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Copyright VisionMobile 2011

VisionMobile
Mobile Megatrends 2011
how telecoms business is transforming in the software era. updated 8 March 2011
Copyright VisionMobile 2011
Andreas Constantinou
Michael Vakulenko
Matos Kapetanakis

(c) VisionMobile 2011
Knowledge. Passion. Innovation.
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 VisionMobile (www.visionmobile.com).
Copyright VisionMobile 2011
VisionMobile research
Distilling market noise into market sense
Market maps
Competitive landscape maps of
the mobile industry
Active Idle Screen
Who will own the
screen?
Developer
Economics 2010:
Everything on mobile
development
GPLv2 vs GPLv3
White Paper
Mobile Megatrends series
Research
competitive analysis,
commissioned research,
company due diligence
Strategy definition
strategy design, ecosystem
positioning, product definition
Mobile Industry Atlas, 3
rd
ed.
1,100+ companies, 69 market sectors
100 million club
tracking successful businesses
in mobile
Training
open source economics,
Android commercials,
mobile industry dynamics
Open Source Chessboard
business impacts of mobile open
source, the competitive landscape and
how to design your company strategy
The Android Game Plan
the commercial mechanics
behind Android and how
Google runs the show
Top-100 analyst blog
4,000+ subscribers
20,000+ monthly uniques
90% mobile industry insiders
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Copyright VisionMobile 2011 Copyright VisionMobile 2007-2010
Trusted by industry brands
Clients
selected
VisionMobile clients
2008-2010
Copyright VisionMobile 2011
Experience ecosystems
how telecoms + internet convergence
is leading to the next megabrands
Mobile Megatrends 2011
The DELL-ification of mobile
How the mobile handset landscape is
becoming much like the PC
Software: new era for telecoms
and the new rules for innovation
Apps are the new web
Why apps are the new information
paradigm for web 3.0
Developers, developers
the engine behind telecoms innovation
open + closed
use of open + closed strategies to
commoditise + protect
Communities: a new currency
Communities will provide the main
differentiation above price, design and content
Stuck in the telecoms age
how carriers are stuck in the telecoms age and
how to compete
Augmented Economics
making money at the edge of reality
Copyright VisionMobile 2011
The DELL-ification of mobile
How the mobile handset market is approaching PC-like commoditisation
Copyright VisionMobile 2011
Internet players agenda drive top-5 OEMs
and OEM market is fragmenting, approaching the PC market
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Market share of top-5 OEMs (source: Gartner)
Copyright VisionMobile 2011
Profits are driven by end-to-end players
and away from the old top-5 OEM league
source: Deutsche Bank
Copyright VisionMobile 2011
OEM strategies: volume vs profit strategies
data source: Deutsche Bank
2010 market share %
= strategy expectations
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Copyright VisionMobile 2011
OEMs at different stages of integration
Three roles for handset manufacturers across the double helix
Leaders: new product experiences
and enviable margins
Innovators: incremental innovation
strong brand, performance, good looks
and services
wannabee
leaders
wannabee
innovators
Assemblers
razon-thin
margins
Horizontal player structure Vertical player structure
Copyright VisionMobile 2011
Lead, innovate or assemble
The new role models for OEMs in the post-Android era
1. Assemblers: Razor-thin margins
10s of assemblers use Android to deliver ready-to-market smartphones with complete service and apps
ecosystem competing head-to-head with major OEMs. iPhone me-too experience at $100 retail.
2. Leaders: unique product experiences
Manufacturers who can masterfully integrate hardware + software + services + industrial design into new
product experiences - from phones and tablets to TVs. Unique product experiences at $500 retail.
3. Innovators: incremental innovation
The old top-5 OEM guard. Differentiation is on strong brand, performance, good looks and services.
4. Mass producers: catering to developing markets
Mass producers rely on huge economies of scale to break even at $50, but make up nearly 50% of unit sales
in the mobile handset market.
?
Copyright VisionMobile 2011
The innovators are squeezed in
Leaders:
new product experiences
Innovators:
incremental innovation
Assemblers:
razor-thin margins
performance
pressure
price
pressure
Revenue pyramid
Pyramid squeeze is accelerated by Googles Experience handsets (fast hardware/software evolution) and Windows Phone
Copyright VisionMobile 2011
Leaders
Role model: Apple
Innovators
Role model: Samsung
Mass producers
Role model: Nokia
Assemblers
Role model: Dell
DELLification in 2015
closely modelling the PC business
5% @ $500
1
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25% @ $250
25% @ $100
45% @ $50 $37.5B
$56B
$90B
$37.5B
$200B
Profit pyramid Revenue pyramid
?
Present-day example
Copyright VisionMobile 2011
OEM + Android: winners and losers
The winners:
low cost assemblers
Cost structure optimised for razor-thin margins
Android is a long-term opportunity for global reach
The losers:
old guard OEMs
Cost structure requires high-margins
Android is a short-term life support
No Name
source: VisionMobile
Copyright VisionMobile 2011
The new world: Innovate or be replaced
The new rules of the handset industry
1. Software and hardware is commodity
- Software is a loss-leader, monetised by ads (Google), hardware (Apple), content (Amazon), services (RIM)
- Software is provided a la carte and pre-integrated by chipset providers (e.g. Qualcomm, MediaTek)
2. Points of differentiation rapidly disappearing
- Android provides out-of-the-box, complete ecosystems; OEMs compete on equal footing to assemblers
3. The search for innovation is on
OEMs are search for new models of innovation beyond price, brand, performance and marketing:
- communities BlackBerry messaging or facebook deals
- made-to-order handsets; copying DELLs PC model
- white label services for carriers where OEMs trade service revenues for carrier subsidies
- micro-retailing slotting promos across distribution regions and channels
Copyright VisionMobile 2011
Software: the new era for telecoms
and the new rules for innovation
image source: maschinenraum / Flickr
Copyright VisionMobile 2011
2000 2001 2002
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Android
iOS
Chrome OS
2007 2008 2009 2010
= dead end bubble size = company revenues
$$$ and software DNA are key for platforms
20 dead platforms in the last 10 years
Trolltech $30M
A la Mobile
Access ALP
Azingo
Comneon Apoxi
Danger OS
e-SIM Intrinsyc OS
IXI Mobile
Mizi Prizm
MOAP
UIQ
Motorola L-J
Nokia GEOS
OpenMoko
OpenWave MIDAS
Palm 5/6
Sasken Aria
SavaJe OS
SKY-MAP
TTPCom Ajar
Copyright VisionMobile 2011
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OEM internal licensable
The battle for mass-market smartphone reach
!600+
!400
!50
Nokia Series 40
Samsung SHP
LG Wise
Note: OSes omitted: Myriad, Mediatek OS, Mango (Qualcomm), Koretide Elastos
!100
14 out of 15 platforms are monetised indirectly by complementary products
11 out of 15 platforms have developer ecosystems or industry consortia built around them
Copyright VisionMobile 2011
Components
Carriers Nokia RIM Apple Qualcomm Google facebook
Social networks
Cloud services
Developer ecosystem
Network
User interface
Operating system
Hardware IP
Manufacturing
denotes where vendor started
The battle for ecosystem completeness
Copyright VisionMobile 2011
Huge gap between telecoms & software worlds
success as
defined in
2010
success as
defined in
2005
Copyright VisionMobile 2011
software: turning telecoms upside down
414
74
44
3,300
113
1,300
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90,000
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3,000
900
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apps
number of apps avallable ln app sLores (C3 2010)
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internalised
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stasis
dual
personality
back to
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back to
square one
Copyright VisionMobile 2011
Huge gap between telecoms & software worlds
Telecoms world Software world
Success factor installed base number of apps
Primary customer consumer developer
Speed of innovation 1 OS version every 2 years 5 OS versions/year
Time to market 1-2 years 1-2 weeks
Type of services comms-centric catering to entire needs portfolio
Risk-taking predictability / de-risking entrepreneurship / uncertainty
Access to innovation 100s of close partners 100,000s of developers
Business model B2B licensing B2C sales/ads/in-app sales
Channel to market voice, text and web smartphones
Discovery On deck / on device App store
First step we need to sign an NDA we need to download the SDK
Process Waterfall: RFI, RFQ, deliver, QA Agile: add feature, build, test, repeat
Attitude developers will come to us we need to go to developers
Copyright VisionMobile 2011
The new rules of innovation
1. Speed of innovation defined by internet companies, not hardware / networks
- Companies from the Internet domain (Apple, Google, Facebook) out-innovate companies from the mobile
industry domain (Nokia, Samsung, Sun) and the networks domain (Vodafone, China Mobile)
- Internet players are at top of the food chain and are becoming increasingly assertive
- Yet network operators still hold most value (insights and retail channels) in the last mile to the consumer
2. Innovation requires new competence and regional presence
- California is the center for software and services innovation. Japan/Korea is the center of CE innovation.
3. If you cant innovate in software, you will be replaced
- The evolutionary game has just accelerated 10-fold.
- Players who cannot evolve at software speeds will eventually be replaced by alternatives
(oftware has superseded carrier efforts in non-comms user needs, location, billing, discovery, authentication
and mobile termination)
Copyright VisionMobile 2011
Experience Ecosystems
telecoms + internet convergence is leading to experience ecosystems
Copyright VisionMobile 2011
telecoms + internet + PC + consumer electronics = ?
our definition of convergence has changed
2u1u 2uuS 2u1S
.
No moie.
- Innovatois aie in a piice wai
- Anuioiu is making smait uevices possible
- ARN becoming uefacto in CE uevices
- Sensois + foim factois = uiveise expeiiences
- Bevelopei ecosystem is pait of coie expeiience
Copyright VisionMobile 2011
Is the future of convergence?
Assemblers
Innovators
Leaders
Copyright VisionMobile 2011
Social circle
Developer ecosystem
User data roaming
Service roaming
User interaction design
Industrial design
Brand
Convergence is about experience roaming
Convergence is about having an experience that roams consistently across screens
experience roaming across screens
convergence =
x
Copyright VisionMobile 2011
Social circle
Apps ecosystem
User data roaming
Service roaming
User interaction design
Industrial design
Brand
Apple is the poster child of experience roaming
Apple leads by example, by delivering a consistent experience across divers screens
Experience roaming
Ping
App Store
MobileMe
iTunes, AirPlay
iOS
Apple
Apple
iPod
iPhone
iPad
Mac
Apple TV
Across screens
?
Copyright VisionMobile 2011
The next battle is for Experience Ecosystems
Experience Ecosystems create major exit barriers and drive cross-sales; they are therefore a
sustainable strategy for Innovator OEMs needing to survive margin pressures.
network
effects
network
effects
Copyright VisionMobile 2011
the future of convergence is experience roaming
convergence = screens + experience
2u1u 2uuS 2u1S
the future of convergence is in a single experience + developer ecosystem
powered by ARM hardware across mobile, PC & embedded
Copyright VisionMobile 2011
Apps are the new web
Why apps are the new information paradigm for web 3.0
Copyright VisionMobile 2011 Source: Distimo, March 2011
OS vendors
OEMs Carriers Independent
Everyone wants their own app store
but few are above the radar
= number of apps when above 10,000
Copyright VisionMobile 2011
App Stores are a control point for:
- discovery of applications
access to app discovery as a control point - as a gateway to affiliate,
matchmaker and curator business models
- distribution of applications
e.g distribution and delivery of apps as a control point - e.g. Android
uses Market to enforce compliance requirements on handsets
- monetisation of applications
an opportunity to extract a commission in the form of revenue share
for paid apps and in-app purchases
- exit barriers for users
app stores create sticky gardens; if users churn they lose their apps
- consumer insights
an opportunity to optimise device and service targeting
App stores are about control, not $$$
and an opportunity for:
Mobile Application Stores (end- 2010)
App Store
Android
Market
Ovi Store
BlackBerry
App World
GetJar
Fundamentals
Owner Apple Google Nokia RIM Getjar Networks
Distribution model
via App Store on iPhone
and iPod Touch
via Market on Android
devices (closed source)
via download, and pre-
loaded from 4Q09
?
via web only
(direct + white label)
Platforms OSX Android Symbian, S40 BlackBerry
Java, Flash, Android, RIM,
WinMo, Palm, Android
Key figures
Sales base
since launch (2010 est.)
90M 77M 440M 125M
0 (plans to pre-load icon
shortcut on phones)
Downloads per month
as of end of 2010 (est.)
510M 270M 90M 60M 90M
Cumulative downloads since
launch as of end of 2010 (est.)
10B 2.5B N/A N/A 1.6B
Applications
to end of 2010 (est.)
300,000 130,000 25,000 18,000 76,000
Revenue model 70% to developer
70% to developer
30% optional to operator
70% to developer
(less w/ carrier billing)
70% to developer
Ad-based apps
+ paid placement
source: VisionMobile research, Distimo
Note: The sales base represents mobile devices sold and does not include tablets or other connected devices
Copyright VisionMobile 2011
Building an app store is not easy
Copyright VisionMobile 2011
platform
companies
mobile
carriers &
payment
brokers
handset
OEMs
platform
companies
brands and
retailers
Species
Genes
Why is building an app store so hard?
App stores need 5 genes from 5 species across the value chain
Copyright VisionMobile 2011 Copyright VisionMobile 2007-2010
1. Merchandising: App stores will take retailing where its never been before
- app retailing is bottleneck, resulting in price erosion as developers drop prices to bubble up to the top-25.
-This will drive retail sophistication: App Malls (shops-in-shop), bundles, time-limited offers, friend
endorsements, inventory micro-targeting, gift/beg options, second-hand apps, offers tied to carriers, etc
2. Diversity: App Stores will cater to 100s of niche segments;
Genre-centric stores (Games store), lifestyle-centric stores (e.g. sports or clothes brands), specialist content (e.g.
adult or enterprise), region-centric stores (e.g. Seattle apps)
3. Low barriers: App Malls will enable low-cost shops-in-shop setups
SDP vendors will offer the infrastructure, catalogue and recommendations technology allowing wannabe
app retailers to be setup at very low cost, with proven revenue models (setup fee + rent + sales commission)
3 pillars to the app store evolution 2011-13
Copyright VisionMobile 2011
Apps succeed where the web failed
- 2007: voice, text and web was main channel for services
the old school of mobile services: voice, texting, ringtones, televoting, MMS, Mobile TV,..
- 2011: 500,000+ applications on smartphones
- Apps are the single biggest digital channel since the web
- There are apps springing up everywhere there is a website
for every website, for every brand and for every corporate intranet
- Apps succeeded where cross-platform frameworks failed
Mobile web pages and widgets are poor alternatives to apps
Java and Flash failed to pick up where web left off
- The web is now the lowest common denominator across screens
across devices, the living room, the PC and the car
Copyright VisionMobile 2011
what is are apps?
apps are a new information paradigm
For.. Mobile apps Web pages
packaging Self-contained Set of pages
personalising access to location,
contacts
explicitly typed info only
discovering app store text results or URL
monetising micropayments ads
interacting touch, sensors, keys mouse, keys
measuring downloads economy attention economy
.. information
Copyright VisionMobile 2011
Web apps will proliferate in mobile handsets driven by
- web benefactors Google, Microsoft, Apple
- technology commoditisation; WebKit and V8;
- consistent technology adoption WebKit on >350M handsets up to June 2010
- content owners with most assets on HTML/web
- platform vendors seeking to modernise their developer platforms
e.g. WebOS vs Palm OS, RIM WebWorks vs BlackBerry OS 6, Nokia WRT. BREW to follow?
- and buy in to a developer community and a hype-ready platform
building a developer community is extremely expensive. It comes for free with web technologies
- the need to tap into new developer segments from the web domain
1.5 million web developers most of which are new to mobile
- The need to reduce development costs for cross-screen apps
mobile, tablet, PC, TV, consumer electronics, automotive, ..
Web 3.0 will adopt the app paradigm
Copyright VisionMobile 2011
Google rose due to openness, info chaos and lack of monetisation
- the open (crawlable) web,
- the lack of information semantics (needing Pagerank to create order out of chaos)
- the lack of a micropayments mechanism on the web (increasing demand for ads)
Google is now threatened from web silos, app stores and micropayments
- closed web silos (social networks like Facebook and app stores like Apple store)
- semantic information discovery in app stores (reducing greatly the search complexity)
- pay-per download, virtual goods and proximity payments (reducing the need for ads)
To survive, Google is trying to outrun the market trends
- launching is own walled gardens (Orkut and Buzz), its own app stores (Android Market and Chrome Web
Store) and integrating a payments technology (NFC) within Android handsets
Google under threat in web 3.0
Copyright VisionMobile 2011
Open + closed: two sides of the same coin
use of open + closed strategies to commoditise + protect
Copyright VisionMobile 2011
- Android, MeeGo, Webkit, Qt, Maemo, Eclipse, Linux all use open source
all projects use an open source license for the public source code
- Open source licenses are standardised and well understood
3 licenses used most often in mobile projects (GPL, LGPL, APL)
- But an open source license is only the tip of the iceberg
a license determines access to the project (e.g. Android public source code)
- Governance is what determines the rules of the game
the governance model determines access and influence into the product (e.g. Android handsets)
- Open licenses are used with closed governance
many projects restrict governance while maintaining an open source license
Open is the new closed
Copyright VisionMobile 2011
Closed governance is used to control
clever use of governance models can be used to control products based on OSS
governance model (simplified)
open community managed community autocratic
community
weak copyleft
(LGPL, MPL, EPL,..)
strong copyleft
(GPL)
permissive
(APL, BSD, MIT, ...)
Linux kernel
license type
Qt
dual license
(commercial + copyleft)
Android
Foundation
Foundation
WebKit
Copyright VisionMobile 2011
Access
Is source code available to all without discrimination?
Are project mailing lists, forums, bug-tracking databases and developer tools available to all?
Is the project roadmap available publicly?
Development
Are decision-making mechanisms transparent and accessible?
Is the code contribution and acceptance process clear and accessible?
Are the requirements to become a committer clear and equitable?
Can you identify who the committers to the project are?
Are the requirements to become a reviewer clear and equitable?
Can you identify who the reviews to the project are?
Does the contribution license require copyright assignment (vs. a copyright license)
Derivatives
Are trademarks used to control compliance and use of the project?
Are go-to-market channels for Application Derivatives constrained?
Community
Do different community members have different rights?
What are the criteria for openness ?
Copyright VisionMobile 2011
Openness to commoditise product complements
beyond open source, openness is used as a business strategy to commoditise
product complements while protecting core assets
iOS Android
Windows
Phone
BlackBerry Symbian
Bundled services Closed Open Closed Closed Open
App developers Curated Open Curated Curated Curated
Device vendor Closed Open Open Closed Open
Software platform Closed Closed Closed Closed Curated
Hardware platform Closed Curated Closed Closed Open
Copyright VisionMobile 2011
Developers, Developers, Developers
the engine behind telecoms innovation
Copyright VisionMobile 2011 Copyright VisionMobile 2007-10
Based on
Mobile Developer Economics 2010
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- Analysis of the developer experience from design to monetisation
- Across all 8 major platforms
- Based on a sample of 401 mobile app developers
- With significant experience in mobile development
More than 60% of respondents have 3+ years of experience in app development.
Nearly 30% have won one or more developer awards
Copyright VisionMobile 2011
software
houses
apps development
agencies
independent
developers
Internet service
providers
content publishers
system
integrators
software integration
services
The diverse world of software developers
With different business models and incentives
mobile games
developers
Copyright VisionMobile 2011
Android has biggest mindshare
-Android has biggest mindshare
- Symbian/Java down from #1/#2 in 2008
- Most developers work on multiple platforms
The average is 2.8 platforms, across sample of 401 developers
Android is better than other
platforms in terms of tools,
platform features, and its
easier to stand out as
developer.
Android developer

Copyright VisionMobile 2011


Android 3x easier to learn than Symbian
Copyright VisionMobile 2011
Developers becoming market savvy
Commercial above technical reasoning
-Large market penetration (70% of respondents) is
more important than ability to code & prototype quickly (45%)
- Revenue potential (55%) is more relevant than
good documentation (35%)
technical considerations are
irrelevant, the choice of
platform is ALWAYS
marketing-driven.
Mobile web developer

Copyright VisionMobile 2011


App Stores reduce time-to-market by 3x
App Stores minimised
time-to-shelf from 68 days
to 22 days and halved
time-to-payment

Copyright VisionMobile 2011


application
planning
retailing &
monetisation
platform
selection
develop,
debug &
support
market
readiness
in-life
application use
The app developer journey
The many facets of the app developer experience
- IDEs, SDKs and documentation
- UI tools
- emulator and on-target debugging
- community & official forums/websites
- profiling tools
- test frameworks
- porting tools
- premium technical support
- platform hype
- addressable market
(devices/regions)
- platform features
- learning curve & coding effort
- conferences & competitions
- audience targeting
- concept design
- feature design
- prototyping tools
- market research
- focus groups
- developer certification
- app signing, certification & approval
- regional testing & sandbox networks
- beta testing with peers and end users
- localisation frameworks
- packaging and SKU management tools
- go-to-market channels
- promotional tools
- co-marketing programs
- revenue models
- billing & settlement
- analytics & sales tracking
- user ratings
- user support
- application updates
- cross-selling
- privacy compliance
* * *
*: mostly applicable to developers who sell apps
Copyright VisionMobile 2011
application
planning
retailing &
monetisation
platform
selection
develop,
debug &
support
market
readiness
in-life
application use
Key developer pain points
based on Developer Economics 2010 research
Localisation
lack of localised apps for most regions, lack of
localisation tools for developers
App submission & certification
application certification is expensive, approval takes too
long, and signing is complicated
Application marketing
lack of effective marketing channels to increase
app exposure and discovery
Dubious long-tail economics
average RoI through an app store is much less than
the cost of producing the app
most vendor effort goes here
Copyright VisionMobile 2011
Are you a mobile developer?
Want to share your own views on app development?
Join in Developer Economics 2011.
Have your say on the hottest issues in app development and win a $1,500 Amazon voucher.
www.visionmobile.com/dev
open until end March 2011.
created by
sponsored by
Copyright VisionMobile 2011
Communities: the new currency
Copyright VisionMobile 2011
Communities are the new frontier
Building a brand, product or technology is science
Building a community is a form of art
Whether its a consumer, enterprise or a developer community
New techniques are emerging; game mechanics and religion engineering
Copyright VisionMobile 2011
you can buy an audience but..
you cant buy a community
an audience is people who interact with a service.
a community is a network of people who interact amongst them
you can buy an audience (eyeballs or subscribers)
but you cant buy a community (network interactions)
Copyright VisionMobile 2011
Communities are the new differentiator
Service brands, OEMs and carriers have tried to create own communities
But found that community creation needs a very different rulebook
And ended up partnering with communities (Facebook, Twitter, etc)
Exclusive deals with communities will be the new differentiator above
price, design and premium content.
Copyright VisionMobile 2011
Communities are the new currency
Zynga's CityVille grew to 100 million users in just 43 days
Facebook is a platform between 500M+ users and 2.5M+ developers
Facebook is #1 social network across the world except China, Russia, Brazil, Japan
Skype: 8 million paid users and 25% of global international calling traffic
Copyright VisionMobile 2011
Carriers: stuck in the telecoms age
and how carriers can compete
Copyright VisionMobile 2011
Carriers in the midst of an identity crisis
Carriers are telecoms-age species in a software age
- Carriers have grown in the telecoms age; this affects their ability to adapt and their speed of innovation
..In an identity crisis
- Carriers are still undecided as to whether they want to be an access company (e.g. LightSquared, KPN), a
supermarket (own services), a shelf (retailer/curator of 3rd party services) or a broker (matchmaker between
developers and consumers). They want to be everything to everyone.
Losing battle after battle for control points
- non-communication needs (apps), location (GPS), billing (app stores), service retailing & discovery (app
stores), authentication (Twitter/facebook), mobile termination (Google C2DM), subscriber activation
(iPhone soft SIM?)
With no innovation in their core business
- voice, texting and SIM cards have seen no innovation in the last decade.
Copyright VisionMobile 2011
Taking baby steps in the software age
Carriers dont know how to use software
- Carriers software efforts are mediocre; see Vodafone VSCL, VFX and widgets
- Using WAC to profit from apps, when Apple/Google are not profiting from apps
Carriers are accelerating the PC-like commoditisation of handsets
- skewing the natural OEM selection process (by ranging handsets on a OS basis) and forcing
Innovator OEMs to struggle while nimble assemblers thrive
- The $100 smartphone means loss of subsidy power for carriers, therefore loss of differentiation
Carriers are funding their antagonists
- most Android projects 2007-2009 were carrier-funded.
- Android and iPhone are playing AT&T and Verizon like puppets on strings; e.g. Verizon now
heavily marketing iPhone, while AT&T heavily pushing Android.
Copyright VisionMobile 2011
The real value of carriers
The real value of carriers is still untapped
1. Leverage apps to drive core business, not generate revenues
- Deliver voice and messaging apps that build on core network business, at 10x deployment speeds
- quit pushing for higher communications ARPU, but leverage apps to extent revenues across untapped
segments of consumer spending portfolio (transport, health, food, housing, etc)
- expose network APIs that drive lock-in to core business, not APIs that generate revenue
- leverage apps to drive premium customer acquisition, customer retention and increase switching costs
2. Divide and conquer among app stores
- Dont create new app stores (WAC) but divide and conquer among existing app stores
- Create shop fronts for app retailing and promotions
- Monetise by helping developers target apps to the right demographic in real time
- Offer recommendation services by tapping into users social graph
Copyright VisionMobile 2011
The real value of carriers
3. Increase power over OEM suppliers
- Shift handset purchasing model to a performance based per-device bonus based on hitting ARPU,
messaging and churn targets; leverage on network analytics.
- Resist a price war on handsets by favouring an oligopoly of traditional suppliers
4. Become the VISA of mobile
- aggressively grow carrier billing usage via in-app payments
- provide micro-billing at VISA-like rates activated via SMS
5. Invest in retail differentiation
- as devices commoditise, retail will become a stronger control point for customer acquisition
- Invest in retail differentiation, for example visual service retailing, bundling services/apps in handsets,
deploying handset PoS configurators and carrying out PoS customer segmentation analysis.
Copyright VisionMobile 2011
The real value of carriers
6. Customer experience management
- Identify influencers and improve lifetime value metrics
- Understand customer behaviour and enable behavioural targeting by third parties
7. Drive wholesale business beyond mobile
- Drive wholesale model in CE business (ala Kindle) to de-risk and differentiate bandwidth pricing
8. Handset customisation: focus on merchandising and addressbook
- focus on a single app (active idle screen) to be provisioned on all smartphones + some Java handsets
- idle screen app can encompass service merchandising/promos and addressbook functionality
- leave all other apps to 3rd parties!
Copyright VisionMobile 2011
a note of caution
is WAC repeating history mistakes?
- WAC is a framework for creating carrier-owned app stores
even if carriers dont have most of the genes to create their own app store
-
and making money from apps
when Apple/Google use apps as a complementary business, not as a revenue generator
- Needs software agility, but moves with telecoms rigidity
12 months since announcement and no distribution channel, no marketplace, no billing
Telecoms rigidity and design by committee is the key reason why LiMo failed
- Smartphone focus, but feature phone opportunity
Smartphone focus (Opera, S60, iPhone), where competition is fierce. Opportunity is in feature
phones but challenge is fragmentation of widget runtimes and buying power - why i-mode alliance failed.
- Distribution channel will fail once runtimes fragment
Same reason why a Java app store would fail.
- Distribution will fragment among carriers
Each carrier to have different app requirements and revenue shares
Same reason while the BREW app store (since 2001) failed to reach Apples proportions
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Augmented economics
Making money at the edge of reality
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Augmented economics: the study of the economy created
by superimposing value on top of our physical world
Copyright VisionMobile 2011
What is augmented economics?
making money by connecting the physical world with virtual worlds
$1.8B ievenues, S2SN useis (2uu9) $SSuN ievenues,
$SSB valuation
Cityville: 1uuN useis in 4S uays
AR biowseis: applications ieach acioss ietail, aus,
piopeity, militaiy, euucation.
viitual goous, auctions anu Ego seivices
viitual ieal-estate
baicoues, 0R coues
connects papei to
seivice pioviueis
viitual woilus which monetise thiough viitual goous, viitual
cuiiency exchanges anu aus by physical woilu bianus.
"the pooi man's augmenteu ieality"
(Bennis Ciowley)
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Facebook: connecting physical to virtual
a platfoim between the physical woilu anu the 1,uuus of viitual woilus
youi
woilu
heie
the move to off-site aus, self-seivice aus anu viitual goous is expecteu to uouble ARP0 fiom $u.2S to $u.Su
souice: Fieu Wilson, vC.
on-site aus
off-site aus
Facebook cieuits
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The money in augmented economics
The power to capture attractive profits.. is in
these stages that complex, interdependent
integration occurs
Clayton Christensen et al
In augment economics, the platform that links
the physical with the virtual world stands to
profit the most.
The next Google might be a physical world
connection company
S Schaffer
Copyright VisionMobile 2011
Knowledge. Passion. Innovation.
want more?
hello@visionmobile.com
contact us to schedule an on-site workshop.
Updated: 12 November 2010
Thanks for listening.
Copyright VisionMobile 2011
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Industry Atlas: the competitive landscape of mobile

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