Tag Archives: Android

wsj mobile

Mobile : Big Wheels Keep Turning

It seemed just a few months ago that many in the Valley were griping that the mobile app ecosystem was dying.  Looks like that might have been overblown.  Today’s WSJ online has right at the tippy-top two interesting articles on the continuing growth of mobile generally, and mobile apps in particular.  There was a lot to digest.

First, revenue from mobile apps continues to surge–according to Gartner, app store revenue is expected “to rise 62% this year to $25 billion.”  At the same time, the battle to attract and retain new users is definitely getting more challenging, with the WSJ citing “double digit year-over-year” growth in the cost of acquiring users through advertising.  Big growing market, and an increasingly maturing and sophisticated ecosystem of marketing and promotion services gaining hold.

My view: this market is nowhere near saturated and new entrants have opportunities.  The data support this, as only 63% of apps used daily now differ from those used a year ago.  Beyond this quantitative signal, the WSJ provided I thought an interesting qualitative look-see at what a dozen or so business leaders, athletes and entertainers saw as their key go-to apps.  What struck me here is how relatively homogenized the choices were: a few users of Notes (the iPhone bundled note-taking app), Evernote, Uber, a few different news readers.  (Interestingly, Angry Birds was cited by several as being so addictive that these users had to delete the app from their phones.)  This to me speaks to the increasing opportunity for developers to continue to build and deliver valuable services via mobile smartphones and tablets.  Of course, with 700,000+ apps on the Apple and Google stores, discovery will remain a challenge.  But given the continuing growth and the fact that so many daily use apps weren’t used a year ago, the opportunity environment has upside.  Big risk, big potential reward.

The second theme in these articles in the WS was what it called the “evolving economics” of apps. The basic thrust was that app developers are experimenting with different price points and monetization schemes across different app ecosystems, Android, IOS, Windows Phone, etc.  This trend is one I absolutely see.  It’s also one that I think has a lot of room left to run.  The WSJ discussed mainly purchasing price points from an app store.  That’s kind of basic, obvious.  What’s coming is, I think, price testing and discrimination based on different usage in the app.  Power packs, premium features, etc, will get tested and offered at different price points for different user types.  Also, expect new developer infrastructure, offering real-time testing and debugging, A/B routing and others to evolve to improve the flexibility in offerings that developers have on this front.  Early stage startups like Appurify and Leanplum are examples to watch in this space.  Others in the continuing integration (CI) and the platform as a service (PAAS) will help here too.

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Thoughts on Apple’s Tim Cook’s Apology on Maps

Today, Apple CEO Tim Cook posted an apology letter to its customers over the release of its mapping product in iOS6.  It is direct and sincere.  It also recommends partner (or potentially competitor) products to users.  A link to the letter is here, and it is a clear sign of Cook’s leadership style and how this style differs from Jobs’ style.

One of BlueRun Ventures‘ portfolio companies, Waze, is specifically recommended to users.  This is quite a turn of events, as just a few months ago, Apple’s announcement that it was launching its own mapping product had led many in the technorati sphere to pronounce Waze roadkill.  What a difference solving a hard technical problem makes.

This is not a post that is negative to Apple at all.  It is still the most amazing and most valuable company in the tech world, and rightly so.  I am a big time Apple fanboy.  At the same time, today’s development is actually great news for startups as a whole for several reasons.

There are no sure things.  First, today’s note is evidence that just being the 800# Gorilla isn’t enough to guarantee winning a market.  With some markets, even if you are the most valuable company on the planet and you can literally devote limitless resources to a technology, you are not guaranteed a win, at least straight out of the gate.  In some market segments, like Maps, people depend on them and care about them greatly.  And it turns out the technology solution is difficult and takes more than just money to solve–it’s going to take, in the estimation of some analysts “two or three years,” to for Apple to build  a competitive offering.

Competition is good.  The second observation that’s good for startups is that this is evidence of a healthy and competitive marketplace.  Imagine that this happened in the PC ecosystem at the height of Microsoft’s dominance with Windows…  Users would have complained and raised a fuss, and Microsoft would have stuck with the message that ‘as more users use our [crappy] maps, the maps will get better,’ but there wouldn’t have been the same ecosystem support and robustness.  There’d also not have really been an alternative.

Today, not only is Apple recommending products like Waze, but analysts are wondering whether this will drive more users to Google’s Android platform, where Google Maps are happily distributed.  This is the wonder of competition–the invisible hand is clearly at work.  More competition at the platform level is good for startups and good for users, as it drives more diversity, more desire for offerings that each ecosystem can build upon.

Mobile is about local and real-time–maps here are key. The third observation that is that #MapGate and the customer uproar over it highlights things I’ve written about before.  Namely,  the Mobile Web 3.0 is upon us, and it offers the opportunity for real time commerce right here right now at the hyper local level.  When you  think about computing as being very local and real time, you realize that the map is the central locus point, that the map is extremely strategic in this world.  This is great news, not just for Waze, but for the coming future of the Mobile Web 3.0.



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Android Slowing in the US?

An article from today’s NYT Tech Section questions whether Android growth is slowing in the US.  The article quotes an analyst who states that iPhone growth remains healthy, but that growth rates of Android in the US are dropping.  No mention of Windows Phone or RIM btw, which I interpret as those two platforms not yet having achieved relevance.

The article is light on analysis, but it will be worth digging in on.  My quick take on Android is that as the very clear unit share leader in smartphone OS’s, it gains several advantages.  It gains broad ecosystem support from hardware/handset makers.  Developers have to pay attention, etc.

But unlike the Apple/Windows ecosystem battle of the PC Era of the 90s, in which Windows’ commanding market share basically pulled all client app developers to their ecosystem, the same effect is not happening.  In fact its the opposite this time around.  The iOS ecosystem seems by most accounts to be where the money is for developers, and few  development teams that would target Android at the long-term exclusion of iOS.  (Some devs will use Android as a test platform as its app approval process is far simpler than Apple’s.)

What’s driving the different outcomes this time around are a few things, namely:

  • Mobile adoption is happening much faster and more broadly than the PC era of yesteryear.  The market has grown so fast and so many users are now using smartphones that the market to support two (or more) viable ecosystems clearly exists.  While not the market share leader in units, iOS has a big unti share and it pulls the vast majority of profit share in the space.  iOS gets the premium users and their ecosystem is well designed to get users spending money and developers rewarded.  All in all a very healthy ecosystem over there in Apple.  In the PC war era, Apple lacked this virtuous cycle.  The explosive market growth of Mobile enabled 2 ecosystems to do this.
  • Android’s developer ecosystem is still too fractured.  Developers tell me about real concerns on Android owing to the different OS versions, firmwares, etc.  The compatibility problems are all over the place, and it has a chilling impact on developers.  iOS has its own issues, but at a minimum, developers know that if they get an app Approved by Apple they’ll get their app onto devices that can run their app.
  • The mobile app ecosystem and infrastructure is much better developed, enabling developers to support (with some cost) both ecosytems.  In the early PC era, app developmernt and distribution was still so inefficient that developers had to make a choice as to which ecosystem to target.  In today’s world, with eveyrthing from AWS, Phone Gap, HTML5, to say nothing of the ease with which the different app stores can help distribution all helps developers build and support apps on more than one ecossytem.  This efficiency enables more than one ecosystem to thrive.

So all in all, I’m not super troubled by this report.  Android is still a big dog in the space.  It does need to simplify the development ecosystem, IMHO, and showcase that developers can really succeed there.  But being the #1 market leader in units always has benefits, and I expect Android to retain that spot for some time.


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The Vice Tightens

Nokia warned this week of softer than expected revenues and a slower uptake of its new line of gorgeous Lumia phones running Windows Phone.  Nokia also announced aggressive price cuts to drive volume.

Its an expected, necessary response to slow consumer uptake on this launch.   The  price cut also exposes the challenge in front of Nokia and Microsoft–namely that to become a credible “third ecosystem,” they’re going to have to carve out a niche that is distinctly different and protected from Apple/iOS on the high-end, and Google/Android on the low-end.

Though Android is now clearly winning on unit volumes in the smartphone market, Apple is still earning the bulk of profits.  Consumers yearn for Apple products, and Apple appears to still have a lot of marketing magic in terms of whipping us into a frenzy for its new product releases.  And more importantly, the developer ecosystem around Apple  remains strong.  Developers know how to make money on iOS and it remains a ‘must target’ platform from a developer standpoint.  So long as these factors remain true, expect Apple to retain the high end.

Google Android has arrived big time.  Now the leader in terms of unit share run-rate, Android is now the market leader in smartphone shipments.  Being #1 has benefits, in particular, any hardware manufacturer not named Apple basically has to be in the Android ecosystem.  Google’s strategy of giving away the OS and its better than free value proposition to hardware OEMs, which Peter Fenton discusses in this great post, is great competitive defense.  If there’s any weakness in the Android ecosystem, its that the profitability of the developer ecosystem seems lower than iOS’s.  Developers I speak to generally find Android users less likely to pay for an app, less likely to complete in-app purchases etc.  Android runs too many units for developers to not target the platform, but the developer revenue seems less clear.

With these two leaders in place, then the question is how does Nokia / Windows fit?  It will be difficult to compete with Android’s less than free.  To the extent it is successful in gaining (buying?) share at the low end, this strategy has to problems.  First, Nokia/Windows have a business model that will have to likely compete against the better than free model of Android.  While charging nothing to handset manufacturers, Google makes revenue on default searches and reportedly shares this revenue with carriers/handset makers.  This is better than free, and MSFT/Nokia will have a challenge responding.

The second issue here, also important, is the signaling to mobile app developers.  Most mobile app developers I speak to tell me that Android is a broadly distributed platform, but it is nowhere near as profitable (in general) as iOS.  Developers will run you through a litany of complaints: the Android Market is a mess, the in app purchasing platform is weak, users don’t upgrade to the latest versions of the Android OS (or their apps), etc.  The other issue is a function of price point: Android users are generally cheaper and more price sesnitive than iOS users.  Developers know this.  With Windows / Nokia chasing this segment, they are heading into a problem area for their developer efforts–namely, developers will want to understand what the profit profile is for building apps on the platform.

So Windows Phone / Nokia will have challenges fighting against Apple.  And opening a front against Android will I expect prove both costly and difficult to attract developers.  This is the risk of becoming a third ecosystem.  This is what happens when the vice tightens.

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6 Observations from Mobile World Congress 2012

GSMA Mobile. WorldCongress

Image via Wikipedia

This year’s Mobile World Congress drew record crowds to the beautiful Fira de Barcelona venue.  The scale of attendee growth–up over 30% from last year and forecast to be well over 100,000 next year–drove home the obvious message: this mobile thing is going to be really big. 

As venture investors who’ve focused on mobile investments for over a decade, BlueRun has been coming to MWC/GSMA for years, and its interesting to track the moves occurring in the industry year on year. 

At a high level, this year felt relatively incremental versus last year–a lot of overall market growth, but few individual moves.  Here are a key observations that I came away with, generally with observations on a year over year perspective. 

  1. Brands are getting in the game in a big way, but the days are early.
    One of the biggest changes I saw year over year was the interest big brands have in mobile.  We saw this most clearly at the mini-conference AppNation, which was produced in partnership with Nokia, BlueRun Ventures, held its Social Loco conference at MWC.  In it, speakers from a broad range of companies–from Ebay/PayPal, Visa, ESPN, Verizon Wireless, Four Square, Waze, Groupon, Retailligence, Bing Mobile, Keep, and others–discussed how the rise of SoLoMo was impacting their businesses.  The net/net is that we are in the early innings of mobile’s rise in increasing as a new outlet for brand franchises to build and nurture. 

    Over the last 12 months, brands have watched the rise of firms like Groupon (couponing), Zong (now Ebay) (payments), and the opportunity is starting to become clear.  At the same time, the opportunity to do much, much more in terms of building relationships with users is still very apparent.  One example: loyalty.  One panel asked each speaker to name a company who’s mobile strategy had improved the loyalty the speaker had with that brand.  Everyone on the panl could name one brand: Amazon, Starbucks, Delta (sic).  But everyone’s list was relatively short. 

    Brands to date are using mobile as an extention of their brand, e.g., ESPN is now available with scores, news and highlights in your pocket.  Or perhaps they’re using mobile to help extend the ability to drive commerce, e.g., Amazon now gives me the ability to price shop whenever I’m in the store.  But when thinking about how brands really think about building loyalty via mobile, few could point to brands that are yet thinking about this.  Right now, mobile is mainly about driving foot traffic and sales at point of sale, according to the folks that I spoke to.  I expect much opportunity over the next 2-3 years for brands to think really hard about not just closing sales through using their mobile strategies to build real-time purchase intent, but also to spark opportunities to drive long-term loyalty.

    At the same time, in the shorter term, there was a lot of discussion at this from brand’s perspectives about this being the year where m-commerce really explodes.  Several felt that the ecosystem around NFC is finally in place.  And with the next generation of phones having wallet technologies turnkey ready, there’s a sense that we’re finally going to see m-commerce and m-payments really poised to explode.  So for the time being, the brands that were speaking here are looking most heavily at how they position themselves to capitalize on this.  All in all, that’s good for the whole ecosystem. Its going to drive a big solid step for mobile as a market, and it highlights how much opportunity remains in front of us. 
  2. Microsoft / Nokia partnership progress has exceeded expectations 1 year in.  A year ago at MWC, the MSFT/NOK partnership had been just announced.   Leading up to last year’s MWC, Nokia had just released new CEO, Stephen Elop’s “Burning Platform” memo, a clear-eyed assessment of how far behind Nokia had fallen and the level of urgent focus required.   At last year’s show, Elop proclaimed that the Nokia / Windows Phone partnership would provide a “3rd Ecosystem.”  But at the booths of both Microsoft and Nokia, no phones existed, few partners were on board.  So last year, the pronouncements were strong, but the execution wasn’t yet there–skepticism was the order of the day. 

    What a difference a year makes.  Nokia’s Lumia 900 looks awesome–I got a 7 minute demo (and finally had to beg to leave the booth)–for the high end and should grab some share in the premium smartphone market.  At the same time, there are a range of lower end smartphone devices that are going to disrupt the feature phone share. 

    Much work remains.  The app ecosystem is still way too far behind and developers I speak to are not seeing a need to prioritize WP ports yet.  For gaming, the lack of OpenGL and the inability to program in native C or C++, has several mobile game developers unable to shift their focus.  And how WP users will monetize in this 3rd ecosystem is still a big wild card.  Developers I speak to in general understand that iOS monetizes far better than Android.  How WP users will monetize is hazy, especially given that a big chunk of share WP will grab will be feature phone replacements. 

    But all in all, given where Nokia and Windows Phone were a year ago, more progress has been made in a year than I think most would have forecast.
  3. Android’s ecosystem continues to hum.  Last year, Google’s Android presence was in a word: awesome.  Their Android area was a party, and all the cool apps were there.  Cool visualziations of Android activations conveyed the global momentum.  And a smoothie bar and slide rounded out the momentum with “googley” good cheer. 
    This year all this stuff was on display.  Momentum still strong, no big change here.  Steady progress, the stance of a leader.  Kind of like the Dallas Cowboys under Jimmie Johnson–they’re expecting to win. 
  4. Samsung’s Tablets made a lot of progress since last year.  Last year Samsung was demoing its first mainstream Android tablets.  They felt like good version 1.0, but Apple’s iPad really seemed quick, faster, and more real as a producct  The Samsung Galaxy tabs at the booth last year also got really hot, like drop out of your hand hot. 

    This year, Samsung’s product line up is eye-opening.  These machines cover a range of sizes and hit a range of prices.  The software is faster and much more responsive.  The hardware feels sturdier, no device felt hot, and the screen resolution is terrific.  Whereas last year, I thought no tablet would really stand up to the Apple iPad for years, I’m wrong.  Samsung is in the ring.  Game on! 
  5. Blackberry is still dead.  On first impression, the two things that caught my eye at Blackberry’s booth were both negative.  First, they had a Porsche 911 4S in their booth.  Always a bad sign when you’ve got to bring a power car into the booth of a big company like this–its a signal your products aren’t cutting it. 

    Second, it was really dark, low lighting inside the booth.  This also usually conveys to me that the vendor doesn’t really want you to see stuff clearly.  This was in sharp contrast to the Samsung booth, which is light like the inside of a surgical theater–brigh, bright lights. 

    Inside the booth, it just seemed as though there wasn’t much excitement, a high ratio of RIM employees to attendees.  Uninspired product line, with the Playbook still seeming basically at least 18 months behind in terms of product functionality. 

    The lack of momentum here carried over to the Developer Day they hosted.  The developers I talked told me that the Blackberry Developer Day wasn’t really developer focused at all.  The first hour of the session was basically a bunch of marketecture.  The first question in the Q&A was from a developer who asked, “ok so what can we do and what can’t we do?”  This is basically the Developer 101 question that any developer has of any platform.  The developers I spoke to expressed exasperation that on top of having so little market momentum, such weak products, that Blackberry would put together a Developer Day that was so disconnected fromm what developers want to hear about. 

    In addition to the big ecosystems, here are some other big shifts that I perceived out of this year’s show.
  6. The big carriers are still struggling with this new world order.  Because of the huge size, scope and presence of many big carriers, Mobile World Congress / GSMA retains some of the feel of the mobile industry pre-2007, before iOS and Android.  In that old world, the carriers had huge power at MWC (and indeed everywhere), but the carriers were synonymous with distribution.  To get your mobile app or service in front of users, you had to convince a handset OEM (Nokia, HTC, etc) and/or a carrier to support you.  The carriers have the ultimate billing relationship with the user, so their power was pretty much unrivaled.

    That world is over, and now MWC is a walking illustration of how the great unwashed masses of app developers have ridden the iOS and Android waves to liberate their routes to market.  With the ever falling costs of distributed computing services provided by Amazon’s AWS, Rackspace, and others, along with the rapid rise of new mobile-oriented instrastructure services such as Urban Airship, Parse and others, developer power is only going to rise.

    Facebook announced the integration of carrier billing into its platform, a great move and one that makes Facebook even more interesting as a mobile dev platform.  And it exposes a central challenge to carriers–they need to avoid becoming just a ‘dumb pipe of data,’ but how concretely will they achieve that?  I don’t think there is yet a crisp answer here.  I do think that we are starting to see slightly more aggressive and creative carriers, seeking to build value in this new world order.  The Facebook integration with billing systems is one move.  Some carriers are getting more aggressive about the work they do with startups.  Verizon Wireless in the US is one example. 

    But this carrier evolution needs to continue.  Startups and mobile apps and services I spoke to at MWC talked about how difficult it is to work with carriers, how it takes 10+ meetings to get even the simplest things done.  One VP at a very prominent mobile service expressed to me that at last MWC, the carriers he talked to felt as though they still had a lot of leverage over his company.  This year things have changed, he remarked.  When asked why, he said, “Well, we more than tripled in size!”  No more discussion of leverage, the startup has it, no discounts, no rev shares.  Put me on the phone and let’s go.  I expect more of that, not less so. 

    So a big year at Mobile World Congress.  Great to see everyone there, and great to see the industry with as much vibrancy and excitement as there was.  Can’t wait for next year! 
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My Top 5 CES 2012 Observations

I got the opportunity to go to CES in Las Vegas last week. A lot of interesting stuff, as always. (I want me that new Sharp TV, Mom!) Here are my top 5 observations from the show.

1) The Microsoft Windows Phone 7 and Nokia partnership has executed above expectations in year 1.

I don’t think this is controversial. We saw journalists saying that the upcoming Nokia 900 phone was one that they wanted to buy wtihout even being able to put their hands on it. That’s buzz, and its focused at the high end.

We also saw Nokia / MSFT pulling a little blue ocean strategy. Nokia’s US launch of the 700 w/ T-Mobile at the break-through price point of $50 makes it an alternative to feature phones, not iPhone or Android. That’s going to be disruptive, and that’s going to get WP7 share. No question.

Again, this is execution beyond what folks believed would occur in year 1. The market would benefit from a “3rd ecosystem,” and it looks like the market is going to get one.

2) RIMM / Blackberry is still dead.

I visited the RIMM Blackberry booth. It was still a big presence (so was Kodak’s, btw, but I digress), but the energy was gone.

Big booths with red hot energy: Samsung, Microsoft, Sony, Intel, even Motorola Mobility.

Big booths with weak energy: Blackberry.

I wish the company the best, it is a trailblazer. But the wares it was showcasing won’t get them off of the mat.

3) Samsung Galaxy Tabs are worth another look.

Samsung’s hardware form factor for tablets has been strong for about a year. The product feels well built and sturdy. But a year ago, the Android OS felt a little bit laggy, not quite optimized for the tablet form factor.

This year’s CES, the Samsung Galaxy Tabs were screaming fast from a performance standpoint. This I thought was impressive.

I don’t expect a massive uptick this year in Android or Samsung, but they are even more on the map.

4) The Internet of Things is coming.

The user experience in cars and in home automation is really improving, at least based on what I was seeing at CES. I’ll be looking to the technology included in a car or home utility upgrade in the next few years, and I won’t be the only one.

These are blazing the trail for the oft-talked about “Internet of Things.” This is coming our way.

5) Windows 8 / Metro is going to be big.

It may be the former Microserf in me, but I’d put money on W8 and Metro making a big impact. The progress on the OS has been steady—there won’t be some massive reset that delays it 2 years, given how far along it is. The ecosystem seems relatively coordinated. And there are clear contrasts and differentiations for consumers, in particular, that should reinvigorate the Windows ecosystem.

Not talked about as much, but also relevant to this point, I think the Kinect with PC should be an interesting opportunity as well. I am watching that with interest.










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Google’s Huge Q3 & Why It’s Huge for Mobile

Android robot logo.

Image via Wikipedia

Google had a huge Q3 and its great news in the mobile startup world.

Mr. Page added that revenue from mobile devices, largely from use of its search engine on smartphones and tablets, is on pace to generate $2.5 billion over the next year. The figure is up from a $1 billion-a-year pace Google disclosed a year ago, thanks in large part to the proliferation of devices powered by Google’s mobile operating system, called Android. Mr. Page said more than 190 million Android devices, the vast majority of which come pre-installed with Google’s search engine, had been activated.

WSJ, 10/15/2011

We all know and are excited about the promise of mobile.  Mary Meeker‘s fantastic presentation from last fall showcased how the mobile internet and the gadget centric world that is oncoming is a tech trend far outpacing the speed and impact of the internet of the late 90’s.  We’ve seen huge tectonic shifts in the mobile ecosystem with big moves from players including Google (buying Motorola Mobility), Microsoft (purchasing Skype), Amazon (releasing its Kindle Fire), and Apple (just being awesome).

But this announcement from Google has got to be a wakeup call to us all.  Mobile is upon us.  In a big way.  And faster than I’d have expected.

This is a great development to see, as it shows that this huge market — mobile — now is developing a profit pool in a second key ecosystem.  For the past several years, Apple has owned the profitable developer ecosystem.  Apps were built and monetized principally through Apple’s ecosystem.  It was great–Apple offered an ease of distribution unthinkable before the iPhone.  But it had limitations–if Apple didn’t like what you were doing or if your model didn’t fit their approach you were SOL.

Android is much more open.  Developers can experiment with all kinds of different business models and approaches, in ways that wouldn’t work anywhere near as well with Apple.  The promise was great, but the reality was unclear: we all knew Android was out there, gaining traction, but we didn’t know its health as a developer platform.  Well, this announcement should go a long way towards removing the doubt.  Now Google’s Android platform is both broadly distributed and starting to generate money.  This is a big announcement and its great for developers, investors and consumers in the mobile ecosystem.

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