Mobile Megatrends 2008 (VisionMobile)

Slide 1: VisionMobile Research Mobile Megatrends 2008 Knowledge. Passion. Innovation.

Slide 2: Knowledge. Passion. Innovation. Mobile Megatrends 2008 Andreas Constantinou, Ph.D. Research Director, VisionMobile updated: 14 December 2007 licensed under a Creative Commons Attribution 3.0 license.

Slide 3: 15 Mobile Megatrends From mega-portals to me-portals. Content is aging; Content communication is king. The internet is reaching into the phone. The war of the application environments. Value in mobile software is bubbling up. OEMs go for services and vertical propositions. Brand as the new form of equity in handsets. Network operator strategies are shifting. Browsing is out; engaging experiences are in. Browser proxies bring the internet to the masses. Open source is disrupting the status quo. Nokia is now a tier-0 OEM. Mobile is transforming to a FMCG business. Channel ARPU: a new source of revenue.

Slide 4: VisionMobile :a research & market intelligence firm selected 2006/7 analyst reports Five Defining Traits MDM Case Study: The New Age of On-Device Portals: of Open Source Motorola Handset Beyond WAP (Informa) (Ovum) Customisation: (ARCchart) 2006-2011 (ARCchart) GPLv2 vs GPLv3 Firmware OTA: Mobile Operating High-Capacity SIMs White Paper From Hype to Systems: The New (Informa) Market Reality Generation (ARCchart) Open Source in Mobile Software Activating the Idle Mobile: 2007-2012 Management Screen: Uncharted (Informa) Report Territory (Informa)

Slide 5: VisionMobile :delivering strategic market know-how to the mobile industry ecosystem. selected clients

Slide 6: Mobile Megatrends 2008

Slide 7: 1 From mega-portals to me-portals.

Slide 8: 1 From mega-portals to me-portals. From all-in-one mega-portals (e.g AOL), to vertical portals (vortals, e.g. music, sports, healthcare), to personalised my-portals (e.g. iGoogle), to user-centric me-portals (e.g. Facebook) The history of web portals and mobile portals Mega-portals are aging: 1995 2000 2005 2010 portals mega-portals my-portals web me-portals vortals mobile portals my-portals me-portals vortals Source: eMarketeer, company reports (via NY Times) Coming next: community OSes, COMOs (e.g. Open Social)

Slide 9: 2 Content is aging; Content communication is king

Slide 10: 2 Content is aging; Content communication is king The sale value of content is decreasing and DRM walls are falling % of subs buying a ringtone fell consistently over 12 months in GB, FR, DE, IT, ES (M:Metrics, 4Q07) see also Amazon mp3, Y! Music, Virgin Digital, Nokia Comes With Music (subscribe, but own) Content communication, personalisation and remixing is attracting capital 10s of photo sharing sites: Facebook, MySpace, Picnik, Picasa, flickr, flauntr, thebroth, snipshot, ClickFriends, Faces, Photoshop Express online, Shozu, Mosh, Pix-Yu MoJungle, PixPulse, PixSense, SharpCast, SnapFish, rmbr, Kodak gallery, Shutterfly, Photobucket, Webshots, Smugmug, Fotki, Dotphoto, Phanfare, Splashup, Vi.sualize.us, Pixrat, FFFFound, PicURLs, Zoomorama ”up to 25% of the entertainment being consumed in five years will be what we call 'Circular’.. people will have a genuine desire not only to create and share their own content, but also to remix it, mash it up and pass it on within their peer groups”. Mark Selby, VP Multimedia, Nokia, Dec 07

Slide 11: 3 The internet is reaching into the phone

Slide 12: 3 The Internet is reaching into the phone 2001+: the phone reached out to the internet through WAP and web. But the phone was only open to the short head of 10s of 2nd parties (OEM partners) and 100s of 3rd parties with strong funding. 2007+: the internet is reaching into the phone.. The long tail of 1,000s to 1,000,000s of 3rd party developers and scripters are reaching out to the phone thanks to availability of AJAX, Widget platforms and Web runtimes e.g. Nokia Web RunTime, Nokia S60 browser, Motorola WebUI, Nokia WidSets, Opera Widgets, Bling Software, Webwag. 2009+: the phone becomes an active node of the internet Consuming and producing services, e.g. Nokia S60 web server, efforts by Conveneer

Slide 13: 4 The war of the application exec. environments

Slide 14: 4 The war of the application exec. environments 2002+: the war of the operating systems has faded - Symbian OS shipments are dominated by Nokia (outside Japan) and DoCoMo (in Japan) - Windows Mobile is for enterprise segments only (at least up to version 6). - The new Palm OS is still slideware and one year away. Will it follow the fate of Cobalt ? - Most mobile Linux operating systems are in alpha stage (Celunite, ALP, A la Mobile, OpenMoko), not shrink-wrapped (Greensuite), or not backed by a big services firm (Purple Labs). 2007+: the war of the application exec. environments (AEEs) is raging - Flash Lite vs Java; Adobe’s aggressive subsidy vs Sun’s JCP standardisation process. - Java SE vs Java ME; Android’s Dalvik, and Sun’s strategy to phase out Java ME - web programming vs open OS; AJAX, Widgets and web runtimes vs open OS platforms (S60, WM) - interpreted languages vs C++; AppForge, Python, Ruby, .NET (Red Five Labs) vs S60

Slide 15: 5 Value in mobile software is bubbling up

Slide 16: 5 Value in mobile software is bubbling up Mobile software carries high risk & reward and long lead times If you are a software vendor in the OpenOS or RTOS business, you need OEM deal s/w handset handset - $2M - $30M seed capital biz dev agreed embedded launch lifecycle - 2 years technology development -18 -6 (months) -12 +6 - OEM sales cycle of 6-12 months - operator sales cycle of 18-36 months investment - 18+ months for royalties to kick in - but biz model requires scale returns NREs NREs royalties - scaling to new regions, OEMs and operators is non-linear - a lot of factors outside control to do with handset sales The mobile software business is like the Hollywood business; you ‘re either big or you’re out.

Slide 17: 5 Value in mobile software is bubbling up The sale value line (line of commoditisation) is moving up the stack .. accelerated by open source per-unit cost to services and revenue build content collaborative software development $2 $0.1m efforts (e.g. Web Kit) - Google’s Android will further accelerate this commoditisation effect $0.2 $20m - Value will bubble up to UI and service UI & service layer delivery layers. value line $0.1 $5m Embedded apps - Software vendors without unique IPR are not viable $0.1 $10m Middleware $2.5 $500m Operating System

Slide 18: 5 Value in mobile software is bubbling up Value Quadrants for mobile handsets & services extra-device value Delivery Tools & platforms Browse, buy, create, for building content, view, share content, UIs, and services UIs, services pre-sales post-sales Handset intra-device value User data software Messages, photos, stack videos, profile, preferences..

Slide 19: 5 Value in mobile software is bubbling up Value Quadrants represent a shift in revenue models NRE, per-developer seat per user, per use, flat rate, per transaction, per level, subscription. extra-device value Delivery Tools & platforms Browse, buy, create, for building content, view, share content, UIs, and services UIs, services pre-sales post-sales Handset intra-device value User data software Messages, photos, stack videos, profile, preferences.. NRE, free or per unit bundled

Slide 20: 5 Value in mobile software is bubbling up ..but device software is an essential enabler NRE, per-developer seat extra-device value Delivery Tools & platforms Browse, buy, create, for building content, view, share content, UIs, and services UIs, services pre-sales post-sales Software intra-device value User data stack Messages, photos, videos, profile, preferences.. NRE, per unit

Slide 21: 6 OEMs go for services and vertical propositions

Slide 22: 6 OEMs go for services and vertical propositions in order to increase ailing profit margins. OEM acquisitions 2006-7: - Nokia acquired Avvenu (file sharing), Navteq (LBS), EnPocket (mobile advertising), Twango (media sharing), Pixto (physical world connection), Loudeye (digital music), gate5 AG (LBS) and Intellisync (mobile device management). - Motorola invested in Tilefile (content sharing) and acquired Leapstone (SDP), Modulus Video (video codec), Tut Systems (content distribution), Broadbus (content on demand) and Good Technologies (email sync). Own OEM services: - Nokia (Ovi, Maps, Mosh, Medeo, Comes with Music, Internet Radio, Download!), Motorola Screen 3, SEMC (TrackID, PlayNow) Vertical propositions: - Sony Ericsson Walkman & Cybershot, Nokia E-Series, N-Series.

Slide 23: 7 Brands as the new form of equity in handsets

Slide 24: 7 Brands as the new form of equity in handsets \"The mobile-wireless environment is going to create a whole new set of brands: brands around devices, brands around the experiences, and also brands around the way people are connecting and researching on the Internet. You'll see new brands around this mobile world, hopefully some from Motorola, because we are thinking about creating distinct brand experiences underneath the parent brand Motorola in the mobile space in the future.\" Kenneth “Casey” Keller, Chief Marketing Officer, Motorola in Advertising Age, October 2007

Slide 25: 7 Brands as the new form of equity in handsets OEMs have been creating co-branded handsets since 2004: - Sony Ericsson: Walkman, Cybershot - Nokia: E-series, N-series, location-aware devices, Zac Posen, Versace, Aston Martin, WESC - LG: Prada, Shi