Copyright VisionMobile 2007-2010
Knowledge. Passion. Innovation.
VisionMobile Research
Mobile Megatrends 2010www.visionmobile.com/megatrends
knowledge. passion. innovation
updated: 4 May 2010
Copyright VisionMobile 2007-2010
Mobile Megatrends 2010
Andreas Constantinou, Ph.D.Research Director,
VisionMobile
follow me on twitter: @andreascon
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 2007-2010
Distiling market noise into market sense
Analysis + Mapping + Strategy
Market mapsvisual maps of who's who in the mobile industry
Active Idle ScreenWho will own the screen?
Mobile Operating Systems: The New Generation
GPLv2 vs GPLv3White Paper Mobile Megatrends
Business Intelligencecompetitive analysis, commissioned research, company due diligence
Strategy definitionstrategy design, ecosystem positioning, product definition
Mobile Industry Atlas1,100+ companies, 70 sectors (Jan 2010 update)
100 million clubtracking successful businesses in mobile
Top-100 analyst blogwww.visionmobile.com/blog2,800+ subscribers90% mobile industry insiders
Thought leadershipwe coined industry terms like on-device portals, active idle screens, customised design manufacturers and introduced new strategy tools:
mobile industry evolution centres of
gravity
Copyright VisionMobile 2007-2010
Trusted by industry brands
Clients
selected VisionMobile clients
Copyright VisionMobile 2007-2010
Vertical propositionsa one-way street or a quick detour?
Web platformsfuture paradigm for building phones or fad?
Open is the new closedhow companies are using open source to further their own agendas
OEM monetisationproducts, services or distribution?
Operator futures bit-pipes or supermarkets? new smart pipe strategies at the junction of brands+consumers
Mobile Megatrends 2010
Evolution of revenue modelsHow revenue models are changing in the mobile industry
App Storesthe long-tail future of app stores andthe untapped retailing opportunity
Recommendationsreaching into every corner of the mobile services world
Copyright VisionMobile 2007-2010
Vertical propositions:a one-way street or a quick detour?
1
Copyright VisionMobile 2007-2010based on: Charles Fine: Clockspeed and Clayton Christensen: Skate to Where The Money Will Be
Horizontal industry structure Vertical industry structure
integrated componentsproprietary interfaceshigh barriers to entryall or nothing
modular componentsstandardised interfaceslow barriers to entrymix and match
The Double HelixIndustries move between horizontal and vertical structures
Maturing product marketswhich focus in flexibility, customisation
Emerging product marketswhich focus in performance, functionality
Copyright VisionMobile 2007-2010
Horizontal industry structure Vertical industry structure
1980sthe mobile industry
was born here
1999first MVNOs
appear
2003IT operations
outsourced
2005basestation sharing
2004end of walled
gardens
2009open to social networks
open network APIs
2008service
delivery opens up to s/w
developers
2011operators as
micropaymentproviders
2010outsourced sub-brands
1990-8standardisation of radio
and SIM interfaces
Evolution of the network businessfrom vertical to horizontal
2015?convergence of
operator fixed + mobile products
Copyright VisionMobile 2007-2010
Horizontal industry structure Vertical industry structure
1980sthe mobile industry
was born here
1999first ODMs
appear
2003outsourced
operating systems
2007open source
browsers and operating systems
2007-8Nokia Ovi
service shopping spree
2005manufacturing for 1 in 3
phones outsourced
2002Club Nokia
2009OEM app stores
OEM sync services
2002first MNO customised devices
2008-9RIM, Apple:service+device propositions
Evolution of the handset OEM businessfrom vertical to horizontal and back
1990-8standardisation of radio
and SIM interfaces
2010Apple:best-in-class ‘experience’ productsfrom chipsets toad networks
Product leapApple, RIM
2010Windows Phone
Copyright VisionMobile 2007-2010
Network operators: 50 years/cycle
slow-movingrigid
Handset OEMs: 25 years/cycleagilefragile
Clock-speeds differHandset OEMs move 2x as fast as network operators
Copyright VisionMobile 2007-2010
Horizontal player structure Vertical player structure
tier-1 operators
tier-2/3 operators
handset OEMs
chipsetOEMS
Vertical propositions: where are we today?players are at different stages towards verticalisation or horizontalisation
1980sthe mobile industry
was born here
1999first MVNOs
and ODMsappear
2005MNO basestation sharing
2004decline of walled gardens
2009MNOs open to social networks
open network APIs
2008MNO service
delivery opens up to s/w
developers
1990-8standardisation of radio
and SIM interfaces
2007open source
OEM browsers and operating systems
2005manufacturing
for 1 in 3 phones outsourced
Copyright VisionMobile 2007-2010
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
softwaredevelopers
servicesvendors
advertisers
Centres of Gravity are being formed
by integrating all value layers under one roofand creating thriving ecosystems around them
Copyright VisionMobile 2007-2010
ComponentsApple Nokia RIM HTC Google Qualcomm Mediatek
Services
Service delivery
Service distribution
Device design
UI design
Core apps
App environment
Operating system
Hardware platform
Chipset IP
Manufacturing
denotes where player started
Centres of Gravitymoving to capture value across the stack
Copyright VisionMobile 2007-2010
Takeaways- Operators/carriers are moving at half the clockspeed of handset OEMs
- T1 OEMs are approaching fully-formed verticals, led by Apple
- Chipset vendors are the a-la-carte assemblers (DELLs) of mobile
- Both players are creating gravity centers and developer ecosystems
- Sounds like the PC business?
Open questions- Where will Apple make money in 5 years?(applications, services or hardware?)
- Does vertical integration imply greater profits?(Clayton Christensen: biggest profits are at the points of proprietary integration)
Copyright VisionMobile 2007-2010
The evolution of revenue modelsHow revenue models are changing in the mobile industry
2
Copyright VisionMobile 2007-2010
post-sales
value created at point of sale and during in-life use
pre-load
value created before the handset is shipped
cloudvalue created in the cloud
devicevalue created on the device
Introducing Value Quadrants
the whereof value creation
the whenof value creation
Copyright VisionMobile 2007-2010
post-sales
value created at point of sale and during in-life use
pre-load
value created before the handset is shipped
Distinct value in each quadrant
- software IP & services- hardware IP- integration services- industrial design
- content dev. tools- service design tools- developer tools- OEM production tools
- voice & msg services- VAS and SDPs- advertising- content & app stores
- service distribution- inventory leasing- on-device analytics- device management
Value
Value Value
Value
.. distinct value areas
clo
ud
de
vic
e
Copyright VisionMobile 2007-2010
post-sales pre-load
clo
ud
..and distinct revenue models
- software IP & services- hardware IP- integration services- industrial design
- content dev. tools- service design tools- developer tools- OEM production tools
- voice & msg services- VAS and SDPs- advertising- content & app stores
- service distribution- inventory leasing- on-device analytics- device management
Value
Value Value
Value
Revenue models Revenue models
- per activation/install- per week- per unit/user segment- per update
Revenue models
- per unit- per platform- per model- per site
Revenue models
- per usage- per active user- CPA/CPC/CPM- revenue share
- per developer seat- per module- per site
.. with distinct revenue models
de
vic
e
Copyright VisionMobile 2007-2010
post-sales pre-load
clo
ud
The evolution of revenue models
- software IP & services- hardware IP- systemware- industrial design
- content dev. tools- service design tools- developer tools- OEM production tools
- VAS and SDPs- advertising- content & app stores- network capabilities
- service distribution- inventory leasing- on-device analytics- service management
Value
Value Value
Value
Revenue models Revenue models
- per activation- per update- per inventory/day- per user segment
Revenue models
- per unit- per platform- per model/design- per site
Revenue models
- per user, CPC/CPM- revenue share- per segment/reach- per follower
- per developer seat- per module- per site
de
vic
e
from horizontal royalties to vertical productisation
long term evolution:from services to distribution
upstream monetisation(two-sided platform)
from hardware to services revenues
from pre-load royalties to post-sales activation
untapped value in modular design tools
Copyright VisionMobile 2007-2010
Takeaways- pre-load value moving from software IP to systemware & productisation
- services value: from downstream to upstream; and from services to
distribution
- post-sales value: inventory leasing, analytics, service distribution and
service management
Key questions- what % of device value will be in software vs systemware in 2015?(software = platform royalties, systemware = productised software+hardware)
- what % of MNO revenues will come from upstream/downstream in 2015?(downstream=end-users, upstream = media publishers, app developers, advertisers)
Copyright VisionMobile 2007-2010
App Stores: the long-tail futurewhy App Stores will take retailing where it’s never been before
3
Copyright VisionMobile 2007-2010
Top-5 App StoresNo one has been able to copy Apple’s recipe. Is it that hard?
App Store comparative analysis (end- 2009). Source: VisionMobile
Copyright VisionMobile 2007-2010
The App Store recipeThe App Store recipe needs end-to-end control of all 5 ingredients:
Each ingredient is mastered by different players in the value chain,
and requires different technical know-how and commercial relationships.
... no wonder Apple is the most successful cook!
mobile software firms
mobile operators & payments brokers
handset OEMs platform vendors brands and retailers(mastered by)
Copyright VisionMobile 2007-2010
The 2-year future of App StoresTo predict the future you need to know your history
everyone wants to get their hands on
developers
rev share best-practices become standardised
operators seizetheir addressable
market
sophisticated in-life app management
app retailing takes on a life of its own
Copyright VisionMobile 2007-2010
Key predictions for App Stores (2010-2012)
1. Abundance: 100+ App Stores will exist in 2012;Every single tier-1 OEM and MNO is launching their own App Store - enabled by white label App Store
solutions from Amdocs, Cellmania, Comverse, Ericsson, Everypoint, GetJar, Handango, Handmark,
Ideaworks Labs, Javaground, Mobango, Ondeego, OnMobile, PocketGear, Qualcomm, SlideME and Sun.
2. Diversity: App Stores will cater to diverse segments; OEM, MNO or platform-centric stores, lifestyle-centric stores (e.g. sports or clothes brands), specialist
content (e.g. adult or enterprise), region-centric stores (e.g. Seattle apps)
3. Co-existence: several App Stores will co-exist within a handset Case in point: LG and Samsung phones which shipped in 4Q09 in Korea came with four (!) app stores co-existing
within the same handset; one from the OEM, one from the platform provider (Windows Mobile) and two from the South Korean operator SK Telecom.
4. Low barriers: App Malls will enable low-cost shops-in-shop setupsSDP 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)
Copyright VisionMobile 2007-2010
Key predictions for App Stores (2010-2012)
5. Retailing will triumph
- app retailing has been a bottleneck up to 2009Case in point: the Apple App Store top-25 is the main channel by which apps have been able to grab user
attention. This has resulted in price erosion, as app developers drop prices to bubble up to the top-25.
- flurry of startups to capitalise on untapped retailing opportunityApppopular, Appolicious, Appsfire, Chomp, Chorus, Flurry, I use this, Mplayit, Yappler using voting,
automated recommendations, in-app promotions and other techniques to capitalise on retailing opportunity.
- app stores will take retailing where it’s never been beforeApp Malls (shops-in-shop), friend endorsements, inventory micro-targeting, gift/beg options, second-hand
app reselling and other features will spring up, taking retailing to new levels of sophistication.
- retailing will grab a large chunk of revenues, as in the FMCG businessIn the book business, retailers get between 25% (online stores) to 55% (bookstore chains) of the retail price.
Mobile app developers will take 70% of revenues, but will spend another 20% or more in app promotions.
Copyright VisionMobile 2007-2010
Takeaways- The App Store recipe requires diverse ingredients sourced from
across the value chain materialising an App Store needs multiple partnerships
- App Stores will follow the FMCG route; abundance, diversity, co-
existence and low barriers to entry.
- Retailing is the most untapped and biggest opportunity in App Stores
- App Stores will take retailing to new levels of sophistication
Open questions- How many apps will operator stores attract in 2012?(1,000s, 10,000s, 100,000s? So far operator app stores number around 1,000 apps each)
- Who will be the mega-retailers of the mobile apps world in 2012?(e.g. Ericsson, Nokia, Vodafone, Handango, ESPN?)
Copyright VisionMobile 2007-2010
Web platformsand why the future of software development is still elusive
4
Copyright VisionMobile 2007-2010
Web platforms: future of mobile development?
Many signs pointing to web development as a one-way street for mobile:
- from WAP to full HTML 4.0 on mobile browsers and Flash
- from web on high-end phones to the web on every phone (Opera Mini)
- from HTML apps to on-device widgets for delivering services
- from widgets to Palm’s WebOS where every app is web-based
- open source WebKit becoming a de facto standard (170M shipments as of June 2009)
But..
- web platforms address the needs of 3rd party devs, not handset OEMs
- the landscape is much more complex, as we shall see..
Copyright VisionMobile 2007-2010
Which platform?Many platform choices for application developers and handset OEMs
Copyright VisionMobile 2007-2010
For what player? Differences between 3rd parties and 2nd parties
- 10,000s of developers- selling software to end consumers - familiar with common languages and tools
Developer profile
Application profile
- 100,000s of applications, few variants- downloadable to the device post-sales- games, entertainment, utilities, e-books, ..- accessed through (often deep) menus
- 300-400 software houses- licensing to OEMs or MNOs- with access to proprietary toolchains
- 1000s of applications, many variants- often embedded to the device pre-load- middleware, apps or client-server solutions- or integration and customisation services
any software developer without a commercial relationship to handset OEMs
software developers and service providers supplying directly to handset OEMs
Definition
2nd parties3rd parties
Copyright VisionMobile 2007-2010
platforms for 3rd parties vs(any developer)
- designed for building apps- aimed at any application developer- using modern platforms and low cost SDKs- intended for downloadable apps
The platform chasm
platforms for 2nd parties(OEMs, MNOs, and partners)
- designed for building phones- aimed at an inner circle of OEM trustees- using legacy C/C++ platforms and toolchains- intended for core (embedded) apps
3rd party developers want to:
Develop + Deploy + Monetise
2nd party handset OEMs want to:
Build + Differentiate + Customise
Copyright VisionMobile 2007-2010
Simplify developmentIntegrate w/ deviceIntegrate w/ cloudReduce time to market
Distribute appUpdate app
SellPromote
Platform needs differ greatly
Fast chipset portAccelerate perf.Reuse expertiseMax. battery life
Few regional cores10s of MNO variantsFast variant creation
Social core appsDifferentiate w/ UIFast core app developm.Win MNO business3rd party ecosystem
3rd party developers want to:
Develop + Deploy + Monetise
2nd party handset OEMs want to:
Build + Differentiate + Customise
Copyright VisionMobile 2007-2010
Simplify developmentIntegrate w/ deviceIntegrate w/ cloudReduce time to market
Distribute appUpdate app
SellPromote
How do cater to these needs?
Fast chipset portAccelerate perf.Reuse expertiseMax. battery life
Few regional cores10s of MNO variantsFast variant creation
Social core appsDifferentiate w/ UIFast core app developm.Win MNO business3rd party ecosystem
Copyright VisionMobile 2007-2010
Takeaways- The needs of 2nd parties and 3rd parties are worlds apart
- Web platforms level obstacles for 3rd party development
- But.. they do very little in addressing handset OEM needs
- Android addresses OEM phone development and differentiation
- But.. no platform yet addresses OEM customisation needs
- No platform yet to replace legacy RTOSes
Open questions- Which platform will have disappeared by 2015? (S60, Qt, BREW, LiMo, Windows, Java or Flash? choose only one)
- What percentage of phones will run legacy RTOSes in 5 years?(from 85% today to ??% in 5 years)
Copyright VisionMobile 2007-2010
Open is the new closedhow companies are using open source to further own agendas
5
Copyright VisionMobile 2007-2010
What is open source?
- A tactical product move, not a strategy
- a middle ground between build and buy
Advantages:
- Shares cost and risk of developing software building blocks
- Speeds up innovation via third party contributions
Disadvantages:
- Lack of education and best-practices in mobile OSS
- Does not change how much you spend, but where you spend it
What is open source? quick refresher
Copyright VisionMobile 2007-2010
Licenses vs Governance modelsin mobile, licenses converge but governance models diverge
governance model (simplified)
trust community managed community members only single company
weak copyleft(LGPL, MPL, EPL,..)
strong copyleft(GPL)
permissive (APL, BSD, MIT, ...)
Linux kernel
GTK+
license type
Funambol
Qt
dual license(commercial + copyleft)
platform
Proprietarycommunity license
Android
GTK+Foundation
Foundation
WebKit
OKL4Rhomobile
Chrome
sim
ilar
licen
sedi
ffer
ent g
over
nanc
e
Copyright VisionMobile 2007-2010
Control points can detract the freedoms open source is meant to bestowControl points in open source
Open source freedoms Control points
Users should be free to run the software
- Incomplete software: Sponsor can retain key building blocks as closed source, meaning that users will not be able to create fully functional derivatives
Software source code can be accessed freely and easily
- Private codelines: Sponsor can use private codelines which are feature-wise very advanced compared to the public codeline, meaning that anyone using the public codeline is losing features or bug fixes.
Software can be modified freely
- Ownership of contributors: Sponsor can control all contributions into the main codeline (the tip of the tree), meaning users need to maintain a parallel patched codeline which can easily diverge and become very costly to merge back.
- Gravity of contributions: sponsor can dedicate the largest body of engineers to the project (compared to any single other participant), meaning any other contributions will be ‘drowned’ by sponsor-led contributions
No discrimination against any person or group of persons
- Private visibility: Sponsor can make the product roadmap or strategy available only to members of a paid-for or invite-only club.
- Timezone-limited forums: Sponsor can setup rules to operate the project forums (e.g. IRC channel) only during working hours, meaning it disadvantages users in other continents (e.g. US vs Europe vs Asia timezones).
No discrimination against fields of endeavour
- Trademarks: Sponsor can secure Trademarks on the project name, meaning that any users wishing to create derivatives named after the project will need a separate agreement with the sponsor.
- Distribution of bolt-ons: Sponsor can create a developer community for software bolt-ons so as to own the distribution gateway for these bolt-ons onto derivatives of the software.
Copyright VisionMobile 2007-2010
How mobile industry uses control points within open source projects:
-Symbian Foundation: open source capitalism99% of reviewers still work for Nokia. No long tail contributions and complex contribution process
Long term Nokia has most influence over roadmap due to gravity of contributions
OPEX costs of circa $5M per OEM seat; expensive CAPEX for members and unsustainable
- Android: “you can have any colour as long as it’s black”Invite-only membership. Google-owned private codeline which is 6-8 months ahead of public SDK.
All code reviewers work for Google. Google owns Android Market distribution channel (closed source).
Google has a trademark on Android so that you cannot call it an Android phone unless it passes CTS.
CTS is very demanding certification process involving API tests, performance tests and hardware reqs.
-LiMo Foundation: OEM community source$20K entry-level membership needed to access source code. SDKs to be launched publicly in 1H10
A community of OEMs driven by operator requirements
Zero external community contributions since 2007; process established in 2009
Examples of closed governance
Copyright VisionMobile 2007-2010
Recommendations everywhereraising the bar for mobile services
6
Copyright VisionMobile 2007-2010
Recommendations: an underhyped market
- Behind-the-scenes adoption in mobileWhat started as ‘people who bought this also bought that’ has found its way into 10s of mobile operator
portals, not to mention 1,000s of mobile websites. None of this has received mainstream media coverage.
- Right technology at the right timeIn 2009-10, recommendations are the differentiator (the cherry on the cake) for App Stores. This has
prompted several mobile operators (including Vodafone, O2 Telefonica and T-Mobile) to issue RFIs/RFQs.
- Growing academic research Recommendations research is moving into its third phase of evolution. The Recommender Systems 09
conference gathered 50% more paper submissions than last year from 35 countries – making this a rare
case of synchronicity between commercial and academic worlds.
- Underhyped potential Recommendations technology is essential to help users navigate the terabytes of service content from a 2-
inch screen. Recommendations will find their way into every service, from App Stores to Customer Support
Copyright VisionMobile 2007-2010
Reaching every niche of mobile servicesvery wide scope of applications
- Mobile Portal Personalization adaptation of navigational elements, content listed, ads served
and personalised search results (e.g. Changing Worlds, Choice Stream, Media Unbound and Leiki)
- Content Discoverypure content discovery and recommendations across content types (e.g. Xiam, FAST)
- Subscriber segment targetinguser profiling and segmentation as part of an online marketing campaign (e.g. Coremetrics and Pontis)
- Influencer targetingprofiling and identification of influential subscribers (e.g. Xtract and Strands)
- Mobile advertising solutionsinventory targeting (e.g. Jumptap, Aggregate Knowledge, Velti/Ad Infuse, Medio and Wunderloop)
- Product/Content Personalization cross-channel product and content recommendations
optimised for retailers, web and media (e.g. ChoiceStream, Loomia, Aggregate Knowledge)
- Business analytics product/offer bundle recommendations based on user segmentation and real-
time behaviour analysis (e.g. Olista, Oracle, ThinkAnalytics and Coremetrics)
Copyright VisionMobile 2007-2010
Wealth of technology supply
40+ recommendation solutions packaged in a variety of forms- From vertical pre-integration into a service (e.g. App Store) towards operators to horizontal engine with connections to multiple touch points (e.g. mobile, broadband, web, retail) towards media brands.
- Most of these vendors have come from the IT/web side, with few pure mobile-domain vendors
8 key vendors we researched: Xiam, Changing Worlds, Ericsson, Loomia, Pontis, July Systems, Olista and Choice Stream
For full analysis see visionmobile.com/in/recommendations
Copyright VisionMobile 2007-2010
Outlook for recommendation solutions- Academic research moves in parallel to commercial adoptionAcademic research focusing on interfaces in/out of recommendation engine and context adaptation
Commercials focusing on live clickstream processing, content optimisation and market penetration
- Scope of recommendation technology in mobile is rapidly expandingRecommendations are being applied to App Stores in 2009-10 and moving to business analytics,
advanced CRM and product/service recommendations in 2010-12.
- Specialist vendors will endureRecommendations need to be highly tuned to channel & content during launch and continually during
the in-life phase. Moreover, vertical solutions won’t be readily extensible to multiple touchpoints.
- M&A of recommendation vendors to ensueThe incumbent VAS and SDP vendors will need to buy in (rather than build) technology, due to the
content- and context- specific know-how that recommendations require. We expect this will lead to
M&As thanks to the abundant technology startups out there.
(e.g. see Qualcomm + Xiam, Amdocs + Changing Worlds acquisitions in 2008)
Copyright VisionMobile 2007-2010
Takeaways- Recommendations is one of the most underhyped mobile tech sectors
- Seeing rapid adoption in 2010-12 to add differentiation to every service
- 40+ vendors of recommendations solutions, mostly from web
- Multitude of academic and commercial optimisation issues to solve
- M&A of recommendation vendors to ensue
Open questions- Will consumers shun portals without personalisation features? (consumers will expect to see personalised recommendations in mobile portals as they do in Amazon)
- Can reco solutions measurably improve churn or service adoption?(lack of measurable benefits hampers adoption of recommendation solutions)
Copyright VisionMobile 2007-2010
OEM monetisationproducts, services or distribution?
7
Copyright VisionMobile 2007-2010
Value Description Value Boundaries 1990
Boundaries 2010
Value in 2015
Services e.g. voice, messaging, IM, Facebook, Zyb, 3rd party apps ..
70% of industry revenues
NaaS, mbilling
Service delivery e.g. voice, text, web, WAP, software, on-device integration70% of
industry revenues
widgets, OSGi
Service distribution which device and where on the device
70% of industry revenues
service inventory
Device design industrial design, packaging design
15% of industry revenues
cross-
optimise UI design design of the entire user interface
15% of industry revenues
cross-
optimise
Core apps core apps (dialler, call logs, menus, idle screen, inbox)
15% of industry revenues
cross-
optimise
Operating system software middleware and hardware interfaces15% of
industry revenues
optimisation
Hardware platform integrated hardware reference designs
15% of industry revenues
scalability
Chipset IP for apps processors, radio processors, graphics, etc
15% of industry revenues
performance
Manufacturing component sourcing and assembly
15% of industry revenues
supply chain mngmt
OE
Ms
OE
Ms
MN
Os
MN
Os
The telecoms value stackand how value is shared across the stack from 1990 to 2015
chip
sets
Copyright VisionMobile 2007-2010
Value MNO value OEM value Chipset value Boundaries
Services NaaS, mbilling
Service delivery widgets, OSGi
Service distribution service inventory service inventory
Device designcross-
optimise UI design
cross-
optimise Core apps
cross-
optimise
Operating system optimisation
Hardware platform scalability
Chipset IP performance
Manufacturing supply chain mngmt
Value areas and boundariesfor MNOs, OEMs and chipset manufacturers
(analysis omitted)
flat rate data
open gardens
OEM-dependent
standard
chipset-dependent
ARM
outsourced
(see next)(see MNO theme)
RF standards
OEM-dependent
Copyright VisionMobile 2007-2010
OEM valuewhere OEMs can add and extract value (1/2)
Service distribution
- Distribution is a *unique* OEM asset
Distribution = which device and where on the device a service is deployed
(distribution is OEM-proprietary due to pre-load software boundaries)
- In commoditised industries (e.g. books), distribution is 25-55% of revenues
- OEM distribution across 1,000 million devices/year is unmatched
- Service distribution is like Google’s business: managing & selling inventory
(which is why Android moves distribution control from OEMs to Google)
Services
Service delivery
Service distribution
Device design
UI design
Core apps
App environment
Operating system
Hardware platform
Chipset IP
Manufacturing
Services
- The best services will be run by someone else
- No unique OEM value-add
(commoditising due to open gardens - including open on-device services)
Copyright VisionMobile 2007-2010
OEM valuewhere OEMs can add and extract value (2/2)
Device design + UI design
- Device design is most exclusive OEM value-add (and most tightly-kept secret)
- yet today UI design is monolithic due to horizontal integration of core apps
Defendable long-term OEM value add is in:
- Device design which can be mass-customised (think deep fascias, aka Modu)
- Device design which matches UI design and target customer segment at PoS
- UI design which allows ‘personality change’ during in-life use
(downloadable personalities) enabling a new premium content market
Services
Service delivery
Service distribution
Device design
UI design
Core apps
App environment
Operating system
Hardware platform
Chipset IP
Manufacturing
Manufacturing
- Supply chain management is unique value add
- but only for Tier-0 OEMs (Nokia)
- and mega hardware vendors (Qualcomm, Mediatek, etc)
Copyright VisionMobile 2007-2010
Takeaways- Commoditised service delivery opens up services to anyone
- Distribution (which device and where on the device) is unique value add
- Device design and matched UI design are unique value-adds,
especially if mass-customised across global reach and customer segments
Key questions- How will Nokia (tier-0) make money in 5 years?(hardware, services or distribution?)
- How far can mass-customised designs go in 5 years? (1,000, 1 million or 1 billion unique designs?)
- Is there a new market to be created from premium ‘UI personalities’ ?
Copyright VisionMobile 2007-2010
Operator futures: bit-pipes or supermarkets?New smart pipe strategies at the junction of brands+consumers8
Copyright VisionMobile 2007-2010
The operator business is breaking upFrom the supermarkets of the 1990’s, operators are breaking up:
- outsourcing marketing & retailing (see MVNOs)
- sharing basestations
- outsourcing core network expansion
- outsourcing value-added services to 3rd party SDPs
- reselling bandwidth to OEMs (see Kindle)
- billing relationship diluted through App Stores
Are operators destined to become bit-pipes?- not if they don’t choose to
Copyright VisionMobile 2007-2010
Value layers in telecomsand boundaries between OEMs and MNOs
To add:
Radio spectrum
Network infrastructure - analytics, network APIs
Payment and authentication - mbilling
Voice/text/data - resell data via OEMs, etc
Value-added services - brand deliverables
Copyright VisionMobile 2007-2010
How can you build a smart pipe strategy?Three sustainable areas where MNOs can add value:
Value MNO value OEM value Chipset value Boundaries
Services NaaS, mbilling
Service delivery widgets, OSGi
Service distribution service inventory service inventory
Device design
cross-optimise
UI design cross-optimise
Core apps
cross-optimise
Operating system optimisation
Hardware platform scalability
Chipset IP performance
Manufacturing supply chain mngmt
(analysis omitted)
flat rate data
open gardens
OEM-dependent
standard
chipset-dependent
ARM
outsourced
(see next)(see MNO theme)
RF standards
OEM-dependent
Copyright VisionMobile 2007-2010
How can you build a smart pipe strategy?Seven pillars for a sustainable smart pipe strategy
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
1. Focus services only on unique brand deliverables
2. Expose Network APIs as a Service, but monetise as a matchmaker
and marketing channel
3. Reach where VISA doesn’t, but at VISA-like commission rates
4. Explore customer & service Analytics
5. Control the in-the-hands experience via on-device service management
6. Create, broker and monetise idle-screen real-estate to 3rd parties
7. Let App Stores divide and conquer, but offer best-in-class billing and merchandising as a service to all App Stores
Copyright VisionMobile 2007-2010
Focus where the brand value isDesigning a smart pipe strategy (1/7)
Services
1. Focus only on unique brand deliverables e.g. piece of mind, the brand that brings you other brands, in the palm of your hand, choice, traveler-friendly, always-in-touch, always-first-to-know
2. Use these unique brand deliverables to drive service strategy
e.g.
- Piece of mind: sync contacts/SMSs to network, replace lost phones within 24h
- Choice: offer shortcuts to favourite services (from Facebook to flowers) from the idle screen
- In the palm of your hand: offer local device access to a) core network services like voicemail, self-help, phone bill, phone use andb) widgetise the 100s of SMS/WAP-only services to boost adoption and provide consistency of service experience and management
Mobile PC STB
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
Copyright VisionMobile 2007-2010
Network as a ServiceDesigning a smart pipe strategy (2/7)
- Making $$ from network APIs is hard:
users will not pay more for a network-enabled app, there’s little unique to it
1. Monetise as a matchmaker
- deliver dynamic profiling info per subscriber segment
- leverage customer segments for promos (aka white label Blyk)
- outsource new brand creation and co-own derivate brands
2. Monetise as a marketing channel
- offer a marketing backchannel for app developers through app store
- offer recommendation services by tapping into users’ social graphs
3. Offer network APIs via on-device widget environment
for consistency of experience, device integration, in-life service maangement and inventory management
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
Mobile PC STB
Copyright VisionMobile 2007-2010
Reach where VISA doesn’tDesigning a smart pipe strategy (3/7)
1. offer micro-billing at VISA-like commission to mobile, PC, STB environments
a) via web-activated billing with MT SMS confirmation
b) NFC-activated billing with free NFC reader terminals
2. Extend billing beyond VISA capabilities
through recurring payments, in-app purchases, DoesUser HaveCredit()
Mobile PC STB
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
Copyright VisionMobile 2007-2010
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
Customer & service analyticsDesigning a smart pipe strategy (4/7)
Customer & Service Analytics
Install network and device probes to develop new intelligence:
1. Understand customer behaviour and enable behavioural targeting
2. Monitor and fine tune service performance (A/B testing)
3. Identify influencers and improve lifetime value metrics
4. Understand device performance and leverage in OEM deals pre- and post-sales
5. Monetise by reselling analytics to OEMs, ISVs (i.e. become the Nielsen of mobile)
Mobile PC STB
Copyright VisionMobile 2007-2010
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
Service lifecycle managementDesigning a smart pipe strategy (5/7)
In-hands experience is more important the out-of-the-box experience.
Implement on-device service management to:
1. Reduce ‘runtime age’ for existing content
2. Multiply addressable market for new content and services
3. Monetise from 3rd party software management with ‘per install’ and ‘per activation’ revenue models
4. Multiply customer touchpoints and opportunities for customer conversations
Mobile PC STB
Copyright VisionMobile 2007-2010
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
Service retailingDesigning a smart pipe strategy (6/7)
Networks buy the most terminals in Europe/US and hence control distribution and retailing (‘which device and where on the device’)
1. Create new real-estate through the idle screen (aka home screen, desktop)
2. Broker real-estate to 3rd parties and own services using innovative revenue models (per-widget, per-time slot, per action)
3. Implication: focus on a single app to be provisioned on all terminals
- idle screen for real estate management with widget runtime
- idle screen can encompass address book and any other functionality
- leave all other apps to 3rd parties! (and monetise upstream through distribution deals)
Mobile PC STB
Copyright VisionMobile 2007-2010
Services
Service delivery
Service distribution
Device design
UI design
Core apps
Operating system
Hardware platform
Chipset IP
Manufacturing
App StoresDesigning a smart pipe strategy (7/7)
Networks add unique value in billing, distribution and network APIs
but NOT in developer support and on-device storefronts
(or any other aspect of app stores!)
Networks can only extract value where they add value. Consequently:
1. Let app stores fight amongst themselves and evolve
2. Monetise as a billing platform and on-device inventory platform
3. Authorise network API access only for apps within pre-approved app stores -> creates new control point in application distribution!
Mobile PC STB
Copyright VisionMobile 2007-2010
Takeaways- MNO value is in matchmaking, micro-billing, analytics and service
distribution
Open questions- How will operators make money in 5 years? (access pipe, MVNO enabler, smart pipe, supermarket or closed garden?)
- How will operators position themselves in micro-billing?(premium payment gateway, VISA of mobile, or bank?)
- What % of MNO revenue will come from up vs downstream in 5 years?(10%, 40%, 80% ?)
Copyright VisionMobile 2007-2010
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