sfmobile: founder labs mobile edition 01/09/11
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Founder Labs – Mobile EditionWeek 1 – Ecosystem Overview & Business Models
January 8, 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)
Lars KampLars Kamp
Work Network
Management Consulting
2
www.sfmobile.org
San Francisco, CA415.894.5423lars@sfmobile.org
Suite 1200560 Mission StreetSan Francisco, CA 94105415.894.5423lars.kamp@accenture.com
Some history (of mobile).
3
Q: Whose mission statement is this?
“We have a dream of improving the lives of many millions
of people by means of small, intimate life support
systems that people carry with them everywhere.
These systems will help people to organize their lives, to
communicate with other people, and to access
4
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.”
A: General Magic, 1990. You could say it all started here.
5
General Magic’s “Magic Cap”. Looks familiar?
“Magic Cap”
6
Maybe now?
7
Three people from the team that architected Magic Cap.
Andy Rubin Tony Faddel Kevin Lynch
8 Source: Wired, SF Mobile analysis.
Mobile economics.
9
Mobile is the single biggest global distribution platform.
PC Installed Base TV Households Mobile Subscribers
PC TV Mobile
20091.2 Billion
20091.3 Billion
20094.0 Billion
10
BroadbandSubscribers
Pay TVSubscribers
20131.6 Billion
2009420 Million
2013648 Million
20131.33 Billion
2009600 Million
2013739 Million
4.0 Billion
20135.5 Billion
Source: Gartner, PWC, ITU, IDC, Accenture analysis.
Evolution of “the stack”: Shift from hardware to software.
Phone
ApplicationMiddleware
Middleware
Shell & UIUser Interfaces, App Stores &
User Software
Exte
rnal In
terfa
ces,
e.g
. US
B, S
peaker, F
lash C
ard
CommsSoftware
Early days Today
Mobile Device Stack
11
Chipsets,Processors, Basebands
Drivers Drivers
Core Operating System
PhoneMiddleware
Hardware
Platform / OS
Middleware
Exte
rnal In
terfa
ces,
e.g
. US
B, S
peaker, F
lash C
ard
Hardware
1-2 MB of closed software
>1 GB of open software
Hardware Software
Source: Accenture analysis.
Value in mobile is moving up the stack…
Services and Content
Screen, User Interfaces,User Software
e.g
. US
B, S
peaker, F
lash
Card
Cost to build ($M)
Per-unit Revenue ($)
Break-even # of units
$0.1M $1.00 0.1M
$20M $0.20 100M
Mobile Handset Stack & Elements
DIRECTIONAL
12
Chipsets, Processors, Radio Basebands
Core Operating System
DeviceMiddleware
ApplicationMiddleware
Exte
rnal In
terfa
ces,
e.g
. US
B, S
peaker, F
lash
Card
$10M $0.10 100M
$1,000M $5.00 200M
Valu
e F
low
Hardware Software
Source: Estimates based on industry interviews; see David Wheeler “Linux Kernel 2.6: It's Worth More!” for estimating the cost of the Linux Kernel.
… and is fueling the app store economy.
149,000
211,000
2008 2009 2010
Size of Catalog (K) – Apple App Store vs. Android Market2008-2010, as of Q2 2010, by Number of Available Apps at End of Quarter, Excluding Books
Android
~20,000 monthly submission
13
740 4,40013,200
25,300
52,610
74,500
97,000
600 2,900 5,200 11,500
20,100
35,200
56,200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
App StoreJuly 11
Android MarketOct 22
Day 1 500 Apps
Day 1 62 Apps
~7,000 monthly submission
Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes books. All numbers rounded.
But: An app is not a business model.
60%
70%
80%
90%
100%
60%
70%
80%
90%
100%
60%
70%
80%
90%
100%
Re
ten
tio
n R
ate
60%
70%
80%
90%
100%
Loyalty and Retention Rates of Mobile Apps Over Time, 2010
14
0%
10%
20%
30%
40%
50%
60%
0 30 60 90 120 150 180
0%
10%
20%
30%
40%
50%
60%
0 30 60 90 120 150 180
0%
10%
20%
30%
40%
50%
60%
0 30 60 90 120 150 180Days After First Measurement
Re
ten
tio
n R
ate
News (9.1%)
Games (2.4%)0%
10%
20%
30%
40%
50%
60%
0 30 60 90 120 150 180
News (9.8%)
Enter-tainment (2%)
Days After First Measurement
Source: 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 category with at least 120 days of data availability in the Flurry system.
90% dead after 90 days.
52%
40%
20%
9%
58%
38%
18%
5%
iPhone App RetentionAs of January 2010, by Application Category
30 Days 90 Days
Android App RetentionAs of January 2010, by Application Category
News
Social Networking
30 Days 90 Days
15
34%
35%
33%
10%
9%
4%
34%
38%
42%
10%
7%
16%
Games
Lifestyle
Enter-tainment
39% 10% 42% 11%Average
Retention Rates
Source: Flurry, Accenture analysis.
The cloud.
16
What is “The Cloud”?
Cloud Origins Cloud Today Cloud Benefits
• Cost ReductionLower infrastructure, energy, licensing and maintenance costs
• Speed to Market
VirtualizationOne computer
acting like
many
• Virtualization and
Grid abstracted
• Computing as a
A style of computing that provides on demand access to a shared set of
highly scalable services.
17
• Speed to MarketReduces time requiredto pilot projects
• Elasticity / ScalabilityOn-demand capacity and high business agility
• High Performance ComputingProvides “infinite” computingcapacity as needed
many
Grid Computing
Many
computers
acting like one
+• Computing as a
utility
• Scale economies
of central supply
• Uses massively-
parallel processing
• Geo-distributed
with massive
redundancy
Who is building a cloud?
Facebook – Prineville Google – The DallesYahoo – Lockport
18
Apple – Maiden Microsoft – DublinAmazon – Morrow
The cloud: massive off-deck computing for mobile.
19 Source: Amazon press release, December 2010.
Silicon.
20
Moore’s Law – since ~1965 on the desktop.
21 Source: Intel.
The original paper from 1965.
22
Coming your way in mobile as well.
Baseband Processors
“Fat Modems” Baseband & Application Processor
23
Low power silicon for voice/SMS and long
battery life.
OS-enablement of light apps running on top of
baseband.
High performance, low power application
processors.
Massive on-deck computing power.
2GHz
2.5GHz
Cortex-A9
Cortex-A15
20nm
2 cores
4 cores
Mobile Silicon: Chip Size, Cores & Clock Speed Over Time
24
533MHz667MHz
800MHz833MHz
1GHz
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ARM9
ARM11
Cortex-A8
Cortex-A9
130nm90nm
65nm45nm
32nm
28nm
20nm
Clockspeed:
Cores:
Node:
1 core
1 core
1 core
Source: ARM.
Development before knowing the actual device.
25
Business models.
26
Four quadrants and generic business models.
Cloud • SDK and developer fees to marketplace
• Software sales to aid app development and design
• Transaction fee
• Subscriptions
• Advertising
• In-app
• Display / search
• Multimedia
Pre-Load Post-Load
27
Device
• IP licensing
• Pre-installed app licensing
• Software sales
• Hardware sales/materials
• App sales
• Virtual goods
• Digital media sales
• Subscriptions
and design
Source: Adjusted based on Vision Mobile (visionmobile.com).
Business models applied.
Cloud
Pre-Load Post-Load
28
Device
Expect the center of gravity to shift to post-load.
Post-Load Revenue Streams
Pre-Load Revenue Streams
100%
ILLUSTRATIVE
Ecosystem Revenue Mix Over Time.
29
Primary Revenue Models
• Licensing• Software sales• Hardware sales• Service subscriptions
• Licensing• Ads• Software sales• Hardware sales• Service subscriptions
• Social• Ads• Service subscriptions• Transaction fees• Privacy (User data)
0%
“Yesterday”2000
“Today”2010
“Tomorrow”2015 Onwards
A few ideas…
Enterprise Apps
Security
Cloud Services
Untapped market w/ customers who are used to paying lots of money for bad software.
Apps need to connect; remote service access; solves fragmentation – runs in browser.
Prevent abuse of sensitive data that resides on or can be accessed over mobile device.
Consumer Apps Gaming, social networking, dating, digital marketing are still in the nascent stage for mobile.
30
Enablers
Analytics
Shannon’s Law
Devices
Smart Grid
On-device engagement requires enablers, e.g. authentication, payments, middleware
Engagement data provides opportunity for data mining for e.g. tracking, reporting purposes
Between powerful devices and clouds, wireless links remain the bottleneck.
Power-efficient devices, enabled with mobile OS, for vertical purposes, e.g. healthcare
Drive efficiency in electrical grids through mobile web services and devices.
And with that… Good luck!
“I have come here to
Nada, 1988
31
“I have come here to
chew bubblegum and
kick ass...and I'm all
out of bubblegum.”
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