go to market plan - startup for smartphones

7/27/2019 Go to Market Plan - Startup for smartphones

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Product Plan: Direct to User

Draft 4.0 Ned Hayes

March 19, 2010

Kiha Software, Inc.

100 South King Street, Suite 320 Seattle, WA 98104

MAIN206-697-7760 [email protected] WEBwww.kiha.com


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Kiha Software. All rights reserved.

The information contained in this document represents the current view of Kiha Software on the issues discussed as of the dat e of

publication. Because Kiha must respond to changing market conditions, it should not be interpreted to be a commitment on the part

of Kiha, and Kiha cannot guarantee the accuracy of any information presented after the date of publication.

This document is for informational purposes only. KIHA MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT.

Kiha Software, Inc.

100 South King Street, Suite 320

Seattle, WA 98104

USA

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.


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Kiha Software Proprietary and Confidential i

Saved 10/6/2013 9:16:00 AM Product Plan: Direct to User

TABLE OF CONTENTS

Product .................................................................................................................................................................. 1

Product Ecosystem ................................................................................................................................................ 4

Target Users .......................................................................................................................................................... 6

Product Roadmap .................................................................................................................................................. 9

Market Segments ................................................................................................................................................ 11

Marketing Strategy .............................................................................................................................................. 18

Revenue Models .................................................................................................................................................. 22

Operations ........................................................................................................................................................... 27


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2013 Kiha Software Proprietary and Confidential 1

Saved 10/6/2013 9:16:00 AM Document1

Product

Value PropositionKiha's application delivers a new layer of services that optimizes the mobile lifestyle. In a world of highly

capable, always-on, information-aware devices, Kiha understands and optimizes your complex world into

one clear, dynamic flow.

Kiha knows

Connections between contacts, acquaintances, new incoming data and older archived data. Kiha

connects the people in your world with the information that matters.

Relevance of one email to the complete history of your interactions, mapping relationships

between one piece of data and another piece of data: between one concept and every related

term or contact.

Calendarevents and their locations, and maps your schedule so it makes sense to you. Youractivity matters to Kiha, and your calendar learns your preferences, your timezones, and your

locations.

Context of your activity, your email, your contacts and your calendar all affect what action you

need to take. Kiha's context-sensitive user interface makes it possible to take relevant action

instantly.

With Kiha, you don't need anyone's help: you can do it yourself.

What Kiha does

Kiha connects and finds relevant information. Kiha uses a proprietary semantic service to

analyze the content and connections between your emails, documents and other information

accessed through your phone. Kiha's analysis makes search incredibly fast on your phone. The

computer-driven intelligence of the Kiha system ties together related concepts, people who work

together, events & terms that are part of your personal lexicon. This makes it possible for Kiha to

find & deliver exactly the actions & information you need, when you need it.

Kiha keeps everything safe and accessible. Kiha uses terabyte-class online storage systems

to save all the information you need from your desktop, your laptop, and your phone in one

convenient place. You can access your day's "playlist" of documents, events, or music from one

interface, on the Web or on your mobile device.

Kiha's interface speeds things up. Kiha delivers our service through a patented user interface

that goes far beyond basic touch screens to deliver multiple options immediately, in a new and

innovative way of presenting "instant actions to you without forcing you to leave your place in a

document, or your page on the Web.


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Key Features

1) Connection-Finder: Kiha processes information on-the-fly and automatically finds connections

and related data. These connections are exposed to the user through "related lists" and "instant

actions".

o Related Lists: Kiha understands English well enough to know that two terms are relatedconcepts. From any of your standard terms, your contacts -- or even from any email or

document, Kiha will pull up an automatic list of items related to that item, even a new

email.o Instant Actions: Kiha provides instant actions on any document, email, event or

recognized term. Instant actions are always context-sensitive and sensitive to your

location and needs.

2) Better Mobile Browser: Kiha's browser highlights terms you know to enable these features:o Act Instantly: Touch to send an email, add a contact, make a call and other common

actions.o Search without Typing: Touch on a term to automatically search your data or Web datao Find Your Sites Later: Kiha's system automatically archives information and relates your

Web history to other information in your data, so that you can easily retrieve a related

Web page.

3) Cloud Storage: Kiha stores all information connected to the system in a secure online storage

system that delivers optimized on-time information to the mobile device or browser application.

4) Smarter Calendar: Kiha's calendar provides access to every calendar you register in the

system, along with always-on access to schedule in multiple time zones and in multiple location

calendars.

Secondary Features

Most of these features are secondary because they are "feature-parity" with existing phones & apps.

Direct Social Networking: Kiha pulls down social network updates and integrates updates,

tweets, and comments into your social stream, tying together all your data and your friends into

one seamless flow.

Faster Interface: Kiha analyzed common mobile device activities and optimized the number of

steps you need to take for most actions: in many of the operations you need the most, Kiha's

interface is faster by a factor of up to 3X.

Universal Search: Kiha's search is ubiquitous and universal: search anywhere for anything in

your world. Kiha can find anything from docs on your desktop to emails and text message on your

phone. (Google's Universal Search has made this feature a commodity:

http://www.wired.com/magazine/2010/02/ff_google_algorithm/all/1)

Multitasking: Kiha switches task contexts rapidly, and always keeps your activity "alive" on the


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phone. (Apple Insider - Apple iPhone to ship Multitasking in 2010 http://bit.ly/aEt04e)


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Product Ecosystem

Business & Pleasure

Advanced mobile devices with fast processors such as the iPad and the Nexus One are

increasingly treated by business users as indispensible always-on companions -- even

"extensions of the person part of their identity" (Stanford Study March 2010). Users of these

smart devices often don't have the sense that some other system is doing the work for them --

their tactile interactions with touch-screen devices give them a greater sense of involvement with

their electronic activity. It feels more personal: in fact, users report that they feel they have "done

the work themselves more" than when they are at their desktops or laptops (LA Times Jan 2010).

Most business users of these devices provision their device with full access to all email accounts

-- business and pleasure -- and view both business data and personal data on the same device,

within the same span of time (ABI Research Feb 2010).

Yet many smartphones today separate activities and force data into separate silos. Kiha's

application will be different: our application must emphasize synergy and discover connections.

Kiha's proposed value proposition speaks directly to this persona's daily life and expressedneeds: "Kiha's application delivers a new layer of services that optimizes the mobile lifestyle. In a

world of highly capable, always-on, information-aware devices, Kiha understands and optimizes

your complex world into one clear, dynamic flow."

Paradigm Shift: Smartphones to Superphones

The market for smart mobile devices and data-aware applications has definitively moved away

from the late 90s separation of devices into segmented categories: the "Blackberry for Business"

and other devices (such as Sidekick or iPod) for entertainment (Forrester 2010). The user with

disposable income (or an expense account) to purchase a "smarter" device tends to buy one

device with the intent of using it for both business and pleasure. These devices are rapidly

becoming the primary phone and email device for business users and often serve as a secondaryentertainment device for multiple users -- not just the original purchaser (Forrester 2010, Gartner

2009). They are always on, always connected, and always receiving new information.

The Superphone as Commoditized Platform

The shift from a segment-

specific device to a device

with an operating system

that can be used as a

foundation for many types of

applications and uses is best

seen as a shift from"Smartphone" to

"Superphone." The

"superphone" is a device

that has available tens of

thousands of potential

applications, and whose user

experience and individual


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personality is at least partially driven by the user themselves. (Rob Glaser,

Seattle Mobile Breakfast Series, March 2010).

For advocates of the "superphone" as a touch-driven vehicle of personal expression and always-

on full Web connectivity, this is an exciting prospect. For OEMs and carriers, this should be a

terrifying idea, because at the end of the day, this implies that the smartphone hardware and

even the underlying operating system become a commodity vehicle to deliver a rich user

experience based on applications.

The platform itself is worth next to nothing: this parallels Microsoft's work in delivering Windows to

a large worldwide market for commodity prices, working directly with OEMs to install that

operating system as default on a vast majority of computers worldwide. Microsoft makes much

more margin per installation of their productivity suite -- Microsoft Office -- than they do on the

operating system. (The operating system revenue shortfall in margin is made up in the vast

volume of their install base.)

Market for Applications

In a world where the underlying platform -- the mobile device operating system and hardware -- islargely a commodity, the real money and impact is to be made in the customized applications

delivered on a near-universal platform. As Microsoft has already proven, productivity applications

are valued by users -- especially business users -- as premium purchases. Users will pay for

productivity.

The essential play for Kiha is to deliver a premium application experience on one or more of

these initial commodity platforms and gradually extend the Kiha value proposition into increasing

platforms in the "superphone" world ( i.e. iPhone, Android and eventually new or resurgent

platforms such as Palm WebOS and Microsoft Mobile 7+).

One of the keys to Kiha's success in the market is the Internet-based nature of both the semantic

processing and the always-on storage and retrieval of data from an "in-the-cloud" repository.

Kiha's value prop is mobile productivity -- not necessarily tied to the attributes of any particular

operating system or mobile device. If you lose your iPhone and "upgrade" to a Nexus One or a

new Microsoft device, your data and productivity is never interrupted.

Data Types for Working Adults

Smartphone users consistently state that their smartphones are being used for a great deal of

their working and leisure day, regardless of their particular activity at that time (Compete.com

2010). Today, smartphones are being used at nearly all points of the day, from the morning commute,

to the waiting room at a personal appointment, to a meeting at the office, to texting with friends at night

while trying to understand that weeks episode ofFringe.

Because activity-specific market segmentation is fading in the "superphone" world, and the

operating systems are no longer tied to a specific type of usage, it is vital that a productivity

application does not create artificial boundaries between data types. Salesforce.com's CEO

recently observed that Facebook is a productivity tool for many of their business sales people,

and that new collaborative capabilities in his software mirror and integrate Facebook functions

(Marc Benioff March 2010 http://tcrn.ch/9gX305).


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A mobile device that processes data and focuses on productivity would be well positioned in this

new paradigm if it did not simply process one type of data well, but instead was capable of

processing multiple term clouds and was semantically aware of terms, locations, and data from

multiple sources. In an environment where a user is using their iPhone or Nexus One to look at

business email one minute, and Facebook the next, it makes little sense to compartmentalize

these activities into different silos (Stanford Research Study March 2010).

Target Users

Persona

Kiha's target market is composed of adults 25-45 who use their smartphones for at least half their

day -- for activities both business-related and leisure-related. This kind of online service and

smartphone user must have a considerable disposable income as well, as current smartphones

require the user to pay for the phone outright and often cannot be purchased without an

expensive data plan. This places our target application user in an income bracket of at least

$65K/year (Forrester 2010). Today's smartphone users must be technology savvy, with multipleonline accounts and familiar with recent online innovations such as Facebook, Twitter and

Blogging.

The specific segment targeted by Kiha are productive working adults who are self-directed and

can download and use their own purchased applications for business and personal reasons: a

majority of workers who describe their work as self-directed and self-managed are SMB and

SOHO workers (CompTia / McKinsey).

Avid smartphone application users often state they need on-device applications that can

effectively "manage their family's complex schedules" and/or their "complex work schedules"

(CompTia 2010). Therefore, more likely than not, our target audience has a family of their own,

with minor children to manage or supervise. This also means the scheduling functions of Kiha'sproductivity applications must be able to support multiple schedules and must be able to flexibly

import and analyze multiple schedules.

Persona Characteristics

Age Income HouseholdWork

Type

Social

Networks

Online

BehaviorSmartphone

On-Device

Applications

25-45

$65k-

$200k

3-5

members

SMB

SOHO

FB, Twitter,

Blogs, etc

Online 14 of

24 hours

65% iPhone

25% Android10% Other

20-100 apps

Use CasesKiha's application product will tie together a user's complete day, creating a holistic picture of

activity and upcoming data needs. In Kiha's application, processing information related to

business should be coupled by the basic ability to process information related to consumer


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entertainment activities, such as Web browsing for pleasure and interactions over text messaging

systems and the like.

Kiha is an application oriented at working adults, and the types and magnitude of "entertainment"

processing suitable to this audience does not differ significantly in data types, volume, or even in

terms from business text. (The obvious exception to this statement is the processing of streaming

video content and video tagging. These media types are outside the scope of this proposal.)


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Business Use Cases

Kiha's on-device application should be able to absorb, process and semantically recognize

business email, business contacts, business documents, and other business-related textual

information. Kiha's ability to recognize and provide user interface "actions" and "lists" relevant tobusiness content would play out in the following use cases:

Business Scenario Kiha Use Case

A customer calls you See all communications and documents related to that customer during the in-

progress call.

You receive a business email message

from a sales prospect

Check all your email accounts from one unified inbox thats color coded by

account. Find items related to any recognized person, location, organization,

date, and time mentioned in an email message. Search your information or the

internet for highlighted items.

You have a meeting soon Get estimates of the time required to go from one scheduled location to the

next. If youre running late, get alerts well in advance. Send a message to the

meeting attendees from your calendar.

You're reading an email message about

a customer, from someone you have

never met before.

Find the account representative's name and phone number, and call her, even if

you dont regularly correspond with her, and she is not in your contacts list.

A customer requests a document

during an in-progress phone call.

Search for and send the file while you're talking--without downloading It to your

phone.

You're searching for a new customeryou wrote to last week

Retrieve contact information for people with whom you have communicated inmessages, even if you havent added them to your contact list.

You want to store some information in

one place

Use spaces to create custom desktops on which you can store categories of

pages, links, documents, widgets, and applications.

Consumer Use Cases

Kiha's on-device application should be able to absorb, process and semantically recognize

consumer email, consumer contacts, consumer documents, and other pleasure and entertainment-

related textual information. Kiha's ability to recognize and provide user interface "actions" and "lists"

relevant to consumer content would play out in the following use cases:


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Consumer Scenario Kiha Use Case

A friend calls you, to confirm a date

that evening

See all past communications (including text messages, calls and emails) related

to that friend during the in-progress call.

You receive a personal email messageat your work account.

The personal email is automatically tagged with an appropriate color and isconnected to all personal email from that same person even if they didnt use

the same email address as before. You can easily search your information or the

internet for highlighted items.

You have a soccer game on your

personal calendar

Kiha provides estimates of the time required to go from work to the next

scheduled location (even if its just on your home calendar, not your business

calendar). See automatically if traffic is an issue. If youre running late, get alerts

and suggestions for alternative routes.

You're reading an email message about

a new movie

Find the movies local showtimes, and a phone number for the theater, without

leaving the email message.

You're searching for a friend of a friend Retrieve contact information for people with whom you have communicated inmessages, even if you havent added them to your contact list.

You want to store your sons soccer

game dates and roster in one place

Use spaces to create custom desktops on which you can store categories of

pages, links, documents, widgets, and applications.

Product Roadmap

Kiha plans to deliver a productivity-focused application that can be installed on multiple phones and

devices that are supported by a single ecosystem.

Kiha should deliver one productivity application that is available through a Web-based interface, and

through an interface made available on leading smartphone ("superphone") platforms.

Smartphon e Platform Market Share

Smartphone owners in the U.S. constitute a group of 42.7 million people. RIM's Blackberry platform

continues to lead the field with 43% share of U.S. smartphone subscribers, while Apple's iPhone

ranks second with 25%, but is accelerating rapidly with year over year increases. Microsoft's aging

6.0 and 6.5 platforms is slipping rapidly from its 15.7% market share, and their next release has been

significantly delayed. What's most interesting is that Google's Android is already growing, in the first

18 months of release, and now ranks at 7.1% overall (up 4.3%). (ComScore, March 2010http://bit.ly/bFeNns)


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Takeaways to this ComScore market analysis are A) Apple rising, B) Googles Android platformcontinues to see rapid gains in market share, C) Other platforms stagnant or hold steady. Most

telling is another data point from ChangeWave (Jan 2010), in which we can see the true cost of

Apple's dominance and the ability of Google Android to continue to rise in this space and challenge

Apple.

In 2009, 32% of smartphone users planned to

upgrade to a new iPhone (orange). In 2010, this has

slipped slightly to 28%. The platform with real gains in

2010 looks to be Google Android, moving from 6% to

21%.

Today, the leading smartphone platforms in NorthAmerica are ranked in this order of preference by

users:

1) Apple iPhone, 2) RIM, 3) Android, 4) Microsoft.

Smart application developers targeting large audiences of users would be wise to target the iPhone

and Android. (ChangeWave 2010 http://bit.ly/c8znOB)

RIM is increasingly becoming the domain of enterprise business users, as companies can more

easily "shut down" the installation of third party applications on these devices (ChangeWave 2010).

Therefore, it is not a receptive environment for Kiha's productivity application.

Therefore, it is recommended that Kiha NOT target the RIM platform in the first years of release.

Kiha Prod uct Delivery Timetable

Kiha should deliver an application that delivers to each of these segment types, in this order:

1) Apple iPhone + Web Q4 2010

2) Android Q1 2011


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3) Microsoft Mobile Platform Q3 2011

A projected release timeline for application deployment follows:

The majority of early adopters of new applications install such applications within 60 days of purchase

of a new device: over time, the install rate of new applications diminishes to a steady trickle, instead

of the early blast from new purchasers or upgrading purchasers (Silicon Insider 2010).It is

advantageous to launch applications as close in time as possible to the release of new versions of the

target handsets.

If Kiha can map application release product release schedules to key deliverable dates for the target

platforms, the Kiha application can achieve maximum impact. Here are two examples:

APPLE

Q3 2010 Apple iPad Delivered (hypothetical)

Q3 2010 First (1.) Delivery of Kiha Application for iPad, iTouch, iPhoneQ4 2010 (Expected) Update to Apple iPhone (hypothetical)

Q4 2010 Second Version (2.0) of upgraded Kiha Application for iPad, iTouch, iPhone

ANDROID

Q4 2010 Android Devices ship on AT&T, Verizon, T-Mobile (hypothetical)

Q4 2010 First (1.) Delivery of Kiha Application for Android Gen1 Devices

Q1 2011 Android Second-Generation Devices Ship (hypothetical)

Market Segments

Smartphones are the remaining growth segment in a static mobile environment, and replacement

phones are moving towards smartphones like iPhone & Android (IDC 2009, Forrester 2010). If Kiha

hopes to deliver a mobile application, Kiha will sell to an existing or emerging smartphone market

segment.

The three standard segments in technology sales have traditionally been: 1) Enterprise, 2) SMB, 3)

Consumer. In the new world of smartphone and mobile device sales, Apple has had remarkable

success by delivering a closed device (i.e. Consumer-level) that then blurred the lines between

Q3 2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Web App Web application, Data can also be accessed & updated via smartphone apps

iPhone iPhone App v1

Android Android App v1

iPhone v2 iPhone App v2

MSFT

Mobile MS Mobile App v1

Android v2 Android App v2


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"Consumer" and Enterprise/SMB by selling heavily to business users in release 2.0 (but without

significant changes to the product line). Apple sold a device aimed squarely at the high end of the

consumer market, and then used its App Store model and upgrades to its product to add features and

applications that appeal to business users, ranging from secure Exchange access to productivity

apps.

Apple's success was predicated on two factors: 1) Apple shipped at the time when the upgrade cycle

to smartphones was just beginning, 2) Apple correctly anticipated the fact that consumers were fed

up with phones as a technology sink-hole, and wanted a bone-simple Consumer level device that

could be extended. In short, Apple proved that there was a large pent-up desire for always-on mobile

devices that can provide much of the computing power of a laptop, but without the hefty form factor or

maintenance overhead. Google, obviously, is now attempting to capitalize on that success with

releases that open the device to more customization and to more customizable form factors and

enterprise-class applications.

Kiha 's Product iv i ty Opportun i ty

Yet neither Google nor Apple have yet delivered an on-phone productivity suite that is on par with the

capabilities of their devices: we believe that Kiha has a prime opportunity to capitalize on this gap by

delivering a semantically-enabled productivity suite that brings together all textual content on a deviceand allows a user to take action very rapidly and smoothly.

The App Store model used effectively by Apple also created a prime opportunity for a Kiha

application. Prior to the iPhone, mobile developers pursuing Consumers had to work with carriers to

get "on the stack" and if they wished to pursue the Enterprise market, they had to work directly with

large enterprises, or be a large enterprise vendor themselves (such as Microsoft, Oracle CRM, etc.)

This is the not the case any longer: today, an application can be developed for either Android or

iPhone and be purchased directly and immediately by Consumers or by SMB users. Note that

Enterprise users are often blocked from purchasing applications themselves for use on Enterprise-

provided iPhones or other devices.

Thus, Apple's initial work in familiarizing business people with touch screens and an App Store modelprovides Kiha with a solid foundation on which to build.

Market Estimates

Today, there are over 25 million iPhones in the market. Approximately 60% of those phones -- or 15M

-- are used for business during at least part of the day (IDC 2010). If we discount approximately 1/2 of

those devices as being purchased by large enterprises (7.5M), and thus inaccessible to third party

applications such as Kiha, we are left with a target group of approximately 8M existing iPhone users

who may wish to use a third party productivity application for business purposes.

This 8M number happens to correlate with a recent estimate that there are 5.7 million small

businesses in the U.S. and an additional 3-4 million SOHO workers in the United States (Analysys

Mason 2010). SMB customers themselves validate their use of smartphones for work -- 44% of

surveyed SMBs said they plan to invest more in smartphones in the next 2 years (CompTIA). The

same is true for SOHO -- the smaller the business, the higher the use of smartphones for work

(DigiWorld 2009). Kiha's total available market for an initial iPhone application for SMB and SOHO

would thus be approximately 8-9 million business-oriented users in the United States.

The emphasis on business-oriented users is necessary, because only business users seem to payfor

App Store applications. The majority of applications in both the iPhone and Android app stores are


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still free today. There are several options for revenue growth using the Kiha application as a beach-

head application (discussed later in this proposal), but all but one of these options involve an eventual

upsell and money changing hands.


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Go to Market Options

Paid App Only:Although productivity suites on the desktop have sold well for decades, the same is

not true on mobile phones. In fact, most productivity software on mobile phones and even on

"superphones" has been bundled into the underlying platform. This is true of basic productivity

software such as Email clients (even Exchange-capable clients such as the iPhone's on-phone Mailclient) and of document markup and document editing software. The most installed and used

software is "free" on the phone.

Data from application business cases in both Apple and Blackberry App Stores clearly demonstrate

that delivering ONLY a "paid" productivity application is one way to ensure a minimal install base.

Free App Up sel l ing Paid App:Providing a minimally-featured product alongside a paid version has

worked for many applications that are in constant use, such as IM Clients and the like. However, it is

not a viable path to short-term assured revenue: 4 years of effort leading to 1M "paid" installs is not a

viable long-term roadmap for a growing business.

Advertising as Game Changer

Many applications on the iPhone and Android have turned to advertising support as the primary

revenue stream for the application business. A recent finding by Compete.com demonstrates that

mobile advertising may be even more successful when it is pertinent to a user's activity or location.

Competes Quarterly Smartphone Intelligence Report found that nearly half of smartphone users would be

interested in mobile advertising, making this a viable product option.

Consumers were most interested in receiving grocery coupons (36%), scanable barcodes (29%), offers to save

and pursue at leisure (26%), movie theater offers (26%), and ads via SMS when going by a retailer with a

promotion / coupon (21%). The fact that over 1 in 5 smartphone owners would be interested in these top-5 is

very promising for the mobile marketing industry (Compete Feb 2010).
http://static.seekingalpha.com/uploads/2010/3/12/saupload_dn_si_q1_031110.JPG


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This recent demonstration by smartphone customers of openness to mobile advertising that is

pertinent to their communication usage, location and/or mobile activity provides a firm grounding

for a delivery recommendation for Kiha.

Delivery Recommendation

Kiha should take its initial product to market via both a free application supported by advertising and apaid mobile application. The following sections present both a conservative approach to this model, and a

more aggressive approach.

In the Conservative approach, the Free Application should be 99% functional, but supported by

advertising. The Paid version is 100% functional, but simply gets rid of the advertising. The additional

1% of added value can take the form of business-specific features, such as additional security

protections and a data encryption layer. The Paid version is worth considerably more to Kiha in this

scenario.

In the more Aggressive approach, the Free Application would also be 99% functional, but would be

supported by semantical ly-targetedadvertising. The application itself -- with user opt-in upon

application installation -- consistently mines the user's data for current activity, current interests,current schedule and current location and provides targeted advertising specific to that moment.

Conservative Grow th Forecast in U.S.

This conservative forecast is based upon a basic App Store business model of a "simple advertising"

supported application, which also upsells an ad-free "premium" version of the application.

Note that this forecast is followed by a more aggressive forecast that is predicated upon Kiha fully

using the product's datamining and semantic analysis capabilities.

The proposal is that Kiha would ship a free iPhone application in 2010 and a similar Android

Application in late 2010, both aimed at the immediate needs of the SMB/SOHO target customer.

Because Kiha's application would not be markedly distinct from other productivity applications, it is

reasonable to project that Kiha will first achieve 1% of the target market (480K install base Year 1 out

of target base of 8M).

With continued marketing and product improvements, Kiha can expect to see a substantial CAGR

over the next several years, leading gradually to an install base of 1.7M out of 13M target users by

Year 5. (Estimates are that each application user would be worth approximately $0.59/annually to

Kiha, and the Paid version of the application would be sold for $9.99 per subscriber as a premium

business app.)

"Conservative Recommendation" projected install rates for both paid and free applications, on

iPhone and Android can be seen in the graph below:


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-

200,000

400,000

600,000

800,000

1,000,0001,200,000

1,400,000

1,600,000

1,800,000

2010 2011 2012 2013 2014

Conservative Recommendation / Install Forecast

iPhone (free)

iPhone (paid)

Android (free)

Android (paid)

The Conservative Recommendation demonstrates a successful iPhone or Android application story,

but it is not a groundbreaking success as a company's sole product asset.

Therefore, in this scenario, Kiha would have to productize and sell the Kiha online service as a

separate monetizable asset in order to achieve a truly breakthrough revenue plan.

Aggressive Growth Forecast in U.S.

In this approach, Kiha would take its initial product to market via both a free and a paid mobile

application. The Free Application should be 99% functional, but supported by semantical ly-targeted

advertising. The application itself -- with user opt-in upon application installation -- consistently mines

the user's data for current activity, current interests, current schedule and current location and

provides targeted advertising specific to that moment. This model was first pioneered by Google

based on a user's entered search information and information they found in a search: narrowcast

advertising has never been done based on semantic content of messaging and personal data, andcarries with it potential unforeseen risk.

In this proposal, the Paid version is 100% functional, but simply stops data-mining in order to place

targeted advertising. Many businesses will pay to nothave their data mined, so this is a valued up sell

in the business market. The Paid version gets rid of the advertising, and in this scenario is a lesser

revenue source for Kiha. (Again, the additional 1% of added value can take the form of business-

specific features, such as additional security protections and a data encryption layer, and removal of

semantically targeted advertising.)

The aggressive forecast is predicated upon Kiha fully using the product's datamining and semantic

analysis capabilities to deliver targeted advertising in text and visual form that are contextually aware:

advertising will reflect terms and concepts within the recent activity stream, will demonstrate

"awareness" of user's data activity, recent data consumption, data searching proclivities, recent and

current acquisitions and business relationships and the user's location in space and time (i.e.

calendar, time of day and user's physical location).

The recommendation is that Kiha deliver an entirely "free" version of the Kiha smartphone application

which contains this semantically-driven advertising, and monetizes through sales of these types of

narrowly targeted advertising.


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-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2010 2011 2012 2013 2014

Aggressive Recommendation / Install Forecast

iPhone Free Install

Base

iPhone Paid Install

Base

Android Free Install

Base

Kiha should also deliver a Paid version, which simply turns off the semantic & context-sensitive

advertising. Businesses will find this version useful, but it is not as monetarily profitable to Kiha.

If Kiha ships a free iPhone application in 2010 which is supported by semantically-aware advertising,

we have the opportunity to build a new category of applications and a new kind of revenue stream on

the mobile device. The kind of services we offer, coupled with the uniquely targeted advertising we

can deliver during actual productive activities may sufficiently differentiate Kiha from the crowded App

Store market. The resulting negative and positive press around this new class of semantically-aware

application may help to lift our product line to a level of public and professional interest and provide a

substantial lift in installations.

In this model, the expectation is that Kiha may almost double our Conservative install forecast, hitting

nearly 10% of our target market in Year 1 (700K install base). By Year 5, Kiha could expect to

achieve an install rate of nearly 25% of our target market of SOHO/SMB business users of

"superphones" (3.1M out of 13M target users).

The real difference in this model is that the "free" application is worth much more to Kiha, because

the advertising can be sold at a premium. (Estimates are that each application user would be worthapproximately $14.99/annually to Kiha. In contrast to this, the Paid version of the application would

only be sold for $9.99 per subscriber per year.) Revenue estimate details can be seen in the

Revenue section.

"Aggressive Recommendation" projected install rates for both paid and free applications, on iPhone

and Android can be seen in the graph below:

Andro id Ris ing

Smartphone market analysts largely concur that Android's open marketplace, low cost to invest, open

development platform will gradually subsume some of the market momentum of the proprietary and

closed iPhone platform, much as the open development environment of Microsoft Windows created a

larger value-add for developers and consumers over the proprietary and expensive Macintosh

operating system in the personal computing world (Forrester 2010, IDC 2010, ABI 2009, etc.)


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Kiha believes that as Android moves from an initial install base in the "tech-savvy" early adopter world

to more mainstream acceptance, that our application will track this platforms substantial growth.

Today, the iPhone continues to have an edge in usability and in install base with non-technical

business users. Over time, Android will become part of mainstream productivity. It would be wise for

Kiha to anticipate that shift in late 2012, early 2013, and shift substantial resources to creating new

and improved versions of our applications for this Android growth market.

Long-Term Global Growth

Over time, if Kiha has some success in the U.S. market, it is worth noting that there are 200 million

SMB / SME customers worldwide today (ABI 2009), a number which is expected to reach 330 million

by 2014

(ABI 2010).

These are impressive figures, but it is important to remember that Kiha's semantic technology has not

yet been tested on non-English vocabularies and non-English datasets.

Marketing Strategy

Key Message

Kiha wants to communicate that we make users smarter, connect Information and make businesses

faster.

A quick shorthand call to action that speaks to these Kiha values of "smarter action" "connected

information" and "faster business" and also can be built into a viable viral marketing campaign is the

simple statement: " Do It Yours elf" (DIY)

This statement emphasizes action (Do), productivity (It) & personal achievement (Yourself + the DIY

aesthetic).

Distribution of Kiha ApplicationDistribution is only a means by which we would deliver the same Kiha value to our customers, andshould not have an undue influence on the marketing messages and the core value we can deliver.

How we reach our target audience does NOT depend on what platform Kiha elects to target with our

initial shipment if Kiha targets the iPhone/iPad ecosystem or the Android ecosystem, our key value

prop will be the same.

Although the market sizing has already been presented in our Product Roadmap section, it is key to

consider Apple and Android as two different types of distribution mechanisms for the same

productivity product. Here are the advantages of both platforms as distribution strategies:

Primary Proposal: Deliver an iPhon e / iPad Appl ic ation

Largest market for "smarter" mobile customers today is the Apple iPhone, iTouch and iPadecosystem. Apple provides a stable underlying operating system and a well-documented set of

application programming interfaces. Apple further provides a well-established Application Store model

for product delivery, and already has significant penetration in the SOHO and SMB spaces.

Advantages

1) Reach of the Apple platform. Apple has a very large market for applications in the App Store, and has

made this a viable business for many players.


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2) Closed platform for UI innovations may actually allow Kiha to focus on what makes us unique --

semantic processing and in-the-cloud storage, rather than trying to innovate in UI as well with our

first app shipment (Apple March 2010 lawsuits may further demonstrate closure of UI innovations to other developers onareas such as multi-touch, etc.)

3) High Adoption by Target Market

(a slim majority of smartphone-ready SMB and SOHO customers are already Apple customers)

4) App Store model is well established for Apple customers, and Kiha would not have to establish a

model or a price point to sell our product.5) Stability of platform Apples smartphone has demonstrated re-start issues only in approximately 12%

of use scenarios. This is in contrast to Androids documented re-start and device wipe issues, known

to be in the 20% to 35% range, depending on device and scenario usage.

Disadvantages

1) Closed Apple Platform, and therefore all of our value must be contained In offline storage andsemantic processing, rather than through UI enhancements (this is both an Advantage and a

Disadvantage)

2) Rise Above the Noise? Apple's App Store's success may make it difficult to rise above the noise witha unique product proposition.

3) Built-in Apps: iPhone/iPad ship built-in applications for productivity (iWork) and Email. Third partyapps already exist for strong social network datamining. Shipping products in this productivity and

communication space would mean competing with Apple head-to-head in some areas

4) Getting Additional Data: Closed Apple Platform additionally means that access to additionalinformation, such as email records, calling records and call-in-progress information may be difficult

to get.

Secondary Proposal: Andro id Appl icat ion

Secondary proposal is to build a product specific to the Android platform. Ideal would be to be "on the

stack" as a pre-installed productivity application on an Android device with significant marketing, such

as Droid (2009) or Nexus One (2010).

Advantages

1) Kiha Could Lead: No clear leader has been demonstrated leader in productivity applications onAndroid platform -- Kiha has the capability to lead here with our own brand and productivity apps

2) Define Value: Ability to drive business terms and define our value ourselves (rather than beingbeholden to Apple for the complete model)

3) Open Platform provides Kiha with more insight and flexibility in development4) Getting Additional Data: Open Platform additionally means that access to additional information,

such as email records, calling records and call-in-progress information may be easier to get.

Disadvantages

1) Low Adoption by Target Market Android has potential, but carriers are selling individual brand

names, and the idea of Android Inside (a la Intel) hasnt really taken off yet for customers.2) Lack of Viable App Store model is not well established or well populated for Android customers,

and fragmentation of app stores means that Kiha would have to work harder to establish ourselves

and market ourselves as available in the Android App Store.

3) Stability of platform Android has demonstrated some instability, especially as compared to Apple(35% in some cases, compared to Apples 12%)

4) Open Platform has already led to some fragmentation, especially in UI and App Stores. The Androidplatform is fragmenting to some degree. This makes it less suitable for broad penetration.


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5) Open for UI Innovation may actually force Kiha to innovate here, which may muddle our primaryand hard-to-replicate value in the market which is our unique semantic processing and in-the-cloud

storage.

Go to Market Strategy

Analysis of the application store market demonstrates that providing a paid application thru the App Store

(on either Apples storefront or the Android store) is not a viable long-term business model as a stand-alone

strategy (IDC 2010). The financial viability of the App Store model for any individual developer of an

application is relatively small (Apple Cut of App Stores, ZDNet 2010). App Store should be a beach-head

application, not the end game.

However, if the application can pay for itself through other means, then an initial application install can be a

viable first step. There are several ways of ensuring the application pays for itself over time:

1) Advertising supported Free Application: Many applications in the Apple App Store have managed to

cover their expenses through advertising and partnerships. They become a brand-vehicle for other

corporate entities who want their name associated with the application, and want to be seen by the

eyeballs on the application. The kind of detailed information that Kiha might be able to share withadvertisers (with user opt-in) would be quite compelling, and might enable partnership and co -branding

(i.e.Hulu Entertainment Organizer! OR the Amazon Connections Application)

2) Mobile App as Beach-head for Service: Applications have also had some success as a beach-head for

continued use of their service. The customer pays for access to the service, and the mobile application

head for the service thus becomes simply a feature of the service. One consumer applicat ion with

considerable success is Pandora, whose revenues only took off after their mobile apps received sufficient

interest.

3) Mobile App as Beach-head for Desktop App: Kihas role as a productivity application might also have

legs on the desktop. If Kiha used the mobile app as a way to build interest in the desktop app and to

provide another front-end for basic functions, Kiha might be able to make a play for desktop growth.

Revenue models for each of these options are included in the "Revenue Models" section below.

Call to Action

Kiha's value proposition is consistent, clear, and concise. The underlying values are always the same

--

"Kiha makes you smarter, connects information for you, and makes your business faster."

A quick shorthand call to action that speaks to these same Kiha values, and connects with our target

audience is simple and direct, and is powerful in its multivalency: " Do It Yours elf" (DIY)

This DIY aesthetic can be used in multiple ways through a campaign, and can be seen both as the

primary call to action for a user-created viral campaign (described below), and as a description for the

application's use by the consumer.

After the application has some market penetration, and other messages are being delivered, this DIY

moniker can be used as a standard marketing tagline, and can be appended to every instance of the

application in action, in order to emphasize the individualistic nature of the application, and the power


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of "fast action" that Kiha delivers.

The use and implications of the DIY tagline is explored in greater detail in the proposed Viral

Marketing campaign outlined below. Here is a brief explanation:

Do -- focuses the user on Action. This is not a passive application. This is an application to

"Do"

It -- multivalency of "it" focuses on Productivity. Throw anything at Kiha, and we will do "it"

Yourself -- focuses on user persona. Connects directly with the mobile device as an "extension of

the

person." Also connects with the individualistic character of our SMB/SOHO target

audience.

Viral Marketing Campaign

The disaggregation of media influencers have made it more difficult for large-scale product launches to

receive the kind of consumer or business attention they once received. Today, loosely joined social mediacircles and viral messaging should be treated as primary methods of getting a message out. The key element

to success in viral and social media messaging is creating participants, rather than just consumers.

Consumers of your message have to be involved.

Kiha can drive early buzz and viral interest thru online social networking and user-built collaborative

multimedia that "pre-announces" Kiha's un-released, futuristic smartphone application.

Prior to and concurrent with product launch, Kiha build on the power and growth of this social and

empowered online user network with extensive online resources about the product. Kiha should launch the

product using these same online social network and viral tools.

The actual Product Launch itself can do a soft-switch on the gear, but use the same messaging and leveragemuch of the user-created content. Our marketing campaign should always foreground user-created content.

Heres how we encourage, acquire, and develop this user-generated content, and how we use it to deliver our

application to market.

Phone Context

Today, the carriers have standard marketing plans that they follow in launching any new phone. These plans

typically include X% of dollars to kiosks, X% print and online collateral, X% to online/SMS contests, etc.

Phone marketing spends are split with handset vendors, third party service providers (IM, Good, TeleNav, OS

vendors like MS, etc). Carriers and large vendors including Apple do not effectively marketpaidthird

party applications.

The results are that consumers and self-purchasing business people are largely NUMB to the messages that

come out of these marketing plans. Users have little sense of ownership in their phones or their experience.

They are not brand loyal, and change phones regularly. Apple has built a base of users, but their controls

have alienated some users from the brand (i.e. cracking phones, installing other Apps, etc.)

Application Marketing?


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Furthermore, the lack of effective marketing for applications has made applications into a commodity

product, rather than a premium must-have product to install on new phones. A corollary situation would

exist if Microsoft had never branded MS Office, and had just given it away with every new PC Office would

be a commodity product, rather than the premium brand it is today. The Office example is pertinent because

Kiha provides similar productivity gains with our semantic intelligence and our user interface improvements.

A user-generated enthusiastic embrace of a new product can allow for a market penetration strategy that

includes a significant up-sell and a premium priced model (unlike most consumer available apps today).

Short-Term Marketing Proposal

Create a viable sense of audience participation by intentionally using "low tech" or seemingly "audience-

created" introductions to a product that appears to be somewhat user-generated in its actual features. Most

of the early preview releases should be done in low-tech mode, as in the mode ofhttp://commoncraft.com/

The goal through this audience participation phase is to build buzz and "audience ownership" around the Kiha

application in advance, so that there's a real groundswell of interest. Make it participatory, and engaging, so

that there's an audience of people who build features, and have a real sense of ownership about the phone.

Again, with the tagline Do It Yourself, its highly possible to engage people in designing their own kind ofsmartphone application, and essentially saying to the audience Were taking the best of your ideas, and

shipping an application tailor-made to your specifications.

(Part of the reason we can do this with some confidence is that the Kiha concepts were often independently

proposed by focus groups and large groups, and the ability to deliver the Kiha proposition continues to resonate

with mobile users. See primary Kiha Market Research, May 2008Jan 2010)

Necessary Components

To execute on this proposed viral marketing model, Kiha will need:

1) A viable web presence with the ability to solicit user input and feedback

2) Other online outlets that would link back to the main Kiha-DIY website. Links such as a Facebookgroup, several Twitter accounts, a YouTube Channel, and other social media outlets.

3) An online community organizer & content editor whose full-time responsibility is the management of thecommunity and the sensitivity to deflect trolls and direct users in useful directions

4) A part-time marketing person who would be able to message out interesting user proposals to sites suchas Engadget and Gizmodo so that our site could begin to receive buzz for cool ideas

5) A fund that would reward user creativity with small prizes, increasing in size closer to launch

Long-Term Marketing Proposal

Using the social media and online content model, Kiha could encourage our users tremendously with their

ideas and build a rabid base of users who function as evangelists, who are empowered to help other users,

and who contribute to an ongoing user community. Given our limited size, this also creates a user-base ofpeople who will help other people with our application once an initial version launches.

(The downside is that the sense of ownership can lead to backlash if the company does not do what the users

"want" them to do. Therefore, transparency and clarity is essential with the community.)

Revenue ModelsThe Kiha application can be sold in one of two business models.
http://commoncraft.com/http://commoncraft.com/http://commoncraft.com/http://commoncraft.com/


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1) Conservative Model: The first Conservative model would deliver a basic-advertising application for

Free that can be upgraded to a Paid version. The Paid version is worth more to Kiha in the Conservative

model. The forecast for this model is $20M in five years. This model, the overall play would be to sell the

service itself. (The revenue model for the service is not included here.)

2) Aggressive Model: The second, Aggressive business model, would deliver a Free application that is

underwritten through narrowcast targeted advertising that makes use of the systems semantic

capabilities to deliver context-sensitive advertising. Again, the Free version can be upgraded to a Paid

version, but in this scenario, the Paid version is actually worth less to Kiha. The forecast for this model is

$240M in five years. However, the assumptions underlying this model are complicated, and may create

blowback for Kiha that will hurt the overall brand and the long-term revenue proposition.

Both the Conservative and the Aggressive revenue models are presented in detail below:

Conservative Model Forecast

Revenue potential in the Conservative model can be achieved by a combination of free applications, funded

by advertising, which can be upsold as a premium business productivity application that no longer includesadvertising.

In this model, Kihas free and Paid applications are worth approximately $21 million in the first five years of

release for Kiha. This model focuses on the application as a stand-alone revenue source (aside from any

revenues derived from an online or desktop-based application)

This revenue model is predicated on this projected installation rate for Kihas initial smartphone apps:

The overall revenue roadmap projects only $800k in the first year of release, rolling gradually to

approximately $8 million in annual revenue for both the ad-driven free app and the premium application.


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Conservative: Pricing (Revenue drivers and $/unit)

Advertising rates for consumer-focused

applications have been substantial and

successful, but have not been tested

broadly in productivity or business

applications. Therefore, $0.59 annually as

advertising revenue per application

seems to be a conservative estimate for

non-intrusive advertising. Within the first

five years, with this conservative

estimate, an advertising-supported

application on the iPhone would be worth $3.3M.

Paid versions of the application would be sold for $9.99 and upwards, as one of the more premium

applications on either the Apple App Store or the Android App Store. Both paid versions of the application

would be worth $15 million within the first five years of deployment.


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Aggressive Model Forecast

In the Aggressive model, Kiha would mine user data to deliver targeted advertising pertinent to the activity or

the data they are currently viewing or transmitting. For example, if a user is reading an email about new

gardening materials, the user would receive targeted advertising focused on gardening. This approach has

been pioneered by Google: their work led to some controversy, but has been an overall success. A user might

be able to customize advertising they receive, much as Facebook successfully targets ads and allows users toturn off ads they no longer wish to see.

As previously discussed, the semantic mining and breakthrough nature of Kihas applications here may allow

the company to achieve far beyond the Conservative forecast.

This revenue forecast is predicated on the following installation rates on Kihas initial smartphone apps:

The basic free version of the iPhone application, with targeted context-sensitive advertising, would then

more than double the Conservative projected revenues for the iPhone application, moving from $10M in the

first year to approximately $47M in the fifth year, creating a stand-alone revenue source of $147 million in the

first five years.

Other applications on other platforms would benefit from a similar uplift in revenue projections, and the

overall superphone application play would lift Kiha revenue projections into the $240M+ range, as an

aggregate of all application revenues over the first five years. Here is the full Aggressive revenue forecast:

Aggressive: Pricing (Revenue drivers and $/unit)

The monetary implications to Kiha are considerable. Instead of advertising worth only $0.59 per year,

targeted semantically-placed advertising would be worth nearly $15/year per subscriber. Here are the

complete revenue totals over five years, along with the sources for this revenue uplift:


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Although this is a large-sized opportunity, it is worth noting that the user privacy implications are

considerable, and thus users would have to opt in to such a program through either a small print EULA or

a formal statement of consent. Kiha would have to manage both user and press expectations such that the

company would not receive a negative backlash from not informing users up front of the systems capabilities

or intentions.

Mobile App as Beach-head for Service

Kiha is following an established path by delivering an application on mobile devices to drive service adoption.

The customer pays for access to the service, and the mobile application head for the service thus becomes

simply a feature of the service.

Business-focused applications such as Salesforce.com have led the way here. Consumer-focused business

applications such as Mint.com and Zillow.com have also had marked success in using an iPhone application to

drive traffic to their site. The most successful consumer-focused online service that has driven revenue

through a free mobile app is the music service Pandora (NY Times March 2010).

Applications have thus had some success as a beach-head for continued use of an online service. If the service

is a paid service or certain features are paid premium service features, then the application does not have

as much success, but the uplift on the mobile application end is still available (as has been seen in Apples ownMac Gallery iPhoto Application, which is a free application promoting a paid-for (.me / .mac) online service.

Notes on Alternative Strategies

Potentially Viable

1. Desktop App Only: Although mobile applications and emerging smartphone platforms receive a great

deal of press attention, Windows and Mac-OSX based applications especially for business and

productivity reasons continue to be worth billions of dollars. Creating a desktop or smartbook

application that relies on data analyzed and stored by Kiha in cloud-based services.

Not Viable

2. Paid App Only: Analysis of the application store market demonstrates that providing a paid application

thru the App Store (on either Apples storefront or the Android store) is not a viable long-term business

model as a stand-alone strategy (IDC 2010).

3. Web-based App Only: not viable for the capabilities that Kiha offers. Our target customers are mobile:

we need to be on a significant mobile platform. These mobile platforms can include smartphone and

smartbook platforms.


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Operations

Kiha is currently staffed to deliver a smartphone productivity environment and complete user experience

based on the Android operating system, along with a semantic Web service that processes user data and

stores it in the cloud.

To staff for multiple on-device application and cloud-based system that can deliver data to the on-deviceapplications, Kiha will need to add additional personnel. This headcount should include:

A) Engineering resources to develop these on-device applications, B) Release to Implementation (RTI)

engineering and QA staff, C) Additional staff to the Web Service to ensure always-on connectivity to

our new on-device applications. It is also recommended that Kiha add D) additional Program / Product

Managers specific to the individual device platforms. The additional headcount will be Kihas largest

incurred sunk cost.

Kiha should also plan for a markedly increased marketing budget for promotion, advertising and go to

market initiatives for all of these new on-device applications. As described previously in this document,

much of this marketing budget would be allocated to a viral marketing campaign, which would begin

early in the cycle, prior to release of any of the consumer -facing products.

Complete Staffing Projections

New additional headcount at Kiha should be mapped to the product rollout of new applications. The

current proposal recommends the rollout of an initial iPhone application coupled with a Web Service,

both marketed to consumers. Both would require additional engineering, QA and RTI headcount, as well

as a PM for the iPhone application.

New headcount in the same categories would also have to be added for an Android application,

projected to ship in Q1 of 2011, and a Microsoft Mobile application, due to ship later in 2011.

Development Cost Projections

The headcount projected above is proposed as additional FTE employees, rather than contractors or

consultants. This is because Kiha should plan on updating all of our smartphone applications on a regular

update schedule, and should release a substantial update on at least an annual basis: version 1.0 should

be followed rapidly by release 1.1 and on to release 2.0. This kind of continued improvement is necessary

to build a consumer audience, and to improve and modify the application as the underlying platform

adds capabilities. FTE employees can maintain consistency across an application product cycle.


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Engineering, QA and RTI personnel are calculated at approximately $80k per head. Program and Product

Management are calculated at $120k per head. Both are mid-tier in the current market.

All development and delivery headcount in 2010 is projected to total $1.8 million, with the remainder of

the headcount hired over the remaining months of the product cycle.

Over the next 24 months, total development and delivery headcount is projected to total $2.4 million in

sunk costs.

Marketing and Collateral

Kiha should also add additional marketing budget for promotion, advertising and go to market initiatives

for all of these new on-device applications. As described previously in this document, much of this

marketing budget would be allocated to a viral marketing campaign, which would begin early in the

cycle. Some of the marketing activities to be undertaken would include development of branding and

collateral materials, and work with multiple consultants in online branding, community building and

online community organizing. Marketing activities would include:

1) A viable web presence with the ability to solicit user input and feedback2) Online marketing that would link back to the main Kiha-DIY website. Links such as a Facebook

group, several Twitter accounts, a YouTube Channel, and other social media outlets.

3) Online community organizing and content editing.4) Messaging to online news and media sites.5) A fund that would reward user participation and creativity within the Kiha online community

Marketing and brand planning and collateral activities for each smartphone platform would presage the

release of each application on a particular platform, so the largest expenditure always precedes the

release, followed by ongoing brand maintenance and messaging activities.

Over the first 24 months of the product cycle, Kiha is projected to spend a minimal amount on marketing,

as we believe that the viral and community-focused marketing we do will help to create product

evangelists out of our own users and messaging that is driven through continuing interactions with our

users and through our users. The complete marketing budget for three platforms and five releases over

two years is projected to be only $510,000.


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Customer Service and Support

Kiha is delivering a consumer-available application. Although this application is oriented at technically

savvy business people, this does not ensure that basic product documentation will meet the userscomplete product support needs. This is doubly true of an application that mines data, delivers

semantically relevant content specific to a users specific context, and interfaces with multiple email

accounts and document repositories.

Therefore, Kiha must plan on providing online and offline (i.e. phone-based) customer service support.

This support can be out-sourced to a variety of companies who specialize in application support on

smartphone platforms. The total cost to Kiha for such ongoing cost should be estimated at no less than

$480,000 over the first two years of release, or approximately $20,000 / month.

Total Projected Costs

Kihas investment in a Direct to User delivery plan for Kiha smartphone applications combines theprojected additional development costs ($2.4 million), additional marketing ($510 thousand) and

additional projected customer support costs ($480 thousand).

The total investment in this project is expected to require at least $3.39 million over 24 months.

Competition

Kiha enters a crowded smartphone application space. On the Apple iPhone platform alone, there are

over 170,000 current and updated applications (AppShopper.com). On Android, there are today 30,000

applications, while on the Blackberry RIM, only about 5,000 applications exist.

However, analysis of the application space demonstrates that the majority of applications on the iPhone

and Android are not targeted at the productive data-processing tasks that are compelling to our target

market (ABI Research / MediaMatrix 2010). Few direct competitors exist today.

Indirect Competition

Out of the existing field of smartphone applications, approximately 12% of current iPhone applications

are related to contact management, email management or document manipulation and management


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(tasks pertinent to the Kiha value proposition). On Android, many fewer applications are targeted at

business productivity surprisingly so! (Silicon Valley Insider 2010).

On the iPhone, this 12% provides a competitive field of 20,400 indirectly competing applications. The

majority of this field (95%) are oriented at direct editing of documents (such as Notes+, ZipExcel, etc.) or

document cloud storage of information and retrieval of information from the cloud (representative apps

are FileMagnet, SugarSync and Docs to Go). This means that approximately 1,000 applications integrate

contact lists and email or touch on document downloading and appending of contact or sales

information. Early analysis of a sampling of 24 of these applications demonstrates that all are either

enterprise-oriented and/or sales or contact coordination oriented. The majority of applications that fit

into this segment and the majority of applications analyzed thus far seem to be only available as

Paid applications, rather than Free or Advertising supported applications.

Future Competition

The large great number of cloud storage applications that have integrated Web Services for document

storage and retrieval. It would be relatively straightforward for existing document storage vendors to

begin to analyze and semantically datamine the information they store for users. Thus, it is to expectedthat if Kihas application proves itself in the market, many of these applications will rapidly add these

capabilities.

Some of the potential competitors that could quickly add this capability include SugarSync, Soonr,

Documents to Go. In fact, it may be advisable for Kiha to partner with several of these vendors out of the

gate, so that these vendors can use Kihas semantic service immediately and integrate this service into

their existing smartphone applications, rather than deploying their own, competing, service.

The most dangerous and powerful potential competitors in this space are unlikely to want to license Kiha

technology if it is appealing in the marketplace: these two large players are Google Docs (with Google

Sync built-in + Google on-phone searching) and Apples own .Mac/.Me service, which currently indexes

and syncs email and documents and provides a limited search capability on the iPhone.

Direct Competition

It is clear that direct competitors will emerge for Kihas value proposition in the applications stores.

However, at this point in time there are few direct competitors that are available as Free applications.

Several online applications proclaim that they will compete directly, but have not been released yet. Here

are two projected Direct Competitors, neither of which is yet available on smartphones:

Smish http://smi.sh/

The following points are projected benefits and features of the (unreleased) Smish Web Service and on -

phone application suite:

Files: Smish gives you fast, simple access to all of the files on your computer so you can streamline your

work. Now it's easy to email, organize, rename, print, backup, or search any of your files.

Contacts: With one click you can email, chat, text, map, and even call any of your friends. Import their info

from your Outlook, Gmail, Facebook, and other networks and put it all inside Smish. It saves time, and


34/35




puppies. But mainly time.

Web: Now you can enjoy at-a-glance previews of your favorite websites with one click. Smish

remembers your favorite sites and organizes them and lets you easily group them for split

second access.

NASUNI http://www.nasuni.com/product/product-overview/your-management-tools/#snapshots

Nasuni stores files and documents in the cloud. The difference between Nasuni and other applications that

sync documents to the smartphone is that marketing materials on the Nasuni website imply some level of

semantic analysis available in a future release. This may be marketing moving beyond what the product can

actually do but the possibility definitely exists.
http://www.nasuni.com/product/product-overview/your-management-tools/#snapshotshttp://www.nasuni.com/product/product-overview/your-management-tools/#snapshotshttp://www.nasuni.com/product/product-overview/your-management-tools/#snapshots


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Additional analysis of competing applications available upon request.