Friday, January 09, 2009

Mobile Trends - 2009 and beyond

2008 has been a very exciting year for mobile technology in general and I feel that despite the shaky economy, the developments in the mobile space will continue on its growth path, creating opportunities for new application scenarios for entrepreneurs in the ever-evolving global mobile ecosystem.

I have over here tried to present the evolving trends in the mobile space not for the immediate year per say but from a long term perspective ...

Trend 1: Ad funded revenue model
Over the last decade we have seen phenominal growth in mobile adoption and SMS volume growth and the key drivers are now in place for mobile services to reach the critical mass. 

This has in turn lead to a trend among consumers who are now looking for new and innovative offerings for which they do not have to pay a premium for mobile content they can access for free online through a more convenient PC/laptop experience. As a consequence, mobile paying audiences will represent a limited share of the overall mobile content audience. Mobile content will thus increasingly transition to use of ad-funded revenue models.

Trend 2: SMS becomes commodity
I also see that even though the volume of SMS is soaring to new levels but the declining prices will force the operators to rethink on their offerings to cover up for this loss in revenue. As reported by Forrestor, we will see operators moving to flat-rate adoption rates (for mobile Internet tariff). We will observer operators bundling data options in their pay monthly tariffs (such as Orange with its Origami offering or Vodafone). After voice (per minute), voice packages, SMS per units, SMS options, unlimited SMS bundled into voice, data options, unlimited data package. 

As SMS becomes a commodity no one would be willing to pay for other services and we will see the evolution of voice+unlimited data plans. 

We might also see operators offering data / Internet package with different services bundled such as social networking, IM or communication with presence / location to stay in touch with your community of friends / relatives.

So definitly the door is going to be wide open and competion with heat up not only among application providers but also between application providers and service providers.

Trend 3: Consolidation
Consolidation will continue to be the mantra in the mobile industry. Companies having adequate cash or which have raised capital before the financial crisis (think of Zed and its 92,5M€ raised in July) will be interested in making new acquisitions. Also companies who are not into the mobile space will be willing to enter this space will be looking out for easy preys and there will be many medium-sized players and lots of start-ups with innovative ideas and technologies that may go bankrupt this year because they rely on long-term advertising business models.
That’s true for large operators willing to buy regional ones in emerging countries. That’s true for handset manufacturers (Motorola handset division is officially for sale). 

Trend 4: New Devices filling the market
Blackberry launches Bold and Storm.
Apple will launch new devices. Still tricky to say whether this will be a nano or something else. 
Major handset manufacturers will launch Android-based handsets and we’ll now discuss millions of phones.
Nokia launching N97 and so on.

So there will be a list of new devices coming to the market. That being said, I still believe it won’t change the game in 09. Blackberry will continue to stay strong in its segment for business users and travellers and it will stay there for a while since the iPhone is still lacking good & fast keypad input. 

The industry will stop talking about a Google Phone and realize that launching an OS is a long-term play that depends on your manufacturer partners. Nokia has a problem with it’s OS. The company will need at least two years to move seamless to the new open-source OS after having acquired Symbian in 2008.

Trend 5: Merchandizing of Mobile Applications
The success of Apple AppStore has completely refined the way application provides sell their applications. 300 millionapplication downloads in less than 4 months and over 10000 applications on the store has changed it all. Still I actually agree with Thomas that these are early days of mobile merchandizing and we can expect lots of improvement in mobile application merchandizing and expect a bunch of operators to launch widgets and equivalent of Apple Application stores. Blackberry Store is expected to be launched by March 2009 and Google coming with Android MarketThis will pose a significant challenge for the mobile developers as well and we will see a surge of innovations in the application development space. Read my article on "Contraint based innovation

Though there is a lot more to talk about but let me not make it long. 

I do recommend the following articles from Rudy & Thomas which are quite interesting where they share their predictions for 2009.

Wish you all the best for 2009!

Monday, January 05, 2009

Constraint based innovation

As an iPhone application provider Endeavour Software Technologies has been developing applications for Appstore since its launch and we’re starting to see a trend that is evolving.  People want large number of small apps. That the iPhone dev market is getting highly commoditized and as a result the word going around in the US is that you can get an iPhone app developed in around 10 K $.

The developers are lowering prices to the lowest possible level in order to get favorable placement in iTunes.

Many of the responses to Craig’s post focus on the need for marketing vs. depending on the App Store for sales. I do agree with the need for marketing, but if we are talking of low cost apps then marketing activity which involves additional cost is adding to the cost. There are methods which are cost effective such as working with press or getting featured by Apple but they are incredibly hard to guarantee.

What will it take to succeed?

I see that in order to make profits and sustain in this market companies need emphasize on a flawless, streamlined process where there are GUERILLA teams which churn our code quickly. By Guerilla I mean the ability to move in and move out of customers and their applications quickly, be able to get a very robust configuration, build and release mechanism to handle large volumes and a robust project and cost management oversight, which is led by a senior level executive.

The profits have to come out of the efficiencies by the way we build those apps. In the "app store" world we have seen that smaller players want to build an app quickly and inexpensively because for them the profit comes from launching many apps with small time to live, not with a single, large time to market application. Companies must therefore understand this trend and adapt.

Similarly, we know that BlackBerry app store is getting launched shortly. This will give rise to the need for the publishers to make their iPhone offerings available for the BB store as well. Here again the, short time to launch, high volume, low price app laws will hold. And here again we must tailor our offerings accordingly.

As of day there are over 10,000 applications on the iPhone Appstore and growing. In order to get a significant chunk of this one has to get the right price to drive volumes. This however is a million dollar question and begs some research. It is important t know the price point in which we get a customer to say YES? Is it $10,000, $8000 or $15000?

At the same time one has to think of innovative ways to bring down the cost such as Annuity based pricing? Are we willing to do development for a one-time cost of say $7000 and the rest in revenue per seat sold by our customer. For example, customer pays $7000 per application and then promises 25 cents per download on the Appstore.

Companies need to focus on agile development which has elements of

  • Process steps are well defined, streamlined and efficient
  • Rework is a minimum
  • Self Motivated and Independent teams

This concept though is not new and similar concept is also developed by Mobile Distillery for other java enabled devices. They proclaim reducing 30% of development time. This tells me that that software development for the mobility world has to change dramatically over standard s/w development where speed and portability becomes key.

Companies need to come up with automated development and test frameworks for rapid application development. The efficiency will be the key. I have seen Barclays using such frameworks for building complex trading tickets by designing widgets (GUI controls embedded with behaviour) and then by just putting these together for building the application. This worked very well. These widgets were individually tested to save time and finally the overall picture needed to be tested.

In all this one must keep in mind the three main issues with mobile applications

Porting:- Not a tough job as such, we just have only one SDK to develop the application for

Distribution:- Appstore is all about distribution and as easy as downloading music via iTunes

Discovery:- This is something that isn't sorted out yet & needs further elaboration

Approach to beat the market

  1. Focus on Agile development and be able to change concept of software development for changing face of software that is needed for the mobile platform.
  2. Need for a dedicated testing team connected to each application. We can offer it as a service for Appstore developers and publishers
  3. Need to practice for each horizontal platform such as iPhone, Blackberry, Windows Mobile, Android Market, etc. This can also be extended to vertical elements as we go on.


Well, its true that in crowded market prices is driven down but is only true of products and services where the barrier to entry is low. Indeed in a globalized and open playing field only those who provide a differentiated offering and able to educate their target audience will be able to command a better price.

Such barriers though are the very seeding point for creativity that will be born out of very constraints that are now seen as barriers. Constraint based innovation as C.K. Prahlad would say.

If one market place, say Appstore, does not offer what the customers want over a period of time then again market will shift in a direction to create quality. The move from the red ocean to blue ocean.

Never in human history have we been held back because the space for selling is crowded. Markets always find a way and mobility is still at its infancy...