Founder Labs - Summer 2011 - The Mobile Ecosystem

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The "standard" Founder Labs deck for kicking off the Summer 2011 program in San Francisco; updated sections on Silicon, Apple Retail Stores, Ephemeralization

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Founder Labs - Summer 2011 - The Mobile Ecosystem

  1. 1. Founder LabsSummer EditionThe Mobile EcosystemAugust 12, 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 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. Companies.3
  4. 4. Today’s topics. History Silicon Mobile Economics Cloud What’s Next?4
  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. History6
  7. 7. A bit of Silicon Valley History: General Magic, Apple spin-off, 1990. General Magic Mission Statement, May 1990 “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.”7
  8. 8. General Magic’s “Magic Cap”. “Magic Cap” User Interface, 19948
  9. 9. Three people from the team that architected Magic Cap. Andy Rubin Tony Faddel Kevin Lynch9
  10. 10. General Magic’s lasting influence on Android… “Magic Cap” UI, 1994 G1 “HTC Dream” UI, 200810 Source: Wired, Accenture analysis.
  11. 11. Google is iterating Android at a breathtaking pace…History of Android July 2005 Oct 2008 Apr 2009 Android acquired after Android Market Android Andy Rubin meets with announced. SDK Larry Page for support. First device. released 2005 2007 2008 2009 2010 2011 2012Sept 2003Androidincorporated. … C D E F G H I … Nov 2007 OHA founded. April Sept Oct May Dec Mar H2Android uses Google 2009 2009 2009 2010 2010 2011 2011as default search “Android” platform unveiled. Cupcake Donut Éclair FroYo GiBr HoCo ICengine. v1.5 v1.6 v2.0 v2.2 v2.3 v3.0 v3.111 Source: Google, Accenture analysis.
  12. 12. … including one OEM and SemiCo at a time. Android Release C D E F G H I April Sept Oct May Dec Mar Nov 2009 2009 2009 2010 2010 2011 2011 Cupcake Donut Éclair FroYo GiBr HoCo IceCrm v1.5 v1.6 v2.0 v2.2 v2.3 v3.0 v3.1 “Hero” Device ? HTC Samsung Motorola HTC Samsung Motorola Nexus Dream Behold II Droid Nexus One Nexus S Xoom 3 Chip Qualcomm Qualcomm TI OMAP Qualcomm Intrinsity NVIDIA MSM7201A MSM7201A 3430 QSD8250 S5PC110 Tegra 2 250 ? 528MHz 528MHz 600 MHz 998MHz 1,000MHz 1,000MHz12 Source: Accenture analysis.
  13. 13. The IP Wars. Me too. I will eat your babies. Uggh, FAWK… Om nom nom nom.13
  14. 14. Silicon14
  15. 15. Gordon Moore.15
  16. 16. Moore’s Law – since ~1965 on the desktop.16 Source: Intel.
  17. 17. Coming your way in mobile as well. Nvidia Tegra roadmap: 2 orders of magnitude until 2014. Today, you are here17 Source: NVIDIA.
  18. 18. Massive on-deck computing power for smartphones... 1966 2011 2016 Apollo Guidance Samsung Era of Computer – Block I Galaxy S2 “Uberphones” 4,100 Integrated Circuits ~26M ICs ~1B ICs 1 MHz Clock Speed 1 GHz 1GHz+ 9 KB RAM 512 MB ~4 GB18 Source: Computer History Museum, Accenture analysis.
  19. 19. Horizontal de-layering of the silicon industry. 1970s 1980s 1990s 2000s 2010s Vertical ASIC Fabless IP-driven SW-driven Suppliers Vendors Semis Design Design “Texas Instruments” “VLSI Technology” “Qualcomm” “ARM” Various System Design & IP Porting Distribution ASIC Vendor (“Fabless”) IP Design & Fully Vertically Distribution Integrated: EDA Design & Design & Distribution Foundry EDA System EDA Manufacturer (Foundry) Foundry Foundry Foundry Ratio HW : SW 1:0 1 : 0.5 1:1 1:2 1 : 2+ Engineers Sources: ARM company website, Cadence company website, Accenture analysis. HW engineers refers to design, SW engineers to validation. Copyright © 2011 Accenture All Rights Reserved.19 19
  20. 20. ARM vs. QCOM. 500 Daily Stock Prices ARM vs. QCOM Indexed, 01/01/2006 – 03/30/2011 ARM 450 460 Index 05/12/11 400 350 300 250 ARM announcement that “major OEM” acquired 200 architecture license QCOM in July 2008 106 Index 05/12/11 150 100 50 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Sources: Google Finance, Accenture analysis. Copyright © 2011 Accenture All Rights Reserved.20 20
  21. 21. Apple: A single application processor for all devices. iPhone iPad Apple TV Time Capsule ?21
  22. 22. 2 philosophies: Discrete baseband & CPU vs. a single, integrated SoC. Apple: Discrete BB & CPU HTC: Integrated SoC with BB & CPU iPhone 4 HD7 Qualcomm Baseband Apple CPU Qualcomm Snapdragon SoC Physical separation of computing for RF Logical separation of computing for RF and and applications through different chips applications but physically on same chip22
  23. 23. The likely future, just untethered.23
  24. 24. Economics24
  25. 25. Explosive growth for mobility. “We really see Mobile a bit like Search “eBay mobile apps have been down-loaded was in 2001, 2002, 2003. All these formats more than 45 million times [with] $4 billion are so new it is a mistake to say today of volume on eBay Mobile: […] the mobile whatever we have is a good proxy for what device is absolutely lowering the boundary the future will look like. I actually have a or blurring the boundary between online and new metric to report in Android of 550,000 offline; […] this has created incremental phones activated a day. Thats a huge opportunity far greater than what we number, even by Google standards.” wouldve expected.” Larry Page, Google CEO Joe Donahoe, eBay CEO Q2’11 Earnings Call, July 14th, 2011 Q2’11 Earnings Call, July 20th, 2011 “Mobile” quoted 39 times during call “Mobile” quoted 62 times during call “We were thrilled to sell a record 20.3 “We [...] have articulated a very strong million iPhones compared to 8.4 million in innovation-oriented strategy and mobility the previous June quarter. This represents plays a very strong part in that. […] If you 142% year-over-year growth. […] iPhone look at our results this quarter youll see that continues to be adopted as the standard its not only the new categories that drive across the enterprise with 91% of the growth for us, its also the traditional core Fortune 500 deployed or testing the device, business of SAP. […] Mobile will change up from 88% last quarter.” the way we work and the way we live.” Peter Oppenheimer, Apple CFO Jim Hageman Snabe, SAP CEO Q3’11 Earnings Call, July 19th, 2011 CNBC Interview July 27th, 2011 “iPhone” quoted 48 times during call25
  26. 26. 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 1994 Rolling Stone interview26 Source: Rolling Stone Magazine.
  27. 27. SW is fueling the app store economy: ~350,000 apps. ESTIMATES Catalog Size – Apple App Store vs. Android Market 2008-2011, by Number of Available Apps at End of Quarter 350,000 300,000 310,000 250,000 225,000 200,000 149,000 130,000 97,000 74,500 52,610 56,200 35,200 25,300 20,100 13,200 5,200 11,500 740 4,400 600 2,900 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes27 books. All numbers rounded.
  28. 28. The “early days” with iOS & Android: A mobile revolution. App & Mobile Web Usage Growth, US Ads Requested, April 2008 – March 2010 4,000 3,500 32% 3,000 Monthly Ads Requested (Millions) 2,500 Growth (Nov’08-Mar’10) 2,000 1,500 19 % Monthly 1,000 Growth (Apr’08-Mar’10) 500 0 RIM Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Others incl. Palm & Windows28 Source: AdMob, Accenture analysis.
  29. 29. But: An app is not a business model. Retention Rates of Mobile Apps Over Time, 2010 100% 100% 100% 100% 90% 90% 90% 90% 80% 80% 80% 80% 70% 70% 70%Retention Rate 70% 60% 60% 60% 60% 50% 50% 50% 50% 40% 40% 40% 40% 30% 30% 30% 30% 20% 20% 20% 20% News (9.1%) 10% 10% News (9.8%) 10% 10% Enter- Games (2.4%) tainment (2%) 0% 0% 0% 0% 0 0 30 30 60 60 90 90 120 120 150 150 180 180 0 0 30 30 60 60 90 90 120 120 150 150 180 180 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 29 category with at least 120 days of data availability in the Flurry system.
  30. 30. 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% Rates30 Source: Flurry, Accenture analysis.
  31. 31. Enter analytics…31
  32. 32. … and push notifications.32
  33. 33. Facebook: Putting a social layer into your app. News and Media Companies Commerce and Sales Companies 90% more articles are read $5.30 of direct ticket sales 85% more time is spent resulted from sharing links 4x increase in traffic from 57% more money spent per user Facebook 8 minutes longer on site 40% increase in referral 22% more pages are read traffic from visitors Increase in traffic and time Increase in sales through spent on websites through user of social plugins: “Login with Facebook” “Like” and “Share”33
  34. 34. Emergence of solid mobile business models. Location Inventory Discounts Transparency Reviews Finds deals at local Real time visibility Real-time Compare local “Crowd-source” retailers of into restaurant discounts on local price with best reviews before national chains “inventory” merchant offers prices on the web buying decision34
  35. 35. Ephemeralization: “Progressively accomplishing more with less” Buckminster Fuller35
  36. 36. Early “ephemeralization” aka “appification”: Devices are being replaced by apps. 2006 2011 and Beyond TV Video Phone Voice MP3 Player Music Camera “Camera” Credit Card Payments Copyright © 2011 Accenture All Rights Reserved.36
  37. 37. Software “eating” people and things. People Things Taxi Dispatcher ATMs Keys37
  38. 38. And it’s only the beginning. Global Mobile Shipments 2005-2015E, Millions ‘10 –’15 2,500 CAGR Total 2,076 8.4% 1,971 Devices 2,000 1,854 1,718 1,557 Smart 820 926 1,500 1,389 707 Phones 25.0% Millions 582 1,188 1,190 453 1,128 303 1,002 124 151 1,000 173 833 82 57 1,064 1,085 1,105 1,135 1,147 1,151 1,150 Non 500 1,039 954 1.2% 920 SPs 777 0 2005 2006 2007 2008 2009 2010 2011 E 2012 E 2013 E 2014 E 2015 E SP Share 7% 8% 10% 13% 15% 22% 29% 34% 38% 42% 45% of Total38 Source: IDC Accenture analysis.
  39. 39. Mobility hardware: This morning at Coupa Café in Palo Alto: “Bump Cube”39
  40. 40. A quick note on distribution of mobility hardware.40
  41. 41. 26,500 Apple retail employees selling your HW to 250M+ annual visitors in 323 stores in 11 countries. New York Paris Tokyo Sydney Munich Shanghai41 Source: Apple.
  42. 42. The Apple Store: $13B in sales, with more $/SqFt/Year than Tiffany & Co. Scale of Retail Operations Retail Revenue Metrics Q3 FY2010 – Retail Retail Retail FTEs / $ / SqFt / Year $ / employee / $ / Day / Store $ / Store / Year Q2 FY2011 Revenue Stores Space part-time ($) Year ($K) ($K) ($M) ($B) (#) (M SqFt) employees (K) 13 323 2.5 30 $4,793 $397 $102 $37 $3,010 $337 $36 $13 3.1 233 1 9 $866 $279 $33 $12 50.3 4,172 58 180 $425 $200 $128 $47 419 8,970 985 2,100 $391 $179 $125 $46 9.3 204 23.8 5242 Source: SECfilings, Accenture analysis.
  43. 43. Cloud43
  44. 44. Who is building a cloud? Prineville, OR USA Lockport , NY USA The Dalles, OR USA Maiden, NC USA Morrow, OR USA Dublin, Ireland44
  45. 45. Stuff you can do with the cloud (growing as we speak). ~65M+ ~50,000+ Users Searches Gaming Served Per Daily Second ~ 7,000+ ~41B Tweets per API Calls Second per Day45
  46. 46. Stuff you can do with the cloud and your phone.46
  47. 47. Industrialization of the mobile cloud... Cloud Device Today HTTP (custom libraries) Tomorrow SDKs47
  48. 48. … will bring massive off-deck computing to mobile. Mobile Dev Center Android Project Hawaii & AWS SDKs for Cloud to Device Project Maui on Android & iOS Messaging Framework Windows Phone 748 Source: Corporate websites.
  49. 49. Google’s Spanner: 107 = 10M machines.49 Source: Google.
  50. 50. Ephemeralization of the back-end.50
  51. 51. What’s Next51
  52. 52. Jevons’ Paradox ” It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth." William S. Jevons, 1865 William S. Jevons From the Book “The Coal Question”52
  53. 53. As computing gets cheaper… U.S. Asset Prices, 1945 - 2008 Normalized, 1995 = 100 105 Normalized Price: 1995 = 100 (log) Computers and Peripheral Equipment 104 103 Transportation 102 Equipment Other Equipment Industrial Equipment 10 1950 1960 1970 1980 1990 200053 Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.
  54. 54. … companies consume more of it. U.S. IT Investment, 1970 - 2008 Investment per Employee & Nominal Annual Investment 3,500 350B Anuual Investment per Employee ($) Nominal Anuual Investment ($B) 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 201054 Source: The Business Impact of IT, based on U.S. Bureau of Economic Analysis data.
  55. 55. 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 7 655 Source: SEC filings.
  56. 56. And then there is Facebook . Worldwide Facebook Users Y-o-Y Growth Rates ’11-15 based on 3 User Growth Scenarios, EoY (2011-2015) US EU BRIC RoW 3 2.5 2.52B 4% 15% 268%* 33% 2.3 2 2.22B 4% 15% 90% 33% 2.1 1.9 1.7 Total of ~700-800M 1.5 global FB users by end of 2011 1.3 1 1.27B -2% -2% 45% 20% 1.1 0.9 0.7 0.5 2011 2012 2013 2014 2015 Scenario 2 $8.10 $8.18 $8.20 $8.32 $8.54 Avg. ARPU 0.7B 1.0B 1.3B 1.7B 2.2B EoY Users $5.7B $7.3B $9.6B $12.8B $16.8B $B Rev.56
  57. 57. 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”57
  58. 58. Lessons learned. A few thoughts on: Your Team: Who’s in charge? Build: iOS vs. Android vs. HTML5 Pitching: Killer exec summary Funding (Angels): Ocean’s 11 Funding (VC): Lots vs. little58
  59. 59. Good Luck!59

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