VisionMobileMobile Innovation Economics                                             selected excerptsselected excerpts for...
Knowledge. Passion. Innovation.    selected excerpts                            November 2011        Mobile Innovation Eco...
VisionMobile    Distilling market noise into market sense    Research                               Training              ...
Trusted by industry brands    Clients                  selected       VisionMobile clients               2008-20114       ...
One    Winners and losers in the handset value chain5                                     Copyright VisionMobile 2011
Top-5 OEM market share takes a nose dive OEM market is quickly fragmentingTop-5 OEMsMarket share of top-5 OEMs         80%...
The global smartphone picture
What is leading to the growth of smartphones?                       smartphone share of total handset shipments Global mar...
Smartphone sales vary greatly by region                                    Copyright VisionMobile 2011
Smartphones are realising their promise                % of global sales                                    Copyright Visi...
Apps and content create new empires     Apple Q1’2011: 5% volumes, 20% revenues, 55% profits11                            ...
Android and iOS lead the way          source: Asymco12                                  Copyright VisionMobile 2011
Android: OEM winners and losers     The winners:                                            The losers:     fast followers...
DELLification in 2015     closely modeling the PC business     Profit pyramid    Revenue pyramid                          ...
Two     Smartphone platform competitive landscape15                                 Copyright VisionMobile 2011
Mobile platforms status (Q3 2011)
Three types of platformsPlatform type   Purpose               Audience        Economies of scale ExamplesSoftware        S...
Android, iOS dominate thanks to network effects
Measuring network effects: growing users & developers
Measuring network effects: growing users & developers
Three     Openness strategies21                         Copyright VisionMobile 2011                                 Copyri...
What is Google’s strategy?	     1. Flatten     Flatten everything that stands between eyeballs and Google inventory. This ...
How does Android help Google?	     1. Android drives eyeballs to Google apps     Drives eyeballs to Google Maps, Gtalk, an...
Closed governance is used to control Android                                                                              ...
Source: Google-internal presentation disclosed as a result of Oracles patent and copyright infringement lawsuit against Go...
Four     HTML5 and the impact of web apps26                               Copyright VisionMobile 2011
Where are we with HTML5?     …and how long will it take to fulfill its promise?27                                         ...
…but what is HTML5, really?     brings capabilities of web apps closer to those of native apps           Emerging next gen...
High fragmentation in HTML5 support29                                 Copyright VisionMobile 2011
HTML5 has many benefactors     all pushing HTML5 and web apps for their own unrelated reasons                  Apple looki...
Can HTML5 compete with platforms?     HTML5 is a complementary technology, not yet a full-fledged platform     App platfor...
“We don’t expect developers to choose between HTML5 and native     apps. We expect they will choose both, just as we did. ...
Knowledge. Passion. Innovation.want more?                                  Updated: 12 November 2010             www.visio...
Knowledge. Passion. Innovation.Contactandreas@visionmobile.comAndreas Constantinou | Managing Director | +44 2033 844163  ...
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"Mobile Innovation Economics", Andreas Constantinou, VisionMobile @ Tallinn 21.11.11

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"Mobile Innovation Economics", Andreas Constantinou, VisionMobile @ Tallinn 21.11.11

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"Mobile Innovation Economics", Andreas Constantinou, VisionMobile @ Tallinn 21.11.11

  1. 1. VisionMobileMobile Innovation Economics selected excerptsselected excerpts for AppCircus event, Mobile Monday Estonia, 21 November 2011
  2. 2. Knowledge. Passion. Innovation. selected excerpts November 2011 Mobile Innovation Economics Andreas Constantinou Managing Director2 Copyright VisionMobile 2011
  3. 3. VisionMobile Distilling market noise into market sense Research Training Market maps Strategy definition competitive analysis, open source economics, Competitive landscape maps strategy design, ecosystem commissioned research, Android commercials, of the mobile industry positioning, product company due diligence mobile industry dynamics definition Developer Economics 2011: How developers and brands are making money in the mobile app economy Software Economics in a HTML5 Telecoms World Mobile Megatrends series Mobile Industry Atlas, 3rd ed. and its impact how Internet business models are 1,100+ companies, 69 market sectors to the mobile impacting telecoms and how to industry innovate in the age of software Top-100 analyst blog 4,000+ subscribers 20,000+ monthly uniques 90% mobile industry insiders Active Idle Screen Who will own the screen? The Android Game Plan the commercial mechanics 100 million club behind Android and how tracking successful businesses Google runs the show in mobile3 Copyright VisionMobile 2011
  4. 4. Trusted by industry brands Clients selected VisionMobile clients 2008-20114 Copyright VisionMobile 2011
  5. 5. One Winners and losers in the handset value chain5 Copyright VisionMobile 2011
  6. 6. Top-5 OEM market share takes a nose dive OEM market is quickly fragmentingTop-5 OEMsMarket share of top-5 OEMs 80%   59%   Copyright VisionMobile 2011 Copyright VisionMobile 2011
  7. 7. The global smartphone picture
  8. 8. What is leading to the growth of smartphones? smartphone share of total handset shipments Global market share and by operator demand to differentiate against Apple Smartphone ramp up led by Apple, RIM and HTC in 2009 Copyright VisionMobile 2011
  9. 9. Smartphone sales vary greatly by region Copyright VisionMobile 2011
  10. 10. Smartphones are realising their promise % of global sales Copyright VisionMobile 2011
  11. 11. Apps and content create new empires Apple Q1’2011: 5% volumes, 20% revenues, 55% profits11 Copyright VisionMobile 2011
  12. 12. Android and iOS lead the way source: Asymco12 Copyright VisionMobile 2011
  13. 13. Android: OEM winners and losers The winners: The losers: fast followers ‘old guard’ OEMs Efficient cost structure and ability to differentiate Cost structure requires high-margins on top of Android or in hardware Android or Windows Phone is a short-term life support low cost assemblers Cost structure optimised for razor-thin margins Android is a long-term opportunity for global reach No Name source: VisionMobile13 Copyright VisionMobile 2011
  14. 14. DELLification in 2015 closely modeling the PC business Profit pyramid Revenue pyramid Innovators Role model: Apple $50B 5% @ $500 Fast followers $100B Role model: Samsung 20% @ $250 Assemblers Role model: Dell $48B 30% @ $80 Mass producers Role model: Nokia ? $27B 45% @ $30 No Name $225B14 Copyright VisionMobile 2011
  15. 15. Two Smartphone platform competitive landscape15 Copyright VisionMobile 2011
  16. 16. Mobile platforms status (Q3 2011)
  17. 17. Three types of platformsPlatform type Purpose Audience Economies of scale ExamplesSoftware Sharing of software Device makers None Symbian, BREW,platform dev costs and risks Flash LiteApplication Connecting app Developers - Users to devs Android, iOS,platform developers and - Users to users Windows Phone users - Devs to devsCommunication Facilitating Users - Users to users Telephone, Fax,platform communication BlackBerry between users Messenger
  18. 18. Android, iOS dominate thanks to network effects
  19. 19. Measuring network effects: growing users & developers
  20. 20. Measuring network effects: growing users & developers
  21. 21. Three Openness strategies21 Copyright VisionMobile 2011 Copyright VisionMobile 2011
  22. 22. What is Google’s strategy? 1. Flatten Flatten everything that stands between eyeballs and Google inventory. This is based on the economics of complements; to increase the value of your product you need to reduce the value of your complements. It explains the Android and Chrome strategies 2. Expand Expand the footprint of Google inventory (e.g. search-based text ads) across the user journey by introducing new Google services like Gmail, GMaps, Google Voice as well as Android handsets. 3. Mine Mine the information available on every user of that inventory. Mining information helps Google to better micro-target users which directly increases the value of its inventory.22 Copyright VisionMobile 2011
  23. 23. How does Android help Google? 1. Android drives eyeballs to Google apps Drives eyeballs to Google Maps, Gtalk, and other apps bundled on Android handsets and include ads Google is also the default (and most easy to integrate) ad network for Android apps 2. Android drives a reduction in handset retail price points ..as price becomes the last remaining differentiation option for handset vendors. The cheaper the handsets, the more people will buy, and the more eyeballs for Google ads 3. Android drives more telcos to adopt flat data rates Therefore more people using smartphones, therefore more eyeballs for Google ads23 Copyright VisionMobile 2011
  24. 24. Closed governance is used to control Android license type dual license Foundation (commercial + copyleft) Qt (58%) (58%) strong copyleft Linux kernel (GPL) (71%) weak copyleft MeeGo WebKit Foundation (LGPL, MPL, EPL,..) (61%) Mozilla (68%) (84%) (65%) permissive Android (APL, BSD, MIT, ...) (23%) Closed governance open governance open governance index24 Copyright VisionMobile 2011
  25. 25. Source: Google-internal presentation disclosed as a result of Oracles patent and copyright infringement lawsuit against Google25 Copyright VisionMobile 2011
  26. 26. Four HTML5 and the impact of web apps26 Copyright VisionMobile 2011
  27. 27. Where are we with HTML5? …and how long will it take to fulfill its promise?27 Copyright VisionMobile 2011
  28. 28. …but what is HTML5, really? brings capabilities of web apps closer to those of native apps Emerging next generation of HTML web language –  Collection of drafts by WHAT WG that merge into W3C specifications WHAT WG - Web Hypertext Application Technologies –  W3C standard will be completed no sooner than 2013 Driven by leading web and platform players Main enhancements –  UI tools –  plugin-free video/audio –  off-line storage –  geo location –  2D graphics –  speed and communication28 Copyright VisionMobile 2011
  29. 29. High fragmentation in HTML5 support29 Copyright VisionMobile 2011
  30. 30. HTML5 has many benefactors all pushing HTML5 and web apps for their own unrelated reasons Apple looking to move the web away from Flash –  Google searching for more ways to commoditize complements –  Facebook aiming to break-down Apple/Google silos and distance Adobe –  Microsoft to leverage web innovation to Windows 8 –  Mobile operators hoping to regain control lost to native platforms –  Qualcomm working to create competitive advantage for its chips –  Brands looking use web as a low-cost way to go cross-screen –  Tool makers facilitating web-to-native hybrid development – 30 Copyright VisionMobile 2011
  31. 31. Can HTML5 compete with platforms? HTML5 is a complementary technology, not yet a full-fledged platform App platform ingredients Software Developer Monetisation Distribution Retailing foundations ecosystem HTML5 ✔ = ✖ ✖ ✖ fragmented platform always a step behind native will depend on app store complex tool-chain waiting for a leader Facebook? Google? Microsoft? Other? most appealing to those who do not yet develop for mobile complimentary tech to those who develops native apps31 Copyright VisionMobile 2011
  32. 32. “We don’t expect developers to choose between HTML5 and native apps. We expect they will choose both, just as we did. We view HTML5 as a technology, not a platform.” June 2011 http://www.insidemobileapps.com/2011/06/17/facebook-html5-mobile-platform-project-spartan/32 Copyright VisionMobile 2011
  33. 33. Knowledge. Passion. Innovation.want more? Updated: 12 November 2010 www.visionmobile.com/workshops Copyright VisionMobile 2011 Copyright VisionMobile 2011
  34. 34. Knowledge. Passion. Innovation.Contactandreas@visionmobile.comAndreas Constantinou | Managing Director | +44 2033 844163 Updated: 12 November 2010 Copyright VisionMobile 2011 Copyright VisionMobile 2011

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