SFMobile: Founder Labs Mobile Edition 01/09/11
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This document summarizes the first week of the Founder Labs Mobile Edition program from January 8, 2011. It provides an overview of the mobile ecosystem and business models, including some history on mobile devices and companies like General Magic. It also discusses the evolution of the mobile device stack from hardware-focused to more software-driven. Finally, it notes how value in mobile is shifting up the stack to services and content, and fueling growth in mobile app stores.
SFMobile: Founder Labs Mobile Edition 01/09/11
- 1. Founder Labs – Mobile Edition Week 1 – Ecosystem Overview & Business Models January 8, 2011 Licensed under Creative Commons Attribution 3.0 Unported License (http://www.creativecommons.org/licenses/by/3.0) You are free to Share or Remix any part of this work as long as you attribute this work to SF Mobile (sfmobile.org)
- 2. Work Network Lars Kamp Lars Kamp Management Consulting Suite 1200 560 Mission Street San Francisco, CA 94105 San Francisco, CA 415.894.5423 415.894.5423 lars.kamp@accenture.com www.sfmobile.org lars@sfmobile.org 2
- 3. Some history (of mobile). 3
- 4. Q: Whose mission statement is this? “We have a dream of improving the lives of many millions of people by means of small, intimate life support systems that people carry with them everywhere. These systems will help people to organize their lives, to communicate with other people, and to access information of all kinds. They will be simple to use, and come in a wide range of models to fit every budget, need, and taste. They will change the way people live and communicate.” 4
- 5. A: General Magic, 1990. You could say it all started here. 5
- 6. General Magic’s “Magic Cap”. Looks familiar? “Magic Cap” 6
- 7. Maybe now? 7
- 8. Three people from the team that architected Magic Cap. Andy Rubin Tony Faddel Kevin Lynch 8 Source: Wired, SF Mobile analysis.
- 10. Mobile is the single biggest global distribution platform. PC TV Mobile PC Installed Base TV Households Mobile Subscribers 2009 2009 1.2 Billion 1.3 Billion 2009 4.0 Billion 2013 2013 1.6 Billion 1.33 Billion Broadband Pay TV Subscribers Subscribers 2009 2009 420 Million 600 Million 2013 5.5 Billion 2013 2013 648 Million 739 Million 10 Source: Gartner, PWC, ITU, IDC, Accenture analysis.
- 11. Evolution of “the stack”: Shift from hardware to software. Mobile Device Stack Early days Today Comms User Interfaces, App Stores & Shell & UI e.g. USB, Speaker, Flash Card e.g. USB, Speaker, Flash Card Software User Software External Interfaces, External Interfaces, Application Middleware Middleware Phone Middleware Hardware Core Operating System Platform / OS Drivers Drivers Chipsets, Hardware Processors, Basebands 1-2 MB of >1 GB of open closed software software Hardware Software 11 Source: Accenture analysis.
- 12. Value in mobile is moving up the stack… DIRECTIONAL Cost to Per-unit Break-even Mobile Handset Stack & Elements build ($M) Revenue ($) # of units Services and Content $0.1M $1.00 0.1M Screen, User Interfaces, $20M $0.20 100M e.g. USB, Speaker, Flash Card e.g. USB, Speaker, Flash Card User Software Value Flow Application External Interfaces, Middleware $10M $0.10 100M Device Middleware Core Operating System $1,000M $5.00 200M Chipsets, Processors, Radio Basebands Hardware Software 12 Source: Estimates based on industry interviews; see David Wheeler “Linux Kernel 2.6: It's Worth More!” for estimating the cost of the Linux Kernel.
- 13. … and is fueling the app store economy. Size of Catalog (K) – Apple App Store vs. Android Market 2008-2010, as of Q2 2010, by Number of Available Apps at End of Quarter, Excluding Books 2008 2009 2010 211,000 ~20,000 monthly submission 149,000 Android Market Oct 22 App Store July 11 97,000 Day 1 62 Apps Day 1 74,500 500 Apps 52,610 56,200 ~7,000 monthly 35,200 submission 25,300 20,100 13,200 11,500 740 4,400 2,900 5,200 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source: Apple press releases & earnings calls, Google, AndroLib, PCWorld, Distimo, Accenture analysis. Catalog size for Apples excludes 13 books. All numbers rounded.
- 14. But: An app is not a business model. Loyalty and Retention Rates of Mobile Apps Over Time, 2010 100% 100% 100% 100% 90% 90% 90% 90% 80% 80% 80% 80% 70% 70% 70% 70% Retention Rate 60% 60% 60% 60% 50% 50% 50% 50% 40% 40% 40% 40% 30% 30% 30% 30% 20% 20% 20% 20% 10% 10% News (9.8%) 10% 10% News (9.1%) Enter- Games (2.4%) 0% 0% tainment (2%) 0% 0% 0 30 60 90 120 150 180 0 0 30 30 60 60 90 90 120 120 150 150 180 180 0 30 60 90 120 150 180 Days After First Measurement Days After First Measurement Source: Flurry, Accenture analysis. User retention defined by the number of users who downloaded an application and launched the application at any time in the past, and also launched the app within the last seven days, e.g. "30 days ago" represents any new user that launched a given app in January and also again within the last seven days. "60 days ago" represents new users identified in December and also used within last 7 days. Sample based on relevant 5-6 apps per 14 category with at least 120 days of data availability in the Flurry system.
- 15. 90% dead after 90 days. iPhone App Retention Android App Retention As of January 2010, by Application Category As of January 2010, by Application Category 30 Days 90 Days 30 Days 90 Days News 52% 20% 58% 18% Social 40% 9% 38% 5% Networking Games 34% 10% 34% 10% Lifestyle 35% 9% 38% 7% Enter- 33% 4% 42% 16% tainment Average Retention 39% 10% 42% 11% Rates 15 Source: Flurry, Accenture analysis.
- 16. The cloud. 16
- 17. What is “The Cloud”? A style of computing that provides on demand access to a shared set of highly scalable services. Cloud Origins Cloud Today Cloud Benefits • Cost Reduction Virtualization Lower infrastructure, One computer • Virtualization and energy, licensing and Grid abstracted maintenance costs acting like many • Computing as a • Speed to Market utility Reduces time required to pilot projects + • Scale economies of central supply • Uses massively- • Elasticity / Scalability On-demand capacity and high business agility Grid parallel processing Computing • Geo-distributed • High Performance Many with massive Computing redundancy Provides “infinite” computers computing acting like one capacity as needed 17
- 18. Who is building a cloud? Facebook – Prineville Yahoo – Lockport Google – The Dalles Apple – Maiden Amazon – Morrow Microsoft – Dublin 18
- 19. The cloud: massive off-deck computing for mobile. 19 Source: Amazon press release, December 2010.
- 20. Silicon. 20
- 21. Moore’s Law – since ~1965 on the desktop. 21 Source: Intel.
- 22. The original paper from 1965. 22
- 23. Coming your way in mobile as well. Baseband “Fat Modems” Baseband & Processors Application Processor Low power silicon for OS-enablement of light High performance, low voice/SMS and long apps running on top of power application battery life. baseband. processors. 23
- 24. Massive on-deck computing power. Mobile Silicon: Chip Size, Cores & Clock Speed Over Time 2.5GHz 2GHz 4 cores Cortex-A15 2 cores Cortex-A9 1GHz 20nm 833MHz 800MHz 1 core 667MHz 28nm 533MHz Cortex-A8 1 core Clockspeed: ARM11 32nm 1 core 45nm Cores: ARM9 65nm 90nm Node: 130nm 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 24 Source: ARM.
- 25. Development before knowing the actual device. 25
- 27. Four quadrants and generic business models. Pre-Load Post-Load Cloud • SDK and • Transaction fee developer fees • Subscriptions to marketplace • Advertising • Software sales • In-app to aid app development • Display / search and design • Multimedia • IP licensing • App sales • Pre-installed app • Virtual goods licensing • Digital media • Software sales sales • Hardware • Subscriptions sales/materials Device 27 Source: Adjusted based on Vision Mobile (visionmobile.com).
- 28. Business models applied. Pre-Load Post-Load Cloud Device 28
- 29. Expect the center of gravity to shift to post-load. ILLUSTRATIVE Ecosystem Revenue Mix Over Time. 100% Pre-Load Revenue Post-Load Revenue Streams Streams 0% “Yesterday” “Today” “Tomorrow” 2000 2010 2015 Onwards Primary • Licensing • Licensing • Social Revenue • Software sales • Ads • Ads Models • Hardware sales • Software sales • Service subscriptions • Service subscriptions • Hardware sales • Transaction fees • Service subscriptions • Privacy (User data) 29
- 30. A few ideas… Enterprise Apps Untapped market w/ customers who are used to paying lots of money for bad software. Consumer Apps Gaming, social networking, dating, digital marketing are still in the nascent stage for mobile. Cloud Services Apps need to connect; remote service access; solves fragmentation – runs in browser. Security Prevent abuse of sensitive data that resides on or can be accessed over mobile device. Enablers On-device engagement requires enablers, e.g. authentication, payments, middleware Analytics Engagement data provides opportunity for data mining for e.g. tracking, reporting purposes Shannon’s Law Between powerful devices and clouds, wireless links remain the bottleneck. Devices Power-efficient devices, enabled with mobile OS, for vertical purposes, e.g. healthcare Smart Grid Drive efficiency in electrical grids through mobile web services and devices. 30
- 31. And with that… Good luck! Nada, 1988 “I have come here to chew bubblegum and kick ass...and I'm all out of bubblegum.” 31