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Mobile megatrends 2011 (VisionMobile)


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An analysis of the Megatrends impacting the Mobile Industry in 2011. Researched and compiled by VisionMobile.

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Mobile megatrends 2011 (VisionMobile)

  1. VisionMobileMobile Megatrends 2011how telecoms business is transforming in the software era. updated 8 March 2011 Copyright VisionMobile 2011
  2. Knowledge. Passion. Innovation. Andreas Constantinou Michael Vakulenko Matos Kapetanakis (c) VisionMobile 2011Licensed under Creative Commons Attribution 3.0 Unported License ( are free to Share or Remix any part of this work as long as you attribute this work to VisionMobile ( Copyright VisionMobile 2011
  3. VisionMobile researchDistilling market noise into market senseResearch Training Market maps Strategy definitioncompetitive analysis, open source economics, Competitive landscape maps of strategy design, ecosystemcommissioned research, Android commercials, the mobile industry positioning, product definitioncompany due diligence mobile industry dynamics Developer Economics 2010: Everything on mobile developmentActive Idle Screen Open Source ChessboardWho will own the business impacts of mobile open Mobile Megatrends series source, the competitive landscape and Mobile Industry Atlas, 3rd ed.screen? 1,100+ companies, 69 market sectors how to design your company strategy Top-100 analyst blog 4,000+ subscribers 20,000+ monthly uniques 90% mobile industry insiders GPLv2 vs GPLv3 White Paper The Android Game Plan the commercial mechanics 100 million club behind Android and how tracking successful businesses Google runs the show in mobile Copyright VisionMobile 2011
  4. Trusted by industry brandsClients selected VisionMobile clients 2008-2010 Copyright VisionMobile 2011 Copyright VisionMobile 2007-2010
  5. Mobile Megatrends 2011The DELL-ification of mobile Software: new era for telecoms Experience ecosystemsHow the mobile handset landscape is and the new rules for innovation how telecoms + internet convergencebecoming much like the PC is leading to the next megabrandsApps are the new web open + closed Developers, developersWhy apps are the new information use of open + closed strategies to the engine behind telecoms innovationparadigm for web 3.0 commoditise + protectCommunities: a new currency Stuck in the telecoms age Augmented EconomicsCommunities will provide the main how carriers are stuck in the telecoms age and making money at the edge of realitydifferentiation above price, design and content how to compete Copyright VisionMobile 2011
  6. The DELL-ification of mobileHow the mobile handset market is approaching PC-like commoditisation Copyright VisionMobile 2011
  7. Internet players agenda drive top-5 OEMs and OEM market is fragmenting, approaching the PC market !""" !""! !""#$ !""%$ !""&$ ($!")"$Market share of top-5 OEMs (source: Gartner) !$# $%# $&# "* (# !"# Copyright VisionMobile 2011
  8. Profits are driven by end-to-end playersand away from the old top-5 OEM league source: Deutsche Bank Copyright VisionMobile 2011
  9. OEM strategies: volume vs profit strategies = strategy expectations$ profit per unit data source: Deutsche Bank 2010 market share % Copyright VisionMobile 2011
  10. OEMs at different stages of integration Three roles for handset manufacturers across the double helixHorizontal player structure Vertical player structure Leaders: new product experiences and enviable marginsAssemblersrazon-thinmargins wannabee innovators wannabee leaders Innovators: incremental innovation strong brand, performance, good looks and services Copyright VisionMobile 2011
  11. Lead, innovate or assembleThe new role models for OEMs in the post-Android era1. Assemblers: Razor-thin margins10s of assemblers use Android to deliver ready-to-market smartphones with complete service and appsecosystem competing head-to-head with major OEMs. iPhone me-too experience at $100 retail.2. Leaders: unique product experiencesManufacturers who can masterfully integrate hardware + software + services + industrial design into newproduct experiences - from phones and tablets to TVs. Unique product experiences at $500 retail.3. Innovators: incremental innovationThe old top-5 OEM guard. Differentiation is on strong brand, performance, good looks and services.4. Mass producers: catering to developing markets ?Mass producers rely on huge economies of scale to break even at $50, but make up nearly 50% of unit salesin the mobile handset market. Copyright VisionMobile 2011
  12. The innovators are squeezed in Revenue pyramid performance pressure Leaders: new product experiences Innovators: incremental innovation Assemblers: price razor-thin margins pressurePyramid squeeze is accelerated by Google’s Experience handsets (fast hardware/software evolution) and Windows Phone Copyright VisionMobile 2011
  13. DELLification in 2015 closely modelling the PC business Profit pyramid Revenue pyramid Present-day example Leaders Role model: Apple $37.5B 5% @ $500 Innovators Role model: Samsung $90B 25% @ $250 Assemblers Role model: Dell $56B 25% @ $100 s ce Mass producers vi Role model: Nokia ? de $37.5B 45% @ $50 B1.5 $200B Copyright VisionMobile 2011
  14. OEM + Android: winners and losersThe winners: The losers:low cost assemblers ‘old guard’ OEMsCost structure optimised for razor-thin margins Cost structure requires high-marginsAndroid is a long-term opportunity for global reach Android is a short-term life support No Name source: VisionMobile Copyright VisionMobile 2011
  15. The new world: Innovate or be replacedThe new rules of the handset industry1. Software and hardware is commodity- Software is a loss-leader, monetised by ads (Google), hardware (Apple), content (Amazon), services (RIM)- Software is provided a la carte and pre-integrated by chipset providers (e.g. Qualcomm, MediaTek)2. Points of differentiation rapidly disappearing- Android provides out-of-the-box, complete ecosystems; OEMs compete on equal footing to assemblers3. The search for innovation is onOEMs are search for new models of innovation beyond price, brand, performance and marketing:- communities BlackBerry messaging or facebook deals- made-to-order handsets; copying DELL’s PC model- white label services for carriers where OEMs trade service revenues for carrier subsidies- micro-retailing ‘slotting’ promos across distribution regions and channels Copyright VisionMobile 2011
  16. Software: the new era for telecoms and the new rules for innovationimage source: maschinenraum / Flickr Copyright VisionMobile 2011
  17. $$$ and software DNA are key for platforms20 dead platforms in the last 10 yearsInternet Danger OS Android Chrome OS SavaJe OSPC Trolltech $30M A la Mobile iOS Nokia GEOS IXI Mobile Palm 5/6 Azingo Motorola L-J Comneon Apoxi Access ALPMobile e-SIM Intrinsyc OS OpenWave MIDAS Sasken Aria Mizi Prizm SKY-MAP MOAP UIQ TTPCom Ajar OpenMoko 2000 2001 2002 2007 2008 2009 2010 = dead end bubble size = company revenues Copyright VisionMobile 2011
  18. The battle for mass-market smartphone reach OEM internal licensable !600+ computers mobile !400device retail price connected Nokia Series 40 phones Samsung SHP !100 LG Wise !50 phones voice Note: OSes omitted: Myriad, Mediatek OS, Mango (Qualcomm), Koretide Elastos 14 out of 15 platforms are monetised indirectly by complementary products 11 out of 15 platforms have developer ecosystems or industry consortia built around them Copyright VisionMobile 2011
  19. The battle for ecosystem completeness Carriers Nokia RIM Apple Qualcomm Google facebookComponentsSocial networksCloud servicesDeveloper ecosystemNetworkUser interfaceOperating systemHardware IPManufacturing denotes where vendor started Copyright VisionMobile 2011
  20. Huge gap between telecoms & software worlds success as defined in 2010success asdefined in2005 Copyright VisionMobile 2011
  21. software: turning telecoms upside down VA3#234+53#41G#N::1#L8?87-W#XX#C+1+-.D-E+,3#Y3138?5A# 234+531#6-,7#0-#7803#9/:#0-#;%#)"<# J/*E3?#-K#8::1#848+,8E,3#+.#8::#10-?31#9;%#)"<# !"!# 6>*E+8.# $&%# internalised $!# +LA-.3# )H&# 9+M6<# the new !!# N.7?-+7# I&# networks %&%# O848#DP# !(&# dualstasis ""(# Q,85RQ3??># "&# personality back to "&(# S,81A# (&# T+03# square one back to U+.7-F1# # I# square one *+,,+-.#/.+01# LA-.3# 8::1# %&(# %&# )&(# )&# "&(# "&# (# # # (&# "&# "(&# )&# )(&# %&# =-:>?+@A0#B#C+1+-.D-E+,3#)"# FFFG4+1+-.*-E+,3G5-*# Copyright VisionMobile 2011
  22. Huge gap between telecoms & software worlds Telecoms world Software worldSuccess factor installed base number of appsPrimary customer consumer developerSpeed of innovation 1 OS version every 2 years 5 OS versions/yearTime to market 1-2 years 1-2 weeksType of services comms-centric catering to entire needs portfolioRisk-taking predictability / de-risking entrepreneurship / uncertaintyAccess to innovation 100s of close partners 100,000s of developersBusiness model B2B licensing B2C sales/ads/in-app salesChannel to market voice, text and web smartphonesDiscovery On deck / on device App storeFirst step “we need to sign an NDA” “we need to download the SDK”Process Waterfall: RFI, RFQ, deliver, QA Agile: add feature, build, test, repeatAttitude “developers will come to us” “we need to go to developers” Copyright VisionMobile 2011
  23. The new rules of innovation1. Speed of innovation defined by internet companies, not hardware / networks- Companies from the Internet domain (Apple, Google, Facebook) out-innovate companies from the mobileindustry domain (Nokia, Samsung, Sun) and the networks domain (Vodafone, China Mobile)- Internet players are at top of the food chain and are becoming increasingly assertive- Yet network operators still hold most value (insights and retail channels) in the last mile to the consumer2. Innovation requires new competence and regional presence- California is the center for software and services innovation. Japan/Korea is the center of CE innovation.3. If you can’t innovate in software, you will be replaced- The evolutionary game has just accelerated 10-fold.- Players who cannot evolve at software speeds will eventually be replaced by alternatives(oftware has superseded carrier efforts in non-comms user needs, location, billing, discovery, authenticationand mobile termination) Copyright VisionMobile 2011
  24. Experience Ecosystemstelecoms + internet convergence is leading to experience ecosystems Copyright VisionMobile 2011
  25. telecoms + internet + PC + consumer electronics = ?our definition of convergence has changed!""($ !")"$ !")+$ ,$ Copyright VisionMobile 2011
  26. Is the future of convergence?-.$/.012 Leaders Innovators3$455.678.09$701$:5$7$;0:<1$=70 Assemblers3$>5?0.:?$:9$/7@:5A$9/708$?16:<19$;.99:BC13$>DE$B1<./:5A$?1F7<8.$:5$GH$?16:<193$I159.09$J$$F.0/$F7<8.09$K$?:61091$1L;10:15<193$M161C.;10$1<.9N981/$:9$;708$.F$<.01$1L;10:15<1 Copyright VisionMobile 2011
  27. Convergence is about experience roamingConvergence is about having an experience that roams consistently across ‘screens’ experience roaming across screens Social circle Developer ecosystemconvergence = User data roaming Service roaming x User interaction design Industrial design Brand Copyright VisionMobile 2011
  28. Apple is the poster child of experience roamingApple leads by example, by delivering a consistent experience across divers screens Experience roaming Across screens Social circle Ping iPod Apps ecosystem App Store iPhone User data roaming MobileMe iPad Service roaming iTunes, AirPlay Mac User interaction design iOS Apple TV Industrial design Apple ? Brand Apple Copyright VisionMobile 2011
  29. The next battle is for Experience EcosystemsExperience Ecosystems create major exit barriers and drive cross-sales; they are therefore asustainable strategy for Innovator OEMs needing to survive margin pressures. network network effects effects Copyright VisionMobile 2011
  30. the future of convergence is experience roaming convergence = screens + experience!""($ !")"$ !")+$the future of convergence is in a single experience + developer ecosystempowered by ARM hardware across mobile, PC & embedded Copyright VisionMobile 2011
  31. Apps are the new webWhy apps are the new information paradigm for web 3.0 Copyright VisionMobile 2011
  32. Everyone wants their own app store but few are above the radar = number of apps when above 10,000OS vendorsOEMs Carriers Independent Source: Distimo, March 2011 Copyright VisionMobile 2011
  33. App stores are about control, not $$$ App Stores are a control point for: and an opportunity for: - discovery of applications access to app discovery as a control point - as a gateway to affiliate, matchmaker and curator business models - distribution of applications e.g distribution and delivery of apps as a control point - e.g. Android uses Market to enforce compliance requirements on handsets - monetisation of applications an opportunity to extract a commission in the form of revenue share for paid apps and in-app purchases - exit barriers for users app stores create ‘sticky gardens’; if users churn they lose their apps - consumer insights an opportunity to optimise device and service targeting Copyright VisionMobile 2011
  34. Building an app store is not easyMobile Application Stores (end- 2010) Android BlackBerry App Store Ovi Store GetJar Market App WorldFundamentalsOwner Apple Google Nokia RIM Getjar Networks via App Store on iPhone via Market on Android via download, and pre- via web onlyDistribution model and iPod Touch devices (closed source) loaded from 4Q09 ? (direct + white label) Java, Flash, Android, RIM,Platforms OSX Android Symbian, S40 BlackBerry WinMo, Palm, AndroidKey figuresSales base 90M 77M 440M 125M 0 (plans to pre-load iconsince launch (2010 est.) shortcut on phones)Downloads per month 510M 270M 90M 60M 90Mas of end of 2010 (est.)Cumulative downloads since 10B 2.5B N/A N/A 1.6Blaunch as of end of 2010 (est.)Applications 300,000 130,000 25,000 18,000 76,000to end of 2010 (est.) 70% to developer 70% to developer Ad-based appsRevenue model 70% to developer 30% optional to operator (less w/ carrier billing) 70% to developer + paid placement source: VisionMobile research, DistimoNote: The sales base represents mobile devices sold and does not include tablets or other connected devices Copyright VisionMobile 2011
  35. Why is building an app store so hard? App stores need 5 genes from 5 species across the value chainGenesSpecies platform mobile handset platform brands and companies carriers & OEMs companies retailers payment brokers Copyright VisionMobile 2011
  36. 3 pillars to the app store evolution 2011-131. Merchandising: App stores will take retailing where it’s never been before- app retailing is bottleneck, resulting in price erosion as developers drop prices to bubble up to the top-25.-This will drive retail sophistication: App Malls (shops-in-shop), bundles, time-limited offers, friendendorsements, inventory micro-targeting, gift/beg options, second-hand apps, offers tied to carriers, etc2. Diversity: App Stores will cater to 100s of niche segments;Genre-centric stores (Games store), lifestyle-centric stores (e.g. sports or clothes brands), specialist content ( or enterprise), region-centric stores (e.g. Seattle apps)3. Low barriers: App Malls will enable low-cost shops-in-shop setupsSDP vendors will offer the infrastructure, catalogue and recommendations technology allowing wannabeapp retailers to be setup at very low cost, with proven revenue models (setup fee + rent + sales commission) Copyright VisionMobile 2011 Copyright VisionMobile 2007-2010
  37. Apps succeed where the web failed- 2007: voice, text and web was main channel for servicesthe old school of mobile services: voice, texting, ringtones, televoting, MMS, Mobile TV,..- 2011: 500,000+ applications on smartphones- Apps are the single biggest digital channel since the web- There are apps springing up everywhere there is a websitefor every website, for every brand and for every corporate intranet- Apps succeeded where cross-platform frameworks failedMobile web pages and widgets are poor alternatives to appsJava and Flash failed to pick up where web left off- The web is now the lowest common denominator across screensacross devices, the living room, the PC and the car Copyright VisionMobile 2011
  38. what is are apps?apps are a new information paradigm For.. Mobile apps Web pages packaging Self-contained Set of pages personalising access to location, explicitly typed info only contacts discovering app store text results or URL monetising micropayments ads interacting touch, sensors, keys mouse, keys measuring downloads economy attention economy .. information Copyright VisionMobile 2011
  39. Web 3.0 will adopt the app paradigmWeb apps will proliferate in mobile handsets driven by- web benefactors Google, Microsoft, Apple- technology commoditisation; WebKit and V8;- consistent technology adoption WebKit on >350M handsets up to June 2010- content owners with most assets on HTML/web- platform vendors seeking to modernise their developer platformse.g. WebOS vs Palm OS, RIM WebWorks vs BlackBerry OS 6, Nokia WRT. BREW to follow?- and “buy in” to a developer community and a “hype-ready” platformbuilding a developer community is extremely expensive. It comes for free with web technologies- the need to tap into new developer segments from the web domain1.5 million web developers most of which are new to mobile- The need to reduce development costs for cross-screen appsmobile, tablet, PC, TV, consumer electronics, automotive, .. Copyright VisionMobile 2011
  40. Google under threat in web 3.0Google rose due to openness, info chaos and lack of monetisation- the open (crawlable) web,- the lack of information semantics (needing Pagerank to create order out of chaos)- the lack of a micropayments mechanism on the web (increasing demand for ads)Google is now threatened from web silos, app stores and micropayments- closed web silos (social networks like Facebook and app stores like Apple store)- semantic information discovery in app stores (reducing greatly the search complexity)- pay-per download, virtual goods and proximity payments (reducing the need for ads)To survive, Google is trying to outrun the market trends- launching is own walled gardens (Orkut and Buzz), its own app stores (Android Market and Chrome Web Store) and integrating a payments technology (NFC) within Android handsets Copyright VisionMobile 2011
  41. Open + closed: two sides of the same coinuse of open + closed strategies to commoditise + protect Copyright VisionMobile 2011
  42. Open is the new closed - Android, MeeGo, Webkit, Qt, Maemo, Eclipse, Linux all use open source all projects use an open source license for the public source code - Open source licenses are standardised and well understood 3 licenses used most often in mobile projects (GPL, LGPL, APL) - But an open source license is only the tip of the iceberg a license determines access to the project (e.g. Android public source code) - Governance is what determines the rules of the game the governance model determines access and influence into the product (e.g. Android handsets) - Open licenses are used with closed governance many projects restrict governance while maintaining an open source license Copyright VisionMobile 2011
  43. Closed governance is used to controlclever use of governance models can be used to control products based on OSS license type dual license (commercial + copyleft) Qt strong copyleft (GPL) Linux kernel weak copyleft Foundation (LGPL, MPL, EPL,..) Foundation WebKit permissive (APL, BSD, MIT, ...) Android open community managed community autocratic community governance model (simplified) Copyright VisionMobile 2011
  44. What are the criteria for ‘openness’ ? Access • Is source code available to all without discrimination? • Are project mailing lists, forums, bug-tracking databases and developer tools available to all? • Is the project roadmap available publicly? Development • Are decision-making mechanisms transparent and accessible? • Is the code contribution and acceptance process clear and accessible? • Are the requirements to become a committer clear and equitable? • Can you identify who the committers to the project are? • Are the requirements to become a reviewer clear and equitable? • Can you identify who the reviews to the project are? • Does the contribution license require copyright assignment (vs. a copyright license) Derivatives • Are trademarks used to control compliance and use of the project? • Are go-to-market channels for Application Derivatives constrained? Community • Do different community members have different rights? Copyright VisionMobile 2011
  45. Openness to commoditise product complements beyond open source, openness is used as a business strategy to commoditise product complements while protecting core assets Windows iOS Android BlackBerry Symbian PhoneBundled services Closed Open Closed Closed OpenApp developers Curated Open Curated Curated CuratedDevice vendor Closed Open Open Closed OpenSoftware platform Closed Closed Closed Closed CuratedHardware platform Closed Curated Closed Closed Open Copyright VisionMobile 2011
  46. Developers, Developers, Developersthe engine behind telecoms innovation Copyright VisionMobile 2011
  47. Based on Mobile Developer Economics 2010 - Analysis of the developer experience from design to monetisationFree download: www.Developer - Across all 8 major platforms - Based on a sample of 401 mobile app developers - With significant experience in mobile development More than 60% of respondents have 3+ years of experience in app development. Nearly 30% have won one or more developer awards Copyright VisionMobile 2011 Copyright VisionMobile 2007-10
  48. The diverse world of software developersWith different business models and incentives content publishers Internet service providers system integrators mobile games developers software houses independent developers apps development software integration agencies services Copyright VisionMobile 2011
  49. Android has biggest mindshare “ Android is better than other-Android has biggest mindshare platforms in terms of tools,- Symbian/Java down from #1/#2 in 2008 platform features, and it’s easier to stand out as- Most developers work on multiple platforms developer.”The average is 2.8 platforms, across sample of 401 developers Android developer Copyright VisionMobile 2011
  50. Android 3x easier to learn than Symbian Copyright VisionMobile 2011
  51. Developers becoming market savvy “ technical considerations areCommercial above technical reasoning irrelevant, the choice of-Large market penetration (70% of respondents) is platform is ALWAYSmore important than ability to code & prototype quickly (45%) marketing-driven.”- Revenue potential (55%) is more relevant than Mobile web developergood documentation (35%) Copyright VisionMobile 2011
  52. App Stores reduce time-to-market by 3x “ App Stores minimised time-to-shelf from 68 days to 22 days and halved time-to-payment Copyright VisionMobile 2011
  53. The app developer journey The many facets of the app developer experience - platform hype - developer certification - analytics & sales tracking - addressable market - app signing, certification & approval - user ratings (devices/regions) - regional testing & sandbox networks - user support - platform features - beta testing with peers and end users - application updates - learning curve & coding effort - localisation frameworks - cross-selling - conferences & competitions - packaging and SKU management tools - privacy compliance * * * develop, application platform market retailing & in-life debug & planning selection readiness monetisation application use support- audience targeting - IDEs, SDKs and documentation - go-to-market channels- concept design - UI tools - promotional tools- feature design - emulator and on-target debugging - co-marketing programs- prototyping tools - community & official forums/websites - revenue models- market research - profiling tools - billing & settlement- focus groups - test frameworks - porting tools*: mostly applicable to developers who sell apps - premium technical support Copyright VisionMobile 2011
  54. Key developer pain pointsbased on Developer Economics 2010 research App submission & certification Application marketing application certification is expensive, approval takes too lack of effective marketing channels to increase long, and signing is complicated app exposure and discovery develop,application platform market retailing & in-life debug & planning selection readiness monetisation application use support most vendor effort goes here Localisation Dubious long-tail economics lack of localised apps for most regions, lack of average RoI through an app store is much less than localisation tools for developers the cost of producing the app Copyright VisionMobile 2011
  55. Are you a mobile developer?Want to share your own views on app development?Join in Developer Economics 2011.Have your say on the hottest issues in app development and win a $1,500 Amazon until end March 2011. created by sponsored by Copyright VisionMobile 2011
  56. Communities: the new currency Copyright VisionMobile 2011
  57. Communities are the new frontierBuilding a brand, product or technology is scienceBuilding a community is a form of artWhether it’s a consumer, enterprise or a developer communityNew techniques are emerging; game mechanics and religion engineering Copyright VisionMobile 2011
  58. you can buy an audience can’t buy a communityan audience is people who interact with a service.a community is a network of people who interact amongst themyou can buy an audience (eyeballs or subscribers)but you can’t buy a community (network interactions) Copyright VisionMobile 2011
  59. Communities are the new differentiatorService brands, OEMs and carriers have tried to create own communitiesBut found that community creation needs a very different rulebookAnd ended up partnering with communities (Facebook, Twitter, etc)Exclusive deals with communities will be the new differentiator aboveprice, design and premium content. Copyright VisionMobile 2011
  60. Communities are the new currencyZyngas CityVille grew to 100 million users in just 43 daysFacebook is a platform between 500M+ users and 2.5M+ developersFacebook is #1 social network across the world except China, Russia, Brazil, JapanSkype: 8 million paid users and 25% of global international calling traffic Copyright VisionMobile 2011
  61. Carriers: stuck in the telecoms ageand how carriers can compete Copyright VisionMobile 2011
  62. Carriers in the midst of an identity crisisCarriers are telecoms-age species in a software age- Carriers have grown in the telecoms age; this affects their ability to adapt and their speed of innovation..In an identity crisis- Carriers are still undecided as to whether they want to be an access company (e.g. LightSquared, KPN), asupermarket (own services), a shelf (retailer/curator of 3rd party services) or a broker (matchmaker betweendevelopers and consumers). They want to be everything to everyone.Losing battle after battle for control points- non-communication needs (apps), location (GPS), billing (app stores), service retailing & discovery (appstores), authentication (Twitter/facebook), mobile termination (Google C2DM), subscriber activation(iPhone soft SIM?)With no innovation in their core business- voice, texting and SIM cards have seen no innovation in the last decade. Copyright VisionMobile 2011
  63. Taking baby steps in the software ageCarriers don’t know how to use software- Carriers software efforts are mediocre; see Vodafone VSCL, VFX and widgets- Using WAC to profit from apps, when Apple/Google are not profiting from appsCarriers are accelerating the PC-like commoditisation of handsets- skewing the natural OEM selection process (by ranging handsets on a OS basis) and forcingInnovator OEMs to struggle while nimble assemblers thrive- The $100 smartphone means loss of subsidy power for carriers, therefore loss of differentiationCarriers are funding their antagonists- most Android projects 2007-2009 were carrier-funded.- Android and iPhone are playing AT&T and Verizon like puppets on strings; e.g. Verizon nowheavily marketing iPhone, while AT&T heavily pushing Android. Copyright VisionMobile 2011
  64. The real value of carriersThe real value of carriers is still untapped1. Leverage apps to drive core business, not generate revenues- Deliver voice and messaging apps that build on core network business, at 10x deployment speeds- quit pushing for higher communications ARPU, but leverage apps to extent revenues across untappedsegments of consumer spending portfolio (transport, health, food, housing, etc)- expose network APIs that drive lock-in to core business, not APIs that generate revenue- leverage apps to drive premium customer acquisition, customer retention and increase switching costs2. Divide and conquer among app stores- Don’t create new app stores (WAC) but divide and conquer among existing app stores- Create shop fronts for app retailing and promotions- Monetise by helping developers target apps to the right demographic in real time- Offer recommendation services by tapping into users’ social graph Copyright VisionMobile 2011
  65. The real value of carriers3. Increase power over OEM suppliers- Shift handset purchasing model to a performance based per-device bonus based on hitting ARPU,messaging and churn targets; leverage on network analytics.- Resist a price war on handsets by favouring an oligopoly of traditional suppliers4. Become the VISA of mobile- aggressively grow carrier billing usage via in-app payments- provide micro-billing at VISA-like rates activated via SMS5. Invest in retail differentiation- as devices commoditise, retail will become a stronger control point for customer acquisition- Invest in retail differentiation, for example visual service retailing, bundling services/apps in handsets,deploying handset PoS configurators and carrying out PoS customer segmentation analysis. Copyright VisionMobile 2011
  66. The real value of carriers6. Customer experience management- Identify influencers and improve lifetime value metrics- Understand customer behaviour and enable behavioural targeting by third parties7. Drive wholesale business beyond mobile- Drive wholesale model in CE business (ala Kindle) to de-risk and differentiate bandwidth pricing8. Handset customisation: focus on merchandising and addressbook- focus on a single app (active idle screen) to be provisioned on all smartphones + some Java handsets- idle screen app can encompass service merchandising/promos and addressbook functionality- leave all other apps to 3rd parties! Copyright VisionMobile 2011
  67. a note of cautionis WAC repeating history mistakes?- WAC is a framework for creating carrier-owned app stores even if carriers don’t have most of the genes to create their own app store- and making money from apps when Apple/Google use apps as a complementary business, not as a revenue generator- Needs software agility, but moves with telecoms rigidity 12 months since announcement and no distribution channel, no marketplace, no billing Telecoms rigidity and ‘design by committee’ is the key reason why LiMo failed- Smartphone focus, but feature phone opportunity Smartphone focus (Opera, S60, iPhone), where competition is fierce. Opportunity is in feature phones but challenge is fragmentation of widget runtimes and buying power - why i-mode alliance failed.- Distribution channel will fail once runtimes fragment Same reason why a Java app store would fail.- Distribution will fragment among carriers Each carrier to have different app requirements and revenue shares Same reason while the BREW app store (since 2001) failed to reach Apple’s proportions Copyright VisionMobile 2011
  68. Augmented economicsMaking money at the edge of reality Copyright VisionMobile 2011
  69. Augmented economics: the study of the economy createdby superimposing value on top of our physical world Copyright VisionMobile 2011
  70. What is augmented economics?making money by connecting the physical world with virtual worlds O)2&P$01615Q19R$+!(E$Q9109$S!""TU O++"E$01615Q19R$ G:8N6:CC1V$)""E$Q9109$:5$#($?7N9 X8W1$;..0$/75Y9$7QA/1581?$017C:8NX O(+P$67CQ78:.5 SM155:9$G0.=C1NU B70<.?19R$D$<.?19 6:08Q7C$=.0C?9$=W:<W$/.518:91$8W0.QAW$6:08Q7C$A..?9R$6:08Q7C$ 6:08Q7C$017C3198781$ <Q0015<N$1L<W75A19$75?$7?9$BN$;WN9:<7C$=.0C?$B075?92$ >D$B0.=9109V$7;;C:<78:.59$017<W$7<0.99$0187:CR$7?9R$ <.551<89$;7;10$8.$ 6:08Q7C$A..?9R$7Q<8:.59$75?$HA.$9106:<19 ;0.;108NR$/:C:870NR$1?Q<78:.52 9106:<1$;0.6:?109 Copyright VisionMobile 2011
  71. Facebook: connecting physical to virtual7$;C78F.0/$B18=115$8W1$;WN9:<7C$=.0C?$75?$8W1$)R"""9$.F$6:08Q7C$=.0C?9 N.Q0 =.0C? W101 .FF39:81$7?9 .539:81$7?9 7<1B..@$<01?:89 8W1$/.61$8.$.FF39:81$7?9R$91CF39106:<1$7?9$75?$6:08Q7C$A..?9$:9$1L;1<81?$8.$?.QBC1$>DZ[$F0./$O"2!+$8.$O"2+"$ 9.Q0<1V$01?$]:C9.5R$^G2 Copyright VisionMobile 2011
  72. The money in augmented economics “The power to capture attractive profits.. is in these stages that complex, interdependent integration occurs” Clayton Christensen et al In augment economics, the platform that links the physical with the virtual world stands to profit the most. “The next Google might be a physical world connection company” S Schaffer Copyright VisionMobile 2011
  73. Thanks for listening. Knowledge. Passion. Innovation. want more? contact us to schedule an on-site workshop. Updated: 12 November 2010 Copyright VisionMobile 2011
  74. lost? found Industry Atlas: the competitive landscape of mobile Copyright VisionMobile 2011