Impact of Fourth Generation Computers

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Bill Tallent, CEO of Mercury Intermedia, talks about how "Smart Phones" or Fourth Generation Computers are going to change how we consume media. This presentation was presented at the "Smart Phones for Smart Journalists" workshop sponsored by the Online News Association and the Freedom Forum. It was held at the John Seigenthaler Center in Nashville, Tenn., on April 9, 2010.

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Impact of Fourth Generation Computers

  1. 1. Smartphones for Smart Journalists
  2. 2. Smartphones for Smart Journalists Today’s Subjects The Big Picture 4G Computers - Their new role in journalism Lessons learned building native apps for 4G Computers... for newspapers and news channels
  3. 3. The Big Picture
  4. 4. The Big Picture Terminology “Smartphones” vs. Fourth Gen Computers A Blackberry is a smart phone. The iPhone, iTouch, Androids, and iPads are 4G computers. And they’re only the beginning.....
  5. 5. The Big Picture Current 4G Computers Primary use intention differentiates Computing Primary Communication Primary • iPhone • Blackberry • iTouch • Etc. • iPad • Android class
  6. 6. The Big Picture the emergence of the 4th generation
  7. 7. The Big Picture the emergence of the 4th generation Recommendation Follow Mary Meeker’s Research Morgan Stanley
  8. 8. The Big Picture What makes 4G computers different? • highly mobile • lack a keyboard, mouse and power cord • Internet connected • Contain profitable application ecosystems that often replace traditional (profitless) web sites • Gartner says >50% shipped by 2015 w/b touch screen
  9. 9. The Big Picture Future 4G Computers • Apple products - Shirt pocket screen to television • Android products - Shirt pocket screen to television • Maybe Microsoft products • Maybe, maybe Nokia products • Sony, Samsung, Palm, etc. are likely also-rans
  10. 10. The Big Picture Suppliers of 4G Computers Practically speaking, Today its Apple and Google! Major content owners are building products for both.
  11. 11. The Big Picture 4G Computers will most likely.... • kill netbooks • reduce utilization of lap/desktops & shirt pockets • dramatically increase the overall use of computers • outnumber personal computers in use by 2013/4 • will soon become the primary access to the Internet
  12. 12. The Big Picture 4G Computers increase media consumption • Average adult uses a PC 1.5 hours/day • 4G computers are available 18 hours/day • PCs were often shared....not 4G computers • Content consumption by shirt-pocket 4G computers will experience dramatic growth --- via apps, not browsers or web apps
  13. 13. The Big Picture About the iPad • It’s a bird, its a plane, its a newspaper? • Best yet for media consumption • The perfect traveling companion for adults & kids • A business & recreational reader • A teenager & gamer’s delight • Yes, requires yet another/expanded application • Take it very seriously
  14. 14. The Big Picture About the iPad Adult reaction: • “oh no, not another device” • “where’s the keyboard, where’s the mouse?” • “how can I manage another device?” • “you mean now I have buy another device?” Kids reaction: • “way cool.....” • “Dad, I need this now....”
  15. 15. The Big Picture About the iPad The impact of the 4G iPad on development starts
  16. 16. The Big Picture About the iPad - You think its big today?
  17. 17. The Big Picture A Significant 4G Issue: Accessing Content on 4G Devices
  18. 18. The Big Picture Accessing Content on 4G Devices 3 ways: • Native applications • Traditional web sites • Mobile web sites (or WAP sites)
  19. 19. The Big Picture Accessing Content on 4G Devices Native applications ✓ Programs written in native languages ✓ Superior user experience ✓ Expensive, unless compared to previous mediums
  20. 20. The Big Picture Accessing Content on 4G Devices Traditional web sites ✓ Difficult to use on shirt-pocket screens ✓ An “ok” user experience ✓ Render nicely on tablets ✓ Flash doesn’t work on Apple devices - HTML5
  21. 21. The Big Picture Accessing Content on 4G Devices Mobile web sites ✓ Very poor user experience compared to native apps ✓ Least common denominator versions can reach most smartphones ✓ Given a choice, users “always” select native apps
  22. 22. The Big Picture Accessing Content on 4G Devices The bottom line: Native apps win with consumers (today) because they deliver a superior user experience.
  23. 23. The Big Picture Native App Growth on 4G Devices Native Application Sales and Revenue Estimates 29.5 App sales, in billions 21.6 App revenue, in $billions 6.8 4.2 4.5 2.5 2009 2010 estimated 2013 estimated
  24. 24. The Big Picture The unquestioned leader in 4G Computers Apple, Inc. is today leading technology ✓ Because they listen best to consumers ✓ Because everything they deliver is profitable, they have enormous reserves ✓ Apple products deserve serious responses
  25. 25. Subject 2 Lessons Learned building apps for 4G Computers
  26. 26. Native Applications Why have 4G native apps been so successful? From the user’s point of view...... • Ease of use, superior content experience • Price - less than a latte • Provide instant gratification • Fulfill basic, everyday needs • Instantly informative - keeps one “in the know”
  27. 27. Native Applications Why have 4G native apps been so successful? From the content owner point of view...... • Increasingly where the eyeballs are • Take advantage of expanded media consumption • An opportunity for additional ad revenue • An opportunity to return to a subscription model
  28. 28. Native Application Stats • 30,000+ Android apps • 180,000+ iPhone/Touch apps • 3,500 iPad apps • 4 billion downloads
  29. 29. Native Application Tips Downloads are a prerequisite to retention, but.... “Retention” drives revenue Attention to downloads has been excessive (today’s equivalent of “how many hits....”)
  30. 30. Native Application Tips The most important element of an app: The User Experience Because the user experience drives user ratings, ratings determine retention, and retention drives revenue.
  31. 31. Native Application Tips Get these 3 things right The #2 & #3 most important things about an app: 1. User experience 2. Responsiveness - mobile users are impatient 3. Reliability - they hate repeated crashes All three determine retention & revenue and can enhance or damage brand value.
  32. 32. Native Application Tips How much should you spend on an app? Just enough to ASSURE..... • A first-class user experience • A responsive app • A reliable app
  33. 33. Native Application Tips How much should you spend on an app? $40-$80k for most apps is a ball park range Too expensive? Lets follow the numbers.........
  34. 34. Native Application Tips Native App Economics Assumptions: Development Cost - $60,000 Average monthly users - 100,000 Monthly hosting cost - $1,500 Page views (with ads)/month/user - 72 CPM - $10 Percent of inventory sold: 30%
  35. 35. Native Application Tips Native App Economics Per User Results: Annual revenue = $2.59 Annual hosting = ( .18) Amortization of dev cost = ( .20) Gross Profit = $2.21 Times 100,000 users = $221,000 or 369% ROI
  36. 36. Native Application Tips Native App Economics THIS IS AN INVESTMENT WITH A HUGE RETURN, NOT AN EXPENSE TO BE MINIMIZED i.e., PENNY-WISE IS TRULY POUND-FOOLISH
  37. 37. Native Application Tips Attracting Downloads Great user reviews are the most important way to generate downloads. App store ratings are key
  38. 38. Native Application Tips Tips To Attract Downloads User Rankings of 4 iPad News Applications
  39. 39. Native Application Tips Tips To Attract Downloads Other tips To Attract Downloads • Build a great app - Users cannot be fooled • In-app requests for reviews can build ratings • Good apps get Apple’s attention & sell iPhones, etc. • Solicit trade press reviews • Promote in your traditional publication • Promote on a jumbo-tron in Times Square, etc.
  40. 40. Native Application Tips Tips To Attract Downloads
  41. 41. Native Application Tips Retaining Users & Expanding Usage Notifications - a potent traffic driver • Pop-over screen messages (user opt in) • Optional sounds • Icon badges are persistant
  42. 42. Native Application Tips Tips To Retain Users & Expand Usage • Build a great user experience (your competitor will) • Weather • Sports scores • Sharing features
  43. 43. Native Application Tips Users want tabular text listings of articles & thumbnail images for everyday news scans. But they expect video when news breaks.
  44. 44. Native Application Tips Design Average graphic designers can design screen appearances Device professionals should design the U/E Assure collaboration
  45. 45. Native Application Tips Typical Schedule Phases • Design/Approval (brand vs. UE) • Programming • Testing (allow 2 weeks for “burn-in” testing • Allow 2 weeks for Apple approval
  46. 46. Native Application Tips Monetizing Applications with Ads Online ad inventory is infinite. CPMs will continue to drop. Google captures 67¢ of every online ad $ Don’t depend on ad revenue. Did the game change yesterday?
  47. 47. Native Application Tips Monetizing Applications with Subscriptions Subscription revenue is a must. iPad apps will blaze the trail. Web sites too must be paid (iPad).
  48. 48. Native Application Tips Monetizing Applications using A “freemium” Approach • Free content builds traffic base & promotes the paid version • Watch & experiment
  49. 49. Native Application Tips Monetizing Applications Whatever approach you adopt, distance yourself from the web business model.
  50. 50. Native Application Expectations • Retention rate s/b 40-50% • Sessions per day - 1.5 to 2 (45-60/month) • Minutes per session - 3 (text) to (video) • 135 to 720 min/month (web = 51 min/mo.) • Android : iPhone Ratio - 4:1, but changing
  51. 51. Summation • News will increasingly be consumed on screens • News media must transition to paid access • 24/7 coverage & video now essentials • User experience determines winners & losers • Media companies must invest heavily in screen technology as they still do in print equipment

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