Tag Archives: IPhone

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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The Fast-Changing Landscape

Image representing iPad as depicted in CrunchBase

In tech, we talk a lot about how fast things change, how dynamic things are.  As an investor in mobile, I think and talk about this all the time.  I sound like a booster, sometimes even to myself.  I try to balance that, I really do.

This week, though, wow, if you ever thought that the landscape was settling and the picture was coming into focus, did that ever get thrown out of the window.

Intel saw a 27% year-over-year drop in earnings as the PC market continues to shrink.  Chipmaker Qualcomm, which is riding the mobile wave, overtook Intel in market cap: unbelievable.  Also highlighting the headwinds in the PC market, Michael Dell is reportedly looking to take the company he started in his dorm room private.  Hard to imagine giants like Intel and Dell facing such a changed landscape.

At the same time, it’s not like new markets are standing still.  Sharp is reporting that its ramping down production of the full-sized iPad as the demand for the iPad Mini is so much stronger.  Gee, that was quick!  Has the iPad Mini even been out for 6 months yet?

And finally, it’s exciting to see that someone other than Apple is starting to see consumer hype and love in the mobile market, with the WSJ is reporting that the upcoming Galaxy IVS from Samsung is seeing “iPhone like hype.”  I’m not hating on Apple here, I just think its great for everyone when there’s strong competition, which Samsung appears to e bringing.

However stifled innovation may seem today, it sure seems like the market is pretty dynamic.

 

 

 

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Market Cap / Employee

Monday I caught up over lunch with long time friend and superb Japanese entrepreneur, Nori Matsuda.  Matsuda-san is the CEO & Co-Founder of Sourcenext, a publicly listed consumer software company in Japan.

During the discussion, he talked to me about how he thinks about building public technology companies.  He mentioned a metric he thinks about a lot: Market Cap per Employee.  He thought that this was an interesting expression of a company’s culture, of how much opportunity, how much energy there likely was at the company.  He then rattled off the Market Cap per Employee of several large public tech companies.

I built this simple chart below, and I think it’s telling:

Company Market Cap (B) Employees (K) M/E (M$)
FB 52 4 $13.0
APPLE 528 73 $7.2
GOOG 219 54 $4.1
MSFT 227 94 $2.4
AMZN 107 51 $2.1
YHOO 21.8 14 $1.6
CSCO 98 67 $1.5
Zynga 1.8 3 $0.6
Nokia 13 105 $0.1
HPQ 23.6 350 $0.1

 

If you’re thinking of working at a public company, then this is probably an interesting metric to look at and consider.

Alternatively, if you’re running a startup, it’s also an interesting metric.  You might consider your current valuation and divide it by the number of employees.  See where you stack.  It’s probably at least some kind of indicator of the opportunity and the momentum in front of you.

 

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iPhone 5

Apple’s recent iPhone 5 announcement and upcoming launch has been a fascinating testament to the power of brand and to the very strong emotional connection that mobile devices have created with users. The mobile wave just keeps on surging!

For an iPhone version announcement, Apple’s news and showcasing of the device was a massive dud.  The Economic Times declared “iPhone 5 bigger, faster but lacks ‘wow’ factor.”  Others weighed in on the more incremental approach that Apple had taken with this release.

And then a fascinating thing happened: users started pre-ordering the iPhone 5.  In crazy numbers.  It’s clearly the fastest selling iPhone ever, selling more than 2 millino pre-orders in the first 24 hours. I’ve never pre-ordered an iPhone and I got one pre-ordered iwthin the first 48 hours.

So on the one hand, the iPhone doesn’t have much new to justify the upgrade.  On the other hand, users are snapping them up faster than any iPhone ever.  What gives?

A big part of this is Apple and its terrific marketing.  But the larger story is that Mobile is just different.  Smartphones, barely 5 years old, are devices we depend on–80% of respondents in a recent survey would not leave home without their smartphone.  And our usage of them in terms of time per day is surging–one recent survey I saw showed a >30% year over year growth average time per day on the device.  Given how central these devices our to our digital lifestyle, any advances and improvements in the leading devices will be ones that users pay close attention to.  In the case of the iPhone 5, clearly, millions of them were convinced that it was time to upgrade.

In addition to the core dependency we have on mobile, Apple again is masterful at driving its brand.

 

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Beware the Generalizations

This week I got the rare opportunity to have a low key dinner with the founders working at the NewME Accelerator in San Francisco.  It was a great visit—the energy and sophistication of the teams there was really strong, and I enjoyed the time.

This talk was strictly Q&A—just me sitting with a group of around 15 founders, fielding questions one after another.  I love this format.  But if you’ve spent time with me, you’ll know once I get started I don’t really stop talking, so this may not be all that unique.  :)

The founders’ questions were many.  Some were specific and use case oriented, such as, “Our team has built a product, we’re getting traction, and we think we need to raise a small seed round.  Some are suggesting we raise more, what do you think?”  In your case, given the instincts that’ve gotten you this far, I reco following them going forward.  If you have an offer to raise more, then think about that then.

Or, “I’m a founder with unique and differentiated real world experience in a specific market, and I want to hire a tech team to build a product this industry needs.  How do I raise money to hire them or how to do I hire them before I have money?”  Catch 22 — not sure what to say, just have to figure out a solution.

Others were pretty hypothetical, “If you had one company with 2 million users and no revenue, and another company with a small number of users and $50,000 in revenue, which would you be more likely to invest in?”  Hm.  Totally depends on trajectory and relative opportunities of the two.

In answering the questions, I often had to reiterate a caveat I find myself making a lot these days.  Namely, when I’m answering a question on a business I know only lightly, as in when I show up at a Q&A with founders, my answers are going to be broad brushstroke generalizations.  These generalizations may not work for you in your particular situation.  Mileage can vary, a lot.  The core truth is that your on the ground reality may be the sort of thing where my advice, or the advice of other outside perspectives, is pretty useless or even harmful.

In my own experience, in building startups the core on the ground reality is pretty muddy and opaque.  This is a constant reality—startups are inherently dealing in uncertainties, and uncertainty creates ambiguity.  Uncertainty and ambiguity is more the norm than the exception.

At the same time, many in our community, investor types like me and other outsiders, present a worldview that is much more certain.  Company 1 is screwed, Company 2 is can’t miss.  Do A, do not do B.   The world is black; not white.  Approach y worked for company x, so you should think about doing y too.  In an uncertain world, the narrative of certainty is valued.

I disagree with this thinking.  Far more is unknown than known, especially by those of us far removed from the front lines of our business.  I encourage founders to hear out different opinions, but retain your own perspective, informed by the reality of your situation.

In most cases, the situations we’re dealing with aren’t black and white.  They’re gray.  Beware of people who make you think the answers are simple and that generalities work.

If the answers were simple, anyone could do this stuff.

 

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#STARTUPPROTIP : Have (& use) an email signature

The problem: I’m running late to a meeting at a location I’ve not been before.  I’ve parked my car, and I’m on foot.  I want to call the person and tell them I’m running late, that I’m just around the corner.

From my iPhone, I open my calendar invite or the email thread confirming the time, and in the signature line of the other person is the simple, informal signature:

Thanks,

Chris.

No phone number.  No address.

Kind of a bummer.  Must spin up web browser and hope I remember name of company that you’re at and that the company has a web site with address.

The solution: set a signature that includes your name, your phone, and your physical business address.  Email is still an important product, useful to use it well.

 

 

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Yep. 100%. Mobile is where the growth is.

I’ve not had time to scrub through all the announcements at Google IO.  I’m  looking forward to, as sounds like there’s a lot of interesting stuff that came out of there, and I’m especially keen to gauge the steps Goog is taking to make the Android ecosystem healthier.

But before I get to that, VentureBeat covered uber-VC (uber meaning, superb/bigtime, not a transit service), Fred Wilson’s post, Mobile is Where the Growth Is.

As usual from Fred, it’s a great post.  Our portfolio has focused for some time on mobile-first investments, and we’re watching the same kind of surge that he describes.  Web flat-ish, and mobile growing like crazy.   Expect that to continue.

Here are some additional things I’d add and shade.

First, totally agree with this statement:

Mobile does not reward feature richness. It rewards small, application specific, feature light services. I have said this before but I will say it again. The phone is the equivalent of the web application and the mobile apps you have on your home screen(s) are the features.

I take this further. Specifically, mobile creates a new opportunity to disrupt incumbents due to the very small screen size that Wilson mentions.  Because there’s limited screen size and input mechanics, a fully-fledged service built for the web can’t replicate the entire thing to mobile.  And while they can’t replicate their full web- or PC-based service, I can’t think of any PC- or Web-First app that’s really taken a shot at re-envisioning its delivery on mobile.

For example, think about Adobe AcrobatMicrosoft Excel, or even Yelp.  Any of those work in some capacity on mobile.  But they were all conceived in a time when the PC was the portal to the web.  And it shows in their mobile execution.

In this context, a company like Foodspotting, conceived as a mobile first and mobile centric approach that focused on pictures of food rather than entire text based reviews and rants on local, has an opportunity to carve a (fast-growing) niche in a market that most thought was going to be entirely owned by Yelp. Having the limited screen size opens up an opportunity for new entrants and new brands to displace the incumbents, because mobile users have different usage patterns and more focused requirements relative to the PC web. (Disclosure: BlueRun is an investor in Foodspotting.)

Second, I think the opportunity and the disruption around mobile is only at the very beginning stages.  I think this is because the device is always with you, and users are using it in so many contexts that are near and dear to their lives and work.  Sitting a a computer is great and all, you’ve got a keyboard, a screensize, etc., but there’s no question that having a fully functional computer in your pocket that you can use to do basically anything at any time gets more engagement — in terms of time and emotion.  Think about it: it was only about 2 years ago, that you still saw quotes from Blackberry users saying that you would pull a Blackberry out of their dead hands.  Did anyone *ever* say that about using a computer, even a Mac?  They did, but it’s been like 20 years, since people have felt that way about computers.

Because a mobile device is always with you, I think that in addition to the opportunity to create new mobile-centric brands that can disrupt existing incumbents, there’s an opportunity to build a brand around the emotion and connection that a mobile-centric service provides you.  With Foodspotting, the team there focuses heavily on creating a community and service that’s very positive.  You won’t find trolls or flame wars on whether your local Thai place is good or not.  With Foodspotting, if you like the dish, take a photo and submit.  If you don’t, no worries, don’t submit a photo.  At one level, this is a small tweak.  But at another it’s profound.  As a mobile experience—again, tightly controlled due to screen size–makes a difference as the tone and manner on Foodspotting is really positive and affirming, a fun place to go and explore.

Another portfolio company of ours, Thumb, sees a similar benefits. Thumb offers a very simple approach to asking questions and getting responses–think Quora but really simplified for mobile.  Ask any question on Thumb and within a few seconds you’ll start getting responses and comments.  On ANYTHING.  I got 70 responses in a few minutes asking whether I should see The Dark Knight Rises in IMAX or in the Cinema (70% voted IMAX).  I got 50 who affirmed my love of Triscuits. It’s awesome to get these responses immediately, as it feels like what it’d be like to be a Twitter Celebrity for a Day, but for every post you make.  It’s great.

Here’s why I think it works.  Thumb is mobile-centric and its simple.  The simplicity drives crazy engagement: when you post a question, you’ll get crazy numbers of responses.  Because I never go *anywhere* without my iPhone in my pocket, anytime I ask Thumb a question, I come away with a great affirming experience that my question is getting answered and people are engaging.

I think these two examples are only a few of many, many others that are thriving on all sorts of dimension with this transition to mobile.  It’s a new platform, and it’s got new dynamics.

And with iOS and Android duking it out and with Windows still on the horizon as a potentially credible alternative, there’s fragmentation, a great thing to drive more innovation across the industry.  In my mind, we’re in the early innings here.

Whether its ad networks or adtech, social local, gaming, developer tools or enterprise, there’s a lot ahead in mobile.

 

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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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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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The Consumerization of IT Part I: Device Proliferation

Last week I started the first in a set of posts I’m writing on the tech mega-trend, the Consumerization of IT.  The basic set up of that introduction was that we are living in a Steve Jobs-oriented world.  By that I mean that a big leverage point that is and will continue to impact IT  is a function of the products, innovations and services  that consumers have experienced in improving their digital lifestyle.

To summarize: while our digital lifestyle is completely different than where we were 10 years ago (Facebook, YouTube, NetFlix, iPhone, etc., etc.), how we work as information users is basically the same.  The opportunity is high for our digital workstyle to change dramatically.   And that’s what the Consumerization of IT is all about at the highest level.

This series of posts will dig in more deeply on the Consumerization of IT, what are the implications of this, what will we see specifically.  I think there will be several implications.  The first that I want to discuss is the coming proliferation of devices.

I have a running bet with a good friend of mine around how many computing devices will we own  in 10 years.  We generally think about this in the context of how many devices we’ll carry on when we get onto a flight, but anyway, we’ll argue about that in 2021 when the time comes to pay out.

His idea is that he’ll own only 1 device, and the rest will basically be screens.  I tend to think that we’ll have literally dozens of devices, all that are smart.  Also, when I am carrying my bag luggage to a plane, I expect I’ll not have 1, but several devices, as I do today when I get on plane with an iPad, an iPhone, and a MacBook Pro.  (When I’m going on vacation btw, I add to this a Kindle.)

Bets aside, in either scenario, its apparent that device proliferation will continue to happen.  Furthermore, consumers will drive this proliferation–they will have different tastes and price points, and this will fuel a cornucopia of hardware devices that users can choose from.  Alfred P Sloan’s mantra for General Motors: ‘a car for every pocket and every purse’ will be the order of the day.

This device proliferation is an important factor in the Consumerization of IT trend.  Specifically, IT will continue to require control and security management capabilities over users, applications, data, and devices.   This is not a new problem, of course: security management and user provisioninig has been a headache for IT for over a decade, with the rise of users having Windows-based PCs and laptops.   To provide a sense of where we’ve come from, roughly 10 years ago, when IT analysts such as Gartner or IDC talked about an enterprise’s “Mobile Strategy,” it tended to focus on how to secure and manage laptops, not feature phones.  And to be sure, laptops being left behind did cause significant security and IT breaches: e.g., within the past few years, there’s been a highly publicized breech where a Fidelity employee left her laptop containing customer account data on hundreds of users in a taxi cab.

The consumer-led device explosion that we are now experiencing will make IT’s security management responsibilities even more challenging than they have historically been.  There will be more devices (phones, tablets, laptops, smartscreens, etc.), more platforms (iOS, Android, Windows Phone) than were part of the past hegemony of Microsoft Windows on the desktop and RIM Blackberry on mobile.  In addition to device and platform proliferation, there will be a rising calls and demands from users to have their devices and platforms supported.  Unlike the past where IT could dictate reference PC devices and provide a standard “software image,” the future is one where users will expect and demand that their devices, applications and platforms are supported.  It will be IT’s very challenging job to figure out how to deliver that user flexibility while at the same time ensuring that the corporate data assets are protected and all regulatory and legal compliance responsibilities are met.  Truly, the demands on IT are increasing.

What this means for early stage companies and investing is that there are new opportunities around Mobile in the Enterprise.  Companies like MobileIron, Zenprise, and AppCentral (disclosure: I am on the board of AppCentral) arenew entrants into this field, aiming at helping IT deliver the kind of device and application management protection required while enabling users to maintain the flexibility they demand.

In  my next post, I will talk about a second element of the Consumerizaiton of IT trend, namely how consumierization could change the way we think about distributing and managing software applications in the future.

 

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