A Mobile-Centric Viewof Silicon ValleyPrepared for Opinno & PromoMadridJanuary 31, 2011              Licensed under Creati...
@l1rs    Work                                        Network      Lars Kamp                                      Lars Kamp...
Today’s topics.     History           Mobile Economics                Silicon                      Cloud                  ...
History4
A note on people’s ability to predict the future.                                      ”People tend to overestimate       ...
Q: Whose mission statement is this?       “We have a dream of improving the lives of many millions          of people by m...
A: General Magic, 1990.    You could say “mobile” started here.7
General Magic’s “Magic Cap”. Looks familiar?                    “Magic Cap” User Interface, 19948
Maybe now?             T-Mobile G1 (HTC Dream) User Interface, 20089
Three people from the team that architected Magic Cap.               Andy Rubin                 Tony Faddel   Kevin Lynch1...
Economics11
Software-driven innovation.                                      ” The problem is, in hardware you                        ...
Mobile is the single biggest global distribution platform.                 PC                                            T...
Evolution of “the stack”: Shift from hardware to software.                                                  Mobile Device ...
Value in mobile is moving up the stack…                                                                                   ...
… and is fueling the app store economy.       Size of Catalog (K) – Apple App Store vs. Android Market       2008-2010, as...
But: An app is not a business model.            Loyalty and Retention Rates of Mobile Apps Over Time, 2010          100%  ...
90% dead after 90 days.                       iPhone App Retention                          Android App Retention         ...
Expect the center of gravity to shift to post-load.                                                                       ...
Silicon20
The one “law” that drives Silicon Valley.       Gordon E. More       Co-founder Intel21   Source: Intel.
Moore’s Law – since ~1965 on the desktop.22   Source: Intel.
Coming your way in mobile as well.         Baseband                 “Fat Modems”                 Baseband &         Proces...
One company at the core of the mobile revolution.24
Massive on-deck computing power.     Mobile Silicon: Process Node, Cores & Clock Speed Over Time                          ...
The latest mystery: Apple’s A4 (and A5, A6, etc.).26
The ARM Architecture – at the core of Apple’s chips.     Apple SoC Processing Speeds for Single Core, 2007 – 2012     base...
Google’s Android: One OEM and SemiCo at a time.     Android     Release                 C           D          E          ...
Cloud29
The cloud: Massive off-deck computing power.                                      ”In addition to making raw computer     ...
What is “The Cloud”?      A style of computing that provides on demand access to a shared set of      highly scalable serv...
Who is building a cloud?      Facebook – Prineville   Yahoo – Lockport   Google – The Dalles        Apple – Maiden        ...
Stuff you can do with the cloud.             • 88B searches /           • 500M+ active users               month worldwide...
Stuff you can do with the cloud and your phone.34
What’s     Next35
Jevon’s Paradox                                ” It is a confusion of ideas to suppose                                that...
Silicon: Order of magnitude jump in processing power.                                                                     ...
Cloud: 107 = 10M machines, roughly 10x of today.38   Source: Google.
Industrialization of the mobile cloud...                       Cloud                               Device       Today     ...
… will bring massive off-deck computing to mobile.40   Source: Amazon press release, December 2010.
Plenty of cash.     Cash on Hand for Select Tech Titans     Cash and Cash Equivalents, as of 1/26/2011                    ...
As computing gets cheaper…                                                                  U.S. Asset Prices, 1945 - 2008...
… companies consume more of it.                                                     U.S. IT Investment, 1970 - 2008       ...
Think again…                                      ”People tend to overestimate                                      what c...
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A Mobile Centric View of Silicon Valley - January 2011

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A presentation held at Opinno in San Francisco to a delegration from PromoMadrid. Goal was to provide a quick overview of major trends in mobile in 30 min.

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A Mobile Centric View of Silicon Valley - January 2011

  1. 1. A Mobile-Centric Viewof Silicon ValleyPrepared for Opinno & PromoMadridJanuary 31, 2011 Licensed under Creative Commons Attribution 3.0 Unported License (http://www.creativecommons.org/licenses/by/3.0) You are free to Share or Remix any part of this work as long as you attribute this work to SF Mobile (sfmobile.org)
  2. 2. @l1rs Work Network Lars Kamp Lars Kamp Management Consulting Suite 1200 560 Mission Street San Francisco, CA 94105 San Francisco, CA 415.894.5423 415.894.5423 lars.kamp@accenture.com www.sfmobile.org lars@sfmobile.org2
  3. 3. Today’s topics. History Mobile Economics Silicon Cloud What’s Next?3
  4. 4. History4
  5. 5. A note on people’s ability to predict the future. ”People tend to overestimate what can be done in one year and to underestimate what can be done in five to ten years.” J. C. R. Licklider, 1965 J. C. R. Licklider “Grandfather of the Internet”5
  6. 6. Q: Whose mission statement is this? “We have a dream of improving the lives of many millions of people by means of small, intimate life support systems that people carry with them everywhere. These systems will help people to organize their lives, to communicate with other people, and to access information of all kinds. They will be simple to use, and come in a wide range of models to fit every budget, need, and taste. They will change the way people live and communicate.”6
  7. 7. A: General Magic, 1990. You could say “mobile” started here.7
  8. 8. General Magic’s “Magic Cap”. Looks familiar? “Magic Cap” User Interface, 19948
  9. 9. Maybe now? T-Mobile G1 (HTC Dream) User Interface, 20089
  10. 10. Three people from the team that architected Magic Cap. Andy Rubin Tony Faddel Kevin Lynch10 Source: Wired, SF Mobile analysis.
  11. 11. Economics11
  12. 12. Software-driven innovation. ” The problem is, in hardware you cant build a computer thats twice as good as anyone elses anymore. […] But you can do it in software.” Steve Jobs, 1994 Steve Jobs Apple Founder & CEO (on leave), in 1994 Rolling Stone interview12 Source: Rolling Stone Magzine.
  13. 13. Mobile is the single biggest global distribution platform. PC TV Mobile PC Installed Base TV Households Mobile Subscribers 2009 2009 1.2 Billion 1.3 Billion 2009 4.0 Billion 2013 2013 1.6 Billion 1.33 Billion Broadband Pay TV Subscribers Subscribers 2009 2009 420 Million 600 Million 2013 5.5 Billion 2013 2013 648 Million 739 Million13 Source: Gartner, PWC, ITU, IDC, Accenture analysis.
  14. 14. Evolution of “the stack”: Shift from hardware to software. Mobile Device Stack Early days Today Comms User Interfaces, App Stores & Shell & UI e.g. USB, Speaker, Flash Card e.g. USB, Speaker, Flash Card Software User Software External Interfaces, External Interfaces, Application Middleware Middleware Phone Middleware Hardware Platform / OS Core Operating System Chipsets, Hardware Processors, Basebands 1-2 MB of >1 GB of open closed software software Hardware Software14 Source: Accenture analysis.
  15. 15. Value in mobile is moving up the stack… DIRECTIONAL Cost to Per-unit Break-even Mobile Handset Stack & Elements build ($M) Revenue ($) # of units Services and Content $0.1M $1.00 0.1M Screen, User Interfaces, $20M $0.20 100M e.g. USB, Speaker, Flash Card e.g. USB, Speaker, Flash Card User Software Value Flow Application External Interfaces, Middleware $10M $0.10 100M Device Middleware Core Operating System $1,000M $5.00 200M Chipsets, Processors, Radio Basebands Hardware Software15 Source: Estimates based on industry interviews; see David Wheeler “Linux Kernel 2.6: Its Worth More!” for estimating the cost of the Linux Kernel.
  16. 16. … and is fueling the app store economy. Size of Catalog (K) – Apple App Store vs. Android Market 2008-2010, as of Q2 2010, by Number of Available Apps at End of Quarter, Excluding Books 2008 2009 2010 211,000 ~20,000 monthly submission 149,000 Android Market Oct 22 App Store July 11 97,000 Day 1 62 Apps Day 1 74,500 500 Apps 52,610 56,200 ~7,000 monthly 35,200 submission 25,300 20,100 13,200 11,500 740 4,400 2,900 5,200 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes16 books. All numbers rounded.
  17. 17. But: An app is not a business model. Loyalty and Retention Rates of Mobile Apps Over Time, 2010 100% 100% 100% 100% 90% 90% 90% 90% 80% 80% 80% 80% 70% 70% 70% 70%Retention Rate 60% 60% 60% 60% 50% 50% 50% 50% 40% 40% 40% 40% 30% 30% 30% 30% 20% 20% 20% 20% 10% 10% News (9.8%) 10% 10% News (9.1%) Enter- Games (2.4%) 0% 0% tainment (2%) 0% 0% 0 30 60 90 120 150 180 0 0 30 30 60 60 90 90 120 120 150 150 180 180 0 30 60 90 120 150 180 Days After First Measurement Days After First MeasurementSource: Flurry, Accenture analysis. User retention defined by the number of users who downloaded an application and launched the application at any time in the past, and also launched the app within the last seven days, e.g. "30 days ago" represents any new user that launched a given app in January and also again within the last seven days. "60 days ago" represents new users identified in December and also used within last 7 days. Sample based on relevant 5-6 apps per 17 category with at least 120 days of data availability in the Flurry system.
  18. 18. 90% dead after 90 days. iPhone App Retention Android App Retention As of January 2010, by Application Category As of January 2010, by Application Category 30 Days 90 Days 30 Days 90 Days News 52% 20% 58% 18% Social 40% 9% 38% 5% Networking Games 34% 10% 34% 10% Lifestyle 35% 9% 38% 7% Enter- 33% 4% 42% 16% tainment Average Retention 39% 10% 42% 11% Rates18 Source: Flurry, Accenture analysis.
  19. 19. Expect the center of gravity to shift to post-load. ILLUSTRATIVE Ecosystem Revenue Mix Over Time. 100% Pre-Load Revenue Post-Load Revenue Streams Streams 0% “Yesterday” “Today” “Tomorrow” 2000 2010 2015 OnwardsPrimary • Licensing • Licensing • SocialRevenue • Software sales • Ads • AdsModels • Hardware sales • Software sales • Service subscriptions • Service subscriptions • Hardware sales • Transaction fees • Service subscriptions • Privacy (User data)19
  20. 20. Silicon20
  21. 21. The one “law” that drives Silicon Valley. Gordon E. More Co-founder Intel21 Source: Intel.
  22. 22. Moore’s Law – since ~1965 on the desktop.22 Source: Intel.
  23. 23. Coming your way in mobile as well. Baseband “Fat Modems” Baseband & Processors Application Processor Low power silicon for OS-enablement of light High performance, low voice/SMS and long apps running on top power application battery life. of baseband. processors.23
  24. 24. One company at the core of the mobile revolution.24
  25. 25. Massive on-deck computing power. Mobile Silicon: Process Node, Cores & Clock Speed Over Time 2.5GHz 2GHz 4 cores Cortex-A15 2 cores Cortex-A9 1GHz 20nm 833MHz 800MHz 1 core 667MHz 28nm 533MHz Cortex-A8 1 core Clockspeed: ARM11 32nm 1 core 45nm Cores: ARM9 65nm 90nm Node: 130nm 2004 2005 2006 2007 2008 2009 2010 2011 2012 201325 Source: ARM.
  26. 26. The latest mystery: Apple’s A4 (and A5, A6, etc.).26
  27. 27. The ARM Architecture – at the core of Apple’s chips. Apple SoC Processing Speeds for Single Core, 2007 – 2012 based on DMIPs & Clock Speed 2007 2008 2009 2010 2011e 2012e iPxx & TV iPxx & TV ARM Family ARM11 ARM11 Cortex-A8 Cortex-A8 Cortex-A9 Apple Custom DMIPs/MHz 1.2 1.2 2.0 2.0 2.5 2.5 x x x x x x Clock speed 400MHz 412MHz 600MHz 1GHz 1.2GHz 2.0GHz = = = = = = DMIPs 480 495 1,200 2,000 3,250 5,000 Increase in processing +3% +142% +67% +63% +54% speed +942%27 Source: ARM, iSuppli, PDAdb.net, Accenture analysis.
  28. 28. Google’s Android: One OEM and SemiCo at a time. Android Release C D E F G H April Sept Oct May Dec H1 2009 2009 2009 2010 2010 2011 Cupcake Donut Éclair FroYo GiBr HoCo v1.5 v1.6 v2.0 v2.2 v2.3 v3.0 Feature Device HTC Samsung Motorola HTC Samsung Motorola Dream Behold II Droid Nexus One Nexus II Xoom Chip Qualcomm Qualcomm TI Qualcomm Samsung- NVIDIA MSM7201A MSM7201A OMAP 3430 QSD8250 Intrinsity Tegra 2 250, 528MHz 528MHz 600 MHz 998MHz S5PC110 1000MHz 1000MHz28
  29. 29. Cloud29
  30. 30. The cloud: Massive off-deck computing power. ”In addition to making raw computer power available in a convenient economical form, a computer utility would be concerned with almost any service or function which could in some way be related to the processing, storage, collection and distribution of information.” Douglas Parkhill, 1966 Douglas Parkhill “The Challenge of the Computer Utility”, 196630
  31. 31. What is “The Cloud”? A style of computing that provides on demand access to a shared set of highly scalable services. Cloud Origins Cloud Today Cloud Benefits • Cost Reduction Virtualization Lower infrastructure, One computer • Virtualization and energy, licensing and Grid abstracted maintenance costs acting like many • Computing as a • Speed to Market utility Reduces time required to pilot projects + • Scale economies of central supply • Uses massively- • Elasticity / Scalability On-demand capacity and high business agility Grid parallel processing Computing • Geo-distributed • High Performance Many with massive Computing redundancy Provides “infinite” computers computing acting like one capacity as needed31
  32. 32. Who is building a cloud? Facebook – Prineville Yahoo – Lockport Google – The Dalles Apple – Maiden Amazon – Morrow Microsoft – Dublin32
  33. 33. Stuff you can do with the cloud. • 88B searches / • 500M+ active users month worldwide • 1.2M photo views / • 1M+ servers second • 1 PB of data • 50 PB of processed / hour uncompressed data by 2011 • 65 Million users • 90M tweets / day daily • 12 TB incremental • 1,000 servers data / day added / week to accommodate traffic33
  34. 34. Stuff you can do with the cloud and your phone.34
  35. 35. What’s Next35
  36. 36. Jevon’s Paradox ” It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth." William S. Jevons, 1865 William S. Jevons From the Book “The Coal Question”36
  37. 37. Silicon: Order of magnitude jump in processing power. HIGHLY SIMPLIFIED ARM Family ARM11 Cortex Shipment Date 2007 2009 2010 2012 Chip ARM1136 Cortex-A8 Cortex-A9 Cortex-A15 DMIPs/MHz 1.2 2.0 2.5 2.5 “Typical” Moore’s Law x x x x behavior for single Clock Speed 600MHz 1GHz 2GHz 2.5GHz core processors = = = = DMIPs/Core 720 2,000 5,000 6,250 Processing Doubles on average Speed Increase ~9x every ~21 months Cores/Cluster 1 1 2 4 x x x x Clusters 1 1 1 4 Theoretical max computing power = = = = increased through multi-core and Total Cores 1 1 2 16 clustering Total DMIPS 720 2000 10,000 100,000 Processing ~138x Speed Increase37 Source: Calculations based on ARM marketing material.
  38. 38. Cloud: 107 = 10M machines, roughly 10x of today.38 Source: Google.
  39. 39. Industrialization of the mobile cloud... Cloud Device Today HTTP (custom libraries) Tomorrow SDKs39
  40. 40. … will bring massive off-deck computing to mobile.40 Source: Amazon press release, December 2010.
  41. 41. Plenty of cash. Cash on Hand for Select Tech Titans Cash and Cash Equivalents, as of 1/26/2011 44 39 35 27 29 Total of 22 226B 11 10 7 641
  42. 42. As computing gets cheaper… U.S. Asset Prices, 1945 - 2008 Normalized, 1995 = 100 105 Normalized Price: 1995 = 100 (log) Computers and Peripheral Equipment 104 103 Transportation 102 Equipment Other Equipment Industrial Equipment 10 1950 1960 1970 1980 1990 200042 Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.
  43. 43. … companies consume more of it. U.S. IT Investment, 1970 - 2008 Nominal Annual Investment & Investment per Employee 3,500 350B 3,000 300B 2,500 250B 2,000 200B 1,500 150B IT Investment / Employee 1,000 100B 500 Annual 50B Investment 0 0 1970 1975 1980 1985 1990 1995 2000 2005 201043 Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.
  44. 44. Think again… ”People tend to overestimate what can be done in one year and to underestimate what can be done in five to ten years.” J. C. R. Licklider, 1965 J. C. R. Licklider “Grandfather of the Internet”44
  45. 45. 45
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