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Dev Bhatia, CEO
Tyrannosaurus Inc.
you're insight & analysis is right on the money! interesting times we live in; Apple has dis-intermediated the Carriers while Android is dis-intermediating the handset manufacturers. While Android is still behind, I think it will overtake Apple in the next 12 months. With Apple, you get only 1 (maybe 2) form factors, with Android you get (or will get) a lot others..clamshells, quertyboards, etc. But the key drivers of these are the applications...no longer voice and text messaging. This is massively disrupting to carriers and traditional handset makers.
1) 2B downloads on the iPhone later -- how many are from companies that have/will have VC fundable scale? Open mobile makes the life of a VC much harder since now you will have to sort through 10x the companies and guess which will be successful.
2) I predict lots more successful garage shops supporting a few employees each with little niche applications. Probably creates a lot more opportunities for angel investors to back companies that end up with <$20M revenue per year. For now I predict that app infrastructure providers (i.e. admob) will be the early winners since they can support lots of small developers and thus build scale without big marketing budgets.
3) Rising above the noise is getting harder and harder likely giving the advantage to larger and larger players with big marketing budgets.
Considering that app market as any developing markets, will soon become pretty clattered and each product will start competing for users' dollar and eyeballs for ad consumption, i would be rather interested to see some predictive data on the criteria and segments in which the biggest opportunities for developers might reside. Yes, the idea and execution is what defines the success, but I am interested in mathematical approach in locating opportunities, at this point. Would appreciate any links/references on this subject. (I can be easily located via Linkedin or Facebook)
Thank you.
Cheers
Rich
I just read your article and like announcements part.This article is really interesting.Thank you very much for sharing this good information with us.I appreciate you.You have done a great job.Keep doing good work.
So what is it in the app store that make it so successful and how likely to have more of those which will really change the market structure.
One word…COMPLEXITY…apple solved that part of the equation for both the application developer and for user.
They have solved the billing issue (and bypass the operator at the same time), they have solved the discovery and download usability by enabling a one click access to app store. They have solved the after-download discovery of the application, by enabling a single click invocation of the application. (remember that pre-iPhone era 30% of the people who downloads an application don't even know where it is) .They have solved the handset variation and compatibility support, simply by having a single device. They have certainly introduced a better (and cool) user experience for every mobile-data application (except those that requires a lot of text input), and they have introduced a new, compelling business model for application developers.
The result were outstanding, the key question is can someone else reproduce that? There are dozen application stores everywhere and yet no-one is even close to reproduce the success. Apple owns the entire value chain (from the developer of the application through the distribution, the billing and the handset of course). What about the alternatives?
OVI – with 200 different devices and probably more than 200 different networks…and the inability to establish user-billing relationship…well good luck
Different flavor of berry stores, no matter how much I love berries and their outstanding email machine, they also have dozens of different devices to support, they haven't figure out their business model (with developer on one hand, users on the other hand and operators stuck in the middle)…again I don't see that happening.
Look with the complexity of handsets/applications/networks/users at the end of the day it becomes a matter of supporting the complexity (and support to the users once they face the complexity – how come it used to work on my old Nokia e71 and it doesn’t work on the e71x???), the balance between innovation and satisfaction is very delicate and very hard to maintain. Apple found the balance point, Android market is possibly leaning too much towards innovation, everyone else is taking the same path as the operators did for years with their own operator-portal which was just a different name for application (and content) store.
A final word about the android market, up until now they had single device (well G1 and G2 to be exact), but this holiday season we are going to see some more… Motorola, Samsung and more android devices will be launched… which immediately increase the complexity level (they are all androids…but they are different hardware and different configurations on different networks). As long as it is the innovative devices and being adopted by innovators and early adapters, there is good chance for another successful application store, but once main street users (early majority) will start to experience the android market and realize that the complexity issue means innovation at the expense of satisfaction…then we would know if it is apple or nothing or it is a new world.
With the Carrier no longer the gatekeeper of the smartphone world, your main challenges are:
1. Discoverability
2. Billing/monetization
3. Platform fragmentation
Startups can solve #1 for themselves, they'll innovative in how they get the word out. #2 and #3 require a lot of work.
More like the implosion of mobile advertising.
The iPhone is not the entire mobile world. It's a niche market.
Please note the world is slightly bigger than SF Bay Area.
Concerning Android:
There are 3 players on the market:
http://gigaom.c...et-share-in-q2/
Nokia:36% unlikely to use Android
Samsung: 19% potential for Android
LG: 10% potential user of Android
Totals: 65%
The rest (all manufacturers) with 35% market share have no significant impact on the market (including the iPhone).
A few comments: Operators never played such an important role in other areas of the world, maybe except for some countires in Asia (mostly Japan). In Europe e.g., we had a quite open mobile ecosystem for years. Anyone in most countries in Europe can walk into a shop, pick up any unlocked phone he likes, put in any sim card and that`s it. You can do whtaever you like with your phone, install any app, change to a different carrier or choose a prepaid option from the beginning. You can choose to use the operators offerings or portals or you can choose the one you like. There are almost no limitations.
Considering this, I find one sentence especially strange: "The industry owes a thank you to Steve Jobs for the iPhone and now the Android team for really kicking those walls over." Really? Sorry, but in my opinion, the whole iPhone ecosystem is more walled than any other mobile business system I have seen in the past 15 years. Apple totally controls what Apps you can buy, how you pay, it controls which carrier you have to choose, it controls where you can buy an iPhone, it controls how you put your music and other stuff on YOUR phone via itunes and so on. Jesus, it even controls which ringtones you can use. I should thank Steve Jobs for all this? You call this "open mobile"?
You say: "It’s hard to recall just a short 5-6 years ago, before the iPhone, and before Android, how much the industry was controlled by what Motorola and Nokia chose to put in their phones (...)". Sorry, either I have a totally different understanding of freedom or You are arguing from the sole perspective view on the North American market and its history. Nokia nor Motorola never did control the content on their phones in most areas of the world the way Apple does now with the iPhone (see above). Of course, they choose which apps come pre-instelled on their phones, but they let you put anything in the way you like it on their phone, be it java based or native. In my opinion, this is "open mobile".
What I totally agree with is that I also think that Android will play a much greater role in the mobile landscape.
I also agree with the fact that the iPhone had quite an impact on the mobile industry. Which part of this is due to some absolutely brillant and outstanding marketing is a different story.
But regardless of all the hype surrounding the whole smartphone development is the fact that for quite some time, feature phones will absolutely dominate the mobile world. Billions of billions of users in China, India or Africa will not be able to afford a smartphone at least in the next 10 to 15 years. So it is not only pathetic to call some 10 or 15 million iPhone users the dominating majority, it is also a bit of arrogant, considering theses billions of other users.
Thanks for your comments - a few notes back to your points. First, on the topic of perspective, the comments and the title were made from CTIA which is a NORTH AMERICAN trade show, so no surprise the comments were oriented to that market... that said, a few other things:
-- I stand by the point that the perspective on operator influence in mobile data WAS REAL, whether you're talking Verizon in N.America, or if you recall Vodafone Live (circa 2001), or OrangeWorld (UK or FR) or mmO2's WAP portal, or Telefonica's Emocion portal. I'm not talking about basic switching of SIM cards for voice access, but rather mobile data services, and in this sense, the operator portals or "decks" had a major influence on what content and apps were viewed and consumed. Their rate plans, whether flat rate or per KB also had a major impact on mobile data adoption.
--- Again, the adoption of mobile data services (or not) were hugely influenced by client software choices by NOKIA and others handset OEMs. Why didn't mobile email take off in 2001-2002? (e.g. no IMAP and POP clients for a while due to SMS commoditization) What happened to Wireless Village and Mobile IM services? (again no clients in phones decided largely by the handset OEMs). Why is it that MMS became a standard when other protocols could have been used? (search Nokia and the OMA efforts circa 2002) --- these were largely driven by handset OEM players.
--- I actually agree with you on the iPhone point - actually I've blogged about the "new walled garden" which you can find at www.accel.com --- but its still better than doing deals with Operators if you're a startup company
In any case, thanks for the comments, and come say hello at the next MWC or CTIA (or whatever other event)
Cheers
Rich