HTML5 and what it means for the mobile industry                                                               ContentsAbou...
HTML5 and what it means for the mobile industry     Key takeaways     - The web has evolved through two major phases: Web ...
HTML5 and what it means for the mobile industry     Background: Web vs. apps     In today’s world of apps, the web seems t...
HTML5 and what it means for the mobile industry     From web 1.0 to the mobile web     The web has gone through two major ...
HTML5 and what it means for the mobile industry     Independent studies by quirksmode.org and NetBiscuits have shown that ...
HTML5 and what it means for the mobile industry     Web 3.0 changes creation discovery, distribution and monetisation of c...
HTML5 and what it means for the mobile industry      compete on equal footing with native apps, especially in games, which...
HTML5 and what it means for the mobile industry     platform developer tools that allow HTML and JavaScript developers to ...
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Vision mobile   HTML5 and what it means for the mobile industry
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Vision mobile HTML5 and what it means for the mobile industry

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Vision mobile HTML5 and what it means for the mobile industry

  1. 1. HTML5 and what it means for the mobile industry ContentsAbout VisionMobile Key takeaways 3VisionMobile is an industry analysis and strategy firm.We offer research reports, executive workshops and Background: web vs. apps 4strategy at the crossroads of telecoms and software From web 1.0 to the mobile web 5economics. HTML5 as a technology change 6VisionMobile Ltd.90 Long Acre, Covent Garden, The web is dead. Long live Web 3.0 7London WC2E 9RZ What the new web means for+44 845 003 8742 the mobile industry 8www.visionmobile.com/blog How to lead in the web era 9Follow us: @visionmobileContact us: hello@visionmobile.comLicenseCopyright © VisionMobile 2011. All rights reserved.Feedback?For comments, feedback and more information:hello@visionmobile.com Also by VisionMobileDisclaimer Mobile Industry Atlas | 4th EditionVisionMobile believes the statements contained in The complete map of the mobile industrythis publication to be based upon information that landscape, mapping 1,350+ companieswe consider reliable, but we do not represent that it across 85+ market sectors.is accurate or complete and it should not be relied Available in wallchart and PDF format.upon as such. Opinions expressed are current www.visionmobile.com/mapsopinions as of the date appearing on this publicationonly and the information, including the opinionscontained herein, are subject to change withoutnotice.Use of this publication by any third party forwhatever purpose should not and does not absolvesuch third party from using due diligence inverifying the publication’s contents. VisionMobiledisclaims all implied warranties, including, withoutlimitation, warranties of merchantability or fitnessfor a particular purpose. VisionMobile, its affiliatesand representatives shall have no liability for anydirect, incidental, special, or consequential damagesor lost profits, if any, suffered by any third party as aresult of decisions made, or not made, or actionstaken, or not taken, based on this publication. © VisionMobile 2011 2
  2. 2. HTML5 and what it means for the mobile industry Key takeaways - The web has evolved through two major phases: Web 1.0, the era of dumb terminals and Web 2.0, the era of smarter terminals, where users are both consumers and producers of content. - The web is both a technology paradigm (HTML) and a business model paradigm for the unfettered distribution and monetisation of content. - HTML5 is pushing the capabilities of web applications to the point of making web apps as engaging as Flash applications and as integrated with the device as mobile applications. - Despite the adoption of WebKit as the de-facto browser engine on over 500 million handsets to date, mobile browser implementations remain consistently fragmented. Even standards bodies W3C and the WHAT WG show fragmented approaches to HTML5 completion, which is not expected before 2014. - HTML5 remains a technology change that is not designed to solve discovery, distribution or monetisation problems. Moreover, HTML5 app stores don’t address fundamental user needs like access to top-10 apps, long-tail diversity and can’t compete with Apple or Google in terms of app volume. - The web is winning in developer mindshare, but it will not replace native platforms; instead web applications will co-exist with native applications that maintain an edge in terms of device and cloud integration capabilities. Web applications will retain an edge in use cases such as business applications, mass-market services and cross-screen experiences (mobile, TV, PC). - The change to the web business model is emerging in what might called Web 3.0; a new model for information discovery, distribution and monetisation following from the app store paradigm. - Web 3.0 is the model where content is created with semantic tagging (with its own contextual profile), discovered via web stores (much like app stores), distributed within walled gardens (much like Facebook), and monetised through micro-payments (much like apps). - Operators can lead in the era of web 3.0 – not by competing, but by leveraging on the network effects of Apple, Google and Facebook platforms to become a new generation of over-the-top players. - To become over-the-top players, operators should leverage their enviable assets in terms of ubiquitous billing, unprecedented consumer insights and access to consumer channels. At the same time, operators need to move at software speeds in order to catch-up and outrun the platform players. - This is where we believe WAC has the best chances of success but helping operators reach out to developers with ubiquitous billing, quality assurance, content curation, local content deals, privacy and security assurance, and help extend app stores away from the virtual and into the physical retail space. © VisionMobile 2011 3
  3. 3. HTML5 and what it means for the mobile industry Background: Web vs. apps In today’s world of apps, the web seems to have taken a seat in the back row. But many industry observers are predicting a comeback with HTML5 advancements, the proliferation of smartphones and ubiquitous backing by both telcos and Internet players. Is the web as we know it about to change? First things first: what is the web? Firstly, the web is a language for creating interactive, navigable content, which consists of three main parts: HTML (the language used to define the static text and images), CSS (the language defining styling and presentational elements) and JavaScript (the language describing the interactions and animations). Secondly, the web is a paradigm for open, unfettered access to content that is not controlled by any single entity. In the era where apps distribution is controlled by single vendors like Apple and Google, the web seems to challenge the status quo. We ‘ll address the impact of the web to the mobile value chain later in this paper. There are many ways in which web pages differ from mobile apps today, as shown in the next table. Key differences between web pages and mobile apps (simplified) web pages mobile apps development HTML, CSS, JavaScript Objective C, Java or other packaging set of linked pages accessible self-contained applications via a web browser or packaged accessible via the phone as widgets user interface personalisation via cookies via GPS location, contacts & more discovery via any search engine via certain app stores distribution via any website via certain app stores availability on any browser on specific smartphones monetisation ads micro-payments, ads success criteria unique visitors downloads source: VisionMobile © VisionMobile 2011 4
  4. 4. HTML5 and what it means for the mobile industry From web 1.0 to the mobile web The web has gone through two major phases: Web 1.0 and Web 2.0. Web 1.0 was the era of the dumb terminals and static web pages. The first generation of the web assumed all intelligence was in the network; the device had to issue a simple request to fetch a page and then present it on the screen. Web 2.0 was is the era of smarter terminals and interactive pages. This second generation was designed around the ‘read-write web’ where the user is not just a consumer but also an editor, curator and producer of content. Web 2.0 helped create today’s phenomena of Wikipedia, Facebook, Twitter, blogs and nano-publishing. Despite starting off as an outsider to the web, the mobile industry has been rapidly catching up since the early WAP days. WebKit, the Apple-born browser engine is now the common ‘circuitry’ behind more than 500 million devices shipped to Q1 2011, by all major smartphone vendors. Opera, the mobile browser vendor, counts over 100 million monthly active users on its Mobile and Mini browsers. In the manufacturer camp, smartphones are expected to reach well into sub-$100 retail price points in 2011. In the operator camp, content delivery optimization solutions from the likes of ByteMobile, Openwave, and Ortiva Wireless are being deployed across tier-1 operators, facilitating efficient use of the network while browsing the web. Mobile industry initiatives such as the Wholesale Applications Community (WAC) are pushing the envelope for web applications (also known as widgets) while EU-funded initiatives like webinos aim to use the web as a medium for deploying applications across mobile, PC, TV and automotive screens. HTML5 as a technology change The hype surrounding HTML5 has peaked in 2011. HTML5 promises to push the capabilities of web applications to the point of making web apps as engaging as Flash applications and as integrated with the device as mobile applications. HTML5 introduces several technology improvements in these domains by adding off-line storage, 2D graphics capabilities, video/audio streaming, geo-location, access to the phone’s camera and sensors, as well as user interface tools. This next generation of web languages in the form of HTML5 is being standardized by the W3C and the WHAT working group who are driving forward web apps as equal citizens to mobile applications. The W3C consists of 51 member organizations, over 440 participants with strong backing from Google, Apple, Opera, IBM, Microsoft, and Mozilla. In parallel the WHAT working group is working closely with Mozilla, Opera and WebKit who are implementing and testing the latest browser features. Yet HTML5 is still work in progress and even standards bodies show fragmented approaches to HTML5 completion. The W3C expects official completion of the HTML5 set of standards in 2014. In parallel, WHAT has taken a different approach to completion and is now working on ‘HTML’ as a continually evolving set of specifications. Despite the adoption of the WebKit engine as a de-facto standard, HTML5 implementation on mobile devices is both fragmented and incomplete. © VisionMobile 2011 5
  5. 5. HTML5 and what it means for the mobile industry Independent studies by quirksmode.org and NetBiscuits have shown that every mobile WebKit implementation is slightly different. In addition, the leading smartphone platforms show inadequate HTML5 support; iOS, BlackBerry OS and Android devices show partial HTML5 support (at best 2 our of 3 HTML5 features supported), while Symbian and Windows Phone devices are lagging further behind. Much like history has shown with the PC browser wars of the 1990’s and the Java ME fragmentation of the 2000’s, mobile browser fragmentation in 2010’s will be driven by the need to differentiate (embrace and extend), and the varying speeds among vendors in implementing the latest WebKit engine. What about HTML5 app stores? Already a number of start-ups such as OpenAppMkt, Openspace and Zeewe have proposed app stores focused on web apps. The key advantages of HTML5 app stores are cross-device portability and a buy-once-use- everywhere application model. Unfortunately, supply does not always imply demand; HTML5 app stores can’t deliver a business model change if demand is not there, for three reasons. Firstly, users care about availability of popular content (see Angry Birds, Skype and Facebook) most of which are not available as web apps often due to HTML technology limitations. Secondly, users care about choosing among hundreds of thousands of apps, which is currently a 2-horse race (Apple and Google) with the web lagging far behind in terms of number of apps. Thirdly, users are becoming loyal to their smartphone platform (Android, iOS or BlackBerry) where the native app store dominates. The web is dead. Long live web 3.0 HTML5 introduces several technology innovations. However HTML5 remains a technology change that is not designed to solve discovery, distribution or monetisation problems – in other words it is not designed to change the business model. The business models of Web 1.0 and Web 2.0 have largely evolved around decentralised, unencumbered access to sites and information. In this paradigm, discovery takes place via search engines like Google, Yahoo, Baidu and Bing or social bookmarking like Digg and Twitter. Distribution takes places via websites and browsers, which are ubiquitous. Finally, monetisation is achieved via advertisements, from text links to video ads with CPM, CPC and increasingly CPA business models. In the post Facebook and post app store world, we are moving away from the Web 2.0 legacy into what can be called Web 3.0, an information model akin to those introduced by social networks and mobile applications. Web 3.0 is the model of the web where content is created with semantic tagging (with its own profile), discovered via web stores (much like app stores), distributed within walled gardens (much like Facebook), and monetised through micro-payments (much like apps). © VisionMobile 2011 6
  6. 6. HTML5 and what it means for the mobile industry Web 3.0 changes creation discovery, distribution and monetisation of content Web 2.0 Web 3.0 role model Google, Yahoo Facebook, Apple creation loosely structured text, self-contained web apps images & video carrying their own profile discovery discovery via text-based contextual discovery via web search engines stores or app stores distribution open distribution via any distribution within walled website gardens (e.g. Facebook) monetisation advertisements micro-payments (pay per download and virtual goods) source: VisionMobile In Web 3.0 we are seeing creation of content in the form of self-contained applications (whether mobile apps, micro-sites or social networks) which are semantically tagged with contents description and type, as well as user ratings, ‘likes’, and recommendations. Discovery takes place not via text-based search engines, but contextually through web stores or app stores enabling discovery in a relevant, intuitive manner. Distribution of the ‘short head’ content is via walled gardens (the likes of Facebook and Twitter) that retain information silos away from search engines. Of course, the long-tail content will continue to be open-access. Finally, monetisation is increasingly taking place via micropayments, often in the form of virtual goods, which are locked to the distribution medium (e.g. Facebook credits). What the new web means for the mobile industry HTML5 is a technology change, pushing web applications to reach the interactivity and media capabilities of Flash application, while ensuring web apps are equal citizens to mobile applications in terms of level of integration with the device and the user data. Web 3.0 is a business model change which marks a move away from the unfettered discovery and distribution model of the 2.0 paradigm and into the new walled gardens role modelled after Facebook and Apple. In Web 3.0 walled gardens the barriers to entry are far higher than ever before. Apple runs the App Store at just about breakeven, in what we estimate is an average cost of $2,350 per app listed if amortised across all listed iOS apps at the end 2010. In the Web 3.0 era, content discovery, distribution and monetization a again controlled by the few. The web is winning in developer mindshare, but it will not replace native platforms. Web applications and widgets are considerably limited in capabilities compared to native platform apps (iOS, Android and Windows Phone) and therefore are not able to © VisionMobile 2011 7
  7. 7. HTML5 and what it means for the mobile industry compete on equal footing with native apps, especially in games, which typically lead application and download volumes. The lead of native platforms over web platforms in terms of cloud and device capabilities is unlikely to equalize as native application vendors will always push their own native platform interests ahead of browser implementation or integration; instead web applications will co-exist with native applications and will be better suited to categories such as business applications, mass-market services and cross-screen experiences (mobile, TV, PC) where HTML holds a sustainable advantage. However, a few, bold web-based application platforms are making a comeback, like HP’s WebOS and RIM’s WebWorks, that have developed web-based smartphone platforms while retaining control of discovery, distribution and monetisation. One might dismiss new platforms as too small to compete in the two horse race that is now taking place between iOS and Android. If history has any lessons to teach it is that there is continual expansion and contraction in the numbers of application platforms coming in and phasing out. We expect to see the next Android competitor to emerge as a platform that will use the web as its native environment. There are two key advantages that come free with any web platform: • hype ready: a web ‘platform’ comes with implicit goodwill and ‘built-in’ hype, meaning that the marketing investment to create a new platform is reduced manifold. Indicatively, Microsoft is rumoured to have spent an enormous $500 million on marketing Windows Phone during the first few months since launch • established and untapped developer communities: there are millions of web developers who are new to mobile. These constitute untapped developer communities that can be enlisted to the cause of a new web-based mobile platform How to lead in the web 3.0 era Despite the high entry barriers, there are plenty of opportunities to take the lead in the era of web 3.0 business models. The trick here is not to compete, but to leverage on the network effects of the Apple, Google and Microsoft platforms where operators can position themselves as a new generation of over-the-top players. Operators hold enviable assets in terms of ubiquitous billing, unprecedented consumer insights and access to distribution channels. For example, operators can act as the matchmakers between developers and end-users by helping developers get the right apps in front of the right users through techniques such as featured placements, social- graph-based recommendations and segment targeting. This is where we believe WAC has the best chances of success but helping operators reposition as over-the-top players on top of the Android and Apple app stores – that is by helping developers reach out to users with ubiquitous billing, quality assurance, content curation, local content deals, privacy and security assurance, and help extend app stores away from the virtual and into the physical retail space. In parallel, operators can help push the web into a viable alternative for native platforms in many ways. Operators can push the development of WebKit towards better bandwidth management, and closer integration with hardware multimedia acceleration. Moreover, operators can sponsor the development of better cross- © VisionMobile 2011 8
  8. 8. HTML5 and what it means for the mobile industry platform developer tools that allow HTML and JavaScript developers to target multiple native platforms and mass-market browsers. No matter how operators decide to compete in the software world, they need to adopt ‘agile’ development methods and move at software speeds to catch-up the platform players in controlling the last mile to the consumer. One thing is certain; the future of connected web and devices is going to surprise us – much like how applications turned telecoms economics upside down. Like Bill Gates once famously said "we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten". Web is going to be a game changer, but not in the way we expect it. © VisionMobile 2011 9
  9. 9. knowledge. passion. innovation.

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