT docomoi-mode vs. AOL vs. Netscape Users
      First 20 Quarters Since Launch
      ~85MM
      Mobile Internet
      iPhone + iTouch
      Launched 6/07
      Desktop Internet
      Netscape*
      Launched 12/94
      ~31MM
      ~18MM
      Desktop Internet
      AOL*
      v 2.0 Launched 9/94
      ~8MM
      Note: *AOL subscribers data not available before CQ3:94; Netscape users limited to US only. Morgan Stanley Research estimates ~50MM netbooks have shipped in first 10 quarters since launch (10/07). Source: Company Reports , Morgan Stanley Research.
      Source: Morgan Stanley, Katy Huberty
    • 8. One implication is that what were devices are becoming features
      7
      There is (or will be) an app for that
      Source: Qualcomm
    • 9. … and unlike the desktop, consumers are willing to pay for apps and content
      8
      Wall Street Journal
      10,000 paid app iPad installs @ $17.29 per month in 60 days
      $3.3m in total annualized revenue ($2.1m subscription + $1.2m in advertising)
      WSJ.com, a decade-and-a-half old subscription site, has about 400,000 online-only subscribers
      In two months the iPad has added 2.5 percent to that number.
      The Times of London
      5,000 copies sold in the first 3 days @ £9.99
      £49,950 in first 3 days
      Early but promising
      Source: Graphic by Tom Fishburne
    • 10. How will the paradigm evolve? Looking to analogs
      Analogous Market Growth Patterns
      We are roughly here
      >
      >
      >
      >
      >
      >
      • With mobile infrastructure adequately developed and Apple as a platform pioneer, activity is increasing among platforms and applications
      • 11. Mobile Commerce may be around the corner
      Source: Morgan Stanley Research
    • 12. How will this paradigm affect the wireless value chain?
      10
      New Platforms
      (iPhone, Android, Blackberry, MS)
      Consumers
      • Value is shifting from carriers to new consumer-centric platforms which disintermediate carriers’ “walled gardens”
      • 13. Consumers face unprecedented choice of mobile applications and content
      • 14. Today the value is accruing to consumers and platform vendors
      • 15. As platforms become more open, value will accrue to consumers
      Source: Adapted from Anderson & Williams, “Unbundling the Mobile Value Chain”
    • 16. Evidence Seen in the Success of App Ecosystems
      Source: Morgan Stanley, Distimo, Nokia, Apple, Google, RIM, Nielsen
      Nokia apps exclude wallpapers and ring tones
      RIM/Nokia excludes older devices that cannot support App stores
    • 17. … and in Apple’s stock price performance
      5 Year Dividend Adjusted Stock Price:
      Apple, Google, Microsoft, Palm, RIM, Nokia, AT&T, Verizon, Sprint
      Apple
      +500%
      Google, RIM
      +100%
      Everyone
      Else
      Market cap of Apple now exceeds that of Microsoft
      Source: Capital IQ, May 25 2010
    • 18. … and in recent industry developments
      2010
      JAN
      FEB
      MAR
      APR
      MAY
      JUN
      Apple Ships 2M iPads
      Google becomes
      #2 smartphone OS
      Android Hits 100k Activations per Day 18 Months After Launch
      HP Announces Palm
      Acquisition for $1.2b
      iPhone 4 released
      Ballmer Takes Over Windows Mobile
      RIM & Intel Announce Separate Tablets
      Industry Analysts Increase Estimates
      • 53% CAGR for iPhone (2008 – 2013)
      • 19. 23% CAGR for Smartphone (2008 – 2013)
      AT&T Ends Unlimited Data Plan
      FTC clears Google/Admob
    • 20. Apple’s Success has Invited Competition
      14
      Worldwide Smartphone OS Market Share
      by Sales Volume
      • Smartphone OS/Platform market remains concentrated but increasingly competitive
      • 21. Android share has increased from 0% to 10% in 18 months
      • 22. RIM and MSFT also making big investments
      • 23. Winning platforms are consumer-focused with rich content and applications
      Source: Gartner
    • 24. While iPhone & Android Shipment Shares Remain Low, They Have a Disproportionate Share of Web Usage
      15
      Global Smartphone Share of HTML Mobile Page View / Mobile Internet + App Usage / Unit Shipments
      Note: Net Applications collects data from ~160MM monthly visitors on mobile devices that render full HTML pages and JavaScript. Visits to WAP pages are excluded.
      Source: AdMob Mobile Metrics Report (3/10), Net Applications (5/10), Gartner (Q1:10).
    • 25. Mobile Developers Face Important Considerations
      16
      Google Android
      Advantages:
      • Native services and more open platform
      • 26. Java and Eclipse IDE
      Considerations:
      • Hardware profile fragmentation
      • 27. Smaller install base (for now)
      • 28. Frequent OS updates
      • 29. Fewer countries supported
      HTML5 Mobile Web
      Advantages:
      • Open
      • 30. Ultimately it will be necessary to support
      Considerations:
      • Not widely supported today
      • 31. Lack support for native services (e.g. gestures, local content)
      Apple iPhone/iPad
      Advantages:
      • Tight integration with native services and media library
      • 32. Growing audience across many countries
      • 33. Predictable platform release cycles
      Considerations:
      • Proprietary platform
      • 34. Apple approval process
      • 35. No Flash / 3rd party SDKs
      • 36. Objective C
      • 37. iAd Payment toll
      Android
      May 2010
      Source: Google, Admob
    • 38. Mobile Platform Competition and a Dynamic Ecosystem Create Opportunities for Innovative Startups and VC
      Mobile computing growth is creating a land grab among Strategic buyers…
      Mobile M&A Transactions Announced in Last 9 Months
      17
      … and generating interest among VCs
      Financings in Last 60 days
    • 39. 18
      Agenda
      State of Mobile Computing
      Potential Investment Opportunities (Redacted for Public)
    • 40. Mobile health
      Mobile applications for eldercare
      Mobile payments
      Online video
      Multi-device synchronization & staging (e.g. Evernote, Dropbox)
      Retail/ecommerce
      Mobile enterprise
      Helping carriers avoid becoming dumb pipes
      Potential Investment Opportunities (Redacted for Public)
    • 41. Thoughts or Comments?
      Contact me at alex@bvp.com
      Thank You
    • 42. Thank You
      Confidential

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