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Presentation at the Business Growth Initiative on the potential of mobile apps as a micro-enterprise tool.

Presentation at the Business Growth Initiative on the potential of mobile apps as a micro-enterprise tool.

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  • Thanks for the Opportunity to be here and from our perspective—kick off a discussion that hopefully will take us somewhere on this extremely dynamic topicA little of my background:Have had a career in ICT in Government mostly…around 24 years at Bonneville Power Administration…then 6 years at US Agency for International Development (1993-1999)…for the last 10+ years doing a range of ICT related consulting projects, mostly relating to e-gov, e-commerce, rural access, etc., including working with Steve in Sri Lanka and Vietnam on Last Mile projectsOne of my current projects is supporting USAID’s ICT Team in EGAT—working with Joe Duncan in helping him develop a new Global Broadband and Innovations (GBI) Program…within this GBI there is a focus on broadband, innovation, and mobile applications…a thread for our discussion todayI believe you all got a copy of a short paper Steve and I put together as a background for this morning…we’ll be covering some of these materials, but again, with a focus to launch a discussion
  • We’ll use this simple structure to guide our discussions First, I’ll walk us through some information on the mobile Internet market dynamics and conclude with a brief picture of the ecosystem associated with mAppsSecond, Steve will pick up from this mApps ecosystem and talk more specifically about the Public-Private Partnerships that simply fall out of this sector—Steve works with USAID’s ODP/PSA/GDA folksThird, Steve will also discuss the practical aspects of making the numbers work for small entrepreneurs engaged in development mobile appsWe’ll finish our 20-25 minute presentations with the rest of the time spent in an Open discussion
  • If at all possible, We’d like these questions to lodge in the back of your minds as we make our introductory comments….…and ideally have your thinking start to move closer to the front of your mind by the time we finish our introductory comments, so we can have an active and dynamic conversation on this topic—mobile Applications for DevelopmentThe Questions: …read the three questions (included in the paper provided in their invitation)I suspect many of us here have already engaged in this space in one form or another…I know we areHere we’re looking pull out lessons learned--we’ll want to hear of existing projects where they relate to this larger discussion…what are your experiences, successes, failures, lessons learned, missing pieces that may still exist, etc.And if possible, we’d like to go beyond our project-level engagement…explore this as a potential key leverage or inflection point on a grander scale—one that holds potential and seeks global scale and replicationOK, on to set the stage by looking at the current-future market dynamics in the mobile Internet arena…
  • OK, let’s look at the global mobile sector market dynamics
  • First part of this foundation: Telecommunications Matters!We’ve known there has been an ICT-Growth/Income correlation for some years now…But more recently studies out of the World Bank and others, has found a direct causality of ICTs and as shown here, GDP per capita income levelsI suspect most of you have seen this graphic before as it’s now showing up in a range of various WB reports.A couple things to note on the GNI per capita graphic:Note the higher impact for low and middle income countries…ICTs must be filling a hole that exists there than may not exist in more developed countriesNote the higher impact of Internet and Broadband…telecommunications that bring with it more than simply connectivity, also information and transactionsIt should also be noted that the highest impact of Internet and Broadband is likely where it is the least availableIf we’re looking for impact…clearly making Internet and Broadband more accessible and affordable is a place to start…no sense in being too creative hereA couple things on the Telecom Density graphic on the rightNote the mobile explosionNote also that on a global basis, mobile Internet has already passed fixed Internet…this is important when one considered mobile Internet relatively new…the ramp up time has been and continues to be very short…note increased slope and trendTAKE AWAY: Internet and Broadband contribute to economic growth and income levels, and the market place is delivering both at an accelerated rate…
  • …but to temper our enthusiasm just a bit, these graphics give us a picture of fixed and mobile broadband between developed an developing economiesSome observations:Note the focus here is Broadband, not simply Internet accessNote that mobile broadband really didn’t get a start until around 2003…1998 for fixed …a 5 year head start by fixedYet by 2009, mobile has significantly out stripped fixed Internet with regards to numbers of subscribers (not users)This accelerated rate of adoption…adoption at the individual level, presents a significant shift in the way the Internet is access, where it’s accessed from, and what it’s accessed for…we’ll explore this more as we move forward.Key: from my perspective, it’s more than simple numbers.…it’s a fundamental shift…shared desktops and individual laptops to computers connected to the Internet with Broadband in your pocketLike the advertisement some years back, “This is not your father’s Oldsmobile.” ….to “This Broadband Internet is not even your own earlier use of Broadband Internet.”TAKE AWAYS: We are in the middle of a fundamental shift, and while there are huge gaps between developed and developing county access, when it comes to shear numbers, the future of the Internet is mobile
  • I suspect some of you at least are well connected to Mary Meeker’s work…the following are several charts taken from some recent Morgan Stanley materialsThis graphic reinforces this dramatic shift even more.While the focus here is on iPhone and iTouch, we’ll see shortly that this is but the bow wave of what’s taking place on a broader scaleHere the focus is on adoption ratesIt’s not just as we saw earlier, the growth of the mobile broadband Internet infrastructureHere the focus is on adoption rates of mobile versus fixed Internet…where all are zeroed out and tracked over the number of quarters they are in the marketplaceAs noted in the title, the adoption rate of the iPhone and iTouch (iPhone without a phone, but with WiFi Internet access) is 11X was was experienced by AOL in the first 11 quartersThis is over a full order of magnitude…and the rate of adoption if anything, is still accelerating Also significantly higher than other form factors of mobile InternetThis adoption of mobile Internet is not simply build-out related, it’s individual-adoption rate relatedTAKE AWAY: If this same uptake of adoption grabs hold in emerging and developing economies, it seems to me there is a tremendous opportunity of leverage for a wide range of socioeconomic opportunities…that can truly be transformative.
  • This set of graphics looks to address this “looking forward” aspect of mobile BroadbandBoth of these graphics represent 3G subscription ratesThe graphic on the left reflects global subscriptions and puts forward the notion that there is an inflection point, a tipping point at around 20-25%...21 % as shown hereAgain, the graphic on the left shows an estimated global tipping point being put forward as 2010—the year we’re just about mid-point through as we enter June this week.The table on the right disaggregates these numbers regionally and shows that in North American and Western Europe, we reached this tipping point in 2007-200.…I suspect most of you would agree with thisThis same table also estimates that this tipping point will be reached in Eastern Europe in 2010-2011—this year and nextFurther, it estimates this tipping point will be reached in Asia-Pacific, the Middle East, and Africa in the 2011-2012 timeframe—next year and the following yearTAKE AWAY: Assuming for a moment that our profession, international development, is about looking forward and hoping to make a difference in the future by what we’re doing today, it’s clear in my mind at least, that there is a tremendous opportunity—a rolling window of expanding mobile Broadband over the next few years--in both the emerging and developing economies, that we should be focusing on today!
  • This graphic simply shifts our focus slightly into a deeper dive re: applicationsThis mobile broadband is not simply infrastructure and devices…it’s applicationsIt’s the entire ecosystem…again, an ecosystem that is the fastest ramp in historyIt is the ecosystem of personal-level access, the user interface, the development tools, the hardware, the distribution, and yes….also the connectivity, be it WiFi or 3G!!…one could almost say it’s viral…this graphic takes us back to answering part of the first graphic I presented and at least in part in part answers the question, “why does the Internet and Broadband add to GDP growth and GDP per capita?” Why? Because it’s used for a wide range of things.It’s all about the Applications…Note the number of applications available (gold line towards the bottom), relative to the green line…the number of downloads.TAKE AWAY: This truly is a unique phenomenon that in many ways is just now starting to unfold in the emerging and developing economies…and it demands attention and focus by the international development community on a scale to which we have not seen before in the ICT arena—certainly in my going on 17 years, nothing I’ve observed that parallels this current unfolding dynamic.
  • This graphic simply takes these applications and compares the iPhone with other Smartphones and with an average mobile phone user.These are top applicationsNote a few things:Social Networking is number 3Instant Messaging is number 5Note what isn’t here in this top 10 list…e-mail…we’ll get back to this one in our next slideBut note to uses that have potential commercial elements—music, games, video, personal banking, restaurants, online shopping…Smartphones have value in the value-chainAlso note news rates high…better informed citizens…democracy and governance is at least in part about better informed citizens and engaged citizens…News + Social Networking + Instant Messaging should contribute TAKE AWAY: There is a shift in not only the way mobile Broadband provides access, but in WHAT we access through these Smartphones
  • …and perhaps nothing expresses this shift than this graphic…and perhaps nothing holds more clues to our potential leveraging of this emerging ecosystem than what is behind this graphicSome key observations:E-mail WAS the Killer App on the Internet...when the dominant access device was Desktops and Laptops...we're now in the Pocket Age...Social Networking is the Killer APPs...not one, but multiple SN tools - first voice, then e-mail, now a melding of sortsWe’ve all observe the value of SN re: Iran, Nepal…even the recent uproars in Pakistan and Bangladesh--Social Networking is the new Democratizing force.  …earlier it was TV, VHS, PCs, Internet E-mail, now SN on mobile devices + Cloud Computing . Why?  Very simple...Social Networking  takes virtually all the friction out of the system; A majority of people will have mobile phones--increasing number of people have them--can reach more people with them...directly with no intermediary, lower pricing--easier to afford with virtually everyone having available on their person,increasing speed to reach people--near instantaneous and worldwide--as Thomas Friedman has touted...it is a flat world...mobile phones+SN is making it even flatter, quickerTAKE AWAY:  Why can't those of us engaged in the development community figure out how to leverage these very same dynamics to allow us harness the smartphone revolution to significantly...as in SIGNIFICANTLY, for improving economic growth through business-economic networking...empowering at the individual level, taking out the friction...lowering the costs, expanding the reach, speeding up the transactions, etc., etc.?   We should be able to figure something out in this space!...or why can't we as part of the development community use these same tools for improving educational networking, health related networking, etc., etc., etc...even leapfrogging the more traditional approaches we are bounded by because our current institutions "sort of" work...so we keep looking for improvements within the current constructs rather than exploring new and innovative approaches?    
  • *asterik this is an average, but the top 10% of sales leaders skew the data. A typical app sells roughly 1200/month
  • By month 10 Entrepreneur is earning approximately $200/month net after all expenses.Additional benefits of broadband and 3G access
  • What Steve and I want to do is pretty simple…First, I’ll walk us through some information on the mobile Internet market dynamicsSecond, Steve will pick this up and talk more specifically about the Public-Private Partnerships that simply fall out of this sector—Steve works with USAID’s ODP/PSA/GDA folksThird, Steve will also discuss the practical aspects of making the numbers work for small entrepreneurs engaged in development mobile appsThroughout our pitch we’ll seek to imbed an Innovation focus into our discussion…in fact…[Turn slides]…
  • Mobile Apps represent a unique convergence of industry and donor interests
  • What Resources can each side provide that add value to the overall objective?
  • If at all possible, We’d like these questions to lodge in the back of your minds as we make our introductory comments….…and ideally have your thinking start to move closer to the front of your mind by the time we finish our introductory comments, so we can have an active and dynamic conversation on this topic—mobile Applications for DevelopmentThe Questions: …read the three questions (included in the paper provided in their invitation)I suspect many of us here have already engaged in this space in one form or another…I know we areHere we’re looking pull out lessons learned--we’ll want to hear of existing projects where they relate to this larger discussion…what are your experiences, successes, failures, lessons learned, missing pieces that may still exist, etc.And if possible, we’d like to go beyond our project-level engagement…explore this as a potential key leverage or inflection point on a grander scale—one that holds potential and seeks global scale and replicationOK, on to set the stage by looking at the current-future market dynamics in the mobile Internet arena…
  • This graphic simply gives us an idea of what these applications are, and how much they are used.The comparison is the average US cell phone user on the left versus the iPhone user on the right – shown in minutes per dayA couple things to note:While voice use is lower on the iPhone as a percent--from 70% to 45%, with the overall minutes per day increasing from 40 minutes to 60 minutes, in fact this is no significant difference—one minute is all (28 minutes to 27 minutes)The difference is in the increased reliance on the mobile device for other usesNot only significant in the increase %, but perhaps more importantly, increase in the base use—a 50% increase in use…most all of it in applications that require Broadband accessTAKE AWAY: These expanded uses of Smartphones represent income to the broader mobile ecosystem—to the handset manufacturer who makes a better device, to the carrier who sells more minutes, to the application developer who makes and sells the application, to the content company to produces the music, etc. Can we take advantage and further leverage this current dynamic within the development context to enhance or accelerate?

Mobile Apps for Development Mobile Apps for Development Presentation Transcript

  • mApps4D: Harnessingthe Smartphonefor Development
    Discussion @ Business Growth Initiative3 June 2010
    Steve Schmida: SSG Advisors
    Darrell Owen: Owen&Owen
  • mApps4D: Challenge & Opportunity
    • Mobile Sector Market Dynamics
    • The Mobile Apps Entrepreneur
    • Public Private Alliances
    • Open Discussion
  • mApps4D: Questions for the Morning
    • To what extent is USAID utilizing mobile applications in any of its SME development programs already? Are there countries or regions where a mobile apps-driven strategy makes more sense?
    • What types of mobile applications might be most in demand in the markets where USAID is promoting entrepreneurship?
    • What are the additional pitfalls and risks of a mobile applications SME/Micro-enterprise strategy (IPR, lack of collateral for loans, payment risk, etc)?
  • mApps4D: Challenge & Opportunity
    • Mobile Sector Market Dynamics
    • The Mobile Apps Entrepreneur
    • Public Private Alliances
    • Open Discussion
  • mApps4D: Telecom Market Dynamics
    WB’s ICT4D – Extending Reach & Increasing Impact
    ITU’s Measuring the Information Society 2010
  • mApps4D: Fixed & Mobile Internet
    http://www.itu.int/ITU-D/ict/publications/idi/2010/Material/EMBARGO2%20couv%20ICT%20dev%20index2009%20sans%20sap.pdf
  • mApps4D: Accelerated Adoption
    Source: Morgan Stanley - 12 Apr 2010 – Mary Meeker, Scott Devitt & Liang Wu
  • mApps4D: Reaching 3G Tipping Point
  • mApps4D: It’s about the Apps!
  • mApps4D: mApps Content/Use
  • mApps4D: Social Networking
  • Mobile Apps: An Exploding Opportunity
    • Smart phones now marketed in 96 countries (50 million devices)
    • More than 200k apps available
    • iPhone leads, but Android closing fast
    • Average app sales: 100k in 260 days*
    • Median sales price: .99
    • Average Development Cost: $6400
    • Substantial ROI
    Source: Techcrunch.com
  • Why Smartphones are poised to take off in developing countries
    Handset unit prices expected to drop to $50 in 2010
    Payments system already in place (pre-paid, post-paid)
    Smartphones will be the sign of middle class attainment for the next decade.
    3G experiencing high double and triple digit growth in Rwanda, Cambodia, Philippines, Vietnam (gigaom.com).
    http://papr.intel-research.net/intel-papr-reassessing-ictd.pdf
  • mApps4D: Challenge & Opportunity
    • Mobile Sector Market Dynamics
    • The Mobile App Entrepreneur
    • Exploring the Feasibility
    • Open Discussion
  • Typical Challenges Facing an Entrepreneur
    • Access to Capital
    • Marketing
    • Distribution
    • Difficulty Getting Paid
    • Low growth prospects
    The Promiseof Mobile Apps
    • High growth potential
    • low technical barriers to entry
    • Instant market access
    • Existing payments infrastructure
    • Recurring revenue stream
    • Global Tech, Local Markets
    Entrepreneur: Challenges & Opportunities
  • Input Requirements
    • Trained IT entrepreneur
    • 1 Net Top PC and Printer with Broadband
    • 2 3G smart phones
    • Work space with electricity
    • Access to Apps Store Environment
    Operating Assumptions
    • Entrepreneur produces 6 apps/year
    • Average 220 sales/app/month for 8 months
    • Gross from each sale $.31 (factors in apps store take)
    • Entrepreneur takes $800 loan @25% for 24 months for both cap ex and working capital
    Apps Entrepreneur: Requirements-Assumptions
  • Back-of-the-Napkin Numbers
    • Cash flow positive by month 5
    • Net income of $200/month by month 10
    • Break even in less than 2 years
    • Does not include additional benefits of 3G and Broadband access
  • 18
    End Users
    Banks/ MFIs
    Investors
    Apps
    Entrepreneur
    Handset OEMs
    Mobile Carriers
    (MTN, Vodacom)
    Diaspora
    OS Firms (Google, MS)
    Donors
    Government
    Retail
    Think Tanks
    Mobile Apps Entrepreneur Cluster
    Training Institutions
  • mApps4D: Challenge & Opportunity
    • Mobile Sector Market Dynamics
    • The Mobile Apps Entrepreneur
    • Public Private Alliances
    • Open Discussion
  • Alliances: Shared Interests
    Shared Interest:
    Rapid growth of mobile applications developer firms servicing local, regional and national markets.
    Industry business objective:
    Increased 3G handset and connectivity sales.
    Donor/Host Country Objective:
    Increased employment and income through Micro/SME Development
    Graphic courtesy USAID’s ODP/PSA
  • Alliances: Resources
    Thousands of new entrepreneurs producing content/services and generating income over 3G networks
    Industry
    IT Training
    SDK
    Apps Store
    Marketing
    Discounts
    Donor/H-C Government
    Access to finance
    BDS
    Content
    Network investment
  • mApps4D: Questions for the Morning
    • To what extent is USAID utilizing mobile applications in any of its SME development programs already? Are there countries or regions where a mobile apps-driven strategy makes more sense?
    • What types of mobile applications might be most in demand in the markets where USAID is promoting entrepreneurship?
    • What are the additional pitfalls and risks of a mobile applications SME/Micro-enterprise strategy (IPR, lack of collateral for loans, payment risk, etc)?
  • mApps4D: Pursuing the Opportunities
    Comments-Discussion
  • mApps4D: Backup Slides
  • mApps4D: Mobile & Internet
  • mApps4D: Fixed & Mobile Internet
  • mApps4D: Accelerated Adoption
  • mApps4D: Handsets and OpSystem
  • mApps4D: mApps Content/Use
  • mApps4D: mApps & Cloud Computing
  • mApps4D: Types-Numbers of mApps
  • mApps4D: Really…it’s the Apps!
  • mApps4D: Social Networking is Global